[Senate Hearing 108-]
[From the U.S. Government Publishing Office]



 
  DEPARTMENTS OF LABOR, HEALTH AND HUMAN SERVICES, AND EDUCATION, AND 
          RELATED AGENCIES APPROPRIATIONS FOR FISCAL YEAR 2004

                              ----------                              


                        WEDNESDAY, APRIL 9, 2003

                                       U.S. Senate,
           Subcommittee of the Committee on Appropriations,
                                                    Washington, DC.
    The subcommittee met at 9:35 a.m., in room SD-138, Dirksen 
Senate Office Building, Hon. Arlen Specter (chairman) 
presiding.
    Present: Senators Specter, Byrd, Harkin, and Murray.

                          DEPARTMENT OF LABOR

                        Office of the Secretary

STATEMENT OF HON. ELAINE L. CHAO, SECRETARY OF LABOR

               OPENING STATEMENT OF SENATOR ARLEN SPECTER

    Senator Specter. Ladies and gentlemen, the Appropriations 
Subcommittee on Labor, Health and Human Services, and Education 
will now proceed. This morning, we have the distinguished 
Secretary of Labor.
    Secretary Elaine Chao was sworn in on January 31, 2001, the 
24th Secretary of Labor. She had been president and CEO of the 
United Way Foundation, served as director of the Peace Corps 
and Deputy Secretary for the Department of Transportation under 
President George H. W. Bush, distinguished fellow at the 
Heritage Foundation, MBA from Harvard Business School and an 
undergraduate degree from Mount Holyoke. She has also studied 
at MIT, Dartmouth, and Columbia University. She is a veritable 
Ivy League participant.
    Madam Secretary, we welcome you this morning. We are 
examining your budget and the activities of your Department, 
and it is always a difficult matter to allocate funding, but 
the subcommittee is concerned that the discretionary budget 
request for fiscal year 2004 is more than $368 million under 
the current budget, and we realize that budgets are established 
by the Office of Management and Budget of the administration, 
but we express concern about decreases and elimination of 
programs. The dislocated worker assistance program is down by 
more than $78 million, and that's a very difficult area. Just 
yesterday at a hearing of the Steel Caucus we heard the 
concerns of dislocated workers who were being impacted by the 
acquisition of Bethlehem Steel by the International Steel 
Group.
    We note the elimination of a program on reintegration of 
youthful offenders, which in my view is a very important 
program, trying to take youthful offenders out of the crime 
cycle, something I worked with for many years as District 
Attorney of Philadelphia, and have on the Judiciary Committee, 
and the elimination of the program of youth opportunity grants, 
cuts in mine safety and health, a tough issue. We had an 
enormous problem in my State, Somerset County, with a mine 
disaster last summer. This subcommittee held hearings there, 
and cuts in that program are troubling. Cuts in the OSHA 
training grants and the job training pilot program and 
international labor affairs are all matters of concern to the 
subcommittee.
    With those opening comments, Madam Secretary, we are 
pleased to have a chance to discuss these issues with you in an 
ongoing relationship, and we now look forward to your 
testimony. The floor is yours.

                SUMMARY STATEMENT OF HON. ELAINE L. CHAO

    Secretary Chao. Thank you, Mr. Chairman. I hope you will 
not let the Ivy League background be held against me.
    Senator Specter. I would consider it very much in your 
favor, having some association myself.
    Although the days I spent at the University of Oklahoma, 
which has been very non-Ivy League compared to the fancy Yale 
Law School or the fancy University of Pennsylvania, I think 
non-Ivys have a lot to recommend them, too, but so do we Ivys, 
Madam Secretary.
    Secretary Chao. Mr. Chairman, thank you for the opportunity 
to present the Department of Labor's fiscal 2004 budget. The 
focus of this budget can be summarized in two words, employment 
and enforcement. The fiscal year 2004 budget and the 
President's Economic Growth Package reflects this 
administration's commitment to helping Americans find good jobs 
and to ensuring that our workers remain skilled, safe, and 
fairly compensated.
    The total request for the Department in fiscal year 2004 is 
$56.2 billion in budget authority and 17,503 FTE, of which 
$11.5 billion is the discretionary portion.
    The Department is proposing several changes to the 
Workforce Investment Act which we believe will improve 
accountability, eliminate duplication, enhance the role of 
employers in training and placement, and increase State 
flexibility. We request $2.6 billion for youth employment and 
training programs to help young people make a successful 
transition to the world of work, family, and responsibility.
    The proposal includes $1 billion for a reformed youth 
grants program. Twenty percent of these funds will be set aside 
for challenge grants to cities and rural areas experiencing 
unique youth development needs. $3.1 billion is requested for 
adult employment and training programs. As part of WIA 
reauthorization, we propose to consolidate adult dislocated 
worker State grants together with employment services. This 
will give States the flexibility to target resources where 
they're needed most, eliminate duplication, and serve more 
participants than ever before.
    In addition, we request $47 million to increase marketplace 
demand for people with disabilities as part of the President's 
New Freedom Initiative. Some of these funds will be used to 
test a new pilot disability employment survey by BLS and the 
Office of Disability Employment Policies. This administration 
is also strongly committed to meeting the employment needs of 
our veterans. We requested $220 million and 250 FTE to maximize 
employment opportunity for veterans and to protect their 
employment rights when they return.
    These are just a few highlights of the Department's 
proposed employment and job training initiatives, which are 
described in much greater detail in my written statement.

                           WORKER PROTECTION

    Enforcement of the worker protection laws is both an 
obligation and a priority of this Department. During our 
tenure, wage and hour enforcement has achieved new records. 
Last year, we recovered $126 million of pension assets for 
beneficiaries, and occupational injury and illnesses rates have 
reached historic lows, but as we all have said, more can be 
done.
    Among our requests is included an increase in certain civil 
money penalties for MSHA and Wage and Hour, $5.3 million for 
OSHA's expanded outreach and assistance program, including 
specific funding for outreach to non-English-speaking employers 
and employees, strengthening MSHA's enforcement, education, and 
compliance assistance programs for small mines, an additional 
$12.3 million and 69 FTE to enhance enforcement in the Employee 
Benefits Security Administration, and $2.5 million and 20 FTE 
to strengthen the Inspector General's request for labor and 
racketeering initiatives.
    The cornerstone of worker safety is OSHA and the Mine 
Safety and Health Administration. Consistent with their goals, 
OSHA and MSHA will continue to focus on the most serious 
hazards and dangerous workplaces. Requests for the Department's 
other enforcement agencies are detailed in my written 
statement.
    The Department's 2004 budget, of course, also includes 
initiatives for implementing the President's Management Reform 
Agenda and, as I mentioned at the beginning of my statement, I 
believe that the President's fiscal year 2004 budget request 
for the Department reflects the administration's strong 
commitment to helping Americans find jobs and to strengthening 
enforcement of our employment laws.
    And with that, thank you very much for inviting me to be 
here today, Mr. Chairman, and I will be glad to answer any 
questions.
    [The statement follows:]

               Prepared Statement of Hon. Elaine L. Chao

    Mr. Chairman, and distinguished Members of the Subcommittee, thank 
you for the opportunity to appear before you today to present the 
Department of Labor's fiscal year 2004 Budget.
    The Department of Labor (DOL) continues to heed the call of 
President George W. Bush that ``Government should be results-oriented--
guided not by process but guided by performance.'' The Department's 
fiscal year 2004 budget was developed with just such a focus--and the 
outcome is the Department's first-ever integrated performance budget.
    With the ongoing war against terrorism and the related conflict in 
Iraq, every department of the government must continue to take a hard 
look at all of its programs. We must provide more funding for those 
programs that work; reform and revitalize those that can be improved; 
and cut or eliminate those that have not proven effective, are 
duplicative of other programs, or are not currently a great national 
priority. The Department's budget was developed with this outlook in 
mind.
    The total request for the Department in fiscal year 2004 is $56.2 
billion in budget authority and 17,503 full-time equivalents (FTE). The 
request for the Department's discretionary programs is $11.5 billion.
    The Department's fiscal year 2004 budget was developed around four 
critical themes designed to make a difference in the lives of America's 
working families: Helping Americans Find Jobs; Protecting Americans' 
Employee Benefits; Protecting America's Workers; and Bringing DOL into 
the 21st Century.

Helping Americans Find Jobs
    In 2003, the Administration will use the opportunity presented by 
the expiration of the Workforce Investment Act (WIA) to make 
significant improvements in Federal job training and employment 
programs. These reforms will improve accountability; eliminate 
duplication through program consolidation; enhance the role of 
employers in the national workforce system; and increase state 
flexibility.
    This theme will be further accomplished through Personal 
Reemployment Accounts (PRAs) for job seekers who are at risk of 
exhausting their Unemployment Insurance benefits. The President's 
economic growth plan, released January 7, 2003, includes $3.6 billion 
for this new tool, which states will have considerable flexibility to 
design. The accounts will provide up to $3,000 to job seekers to allow 
them to purchase the training, re-employment, or supportive services 
needed to get back to work.
    The fiscal year 2004 budget and the President's Economic Growth 
package reflect the Administration's commitment to assisting American 
workers find and keep work--and will accomplish the Department's first 
focus of helping Americans Find Jobs. Through funding for job training, 
a new initiative to help unemployed workers, and reform of existing 
programs, the Administration is improving opportunities for American 
workers. The 2004 budget proposes a major overhaul of the 
administrative structure of the Unemployment Insurance (UI) system, 
which is an unwieldy relic that badly needs an overhaul. This proposal 
would make the UI system more responsive to the needs of workers and 
employers by giving states flexibility and control.

                PROTECTING AMERICANS' EMPLOYEE BENEFITS

    Effective last month, the Department changed the name of its 
Pension and Welfare Benefits Administration to Employee Benefits 
Security Administration, or EBSA. This was done to better reflect the 
agency's mission and direction. Though newly named, EBSA continues to 
lead the way in protecting workers' health and retirement security.
    As I will touch on later, this budget includes resources to enhance 
employee benefits and retirement security. With these additional 
resources, EBSA expects to dispose of 19 percent more civil and 
criminal cases compared with fiscal year 2003 and restore, protect, or 
recover $69 million more in pension plan assets. This proposal to 
increase the EBSA budget--at a time when other national priorities such 
as the war on terrorism and homeland security are so compelling--is a 
reflection of the Administration's commitment to protecting workers' 
and retirees' benefits.
    In fiscal year 2004, the Department's Office of Inspector General 
will continue its role in bolstering DOL's efforts related to this 
theme through initiatives aimed at achieving the OIG strategic goal of 
safeguarding and improving worker and retiree benefit programs.

                      PROTECTING AMERICA'S WORKERS

    While occupational injury and illness rates have reached historic 
lows, more can and must be done. In fiscal year 2004, DOL will continue 
to balance enforcement and compliance assistance activities through the 
ongoing efforts of its Occupational Safety and Health Administration 
(OSHA); Mine Safety and Health Administration (MSHA); the Employment 
Standards Administration's Wage-Hour Division, Office of Federal 
Contract Compliance Programs (OFCCP), and Office of Labor Management 
Standards (OLMS); and the Office of Inspector General (OIG). 
Initiatives include:
  --Strengthening existing enforcement by proposing increases for 
        certain Civil Monetary Penalties under MSHA and Wage and Hour;
  --$5.2 million and 3 FTE to expand and improve OSHA's outreach and 
        assistance, including efforts to reach non-English-speaking and 
        contingent workers, provide small business assistance, and 
        increase the number of Voluntary Partnership Programs;
  --Strengthening MSHA's enforcement and creating a new Small Mine 
        Office to provide information and assistance to small mining 
        operations; and
  --Related efforts include the OIG's Labor Racketeering Initiative, to 
        which $2.5 million and 20 FTE will be applied in fiscal year 
        2004 to address union corruption.

                   BRINGING DOL INTO THE 21ST CENTURY

    The final theme of the Department's fiscal year 2004 budget will be 
accomplished by several initiatives related to the DOL's ongoing 
implementation of the President's Management Agenda. These include a 
$20 million, first-year investment in a new department-wide accounting 
system for the Office of Chief Financial Officer, which will update and 
improve Departmental financial management. $48.6 million is also 
requested in fiscal year 2004 for the Department's successful 
Information Technology Initiative, which will, in part, consolidate all 
DOL agency requests in support of the President's Management Agenda 
component Expanded E-Government. For fiscal year 2004, $23.5 million is 
also requested for the Department's Management Initiative to centrally 
manage DOL's efforts on implementing the other four government-wide 
initiatives on the President's Management Agenda.
    Further, in fiscal year 2004, DOL intends to resubmit two 
legislative proposals to restore the solvency of the Black Lung Trust 
Fund and improve and update the Federal Employees' Compensation Act 
(FECA). Because it integrates administrative and worker benefit costs 
and provides an incentive to improve workplace safety, the fiscal year 
2004 Budget also re-proposes the FECA Surcharge.
    The Department will also continue to advocate viable options to 
reform its Unemployment Insurance program and will support legislation 
allowing employers to offer employees the option of taking paid time 
off in lieu of receiving overtime pay.

                    EMPLOYMENT AND TRAINING PROGRAMS

    Overall, the fiscal year 2004 discretionary request for the 
Department's Employment and Training Administration is $9.2 billion in 
discretionary funds and 1,360 FTE. The fiscal year 2004 budget request 
for Employment and Training Programs is $6.389 billion in new budget 
authority.
    These resources will be combined with the estimated 2004 spending 
of $2.0 billion on Personal Reemployment Accounts included in the 
President's Economic Growth Package.
Youth
    A total of $2.6 billion is requested in fiscal year 2004 for 
employment and training programs for Youth. This investment will help 
young people make a successful transition to the world of work and 
family responsibility. This proposal reforms the youth program through 
reauthorization of WIA. The reformed Youth Grants program will be 
funded at $1.0 billion, the same level at which Youth Activities is 
funded in fiscal year 2003. Twenty-five percent of the Youth funds will 
be used to provide Challenge Grants to promote collaborative and 
innovative approaches to preparing youth for success in the labor 
market.
Adults
    A total of $3.1 billion is requested in fiscal year 2004 for 
employment and training programs for Adults. The proposal reflects a 
new program to be authorized by an amended WIA that will consolidate 
the former Adult and Dislocated Worker Employment and Training 
Activities, together with the Employment Service.
    The new consolidated adult program will include formula grants and 
a National Reserve, and will give States the ability to target 
resources where needed, facilitate coordination, and eliminate 
duplication in the provision of services to adults. With this request, 
we expect to be able to serve more participants than ever before.
Other Employment and Training Programs
    The fiscal year 2004 budget includes $742 million for Other 
Employment and Training Programs. This includes $101.0 million, 
approximately the same as fiscal year 2003 levels, for new methods of 
providing workforce and related information through One Stop Career 
Centers using America's Labor Market Information System (ALMIS). In 
fiscal year 2004, a $500,000 initiative is included for the Wage Record 
Interchange System (WRIS), in order to help States better track 
performance. Efforts to improve access to One Stop information and 
services include enhanced technology for serving individuals including 
those with disabilities.
    In fiscal year 2004, an increase of $49.4 million will be provided 
as the first of a two-year investment to eliminate the 300,000 case 
backlog in the permanent Foreign Labor Certification program. In 
addition, funding will be provided in the Program Administration 
account to provide the Federal support necessary to address the 
backlog. To effectively address the situation, the backlog elimination 
will begin in fiscal year 2003 as DOL makes changes to the program that 
will prevent future backlogs by expediting certification and 
eliminating the state role in the processing of applications.
    In fiscal year 2004, the budget includes $20 million for Work 
Incentive Grants, the same level provided in fiscal year 2003, to 
enhance the prospects of employment for individuals with disabilities. 
This effort is undertaken in conjunction with the Department's Office 
of Disability Employment Policy to increase the participation of 
individuals with disabilities in DOL programs and services. These 
grants augment the capacity of the One Stop Career Center system to 
deliver a full array of effective employment and training services to 
people with disabilities. Likewise, this effort will ensure that people 
with disabilities are better prepared to enter, re-enter, and remain in 
the workforce. In fiscal year 2004, the program will increase by about 
five percent the number of individuals placed in unsubsidized 
employment after program exit.

Office of Disability Employment Policy
    The U.S. Department of Labor's Office of Disability Employment 
Policy's (ODEP's) mission is to provide leadership to increase 
employment opportunities for adults and youth with disabilities. ODEP 
is additionally tasked with serving as the lead agency in the 
Department's implementation of the employment-related goals of 
President George W. Bush's New Freedom Initiative. ODEP's fiscal year 
2004 budget request of $47.3 and 65 FTE million will be used to 
increase marketplace demand for people with disabilities and support 
DOL's strategic goals through implementation of demonstration programs.
    A primary area of emphasis will be on developing a reliable 
statistical measurement to determine the employment rate of people with 
disabilities because of the critical need for such data to inform 
policies and programs. In fiscal year 2004, ODEP and Bureau of Labor 
Statistics will pilot test disability employment rate questions through 
the Current Population Survey.

Veterans' Employment and Training Service
    The Department's Veterans' Employment and Training Service (VETS) 
is requesting $219.9 million and 250 FTE to maximize employment 
opportunities for veterans, protect their employment rights and meet 
labor market demands with qualified veterans. VETS meets its primary 
responsibilities through the funding of state veterans employment and 
outreach specialists, referred to as Disabled Veterans' Outreach 
Program (DVOP) and Local Veterans' Employment Representative (LVER) 
positions.
    As our Nation continues its war on terrorism, the activation of 
thousands of Reservists and National Guard members has made providing 
technical assistance to them and their employers one of the highest 
priorities for the Department. The Department, through VETS, 
administers USERRA--the Uniformed Services Employment and Reemployment 
Rights Act--a law that protects the jobs of these servicemembers at 
this critical time in our Nation's history.
    The 2004 request funds the Homeless Veterans Reintegration Project 
at $19 million, an increase over the 2003 level. This program will 
provide employment and training assistance to homeless veterans, with 
expected job placements and retention of approximately 9,000 veterans.

                           WORKER PROTECTION

    As we have recently discussed, Mr. Chairman, I remain deeply 
committed to enforcing the many laws that protect workers' safety and 
economic security. As demonstrated in the following initiatives, the 
Department's fiscal year 2004 budget was crafted to only strengthen 
that commitment.

                  EMPLOYMENT STANDARDS ADMINISTRATION

    The Department's Employment Standards Administration (ESA) 
administers and enforces a variety of laws designed to enhance the 
welfare and protect the rights of American workers. The budget request 
to conduct these programs in fiscal year 2004 is $529.8 million and 
4,360 FTE, down $38.4 million from fiscal year 2003. This decrease is 
due largely to reduced funding for the Health and Human Services 
component of the Energy Employees Occupational Illness Compensation 
Program.

Office of Workers' Compensation Programs
    As mentioned earlier, ESA's budget request includes a legislative 
proposal to finance the operations of the FECA program via a surcharge. 
Under this proposal, the direct budget authority for FECA program 
administration ($87.6 million) would be replaced with offsetting 
collections to be paid by Federal agencies based on their employees' 
pro rata share of workers' compensation benefits. Integration of the 
full cost of FECA benefits and administration in the appropriate 
agencies will boost Federal agencies' incentives for improving safety 
in their workplaces.
    The Budget includes additional legislative proposals to promote 
benefit equity and to discourage unnecessary claims in the FECA 
program. Specifically, the budget proposes to amend FECA to move the 
waiting period before the continuation-of-pay period, conform the FECA 
benefits of future beneficiaries over the age of 65 to a benefit level 
typical to what they would receive under Federal retirement programs, 
and make a number of other changes to improve and update FECA.
Wage and Hour Division
    The discretionary funding request for the Wage and Hour Division 
(WHD) is $5.4 million and 3 FTE higher than in fiscal year 2003. Wage 
and Hour will continue to use its multi-pronged approach of compliance 
assistance, partnerships, and enforcement to further its goals to 
promote high quality workplaces, a secure workforce, and customer 
satisfaction. The budget also includes $0.3 million and 3 FTE for 
enhancing compliance assistance to small and minority businesses. Wage 
and Hour's mandatory funding would decrease by an estimated $7.1 
million from fiscal year 2003 due to the expiration of the American 
Competitiveness in the Twenty-first Century Act on September 30, 2003, 
and the corresponding reduction in fee revenues from the H-1B visa 
worker program.
    WHD's budget includes a legislative proposal to increase civil 
penalties for child labor violations that cause the death or serious 
injury of a young worker. Our proposal would increase the maximum 
penalty from $11,000 to $50,000, for any type of child labor violation 
that leads to death or serious injury. We also propose to raise to 
$100,000 the maximum penalty for willful or repeat violations that lead 
to death or serious injury of a young worker. This proposal would 
provide the Department with the tools needed to address the most 
serious of child labor violations.

Office of Labor-Management Standards
    The fiscal year 2004 budget request for the ESA's Office of Labor-
Management Standards is $40.6 million and 372 FTE. OLMS enforces 
provisions of Federal law that require reports from unions and others 
and establishes certain standards for union democracy and financial 
integrity. OLMS conducts criminal investigations (primarily union funds 
embezzlement) and investigative audits of unions; conducts civil 
investigations (primarily concerning union officer elections); 
supervises remedial union officer elections, as required; administers 
statutory reporting requirements; and provides for public disclosure of 
filed reports.
    The fiscal year 2004 budget request includes $5.3 million and an 
additional 75 FTE for enhanced outreach assistance activities and 
enforcement to ensure compliance with the Labor-Management Reporting 
and Disclosure Act. The budget request maintains resources for 
electronic filing and Internet public disclosure of the statutorily 
required reports. The budget also includes a proposal to authorize OLMS 
to impose Civil Money Penalties on unions, union officers, employers 
and consultants, and bonding companies that fail to file their required 
financial reports on a timely basis. The intent is to improve 
compliance, not penalize inadvertent lapses in filing reports.

Office of Federal Contract Compliance Programs
    Total funding for OFCCP in fiscal year 2004 will increase by $2.0 
million. OFCCP continues to ensure that federal contractors' hiring, 
promotion, and pay practices fully comply with federal equal employment 
opportunity laws. OFFCP targets and effectively remedies systemic 
discrimination in companies it monitors, extending the level playing 
field to large numbers of Americans working or seeking employment in 
thousands of establishments across the nation. OFCCP has recently put 
in place a case management process that makes key improvements to 
investigations and information management and continues to work closely 
with the Office of the Solicitor to bring legal expertise to bear on 
its investigations.

             OCCUPATIONAL SAFETY AND HEALTH ADMINISTRATION

    The cornerstone of worker safety is the Occupational Safety and 
Health Administration (OSHA), which promulgates and enforces 
occupational safety and health standards and provides compliance 
assistance to employers and employees. OSHA also assists Federal 
agencies in establishing and maintaining occupational safety and health 
programs and provides funding for state-administered safety and health 
consultation programs. To meet its goals of reducing workplace 
injuries, illnesses, and fatalities, OSHA will focus on the most 
serious hazards and dangerous workplaces and expand compliance 
assistance opportunities. The fiscal year 2004 OSHA budget request is 
$450.0 million and 2,236 FTE.

Standards and Guidance
    OSHA's standards and guidance activities provide for the 
development, promulgation, review and evaluation of occupational safety 
and health standards and non-regulatory products. In fiscal year 2004, 
OSHA will continue to base all standards on clear and sensible 
priorities and review existing rules to revise or eliminate obsolete 
and confusing standards or provisions. Consistent with the findings of 
the Administration's Performance Assessment Rating Tool (PART), OSHA 
will also conduct more rigorous cost-benefit analyses of its proposed 
standards. The fiscal year 2004 budget provides $14.5 million and 85 
FTE for this activity.

Federal Enforcement
    OSHA's Federal Enforcement activity increases compliance with 
workplace standards under the Occupational Safety and Health Act of 
1970 through the on-site inspection of work places and by encouraging 
employers and employees to see safety and health as adding value to 
their businesses and their lives. OSHA will continue to target 
inspections based on the worst hazards and the most dangerous 
workplaces. In fiscal year 2004, the budget request for federal 
enforcement activity is $165.3 million and 1,581 FTE.

Compliance Assistance
    The Agency will assist employers by continuing important programs 
like the Voluntary Protection Program and the State Consultation 
Program, which provides free, on-site compliance assistance for small 
employers. OSHA will also increase its efforts to reach vulnerable 
populations like non-English-speaking and contingent workers. The total 
request for compliance assistance activities is $124.0 million and 356 
FTE.

                 MINE SAFETY AND HEALTH ADMINISTRATION

    The Mine Safety and Health Administration (MSHA) protects the 
safety and health of the Nation's miners through enforcement of the 
Federal Mine Safety and Health Act of 1977. The fiscal year 2004 budget 
request for MSHA is $266.8 million and 2,334 FTE. MSHA created an 
additional budget activity for fiscal year 2004, Program Evaluation and 
Information Resources (PEIR). In the past, PEIR activities (including 
information technology and support of the Government Performance and 
Results Act) have been funded by drawing resources from each of MSHA's 
budget activities. The fiscal year 2004 Budget requests funds for these 
activities in a separate line (funding for PEIR activities is level 
with the fiscal year 2003 President's Budget).

Enforcement: Coal
    The Coal Mine Safety and Health activity is responsible for 
ensuring the safety and health of the Nation's coal miners through 
special emphasis programs, compliance and training assistance, and 
periodic regular inspections and special investigations. The fiscal 
year 2004 request includes $113.4 million and 1,086 FTE for this 
activity, including $350 thousand for the cyclical replacement of 
health and safety sampling equipment.

Enforcement: Metal/Nonmetal
    The fiscal year 2004 Budget includes $66.4 million and 622 FTE for 
Metal and Nonmetal Mine Safety and Health activities. These activities 
promote a healthful working environment in the Nation's metal and 
nonmetal mines and mills--and MSHA will accomplish this goal through 
compliance and training assistance, periodic regular inspections, and 
special investigations.
    The request includes a $2.0 million and 20 FTE increase over the 
fiscal year 2003 request for health, safety, and compliance assistance 
to respond to the growth of the metal and nonmetal mining industry. The 
request also includes an increase of $200 thousand for the cyclical 
replacement of health and safety sampling equipment.

Educational Policy and Development
    The fiscal year 2004 request includes $2.4 million and 21 FTE for a 
new Small Mine Office. The Office will help small mining operations by 
providing compliance assistance, guidance, and training; and reviewing 
regulations that impose undue burdens on small mines.

                          RETIREMENT SECURITY

    President George W. Bush and I share the priority of ensuring 
increased retirement security--and the Department of Labor continues to 
lead the Nation's efforts in achieving such a goal.

               EMPLOYEE BENEFITS SECURITY ADMINISTRATION

    The name change that I mentioned earlier--from the Pension and 
Welfare Benefits Administration to the Employee Benefits Security 
Administration--does not alter and only strengthens the agency's 
mission: to protect the pension, health, and other benefits of 
participants in private sector employee benefit plans. In fiscal year 
2004, the total request for EBSA is $128.6 million and 930 FTE. This is 
an increase of $12.3 million and 69 FTE over fiscal year 2003. The 
request includes $8.6 million and 69 FTE for the Department's Enhanced 
Retirement Security initiative which was designed to bolster compliance 
assistance and enforcement efforts related to pension and health fund 
protections.
    In accomplishing its mission, EBSA directly affects the livelihood 
of over 150 million people who participate in Employee Retirement 
Income Security Act (ERISA)-covered plans, and protects the U.S. 
economy's single largest source of capital for investment: pension 
funds. EBSA will employ an integrated approach that encompasses 
programs for enforcement, compliance assistance, interpretive guidance, 
legislation, and benefits research to protect employee benefits and 
retirement security for our Nation's workers and retirees.

Enforcement and Participant Assistance
    Mr. Chairman, since I appeared before this Subcommittee last year, 
EBSA has received 185,000 calls for assistance from Americans with 
questions about their retirement or other benefit plans. Many of those 
calls led to investigations. It is this activity that conducts criminal 
and civil investigations, performs reviews to ensure legal compliance, 
and further ensures compliance with applicable reporting requirements, 
as well as accounting, auditing, and actuarial standards. During 2002, 
as a result of EBSA's enforcement action, there were 134 criminal 
indictments issued, 4,925 civil investigations closed with monetary 
results of over $832 million. The 2004 request includes an initiative 
to enhance retirement security and nationwide enforcement coordination. 
In fiscal year 2004, the budget request for enforcement and participant 
assistance is $106.7 million and 800 FTE.

Policy and Compliance Assistance
    This activity conducts policy, research, and legislative analyses 
on pension, health, and other employee benefit issues. Agency staff 
supporting this activity provide compliance assistance, especially to 
employers and plan officials, draft regulations and interpretations, 
and issue individual and class exemptions from regulations. In fiscal 
year 2004, the budget request for this activity totals $17.4 million 
and 108 FTE.

Executive Leadership Program
    This activity provides leadership, policy direction, strategic 
planning, and administrative guidance in the management of employee 
benefits security programs. It provides analytical and administrative 
support for financial and human capital management and other 
administrative functions related to coordination and implementation of 
government-wide management initiatives. This activity also manages the 
technical program training for enforcement, policy, legislative and 
regulatory functions. In fiscal year 2004, the budget request for this 
activity totals $4.5 million and 22 FTE.

                      OFFICE OF INSPECTOR GENERAL

    The Department's request for the Office of Inspector General is 
$67.1 million and 473 FTE for fiscal year 2004, an increase of $4.9 
million and 20 FTE over fiscal year 2003.

Program Activities
    The OIG budget includes resources for audit; program fraud; labor 
racketeering; special evaluations and inspections of program 
activities; and executive direction and management. The OIG performs 
audits of the Department's financial statements, programs, activities, 
and systems to determine whether information is reliable, controls are 
in place, resources are safeguarded, funds are expended in a manner 
consistent with laws and regulations and managed economically and 
efficiently, and desired program results are achieved.
    The OIG also administers an investigative program to detect and 
deter fraud, waste, and abuse in Departmental programs and to identify 
and reduce labor racketeering and corruption in employee benefit plans, 
labor management relations, and internal union affairs.
    The fiscal year 2004 request includes $2.5 million and 20 FTE to 
conduct a nationwide comprehensive initiative to combat labor 
racketeering relative to: pension and health care plan corruption and 
organized crime or corruption affecting industries and union 
leadership.

                      INTERNATIONAL LABOR AFFAIRS

    As I referenced before, Mr. Chairman, the Department's budget 
request was developed with careful consideration of all the realities 
now facing our country. Development of the Bureau of International 
Labor Affairs (ILAB) budget was no exception. During the budget 
process, we had to set priorities to fund from our limited pool--and 
our Nation's current economic and employment conditions must be 
included more prominently in this equation. As a result, our fiscal 
year 2004 request for ILAB is $12.3 million and 60 FTE. This is a 
reduction of $135.0 million and 65 FTE from fiscal year 2003.
    The fiscal year 2004 budget request refocuses ILAB on U.S. 
international policies and programs of greatest concern to American 
workers. ILAB will continue to coordinate the Department's global 
responsibilities in 2004 and to provide expert support for many of the 
Administration's international initiatives, including the promotion of 
core labor standards. The Bureau will continue to represent the U.S. 
Government at the International Labor Organization (ILO) and on the 
Employment, Labor and Social Affairs Committee of the Organization of 
Economic Development. The Bureau will also continue to fulfill the 
Department's responsibilities related to our participation in the 
development of U.S. trade policy and the negotiation of trade 
agreements.
    The Department will continue to play a supportive role for other 
federal agencies in their efforts to further prevent and eliminate 
child labor and combating the spread of HIV/AIDS and will help to 
ensure that those priorities are addressed.

             IMPLEMENTING THE PRESIDENT'S MANAGEMENT AGENDA

    Before I close today, Mr. Chairman, I also want to highlight the 
Department's ongoing efforts to implement the President's Management 
Agenda--as well as to discuss our recent experiences with the Office of 
Management and Budget's Program Assessment Rating Tool (PART).
    At my fiscal year 2003 appropriations hearing last year, I briefed 
the Subcommittee on the Department's progress in implementing the 
President's Management Agenda. As you know, Mr. Chairman, the 
President's Management Agenda is an aggressive strategy for improving 
the management of the Federal government with a focus on five 
government-wide areas: Strategic Management of Human Capital; 
Competitive Sourcing; Improved Financial Performance; Expanded E-
Government; and Budget and Performance Integration. Further, DOL is 
also one of just five Cabinet agencies with Agenda responsibilities 
related to Faith-based and Community-based initiatives.
    On a quarterly basis, the Office of Management and Budget has 
continued to rate the government's progress in implementing the 
President's Management Agenda on a ``stoplight'' color grading scale--
and DOL continues to lead the way. As of the most recent OMB scorecard 
of December 31, 2002, DOL received a Yellow baseline rating for Human 
Capital with a Green progress score. For Competitive Sourcing, DOL 
received a Red baseline score with a Yellow progress rating. For 
Financial Management, DOL received a Yellow status score with a Green 
rating for progress--the exact same scores for E-Government, Budget and 
Performance Integration, and Faith-based and Community-based 
Initiatives. With that assessment, DOL continues to lead all Cabinet 
agencies in Status scores.
    As OMB Director Mitchell E. Daniels, Jr., indicated at OMB's mid-
session review last summer, ``Labor has demonstrated a sustained 
commitment to implementation of the management agenda and is making 
good progress. A key component of the department's success is its 
Management Review Board, which monitors progress by regularly reviewing 
department-wide reform implementation.''

Program Assessment Rating Tool (PART)
    Improving programs by focusing on results is an integral component 
of the President's budget and performance integration initiative. As 
such, the Administration rated effectiveness with its PART for 
approximately 20 percent of Federal programs. As part of this process, 
nine DOL programs were reviewed in calendar year 2002: Bureau of Labor 
Statistics; OSHA; EBSA (formerly PWBA); Office of Federal Contract 
Compliance Programs; FECA; Community Service Employment for Older 
Americans; Dislocated Worker Assistance; Trade Adjustment Assistance; 
and Youth Activities. Each program was rated on Purpose, Planning, 
Management, and Results/Accountability and the experience provided an 
invaluable management tool.
    Highlights and results of the reviews, along with discussion of 
reforms we will make to address certain weaknesses identified using the 
PART, are included in the agency-specific sections of the Department's 
Congressional Budget Justification. We are already working with OMB on 
the programs to be reviewed in the next round of PART.

                               CONCLUSION

    Mr. Chairman, this is an overview of what we have planned at the 
Department of Labor for fiscal year 2004.
    I will be happy to answer any questions you may have on the 
Department's fiscal year 2004 budget request.

    Senator Specter. Thank you very much, Secretary Chao.
    Picking up on the issue of dislocated worker assistance, 
there are enormous problems in many industries, but using the 
steel industry as illustrative, as you are well aware, the 
American steel industry--before I proceed with the questioning, 
let me turn to Senator Murray for an opening statement.

               OPENING STATEMENT OF SENATOR PATTY MURRAY

    Senator Murray. Thank you very much, Mr. Chairman. Thank 
you for your statement, Madam Secretary, and I do have 
questions. Let me just say quickly that last Friday's March 
unemployment report brought more bad news for working men and 
women in this country of another 108,000 jobs lost nationwide, 
and that's on top of the nearly 2.4 million Americans who have 
lost their jobs since this administration took office. I'm 
really disappointed that the fiscal year 2004 budget request 
for the Department of Labor's Employment and Training 
Administration fails to recognize the workforce needs of this 
country and continues a pattern of short-changing and denying 
American workers access to the training and resources that they 
are increasingly requiring.

                           PREPARED STATEMENT

    We're seeing tremendous suffering across the country in 
terms of economic hardship and record long-term joblessness, 
and I think we all know that studies have shown that 75 percent 
of the American workforce will need to be retrained to merely 
retain their jobs. In Washington State we have lost 80,000 
good-paying jobs since September 11 in our aerospace airline 
and information technology industries, and there's not much 
future hope in those industries in the short term, and 
hopefully it will look better in the long term, but I think we 
really need to train a skilled workforce, and I am concerned 
that we are not meeting those needs.
    Mr. Chairman, I do have a number of questions, and I 
appreciate the opportunity for opening remarks.
    [The statement follows:]

               Prepared Statement of Senator Patty Murray

    Madame Secretary, thank you for your testimony.
    Last Friday's March unemployment report brought more bad news for 
the working men and women of this country.
  --Another 108,000 jobs were lost nationwide.
  --That's on top of the nearly 2.4 million Americans who have lost 
        their jobs since this Administration took office.
    Unfortunately, the fiscal year 2004 budget request for the 
Department of Labor's Employment and Training Administration (ETA) 
fails to recognize the workforce needs of this country.
    It also continues a pattern of shortchanging and denying American 
workers access to the training resources they need and that employers 
increasingly are requiring.
    At a time when American workers are suffering continuing economic 
hardship and record long-term joblessness, the Bush budget proposes a 
cut of $678 million for Workforce Investment Act-funded programs.
    Recent studies have shown that 75 percent of the American workforce 
will need to be retrained merely to retain their jobs.
    In Washington we have lost 80,000 good-paying jobs since 9/11 in 
the aerospace, airline and information technology industries, with 
little prospect for near term rehires.
    And while the U.S. economy's demand for a skilled workforce has 
increased dramatically over the last 20 years, federal funding to meet 
these needs has decreased by 25 percent.
    I am concerned that we are not meeting the needs that exist.

                      DISLOCATED WORKER ASSISTANCE

    Senator Specter. Thank you, Senator Murray. Senator 
Murray's point is in line with the question that I was about to 
propose, Madam Secretary.
    The steel industry is only illustrative of one of the 
industries which is victimized by foreign subsidies and 
dumping, and the President personally intervened with the 
tariffs which were put into effect a little more than a year 
ago, and in Pennsylvania we are looking at very difficult times 
with dislocated workers, and it is not just a Pennsylvania 
problem, it is a national problem.
    On our Steel Caucus meeting yesterday we had concerns 
expressed by Senators from West Virginia and Maryland and 
Minnesota. Are the funds which will be allocated for dislocated 
worker assistance sufficient, in your opinion?
    Secretary Chao. Let me make a statement at the outset that 
the number of people served will not change, and the $78 
million----
    Senator Specter. How can that be, with the cut of some $78 
million?
    Secretary Chao. Because primarily, the workforce investment 
system still has approximately $1.7 billion in overhang. That 
is a figure that we have talked about in the past, but it seems 
as if every year there continues to be about $1.7 billion in 
overhang. Our commitment to helping dislocated workers cannot 
be questioned and during these particular times we are, of 
course, aware and want to help workers who are having a 
difficult time.
    There is a whole array of assistance programs available to 
dislocated workers, and that includes a one-stop career center, 
that includes transitional assistance, of which there have been 
two temporary extensions of unemployment insurance benefits. 
There is trade adjustment assistance as well, so we believe the 
current figures, including the overlay, and also what we're 
trying to do is consolidate the three funding streams, 
dislocated workers, adult programs, and employment services 
under the Workforce Reinvestment Act through the consolidation 
of all the different programs, we believe that there will be 
actually more resources that will be more flexibly applied to 
where it is needed most, to workers who need it.

                        PENNSYLVANIA TAA FUNDING

    Senator Specter. Madam Secretary, Pennsylvania has had 
insufficient funding in that line with the current larger 
allocation, and I am advised by State officials that 
Pennsylvania was just allocated another $10 million in fiscal 
year 2003 for training, and that those funds may be used both 
to enroll new trainees and pay for costs stemming from trainees 
already enrolled. Is that correct?
    Secretary Chao. We can take another look at that, but if I 
understood the question, apparently Pennsylvania has committed 
more money for training under this program than was available 
in both fiscal year 2002 and 2003. We have been working with 
the State on exploring various options to address this need, 
but the problem is that, absent specific statutory authority, 
obviously the funding available in a particular fiscal year 
could not be used for a prior year obligation, which is what we 
found.
    Senator Specter. Well, would you take a look at that and 
see if there is some way that can be worked out to the 
satisfaction of the State officials?
    Secretary Chao. We will take another look.
    Senator Specter. Pennsylvania has seen what has been termed 
to me a major mismatch between eligible recipients and Federal 
dollars. Aside from deferring new applications, what is the 
Labor Department's position as to how to allocate those funds?
    Secretary Chao. I am not totally informed on the specifics 
of your question, so let me go back and ask about that.
    Senator Specter. All right. We would appreciate it if you 
would supplement your testimony here today when you have had a 
chance to review that.
    [The information follows:]

                Pennsylvania Trade Adjustment Assistance

    The Trade Adjustment Assistance (TAA) program provides assistance 
to workers adversely impacted by trade. Workers certified by the 
Department of Labor under the TAA program are eligible for an array of 
services, including income support and job training. Once the 
Department of Labor certifies workers as eligible for TAA services, 
states are responsible for enrolling certified workers into 
reemployment services, which may include job training. Only training, 
income support, and out-of-area job search and relocation allowances 
may be funded by TAA; other reemployment services are provided through 
other WIA One-Stop delivery system partners.
    Under the Trade Act of 2002, which amended the TAA program, the 
total resources available for training nationwide is capped at $220 
million, an increase of $110 million available annually prior to the 
amendment. Because this is a ``capped entitlement,'' individuals are 
entitled to training to the extent that funds are available. DOL 
distributes these funds to states upon review of information provided 
by states that includes estimates of the number of individuals who 
would require training and anticipated costs.
    In recent years, the $110 million cap was reached well before the 
end of the fiscal year. In an effort both to better manage the limited 
funds available to serve trade-impacted workers and to better integrate 
the trade program services with the Workforce Investment Act (WIA) 
Dislocated Worker program services, DOL's Employment and Training 
Administration (ETA) issued guidance to states in September 2000 
reminding them to coordinate with WIA Dislocated Worker programs to 
fund training for trade-impacted workers.
    In February 2003, officials from the Commonwealth of Pennsylvania 
met with the Assistant Secretary of Labor for ETA, Emily Stover 
DeRocco, regarding $16 million owed by the State to providers for 
training invoices involving TAA participants that was in excess of the 
TAA training funds provided to the State for fiscal year 2002. Fiscal 
year 2003 TAA training funds could not be used since the costs were 
incurred prior to the fiscal year 2003 funds being appropriated.
    Currently, ETA is working with the Commonwealth to address an 
additional shortfall in trade training funds for fiscal year 2003, 
which has the potential of impacting services to workers and payment to 
educational institutions and training providers. The deficit has raised 
serious concerns regarding the Commonwealth's operation of the TAA 
program and management of training funds.
    ETA senior officials visited the Commonwealth and determined that 
the shortfall of funds in both years was caused by state employees 
approving and contracting for training for eligible workers without 
regard to the TAA training funds made available by ETA. State officials 
justified this because of what they believed to be the entitlement 
nature of the program. They indicated that, up until this recent 
problem, they did not concern themselves whether funding was available 
at the time of state obligation, as long as it was available when the 
bills had to be paid. The result was unpaid fiscal year 2002 bills and 
fiscal year 2003 training commitments that are not backed by Federal 
funds.
    A letter was sent to the state requesting they review the $16 
million in invoices from last year to identify how much was for 
training that began after July 1, 2002 that could be financed from 
currently available National Emergency Grant (NEG) monies and they 
determine the amount committed to workers for training begun or 
scheduled to begin after October 1, 2002 that is not presently covered 
by Federal TAA funding.
    Also, subsequent to these findings, while awaiting the results of 
the Commonwealth's review, an additional $11.5 million in TAA funds for 
fiscal year 2003 were provided to cover the cost of new and future 
obligations incurred. State officials elected to use these monies to 
reduce the fiscal year 2003 shortfall and allow participants already in 
the program to continue their training.
    The state did undertake a review of records as requested and 
responded on April 28th. They indicated that:
  --$14.6 million in fiscal year 2002 training invoices has been paid 
        for from non-Federal funds or are unpaid. The Commonwealth 
        submitted a request for National Emergency Grant funds to cover 
        these costs.
  --There is an estimated shortfall this year of $16.2 million in 
        fiscal year 2003 obligations for training already approved by 
        the Commonwealth. Total obligations are $37.9 million compared 
        with the Federal awards of $21.7 million for TAA training.
  --The Commonwealth estimates that an additional $14.1 million needed 
        to cover the costs of services for TAA applications currently 
        pending.
    Pennsylvania has been encouraged to use other available resources, 
including unexpended formula funds provided under WIA, to meet the 
needs of trade-impacted workers. The WIA funds that may be used to 
assist these workers are provided through dislocated worker and adult 
funding streams, and include funds reserved by the state for statewide 
activities and funds allocated to local workforce investment areas 
pursuant to substate funding formulas.
    In addition, we are currently reviewing Pennsylvania's application 
for National Emergency Grant funds under WIA to satisfy fiscal year 
2002 needs occurring after July 2002. We are also considering the $16.2 
million and the $14.1 million current year's requirements along with 
needs identified by other states. As you know, sufficient funds will 
not be available this year to satisfy demand. A final decision on the 
amount that will be made available to Pennsylvania is pending analysis 
of the needs of all states.

    Senator Specter. With 14 seconds left I am going to not 
pose another question which I couldn't get out in that length 
of time, and yield at this point to Senator Murray.

                    UI EXTENSION FOR AIRLINE WORKERS

    Senator Murray. Thank you very much, Mr. Chairman.
    Madam Secretary, let me start with the issue of the 
unemployment insurance benefits for airline workers. I was 
really disappointed yesterday to see the President's opposition 
to a temporary extension of unemployment insurance benefits to 
our unemployed airline industry workers who have lost their 
jobs.
    I was very heartened to see that 67 Republicans in the 
House joined all of the House Democrats to instruct the 
appropriations conference to help our workers, but if you can 
just tell us today, as Secretary of Labor, do you agree with 
the administration that we should provide billions of dollars 
in Federal aid to our industries without doing anything to 
support our workers who have played by the rules and have lost 
their jobs?
    Secretary Chao. The Department's total outlay last year, 
mandatory plus discretionary, was about $71 billion. The 
majority of that was for unemployment insurance. Included in 
that was $12 billion for our workforce investment system, which 
basically helps people train for new jobs. So, in essence, 97 
percent of the Department of Labor's $71 billion budget is 
divided among unemployment insurance, transitional assistance, 
and training needs of workers, dislocated workers----
    Senator Murray. Well, you understand that many of our 
airline workers have skills that are not transferable. They're 
Boeing machinists, they're airline workers who have very 
specific skills and training. We all, I think, expect the 
airline industry to get back on track hopefully in the near 
future rather than in the later future, but just saying, well, 
you get unemployment for a short amount of time and then we 
expect you to retrain for another industry, both leaves our 
airline industry in the future short of workers, but it also 
sets a very high expectation that somehow we're going to 
retrain thousands of people for jobs that don't exist.
    The unemployment extension merely helps these people 
through a difficult time in our Nation's economy through tragic 
circumstances that have occurred in the airline industry beyond 
anybody's control.
    Secretary Chao. I agree with that. I didn't finish my 
answer. We do have also national emergency grants, of which 
I've given out, I believe, about $150 million to help 
specifically airline workers in this industry. We've had two 
extensions of unemployment insurance and right now potentially 
a worker can get up to 65 weeks of benefits.
    We do have serious concerns about singling out one group of 
workers, and from an administrative point of view of how does 
that work----
    Senator Murray. Well, let me go right to that. In fact, 
Mitch Daniels said in his letter, and I quote, to provide 
benefits for a specific industry would be unusual, unfair, and 
potentially harmful to our national unemployment system. Well, 
Madam Secretary, is it the administration's position that trade 
adjustment assistance, which does provide benefits to specific 
industries, is also unusual and unfair?
    Secretary Chao. Trade adjustment assistance was certainly 
expanded in the last TPA discussions.
    Senator Murray. But it is a program that provides to 
specific industries, correct?
    Secretary Chao. It is for people who have been harmed by 
trade.
    Senator Murray. To specific industries. So under the 
standard that an unemployment extension for airline industries 
is, and I quote: ``unfair and potentially harmful because it 
provides benefits for a specific industry, and by the same 
standard, trade adjustment assistance would be''----
    Secretary Chao. Well, that's law by now, so I don't know 
whether it makes any sense to rehash that.

                   MIGRANT AND SEASONAL FARM WORKERS

    Senator Murray. Okay. Well, let me ask a different 
question.
    It appears that the Department no longer believes that a 
national program for migrant and seasonal farm workers is 
needed. How are we going to avoid burdening our Governors and 
local one-stops with the responsibility of trying to serve 
workers who may work and reside in their States for brief 
periods during this time of huge and growing State deficits?
    Secretary Chao. The original intent of this program for 
migrant workers was to help them train for new skills so that 
they can get out of this low-paying and very difficult work. As 
it has turned out, based on experience, we have found that this 
program was used much more for income support.
    If indeed these resources are to be used to supplement 
income and to be used as income support, there are other 
programs which this can be melded into.
    Senator Murray. Such as?
    Secretary Chao. Well, I think they should be linked into 
the workforce investment system overall, and other available 
programs.
    Senator Murray. There isn't enough money in the workforce 
system now. If we say to all seasonal workers and migrant 
workers, we're now expecting you to be taken care of under that 
program, too, we are adding a huge burden to that.
    Secretary Chao. Well, the workforce investment system right 
now is underutilized, first of all, and second, the migrant 
workers, segregating them into a specific area will not be 
helpful to fully integrating them into local communities.

                   GAO REPORT REGARDING WIA SPENDING

    Senator Murray. Well, let me go back to that, because I'm 
confused. You keep arguing that employment and training 
services can be accomplished without impacting service delivery 
because of carryover funds in the WIA formula programs, but the 
GAO conducted an investigation and found the administration's 
argument inaccurate, and it said, and I quote: ``our analysis 
of Labor's data shows that States are rapidly spending their 
funds.''
    In fact, nationwide, States have spent 90 percent within 2 
years, even though the law allows 3 years to spend the money, 
and, in fact, my State was to have spent 98 percent of their 
formula funding in 2001, so I don't understand how we keep 
hearing you say that. I mean, I have the GAO report here.
    Secretary Chao. May I answer that?
    Senator Murray. Yes.
    Senator Specter. She's correct, you may answer, even though 
the red light is on.
    Secretary Chao. We obviously disagree with the GAO report. 
I think we all need to take a look at the balances outstanding, 
and clearly, in every single State there are positive balances. 
This balance is not only for 1 year but, in fact, it's for 
every year. So there is a disagreement about whether to use 
obligations versus expenditures, and there is a disagreement as 
to how much the overlay means, but when it continues year after 
year, I think that needs to be looked at.
    But let me also say the total level of funding remains the 
same in our proposal. Primarily, we are consolidating these 
various different programmatic streams, because it's very 
confusing for the recipient, to have to go to all these 
different programs. What we want to do through Workforce 
Investment Act reauthorization, which we discussed before, is 
to make the program simpler, give the States more flexibility 
so that there is more leeway with which to allocate resources 
to these various different groups of people who need 
assistance.
    Senator Murray. Mr. Chairman, my time is up, but I would 
like permission to submit my other questions for the record.
    Senator Specter. By all means, Senator Murray, they will be 
submitted.
    The ladies and gentlemen who are standing in the rear can 
find seats here along the side, or if you're intending a career 
in journalism you can sit at that table.
    If you plan to be Senate staffers you can sit in the chairs 
behind the podium. If you plan to be Senators, you may sit in 
the chairs at the dias here.
    Now I turn to my distinguished ranking member, Senator Tom 
Harkin, Democrat of Iowa.
    Senator Harkin. Thank you very much, Mr. Chairman. Sorry 
I'm a little late.
    Senator Specter. It looks like the journalists have it, 
Tom. That table is filled.
    Senator Harkin. A wise choice.

                       INTERNATIONAL CHILD LABOR

    Madam Secretary, I hope your staff has given you all the 
stuff. I'm sure they know what I'm going to talk about.
    Secretary Chao. I hope so, too.
    Senator Harkin. Child labor. Child labor, child labor----
    Secretary Chao. Thank you.
    Senator Harkin [continuing]. Child labor. Let me repeat for 
you what you said to me last year, if I can get my proper page 
out here, in a hearing, since you zeroed out all these things 
in the budget. You said--this is your words. So please be 
assured that we are not differing at all in terms of the goal. 
This is on the international program for the elimination of 
child labor, ILAB. We want to work with you on this. The issue 
is how best to do so and how we can work, and how ILAB can 
absorb all this money in such a short period of time, but the 
commitment, I assure you, is absolutely there. We look forward 
to working with you on that. Well, I will work with you on it.
    Well, here we are. Your budget justification touts the fact 
that ILAB child labor programs targeted more than 103,000 at-
risk children in fiscal year 2002, exceeded its goal of 
targeting 90,000 children. Your own document, I quote, says: 
``13 countries established a total of 15 new action plans, 
demonstrating concrete commitments at the highest levels of 
local and national Government to eliminate child labor.'' Well, 
that's pretty good news. That's good news.
    Well, now your budget eliminates all funding aimed at 
preventing exploitive child labor. The U.S. contribution to 
IPEC is zeroed out. The money to provide bilateral assistance 
to other countries, to promote access to basic education for 
child labor, a critically important part of this, is zeroed 
out. Now, tell me about your absolute commitment.
    Secretary Chao. Well, this request doesn't mean that the 
Department will play no role in supporting international 
efforts to prevent and also eliminate, child labor. Rather, we 
hope to use the interagency process to make sure the Government 
agencies active in international affairs address these 
priorities on an ongoing basis.
    Ongoing ILAB projects will also not come to an abrupt halt. 
There is still funding remaining for 2-year moneys appropriated 
in fiscal year 2003. I think the overall goal is that our 
technical assistance projects will continue to operate as ILAB 
transitions into a more policy-oriented role rather than a 
grant-making one.
    Senator Harkin. Well, I'm not certain I know what all that 
means. I don't know what that means, Secretary Chao. To me, 
that's gobbledygook written by somebody back there in your 
Department, but it's some kind of a gobbledygook justification 
for zeroing this out. I mean, I'm looking at the figures. This 
says something to me. Total ILAB, $12.2 million. Do you know 
what we enacted last year?
    Secretary Chao. $147 million.
    Senator Harkin. $148 million. Senator Specter and I and 
others on a bipartisan basis enacted that, and you're telling 
me with $12 million you're going to continue the program, and 
that it's a total commitment.
    Now, I don't know. I mean, I take you at your word, but I 
don't know. I don't know if this is OMB, or where this is 
coming from, but somebody's got their priorities terribly 
wrong, whoever came up with this. I mean, your own Department 
has shown that this is working. It's doing great stuff around 
the world.
    I mean, you know, I realize--I look around and I see all 
what we are doing now, and our military is strong, and we're 
very powerful, but I've got to tell you, this means more to 
people in third world countries than anything else we're doing, 
getting those kids out of those jobs, getting them a basic 
education, and when it has the imprint of the United States on 
it, that means something, and it's happening in countries that 
we're going to have some problems with in the next few years, 
and for $148 million it seems to me that that's a mere pittance 
of what we're spending in other areas.
    Well, Madam Secretary, I'm just really disappointed. I'm 
just really disappointed in this, and I hope that we can come 
up with the money. It's a tight year, and obviously we have to 
take our cues--I know the burden the chairman labors under. 
I've had that position myself. I know what it's like to labor 
under a position where the budget comes out, and the 
administration, especially if it's one of your own party, isn't 
supporting something like this. It's very tough.
    But I hope that you'll take back to OMB and to the White 
House that they're making a terrible mistake here, a terrible 
mistake. It just paints the United States once again as 
uninterested in helping kids around the world break the bonds 
of child labor.
    Oh, yeah, we'll say nice things about it. Oh yeah, we're 
opposed to child labor, we don't like that, but when it comes 
to putting the money out and doing things that have proven 
effective by your own Department's standards, and then we cut 
it back, I think it paints a very bad picture of the United 
States in many, many parts of the world, and it's dooming a lot 
of kids to continue that cycle, that generational cycle of 
poverty, no education, so they're condemned to living a life of 
menial work, and then their kids, the same thing.
    Well, I've said enough. I don't need to say any more, but 
I'm really disappointed in this.
    Thank you.

                         MINE SAFETY AND HEALTH

    Senator Specter. Thank you, Senator Harkin.
    Madam Secretary, turning to the issue of mine safety, last 
October 21 this subcommittee held a hearing in Johnstown on the 
mine disaster at Quecreek, and in this year's budget we have 
$10 million allocated for digitizing mine maps. There was a 
problem with mine maps. The 2004 budget proposes an overall 
increase of 35 staff, but coal mine inspectors will not be 
increased.
    Would you take a look at that and respond to the 
subcommittee in writing as to your best efforts to try to 
increase coal mine inspectors within the allocated funds, and 
would you also include a specification as to how you're going 
to use the $10 million for mine mapping activities, and when 
you propose to start on that? Since we were so late in getting 
a budget to you, you understandably wouldn't be in a position 
to tell us what you've done in the short interval, but if you 
would respond in writing----
    Secretary Chao. I will do so.
    Senator Specter [continuing]. The subcommittee would 
appreciate that.
    Secretary Chao. Are you interested in getting some of the 
answers now, or would you like me to submit it in writing?
    Senator Specter. What was that?
    Secretary Chao. Would you like some of the answers now, or 
would you like me to submit it in writing?
    Senator Specter. I would like it in writing----
    Secretary Chao. Okay.
    Senator Specter [continuing]. Because there are so many 
other priority subjects to be covered.
    [The information follows:]

Proposed Plan of the Mine Safety and Health Administration Distributing 
Fiscal Year 2003 Appropriations of $10 Million for Digitizing Mine Maps 
             and Developing Technology to Detect Mine Voids

    As defined in the House/Senate Conference agreement, $10,000,000 
was appropriated to MSHA ``for digitizing mine maps and developing 
technologies to detect mine voids, through contracts, grants, or other 
arrangements, to remain available until expended.'' Due to the across-
the-board budget rescission of .0065, the $10 million is decreased by 
$65,000 to $9.935 million. The purpose of this undertaking is to 
mitigate potential hazards to miners resulting from water and gas 
inundations when mining in close proximity to abandoned mines.
    MSHA proposes a 3-year disbursement plan to allocate the funds in 
accordance with congressional intent. The funds will be allocated in 
two areas. The first area will be for use by state mining agencies for 
``Digitizing Mine Maps.'' The second area will be funding ``Applied 
Technology Demonstration Projects.'' These projects will demonstrate 
the viability of new or existing mining technology to identify 
abandoned mines (voids) and the extent of their workings.
    MSHA proposes allocating 40 percent of the funds to mine mapping 
and 60 percent to void detection. MSHA will disburse to the states 
$2,000,000 the first year and $1,000,000 each of the following years 
for mine mapping. MSHA will disburse funds for Applied Technology 
Demonstration Projects on a periodic payment schedule over the life of 
the project.
    Digitization of Mine Maps.--It is estimated there are approximately 
150,000 abandoned mines in Kentucky, 15,000 in Pennsylvania, 6,000 in 
Virginia, and 100,000 in West Virginia. In February 2003, MSHA held a 
meeting with representatives of various Federal agencies with 
responsibility for mine maps. Representatives from the Department of 
Interior's United States Geologic Survey (USGS), Bureau of Land 
Management (BLM) and Office of Surface Mining (OSM) attended. MSHA 
found that OSM provides funding to the states for hardware and software 
purchases for digital mine mapping efforts. OSM is currently surveying 
the states to determine the number of abandoned mines, the extent of 
state map digitizing efforts, and details of the current status of that 
state's work. When MSHA receives the OSM survey results, the Agency 
will be able to identify states' needs and develop the specific 
criteria to be used to distribute the funds. MSHA and OSM have 
discussed the possible transfer of funds to OSM through an Interagency 
Agreement. OSM could distribute the funds along with funds they are 
already providing the states. As an alternative, MSHA may enter into 
contracts directly with the states.
    Once all known maps are digitized, detailed information on 
abandoned mines will be available prior to mining. This will reduce the 
likelihood of mining into abandoned mines.
    Applied Technology Demonstration Projects.--MSHA is aware of 
technologies that exist which show potential for detecting in-seam 
voids (detection of abandoned mines). We expect companies that 
specialize in some of these technologies to submit proposals for 
demonstration projects. Also, experts at universities and contractors 
for government agencies such as DOE and DOD may submit proposals. Some 
promising technologies that MSHA hopes to have contractors explore:
    Subterranean Robots Demonstration Project.--Field Robotics 
represents proven technology. Robots can be used to physically enter, 
provide a visual image, and ultimately map abandoned underground mines 
that are not safe for human entry. In addition to the drive components 
and navigational system, robots can be equipped with sonar and laser 
scanners to measure and map fine details. The primary challenge is to 
develop mine-worthy robots that can be adapted to the aggressive and 
diverse mine environment, with sufficient mobility through debris, mud, 
water, and dry conditions. For example, researchers from the Robotics 
Institute at Carnegie Mellon University have already field-tested a 
mine-mapping robot, that traversed more than one mile in a mine in 3.5 
hours. They are interested in developing borehole robots for both wet 
and dry coal mine conditions.
    Ground Penetrating Radar (GPR) Sensors Demonstration Project.--
Technology located underground on the working section may be available 
that can ``sense'' at least 22 feet into a coalbed to detect air or 
water-filled voids. The system involves a radar device encased within 
an MSHA-approved flameproof enclosure. The device could be periodically 
moved to the mine face and readings taken to determine the presence of 
and distance to either an air- or water-filled void, differentiate 
between the two, and provide the operator with a graphical display of 
the conditions.
    Seismic Reflection Demonstration Project.--Seismic technology may 
be a method to identify abandoned mines. It can be either a surface- or 
underground-based device. Surface-based devices are used to identify 
coal bed methane for the oil and gas industry. This technology may be 
adapted to detect air- or water-filled voids. Since this type of 
testing is widespread in the oil/natural gas industry, there would 
likely be a number of companies capable of demonstrating this 
technology under a variety of field conditions.
    In-seam seismic techniques have proven successful in some 
situations. Possible projects may be to use the continuous mining 
machine cutting drum as a seismic source, and automating the system to 
cause a fail-safe shut-down of equipment before cutting-through into an 
abandoned mine. Borehole seismic tomography projects to demonstrate 
mine-to-borehole and borehole-to-borehole seismic methods may also be 
viable.
    Long-Hole Directional Drilling Demonstration Project.--This 
technology would demonstrate whether directional long-hole drilling 
could be used to establish the minimum width of an outcrop barrier by 
drilling a hole that is parallel to, but offset from, the outcrop line 
of a coal seam. This could identify the intact width of outcrop 
barriers in cases where an impoundment overlies the outcrop of a seam 
that is being actively mined. It would require investigating the 
capabilities, limitations, and safety considerations inherent to using 
this system underground. Further development and use of borehole 
geophysical instruments could enhance the capabilities of long-hole 
drilling immensely by accurately assessing the trajectory of an 
undulating coal seam. Adding geophysical logging tools would also allow 
the driller to determine the distance that the drill string is from the 
mine void, whether the void contains air or water, the thickness of the 
coal seam, and any geologic anomalies that could impact inundation 
risk.
                                 ______
                                 
                 Filling Coal Mine Inspectors Positions

    Filling vacant coal mine inspector positions can be a lengthy 
process, especially due to the requirements for background 
investigations and medical examinations. MSHA has taken steps to 
compress that process where possible. MSHA Assistant Secretary Dave 
Lauriski has initiated an aggressive recruiting effort to fill vacant 
coal mine inspector positions. He has established specific deadlines 
for filling positions.
    MSHA has traditionally filled inspector positions by selecting 
applicants for consideration from standing registers of eligible 
candidates. To increase the pool of applicants, MSHA is now 
supplementing this process by posting individual vacancy announcements 
for specific geographical locations. This will allow individuals whose 
names are not on the standing registers to apply and be considered for 
a particular vacancy. The Agency is placing vacancy announcement 
notices on the web site of the Department of Labor and the USAJOBS web 
site of the Office of Personnel Management. State employment offices 
access the USAJOBS site and make the announcements available. MSHA 
staff are recruiting applicants at job fairs and at universities. This 
aggressive recruitment effort will enable the Agency to fill vacant 
positions in a more timely manner.

                               ERGONOMICS

    Senator Specter. Turning to the issue of ergonomics, last 
year in April you proposed to reduce ergonomic injuries through 
voluntary guidelines, but to have enforcement under OSHA's 
general duty clause. OSHA, I am informed, has conducted more 
than 400 nursing home inspections in the last year and 103 
ergonomics inspections were conducted in industries other than 
nursing homes. Would you give us the detail in writing as to 
where those 103 ergonomic inspections were conducted, and give 
us your evaluation as to whether you think the inspections are 
adequate, and advise us as to how much funding is being 
directed to those inspections to evaluate voluntary 
compliances?
    Secretary Chao. We will do so.
    Senator Specter. And the general duty inspections have 
disclosed, have resulted in citations, four citations, and we 
are advised that others are reportedly in progress. The 
subcommittee would like to know what has happened with those 
citations, what others are in progress, and whether you 
consider four citations to be adequate on some 491 inspections 
which have been conducted.
    Secretary Chao. Well, musculoskeletal injuries have 
actually dropped 10 percent last year. We will provide the 
answer, of course. In trying to work on these four general duty 
clauses, we want to make sure that they are effective. We 
talked a lot of target inspections and how we wanted to make 
sure that we are able to use leverage and utilize most 
effectively this general duty clause to get at the bad actors. 
We will ensure that there is some kind of further followup with 
relation to our four-prong strategy of our ergonomics plan.
    Senator Specter. Well, we need to evaluate what your 
voluntary guidelines are producing. Off-hand, on the surface, 
it would appear to me that 103 ergonomic inspections in all 
other industries beyond nursing homes is a small number. Do you 
think that's adequate? Tell me now.
    Secretary Chao. We're very committed, as I mentioned 
before, to ensuring that ergonomic injuries decline, and last 
year's results facts speak for themselves. There's been a 10-
percent decrease in ergonomic----
    Senator Specter. Madam Secretary, I understand your 
commitment.
    Secretary Chao. Yes.
    Senator Specter. My question is, is that a sufficient 
number of inspections for all industries other than nursing 
homes?
    Secretary Chao. We conduct 37,000 inspections, so in 
addition to other inspections, these are just totally focused 
on other industries.
    Senator Specter. You conduct how many inspections?
    Secretary Chao. 37,000.
    Senator Specter. My red light is on, and I'm going to 
observe the time limit which I'm asking everyone else to do.
    Secretary Chao. I will submit the answer.
    Senator Specter. So if you would respond----
    Secretary Chao. I will.
    Senator Specter [continuing]. In writing, we would 
appreciate it.
    [The information follows:]

    OSHA has targeted ergonomic inspections to industries with high 
rates of musculoskeletal disorders. Inspections under OSHA's National 
Emphasis Program (NEP) for Nursing and Personal Care Facilities, which 
focuses on patient-handling hazards, began on September 17, 2002. Since 
this time, OSHA has completed over 469 inspections in Nursing Homes 
under the Nursing Home NEP. Over the past winter, Regional and Area 
Offices implemented Local Emphasis Programs (LEPs) to address 
ergonomics in several other industries with high rates of 
musculoskeletal disorders.
    In all, OSHA has assessed ergonomic conditions in 675 of the 
inspections opened between January 1, 2002 and March 31, 2003. These 
inspections include 469 in nursing and personal care facilities 
pursuant to the NEP; 106 in other industries as a result of SST 
inspections or complaints or referrals; and 50 inspections in 
industries targeted by ergonomic-related Local and Regional Emphasis 
Programs.

------------------------------------------------------------------------
                                                              Number of
          Inspection type                  Time period       inspections
------------------------------------------------------------------------
Nursing Homes under the Nursing      September 17, 2002              469
 Home NEP.                            through March 31,
                                      2003.
Ergonomic Related--Non-Nursing       January 1, 2002                 106
 Homes.                               through March 31,
                                      2003.
LEPs--Ergonomic Related............  December 15, 2002                50
                                      through March 31,
                                      2003.
------------------------------------------------------------------------

    The resources utilized to address ergonomics in both the fiscal 
year 2003 and fiscal year 2004 budget request are contained within all 
of OSHA's budget activities and are not separately identified or 
earmarked to address ergonomics or any other specific issue. Rather, 
the comprehensive approach to ergonomics involves focused activity by 
the entire agency in addressing the four prongs of the ergonomics 
policy: industry specific and task-specific guidelines, strong 
enforcement, outreach and assistance, and research.
    As part of our four-pronged approach to ergonomics, OSHA is 
increasing its outreach and assistance efforts through its Ergonomics 
Webpage, cooperative programs, and other means.
    OSHA's cooperative programs are achieving tangible results and are 
an integral part of our strategy to reduce workplace ergonomics 
hazards. OSHA recently entered into a national partnership with the 
U.S. Postal Service, the National Postal Mail Handlers Union and the 
American Postal Workers Union to address ergonomic hazards in postal 
facilities. In addition 15 of OSHA's National Alliances focus on 
ergonomics.
    The level of interest in OSHA's initiatives and activities is 
demonstrated by participation in stakeholder meetings, visitors to our 
ergonomics web page, inquiries regarding enforcement policy, alliances 
and partnerships which affect ergonomics, requests for consultation and 
compliance assistance, and interest in the work of the National 
Advisory Committee for Ergonomics.
    OSHA has committed to achieving significant overall reductions in 
workplace injury and illness rates. Reducing the number of injuries due 
to ergonomic hazards is an important part of meeting these goals.

    Senator Specter. We have been joined by the distinguished 
former chairman of the Appropriations Committee, former 
president pro tempore, current ranking member of the full 
committee.
    Senator Byrd. Thank you, Mr. Chairman.
    We've had great success in sending a man to the moon and 
bringing him home to earth again, but we've never been able to 
perfect a good public address system.

           MINE SAFETY AND HEALTH INSPECTORS IN WEST VIRGINIA

    Can you hear me, Madam Secretary?
    Secretary Chao. I sure can, thank you.
    Senator Byrd. Last January, an air shaft explosion killed 
three workers at the McElroy mine in Cameron, West Virginia. 
According to news reports, MSHA's District 3 office, where the 
McElroy explosion occurred, was extremely short-staffed. One 
news journal reported that, according to MSHA records, between 
December 2001 and December 2003, when the McElroy mine should 
have had six surface inspections, it had been inspected only 
once. No underground inspections were performed. The MSHA 
district manager reportedly requested additional inspectors and 
resources, but was granted less than half of his request 
because of personnel shortages.
    Now I read that the President has proposed to cut MSHA's 
budget for coal enforcement activities below the $119 million 
appropriated for fiscal year 2003 to $113.4 million in fiscal 
year 2004. Coal miners toil every day in an occupation where an 
accident can mean loss of a life. They trust that MSHA will do 
all that it can to reduce the risk of accidents. Why are there 
not enough inspectors in MSHA's District 3 office to conduct 
adequate safety inspections, and is insufficient staffing a 
problem that is widespread through MSHA?
    Secretary Chao. The simple answer is no, it is not. In 
fact, if you look at the last year's results there has been a 
30 percent increase in site visits, 83,000, there's been a 21 
percent decrease in fatalities, 11 percent decrease in 
injuries, 8 percent increase in citations and orders at coal 
mines.
    The number of mines and inspection completion rates for 
coal mines actually stayed, from about--a 99 percent completion 
rate, which is an impressive number. The issue is that the 
number of coal mines has actually decreased since 1997, the 
last 5 years alone. There were 2,600 coal mines in 1997. Today, 
there are only 2,000, and yet the number of inspectors have 
remained the same.
    In the next year we expect to add 35 increased coal miner 
inspectors, 20 metal/nonmetal inspectors, and another 21 to 
make sure the small mine companies and operators are abiding by 
the law as well, and we want to help them understand what their 
responsibilities, and also help the employees, the workers 
understand what their rights are. So we in fact have about a 76 
increase, new inspectors coming on board.
    Senator Byrd. The UMWA wrote to me just a few days ago to 
apprise me of their concerns with regard to the number of MSHA 
inspections at our Nation's mines. The UMWA wrote that the MSHA 
District 3 office in Morgantown, West Virginia is bringing MSHA 
inspectors in from Pennsylvania and housing them in hotels to 
inspect District 3 mines in an attempt to keep up with MSHA's 
mandatory inspection requirements.
    The UMWA cited a series of accidents that have occurred 
since last April in Kentucky, Illinois, Pennsylvania, and West 
Virginia. Last year's Quecreek accident alone endangered 18 
miners. Had it swung the other way, which it easily could have, 
fatalities would have increased last year greatly, rather than 
decreased, so are we really giving MSHA all of the resources it 
needs to protect our miners from these kinds of accidents?
    Secretary Chao. We actually have increased MSHA's budget, 
so we believe yes. With the problem specifically with district 
number 3, that is a district that we have heard complaints 
about. The UMWA has been very concerned about that. Many of the 
steps, actually, that we've taken are actually in response to 
what they want.
    Senator Byrd. Would you say that again? Would you say that 
again, what you just said?

            MSHA DISTRICT 3 REGIONAL OFFICE IN WEST VIRGINIA

    Secretary Chao. District number 3 is a district that we 
know has had some complaints, and a lot of the complaints 
circled around personnel. We have made certain changes. Certain 
other allegations of personnel changes were not true. That's 
the district that again----
    Senator Byrd. What allegations were not true?
    Secretary Chao. That certain managers were moved out. That 
is not true. The one manager that was moved out, the UMWA 
wanted the person moved out, so we've done that.
    Senator Byrd. If there are reports that mines are not being 
inspected because of the shortage of personnel, how can you be 
sure about whether more MSHA inspectors are needed?
    Secretary Chao. With the inspection completion rate of 99 
percent, there is only 1 percent that we can do better. We will 
certainly try to do that, but I think there are very few other 
endeavors in which you have a 99 percent completion rate. As I 
mentioned, while there are injuries and fatalities, which are 
intolerable, the overall record in terms of safety has actually 
improved quite a bit in the last year.
    As I mentioned, we have had a 30 percent increase in 
inspection citations, and an 8 percent increase in orders. 
There have been decreases in fatality rates. In fact, the 
mining industry had one of its best years in the last year, in 
terms of safety. The number of injuries dropped as well, and we 
are adding 76 more inspectors in this coming year.

                     RETIREMENT OF MSHA INSPECTORS

    Senator Byrd. Madam Secretary, you have been lucky. As I 
indicated earlier, if last year's Quecreek accident had swung 
the other way, which it easily could have, fatalities would 
have greatly increased last year rather than decreased.
    The United Mine Workers of America also raised concerns 
about the upcoming retirement of a number of MSHA inspectors. 
MSHA has said that it takes 1 to 2 years to train a new 
inspector. When you tell this subcommittee that the President's 
budget request for MSHA is adequate to hire inspectors, are you 
considering these impending retirements?
    Secretary Chao. Yes, we are. It does take a great deal of 
skill to manage the personnel resources that are available 
within the Department. Part of the issue also is that it is 
difficult sometimes to find people at the locations in which 
they are needed. Many times an inspector, or a potential 
inspector, would not want to move to another part of the 
country or region in which he or she is not familiar.
    There have been attempts in the past to accelerate the 
responsibilities, the time in which it would take for an 
inspector to get into their inspection activities, and we don't 
approve of that either. We want to make sure that the mine 
inspectors are doing their job, that they're highly qualified 
and highly skilled, because as you said, we want to make sure 
the miners get home every night, but we view this 
responsibility very seriously.
    Senator Byrd. I helped to craft the 1969 and 1977 Federal 
Mine Health and Safety Acts. I did so with the belief that we 
need strong mine safety standards that are enforced through 
frequent inspections, and further, that appropriate stiff 
penalties be imposed on those mine operators who wilfully 
violate the law and endanger the lives of the Nation's coal 
miners, so I am concerned about this administration.
    What I'm concerned about is how this administration is 
reconciling MSHA's enforcement and compliance assistance roles. 
I see resources and personnel being shifted away from 
enforcement activities. I hear about the failure to cite safety 
violations. I hear that violations at our site have sometimes 
languished unchecked for months. I hear about personnel 
transfers because of complaints from coal mine operators to 
administration officials that MSHA enforcement actions are too 
tough.
    MSHA is not a consulting firm. It was created to enforce 
our mine safety laws. Just as the FBI should not act as a 
consultant to criminals, MSHA should not act as a consultant to 
coal companies that wilfully violate the law. Why should MSHA 
be distracted from its principal responsibility of enforcing 
our mine safety laws and protecting our miners so that it can 
act as an advisor to coal companies that break the law?
    Secretary Chao. Well, first of all, those allegations that 
you have cited earlier in your statement are just not true.
    Senator Byrd. Which allegations are not true?
    Secretary Chao. The coal operator who claimed that he moved 
certain personnel out. There is a very comprehensive answer to 
those spurious charges by Dave Lauriski, the Administrator of 
MSHA, that is in the Courier-Journal, and I will send that over 
if you have not seen it already.
    Second of all, I think some people would take exception to 
the----
    Senator Byrd. You will send that over, you say?
    Secretary Chao. Sorry?
    Senator Byrd. You say you will send that over?
    Secretary Chao. I will do so, yes.
    Senator Byrd. How soon will I see that?
    Secretary Chao. Just to make sure, I will send it over.
    [The information follows:]

       [From the Courier-Journal, Louisville, KY, March 16, 2003]

              MSHA Says: ``Protecting Miners Comes First''

           (By Dave Lauriski, Special to The Courier-Journal)

The writer is assistant secretary of Labor for mine safety and health.
    Over the last two years, the Bush administration has instituted a 
culture of accountability and performance in the enforcement programs 
that protect miners' lives--and the clear result is that miners are 
safer than ever before. But you wouldn't know it from the biased and 
baseless screeds The Courier-Journal is negligently posting on its 
opinion pages today.
    Here are the facts:
  --We conducted 87,957 mine inspection and en-forcement events in 
        2002--an increase of 30 percent since the previous 
        administration.
  --Over the last two years, citations and enforcement orders issued 
        against coal mine operators passed the 125,000 mark--up 8 
        percent since the last administration.
  --During that same period, we assessed mine operators with $27.3 
        million in civil penalties--an 11 percent jump.
    Here are the results:
  --Because of our no-compromise enforcement policy, fatal injuries at 
        mines have declined to their lowest point in history.
  --Coal mine injury rates have fallen by nearly 10 percent since we 
        came into office, and are lower than at any time in the last 20 
        years.
  --The only way to achieve results like these is to insist that 
        protecting miners comes first--not protecting the bureaucracy, 
        the industry or individual coal operators.
    For these reasons, it is both stunning and sad to see Cecil 
Roberts, president of the United Mine Workers of America, sign his name 
to an irresponsible opinion piece that accuses the administration of 
putting politics ahead of miners' safety. Cecil is a decent man, and we 
have worked well with him on mine safety issues. But the arguments he 
makes--mostly cribbed from a West Virginia radio story--are flatly 
contradicted by the facts and even conflict with the views expressed by 
senior leaders in his own organization.
    Roberts says he has grounds to be ``suspicious'' of the 
reassignment of MSHA's District 3 manager, insinuating that it was 
payback for enforcement actions against Robert Murray, a politically 
active coal operator. That's odd, because the organization that Roberts 
runs has complained bitterly about the District 3 manager and demanded 
that we take action.
    Roberts' own safety director wrote to MSHA, ``A number of 
complaints have been filed with the MSHA District 3 and Arlington 
offices. . . . As you know, miners became so fed up with the actions of 
the Agency and particularly the MSHA District 3 manager that they 
staged a protest at an MSHA meeting two months ago.'' The UMWA has 
accused the District 3 management of ``tolerating hazardous 
conditions,'' turning ``a blind eye'' to violations and stopping MSHA 
inspectors ``from issuing enforcement actions.'' Richard Eddy, 
president of UMWA District 31, also wrote to complain about decisions 
made by MSHA's District 3 manager. Eddy urged me to ``take whatever 
actions you deem necessary.''
    Seemingly unaware of all this, Roberts blames the reassignment of 
the District 3 manager on ``threats'' allegedly made by coal operator 
Robert Murray. As we say in the country, that dog won't hunt.
    Roberts also alleges that I met with Murray in April 2002 and that 
``the result of those meetings was the sudden reassignment of District 
2 officials Kevin Stricklin . . . and Tom Light, whose reassignment 
Murray [had] bragged about. . . .'' None of that is remotely true. 
There was no such April meeting. And Kevin Stricklin is still with 
District 2; the only ``reassignment'' he had was a leadership 
development rotation as assistant to the coal administrator, one of the 
most highly responsible positions at MSHA. The same goes for Tom Light, 
who is also still with District 2 and, far from being punished, was 
promoted to the second-ranking job in the regional office.
    Finally, Roberts claims that Murray asserted his political 
influence to threaten two other MSHA enforcement officials in the 
District 3 office. Regardless of any threats made by anyone, I'm the 
one who is responsible for all personnel decisions in MSHA--and both of 
those officials are still at their posts.
    The only MSHA official mentioned by Roberts who was permanently 
transferred is the former manager of District 3. But Roberts' own 
safety director and local union president are on record insisting that 
action be taken against him. So why is Roberts cooking up conspiracy 
theories against this administration? I refuse to believe that Roberts 
would play politics with miners' safety--even though he has falsely 
accused MSHA of doing the same. Roberts appears to be the victim of 
overzealous staff who failed to do good research and left him out to 
dry.
    The truth is that the Bush administration and MSHA take miners' 
safety very seriously. One of the first decisions the new 
administration made was to fully defend and enforce the Black Lung 
Program regulations that were issued in the waning days of the previous 
administration. Mine operators like Robert Murray strongly urged the 
administration to back down. Instead, we took the side of protecting 
miners' health--a decision strongly endorsed by The Courier-Journal and 
Cecil Roberts' UMWA.
    Today, we are setting new records in enforcement and reduced injury 
and fatality rates. But we are not resting on these achievements, 
because our job is to bring miners home to their families, safe and 
sound. In our budget for next year, we proposed tougher penalties for 
mine safety violations and added funding to hire 55 more mine 
inspectors. And we continue to pursue a major enforcement case against 
the Ohio Valley Coal Company--owned by none other than Robert Murray.
    The accusation that anyone in this administration assigns a higher 
value to political contributions than to miners' health and safety is 
insulting and clearly disproved by the facts. It is uncharacteristic of 
Roberts to make such irresponsible attacks. However, placing these 
baseless claims on the opinion page does not absolve The Courier-
Journal from the responsibility of doing some basic fact checking 
before printing them.

    Senator Byrd. It won't be like your response to my January 
letter, will it, the response that just came yesterday?
    Secretary Chao. What response?
    Senator Byrd. The response to my January letter.
    Secretary Chao. I'm not--you're saying it came in too late, 
is that what----
    Senator Byrd. Pardon me?
    Secretary Chao. Are you saying that it came in too late?
    Senator Byrd. Well, I wrote you in January. I got a 
response yesterday, the day before this hearing.
    Secretary Chao. We have lots of letters to answer, but I 
apologize for that. We will certainly do better in terms of our 
reply.
    Senator Byrd. You've got lots of room to improve.

                         COAL MINING INSPECTORS

    Secretary Chao. We'll try.
    The second thing also is, I think there might be some 
exception, some people who would take exception that coal 
miners, operators would be compared to criminals. I think that 
there are lots and lots of rules and regulations----
    Senator Byrd. Nobody is comparing coal miner operators to 
criminals.
    Secretary Chao. There are lots of rules and laws----
    Senator Byrd. Have you ever lived in a coal mining camp?
    Secretary Chao. No. I lived in Queens, New York, in a 
little tenement house when I came to America.
    Senator Byrd. You haven't lived around a coal mine.
    Secretary Chao. No, not really.
    Senator Byrd. No. Well, you should try it sometime.
    Secretary Chao. Yes. There are lots of experiences that we 
should all share, I think, to help us understand the world.
    Senator Byrd. You might share that one so we could really 
talk about coal mine inspections.
    Secretary Chao. Yes, sir.
    Senator Byrd. Now, go ahead, will you, if I've interrupted 
you.
    Secretary Chao. There are lots of rules and regulations, 
so--I'll make it very short. So we want to help employers and 
workers understand what their obligations and rights are so 
that workers can be better protected. That's the whole point 
about the inspections and the compliance assistance. There has 
not been any faltering of enforcement, as the numbers that I 
just cited indicate.
    Senator Byrd. I see the light is red. If I may just ask 
this one final question, Mr. Chairman.
    Senator Specter. Of course, Senator Byrd.

                       NATIONAL EMERGENCY GRANTS

    Senator Byrd. Thank you.
    I have been contacted by the Governor's Office of West 
Virginia about the slow response from the Labor Department in 
processing our State's national emergency grant applications. 
To expedite the release of these emergency job training funds, 
the Congress annually appropriates money to the Labor 
Department for the future fiscal year so that the Labor 
Secretary can quickly allocate these funds as grants, and yet 
West Virginia has had to wait for 5 months for its application 
to be processed.
    In the meantime, the number of West Virginians waiting for 
those job training funds has jumped from 500 workers to over 
1,200 workers. Why are these emergency funds being delayed?
    Secretary Chao. Well, I hope that's not the norm, and I 
will look into it, because we have just--I signed off about 
$107 million of these national emergency grants. We tried to be 
very prompt in turning them around, and in fact we prefer, we 
like them better.
    Senator Byrd. Would you look into this?
    Secretary Chao. I sure will.
    Senator Byrd. And give me a specific response to that 
question?
    Secretary Chao. Yes, I will.
    Senator Byrd. Let me repeat it, why are these emergency 
funds being delayed?
    Secretary Chao. I hope they're not being delayed, but I 
will look at them.
    Senator Byrd. I beg your pardon?
    Secretary Chao. I hope they're not being delayed.
    Senator Byrd. You hope they're not.
    Secretary Chao. No. Sometimes it requires working with the 
State to make sure that the application comes in the right 
form, even though it's a very simple application form, and to 
make sure that the workers are indeed eligible and all that.
    Senator Byrd. All right.
    Secretary Chao. But we will certainly take a look.
    Senator Byrd. Could you please, not only take a look, but 
let this subcommittee know your response to that question?
    Secretary Chao. I will.
    Senator Byrd. And give me a letter----
    Secretary Chao. I will.
    Senator Byrd [continuing]. Addressed to me, with an 
explanation, and you might elaborate on some of the other 
answers that you've given me.
    Secretary Chao. I will.
    Senator Byrd. I don't find them to be altogether 
satisfactory, with all due respect to you. Thank you very much.
    [The information follows:]
      Status of National Emergency Grant Request for West Virginia
    Helping American workers who have lost their jobs is a top priority 
for this Administration.
    The State of West Virginia submitted an application for National 
Emergency Grant (NEG) funds in the amount of $4,985,714 to serve 
approximately 450 of the 750 workers impacted by layoffs and closures 
of coal mines. Companies identified in the NEG application include Pine 
Ridge Big Mountain No. 16 in Boone County, Ruffner Mine (ARCH) in Logan 
County, A.T. Massey, Inc. in Boone, McDowell and Raleigh Counties, 
Colony Bay Surface Mine in Boone County, Bar K Incorporated in Kanawha 
County, Kanawha Eagle in Boone County and BJM in Nicolas County.
    Officials in Department of Labor's Employment and Training 
Administration are reviewing the request for the NEG funds very 
closely. Part of this review includes an assessment of existing funds 
in the state.
  --As of the December 2002 reporting period, West Virginia has over 
        $30 million in unexpended WIA Dislocated Worker Program formula 
        funds.
  --The United Mine Workers of America was designated by the Congress 
        to receive a PY 2002 hard-mark, which was awarded on October 3, 
        2002 in the amount of $2 million to serve dislocated mine 
        workers in West Virginia, Pennsylvania, and Virginia.
    ETA officials learned that A.T. Massey began to increase coal 
production, and therefore rescinded the Worker Adjustment and 
Retraining Notification (WARN) Act notice which announced the lay off 
of 37 workers. ETA officials also learned that the Ruffner Mine will 
not be laying off the 260 workers identified in the NEG application. 
Many of the remaining workers who were impacted by the coal mine 
closures are accessing services through WIA Dislocated Worker Program 
formula funds.
    You have my assurances that we will monitor the situation closely. 
When a final decision is made, you will be notified promptly.

    Senator Specter. Senator Harkin.

                       NATIONAL EMERGENCY GRANTS

    Senator Harkin. Mr. Chairman, thank you.
    I have a followup to Senator Byrd's just recent question 
about dislocated workers and about the length of time that it's 
taking to get applications approved. Senator Byrd, I want to 
give you some examples of what's happened out in our State, and 
Madam Secretary, I'm going to ask you about this. You say you 
hope this is not a pattern, but after listening to Senator Byrd 
and looking at what's happening in my State, I'm wondering if 
it is a pattern. For example, let me give you some examples: 
117 days to approve the application of R. R. Donnelley in Des 
Moines for 375 workers; 125 days to approve the application for 
Rockwell-Collins, 153 workers; 111 days to approve the 
application for International Paper in Clinton for 126 workers; 
248 days to approve Iowa dislocated farmer grants for 300 
individuals.
    That's the delay. Then when the grants were approved, 
listen what happens.
    In June of 2002, the Department of Labor approved a 
national emergency grant of nearly $300,000 for dislocated 
workers from Sioux Tools and Terex-Schaeff up in Northwest 
Iowa. The approval took 83 days, but that was in June of 2002. 
Only $79,507 has actually been received. A request for the 
additional $217,865 was submitted last September, and to date 
there has been no response from DOL.
    Secretary Chao. May I answer that, or----
    Senator Harkin. Sure. Well, I've got some more. You answer 
that and I'll give you some more.
    Secretary Chao. I will, of course, go back and take a look. 
Sometimes the national emergency grants are, I don't want to 
use the word confused, because I don't mean to be insulting, 
but sometimes they're mixed up with the TAA grants. Now, the 
TAA grants do take quite a while. On average they take about 4 
months.
    The national emergency grant is a fairly easy process, so 
we do tout its flexibility and its ability to move quickly. The 
TAA grants, on the other hand, are----
    Senator Harkin. I'm told by my staff these are all national 
emergency grants.
    Secretary Chao. And sometimes the glitch is not with the 
Department of Labor. Sometimes it goes back to the State 
Departments of Labor. They have to provide the right 
information, and the State workforce agencies also share in 
these issues, because sometimes they don't provide sufficient 
information that States need to have to use these dollars, so 
it is a very decentralized system, but generally speaking we 
are able to move it fairly quickly.
    Senator Harkin. Well, Madam Secretary, would your staff, 
who is with you, respond why it took so long for R. R. 
Donnelley?
    Secretary Chao. Sure.
    Senator Harkin. Why it took so long for Rockwell-Collins?
    Secretary Chao. I sure will.
    Senator Harkin. Why it took so long for International Paper 
in Clinton, and why farmers are always the last?
    Secretary Chao. I hope that's not the case.
    Senator Harkin. Why are farmers always--248 days to approve 
it for dislocated farmers.
    Secretary Chao. Well, we will see, again, what happened to 
those, and I want to make sure also that it's not the 
Department's----
    Senator Harkin. That's why I want to know.
    Secretary Chao. Yes.
    Senator Harkin. I want to know where the glitch is. If you 
say the glitch maybe some place else, I want to find out about 
it.
    Secretary Chao. These grants are reviewed and handled by 
career professionals.
    Senator Harkin. But what's your average time for national 
emergency grants?
    Secretary Chao. We like to say pretty--you know, I'm a 
little reluctant now to say how much we like to see, but we 
have told people that it can come out within a month or so.
    Senator Harkin. Well, I just gave you some examples here 
that are a lot longer.
    How about, can you answer this for me? How about the one 
that went to Sioux Tools and Terex-Schaeff? In June of 2002 
they approved it. That's last June. $79,000 has been received. 
They submitted the additional request for $217,000 in 
September, and no response yet.
    Secretary Chao. Again, I don't know the specifics of that.
    Senator Harkin. I'm sure you don't.
    Secretary Chao. I don't know whether it's at the Department 
or whether it's at the State level, but we'll certainly take a 
look, but it does require cooperation with the State 
departments of labor, the State workforce agencies, the WIB 
boards to make all this happen.
    Senator Harkin. One last one. The last one I mentioned was 
Sioux Tools.
    Secretary Chao. Right. We'll take a look at all of them.
    Senator Harkin. The last one I've got is $739,073 in 
January of last year, in 2002, not this January, for workers 
who lost their jobs when three plants closed, Exide 
Technologies, that's a battery company, Wabash National and 
Keokuk-Ferro-Sil. They submitted a request for the final 
installment for $237,190 last November and they're still 
waiting.
    Secretary Chao. Sometimes the State work agencies will also 
submit requests, but these requests may not be truly the----
    Senator Harkin. Well, my time is up.
    Secretary Chao. Okay.
    Senator Harkin. I just want--as long as your staff is here, 
there are three more Iowa grants pending at the Department.
    Secretary Chao. There is a tendency to ask for the request, 
but we do take a look at the request, see what the dislocated 
worker situation is within the particular State or the region, 
and see from that how best to put out the grant.
    Senator Harkin. Let me just tell you, there is one grant 
that came in on October 18 of 2002. That's been 164 days now, 
164 days, one, two, three, four, five different companies, 
APAC, Andrew Corporation, Celestica, Charleston Place, and 
Bluebird Bus, the bus builders, and I'd like to have you take a 
look at that.
    Secretary Chao. I will do so. There's not very much 
discretion at my level. I mean, basically this is all done with 
the career ranks. They have a lot of experience in how these 
programs are administered, what is required for x number of 
individuals, and this is the analysis that they go through, but 
we will take a look and, as I mentioned, a lot of workforce 
investment boards will ask for lots of things sometimes.
    Sometimes a grant may be smaller than a request because we 
will go into a region and see what the actual number of 
dislocated numbers are, and it could be smaller than the actual 
requested amount.
    Senator Harkin. Well, I just think the length of time is 
just unacceptable, how long it's taking.
    Secretary Chao. We'll take a look at it.
    Senator Harkin. I don't know whether it's the bureaucracy 
or whatever it is, but you're in charge of the bureaucracy. 
They work for you.
    Secretary Chao. We'll take a look at it.
    Senator Byrd. Perhaps a quote from William Wordsworth might 
be appropriate.
    Senator Specter. This will come out of your fourth round of 
questions, Senator.
    Senator Byrd. Okay. I expect to be charged for it. 
Wordsworth said, it matters not how high you may be in your 
department. You're still responsible for what your lowliest 
clerk is doing.
    Senator Specter. Was he a Senator, Senator Byrd?
    Senator Byrd is replete with pithy, relevant, instructive 
quotations. We thank you for that.
    Secretary Chao. I by no means shirk the responsibility, and 
I just checked, these numbers, unfortunately are not that 
different from previous years.
    Senator Harkin. They're not----
    Secretary Chao. They're not that different from previous 
years, but we want to improve, so let's take a look.
    Senator Harkin. But you told me that national emergency 
grants go out in a matter of just days or weeks, and I've given 
you some that take months.
    Secretary Chao. Well, we've been trying to improve them, 
but those numbers that you cite are not different than previous 
years.
    Senator Harkin. So you're not doing any better now than 
you've ever done.
    Secretary Chao. We're trying, but obviously by your 
example----
    Senator Harkin. I hate to be so provocative--I hate to be 
provocative, but when you tell me that emergency grants go out 
in a matter of days or weeks, and I've given you some that have 
taken months, you come back and tell me, well, it's the same as 
it's always been, so don't----
    Secretary Chao. Well, I'm just trying to say----
    Senator Harkin. Something's not adding up.
    Secretary Chao. We're doing our best, but that's been the 
record. We're going to continuously improve, and we'll check 
into the ones that you want.
    Senator Harkin. Thank you.
    [The information follows:]
          Status of National Emergency Grant Requests for Iowa
    The President and I are committed to helping displaced workers 
access the job and skills training they need to find new jobs that will 
enable them to provide for themselves and their families.
    In Program Year 2002, which began on July 1, 2002, the Department 
awarded $2,550,470 in National Emergency Grant funds to provide 
reemployment assistance to workers dislocated as a result of the 
closure of an International Paper plant, workers laid off from Rockwell 
Collins avionics plant, Ball Corps, Mau Trucking, MCI Worldcom, Inc. 
and farmers.
    Most recently, I approved a request for $217,000 to aid 55 Iowa 
workers dislocated from Sioux Tools and Terex-Schaeff located in Sioux 
City, Iowa. The project will be operated by the Western Iowa Tech 
Community College, and will provide reemployment services, including 
job search assistance, job development, job placement, basic skills 
training and counseling.
    Officials in the Employment and Training Administration are also 
reviewing three other National Emergency Grant applications from Iowa, 
including a request for incremental funding for a Northern Engraving 
project, APAC Teleservices and American Growers Insurance Company. Part 
of this review includes an assessment of existing funds in the state. 
As of December 2002, which is the most recent WIA reporting period, 
Iowa has an unexpended balance of $4,630,710. These funds can also be 
used to provide assistance to workers impacted by plant closures and 
layoffs.
    You have my assurances that we will monitor the situation closely. 
When a final decision is made, you will be notified promptly.

                         ERGONOMICS INSPECTIONS

    Senator Specter. Secretary Chao, I don't want to spend any 
more time on ergonomics because I've asked you to supply the 
materials in writing, but when you come up with this figure of 
37,000 inspections, I didn't want to pursue it, but staff has 
advised me that that's the total number of inspections 
conducted by OSHA, and I had quoted for you 388 inspections of 
nursing homes and 103 on others. What's the relevance in 
responding about 37,000 inspections when the question related 
to ergonomics inspections?
    Secretary Chao. Just to--well, maybe it didn't--I thought 
it made sense at the time, but I'm trying to show the number of 
inspections overall that OSHA does. In fact, that's been an 
increase of more than 7 percent, so we have stepped up our 
inspections.
    Senator Specter. But the question is not about the total 
number of inspections. The question is about ergonomics 
inspections, in an attempt to----
    Secretary Chao. Well----
    Senator Specter. May I finish?
    Secretary Chao. Yes, please.

                        LM-2 PROPOSED REGULATION

    Senator Specter. In an attempt to evaluate whether your 
voluntary system is working. It's very hard to--well, you get 
the point, Secretary Chao.
    Let me come to the question of the new report requirements, 
and I had written to you raising some questions as to how these 
reporting requirements contrasted with other reporting 
requirements of the Small Business Administration or for 
corporations under the Sarbanes act or by the General 
Accounting Office, and I got your response, and I noted your 
statement that I should meet directly with the Department's 
Inspector General and Chief of the Division of Enforcement for 
the Department's Office of Labor Management Standards, and 
candidly that's quite an undertaking for me to do, but I do 
want to pursue this question, starting at the staff level.
    We may need a hearing on this generally, but in the few 
minutes we have remaining on this hearing, Madam Secretary, let 
me ask you to compare reporting requirements for small 
businesses which go to annual receipts under $6 million, 
contrasted with the requirement for labor unions with annual 
receipts under $200,000. Why should there be such a significant 
divergence on reporting requirements?
    Secretary Chao. The $200,000 limit is what is currently in 
the rules, stemming from the statute. We have not changed that, 
number one. That's the current level.
    Number two, when comparing the whole issue about 
accountability and transparency with the labor unions, when you 
compare them with any other organization, any other sector, 
there are basically four layers of protection. There is usually 
a requirement for quantitative information, for qualitative 
information pertaining to materiality, for example, there is 
also another layer of internal controls mandated by the law, 
and also internal audits.
    Senator Specter. When you raise the issue of materiality, 
you move into what the Securities and Exchange Commission does, 
and their standards require the disclosure of, as you put it, 
material information.
    Madam Secretary----
    Secretary Chao. The disclosure just refers to the first----
    Senator Specter. Madam Secretary--I'm asking you a question 
right now----
    Secretary Chao. Please.
    Senator Specter. Madam Secretary.
    Should labor unions be required to have more detailed 
reporting requirements than their corporate, private corporate 
counterparts?
    Secretary Chao. Well, currently they do not, and under the 
proposed new rule they still will not.
    Senator Specter. Well, that's what I would like to work 
out. I commend--there's no doubt about the need for reporting, 
and for knowing what goes on with union records, and I've had 
some experience on that going back to the days of the McClellan 
Committee, which investigated labor racketeering back when John 
F. Kennedy was a Senator, and when I was an assistant district 
attorney I got the first conviction on labor racketeers arising 
from the investigations of the McClellan Committee.
    Six union leaders went to jail after their conviction for 
conspiracy to cheat and defraud Local 107 of the Teamsters 
Union, and I have some appreciation for this sort of an 
inquiry, but what I would like to do initially at the staff 
level, Madam Secretary, and we will be propounding some 
questions for the record, is to take a look at what has been 
done and what are the requirements for small businesses, what 
are the requirements for corporate America.
    I appreciate your interest in wanting to find out what is 
going on, and this subcommittee shares your concern, and we 
will work with you on that, but we want to see to it that 
there's an appropriate balance, and the comparison is always 
made on so many lines, financing of elections reporting, to 
have an equitable burden as you take a look at corporate 
America with unionized workers.
    Secretary Chao. There's a great disparity, and the unions 
do not have a fraction of the reporting requirements as 
required by corporations.
    Senator Specter. Senator Harkin, do you have another line 
of questions?

                      LM-2 REPORTING REQUIREMENTS

    Senator Harkin. I'd like to follow up on that, Madam 
Secretary. Words--I'm listening to the words you're using. You 
say that maybe the unions don't have the reporting requirements 
of corporations. You mean publicly held corporations.
    Let me ask you this question. A labor union with receipts 
of $500,000 a year, its reporting requirements compared to a 
privately held company--not a public corporation. Now, public 
corporations, you're right, they do have to have more reporting 
than labor unions. That's because they're publicly held. I'm 
talking about a private corporation. A labor union is not a 
publicly held corporation, so compare for me a union with 
receipts of $500,000 with a privately held business that makes 
$500,000, and compare for me the reporting requirements, would 
you, please?
    Secretary Chao. I'd be more than glad to. First of all----
    Senator Harkin. And you say----
    Secretary Chao. I would be glad to.
    Senator Harkin. Okay.
    Secretary Chao. The comparison is not analogous. First of 
all, most people are partnerships, single proprietorships, or 
small companies who have some degree of control over their 
resources. If you are a union member, you do not have control 
over your resources. Ten of the top 20 labor unions do not have 
any audits by the Office of Labor Management Standards. There 
are only two forms that they currently have to file.
    Senator Harkin. 10 of the top 20----
    Secretary Chao. That's true.
    Senator Harkin. 20 top in what regard?
    Secretary Chao. Largest.
    Senator Harkin. 10 of the top 20 largest unions have no 
what?
    Secretary Chao. Have never had an audit by OLMS.
    Senator Harkin. Have never had an audit by whom?
    Secretary Chao. The Office of Labor Management Standards, 
which is the office within the Department of Labor, the only 
office in the Government, aside from the IRS----
    Senator Harkin. Is that because the OLMS is prohibited by 
law from auditing them?
    Secretary Chao. No. They don't have the resources. That was 
under the Landrum-Griffith act. They don't have the resources. 
Also, there's no requirement for audited financial statements. 
There are no requirements for auditing for compiling financial 
statements according to the GAAP, that's generally accepted 
accounting practices, or generally accepted accounting 
standards. There are no whistleblower protections. There are no 
internal controls mandated by the law. All of this is mandated 
in most cases for corporations and for small companies. You 
have to have audited statements. You have to have certified 
public statements.
    Senator Harkin. By corporations.
    Secretary Chao. Even private companies, you have to have--
--
    Senator Harkin. What do private companies have to have?
    Secretary Chao. The larger issue is, in a small company----
    Senator Harkin. I think you misspoke, but go ahead.
    Secretary Chao. In a small company, most stakeholders have 
some control over the resources of that entity.
    Senator Harkin. Well, I would say that in a union they have 
some because the union officers are elected. There's a vote, a 
democratic vote.
    Secretary Chao. There are other issues about disclosure, 
quantitative disclosure, qualitative disclosure, internal 
controls, and internal audits. None of those occur.
    Senator Harkin. Has any of those top 10 of the top 20 
unions that you say they've never been audited by OLMS, are you 
aware if they've ever been audited with outside auditors?
    Secretary Chao. They probably have, but it's not mandated 
by law, as it is with other organizations.
    Senator Harkin. But if they've been audited by outside 
auditors, and those audits are available to its membership and 
to others----

                              UNION AUDITS

    Secretary Chao. Whether it is or not, we don't quite know. 
There have been complaints that they've not been available. 
Certainly the union leadership claim that they are available, 
and then we also have heard from some certain members that it's 
not available.
    Senator Harkin. The recent thing about this union, ULICO 
thing, you know, that's sort of been in the news lately, I'm 
told that that came to light not because of you or because of 
the Department of Labor or anything else, it came because of 
audits that were done by the unions themselves. It was a 
voluntary program and they brought it to light. Is that not 
true?
    Secretary Chao. That is not true. We had heard about it 
before, and it was under investigation. The same thing with the 
American Teachers Federation.
    Senator Harkin. But who did the audits?
    Secretary Chao. That I'm not sure of.
    Senator Harkin. I was told that was internal audits, or 
audits, not internal, but audits that were done by outside CPAs 
and stuff that came in that the unions asked to have it 
audited, and that's how they found it.
    Secretary Chao. We have 11 criminal convictions a month, 
and not all of that is self-revealed through the unions.
    Senator Harkin. You've got 11 criminal convictions a month 
on what, criminal convictions of whom, of what?
    Secretary Chao. Of labor unions. We have about 200 audits a 
year. It's a very enfeebled office at this point. Its budget 
and FTEs were cut more than 40 percent in the last 10 years, so 
this small office conducts about 200 audits a year, and there 
are investigations ongoing on others. On average there are 
about 11 criminal convictions a month.
    Senator Harkin. A month.
    Secretary Chao. Yes.
    Senator Harkin. Convictions, by you or by whom? Convictions 
by whom?
    Secretary Chao. The courts, Justice Department.
    Senator Harkin. Are these under State courts? Are these 
Federal cases you bring? I mean, 11 criminal convictions a 
month, are these because of your investigations? Is that what 
you're saying?
    Secretary Chao. A lot of them are instigated not by us but 
by the Office of the Inspector General, because they are in 
charge of a lot, and then also by the Office of Labor 
Management Standards, yes.
    Senator Harkin. All right. When you submit the comparisons, 
don't just use publicly held corporations. I want you to use 
privately held companies, closely held companies that would 
have the same kind of receipts in a year as the labor union, 
and compare them to see what the reporting requirements are.
    Secretary Chao. Labor unions basically don't report very 
much today, anyway. They only report two forms to the Office of 
Labor Management Standards.
    Senator Harkin. Well, what does a privately held company 
with the same receipts have to report?
    Secretary Chao. That's not an analogous comparison.
    Senator Harkin. To try to compare it to publicly held 
corporations, why is that analogous?
    Secretary Chao. No, the labor unions actually wanted to be 
compared to publicly accounted public companies. They claim 
that they are held to a higher standard than public 
corporations, which is not true.
    Senator Harkin. Well, this could go on and on. Thank you 
very much, Madam Secretary.
    [The information follows:]

  Comparison of the Financial Disclosure Regimes for Labor Unions and 
                        Privately Held Companies

    Legally mandated financial disclosure regimes for both unions and 
publicly held corporations are designed primarily to address a 
fundamental problem common to both institutions--the principal/agent 
dilemma. This dilemma exists whenever managerial control of an entity 
lies beyond the direct control of the people who fund the entity. This 
occurs in both unions and publicly held companies. Corporate and union 
financial disclosure regimes are supposed to reduce the informational 
advantages agents have over principals and permit principals to monitor 
and assess the performance of agents. Adequate transparency encourages 
union officers and corporate directors (agents) who are elected by 
union members and corporate shareholder (principals) to conduct the 
business of their organizations in the best interests of the people who 
provide the operating funds. Agents failing to do so can be removed 
through the mechanisms of corporate and union democracy.
    There is no principal/agent dilemma in a privately held enterprise 
where the operator of the business is also the source of the venture's 
financing. There is no principal to perform the monitoring and no agent 
to be monitored. While privately held companies are required to make 
certain financial disclosures related to franchise taxes, Small 
Business Administration loans, FCC licenses and other regulatory 
schemes, these disclosures are designed to assess taxes, fees or 
eligibility for government provided benefits, not to ensure 
transparency of managerial performance. The only scenario in which it 
is rational to compare the financial disclosure regime of a privately 
held company to a union is when a privately held firm creates a 
principal/agent relationship by accepting funding through the venture 
capital markets.
    The Labor Management Reporting and Disclosure Act of 1959 (LMRDA) 
established a unique financial disclosure regime for labor 
organizations designed for two purposes. First it was supposed to 
provide union members insight into how union officials managed members' 
dues so that they could make informed decisions during union elections. 
Second, it was supposed to deter the pervasive infiltration of 
organized crime into unions that was highlighted during the McClellan 
hearings.
    The disclosure regime for labor organizations has not been 
materially updated in more than four decades. The modernized union 
disclosure regime on which the Department of Labor requested public 
comment is far less rigorous than the disclosure regime currently 
mandated for publicly held companies following the passage of Sarbanes-
Oxley and in many respects less rigorous than the legally enforceable 
transparency regimes that privately held firms accept as a condition of 
receiving venture capital funding. The efficacy of these disclosure 
systems as a means to address the principal/agent dilemma and the 
burden associated with them can be evaluated by the extent to which 
they provide adequate quantitative information; qualitative 
information; and audit requirements and internal management controls 
designed to guarantee the integrity of qualitative and quantitative 
disclosures.

    Senator Specter. Thank you, Senator Harkin. Thank you very 
much, Madam Secretary, for coming in today. It is a big job to 
administer the Department of Labor, and we are very pleased to 
work with you on the budget. It's an enormous responsibility to 
have the $11.5 billion allocation of funding and all of the 
responsibilities which you have, and budgets are always 
difficult, and in allocating these budget resources, as you 
know, this subcommittee has to balance off Labor requests with 
Education requests and with Health and Human Service requests 
because it is a unified budget the subcommittee has, and we 
have to make the allocations. When you talk about worker safety 
and worker training and contrast it with Head Start and Pell 
Grants and the National Institutes of Health, it is difficult.
    Thank you for coming in today.
    Secretary Chao. Thank you. We're very committed, obviously, 
to helping workers train, and we want to work with the 
committee.
    Senator Specter. Thank you.
    Secretary Chao. Thank you.

               PREPARED STATEMENT OF SENATOR THAD COCHRAN

    Senator Specter. We have received the prepared statement of 
Senator Thad Cochran that will be made part of the hearing 
record.
    [The statement follows:]

               Prepared Statement of Senator Thad Cochran

    Mr. Chairman, I am pleased to join you in welcoming Secretary Chao. 
I look forward to working with her on issues that are of special 
importance to Mississippi and to our nation.
    The migrant and seasonal farm worker housing program is of 
particular interest to me.
    In the past, this subcommittee has included report language 
directing the continuation of this small, but important program that 
assists farm workers gain better housing. Since 1983, I have worked 
with the Department to ensure a network of local organizations, 
including one in my state, receives funding to plan, develop, and 
manage housing for migrant and seasonal farm workers. There is now a 
well established network of local housing organizations that receives 
these funds.
    I look forward to working with you, Madam Secretary, on this and 
other important Department of Labor programs. Thank you.

                     ADDITIONAL COMMITTEE QUESTIONS

    Senator Specter. There will be some additional questions 
which will be submitted for your response in the record.
    [The following questions were not asked at the hearing, but 
were submitted to the Department for response subsequent to the 
hearing:]

              Questions Submitted by Senator Arlen Specter

                     HISPANIC AND IMMIGRANT WORKERS

    Question. Over the past years, there has been an alarming increase 
in fatalities among Hispanic and Immigrant Workers. The Department of 
Labor has acknowledged this fact and has included $2.2 million in the 
fiscal year 2004 budget request for a Hispanic Worker Initiative. At 
the same time that this program is being proposed, however, the 
Administration is proposing to cut funds for worker training and 
education grants by more than $7 million. Many of the programs 
conducted under these training grants have been directed towards 
Hispanic and Immigrant workers, the very workers that DOL has stated 
are a priority. Why is the Administration proposing to cut funds 
directed towards training and education, including programs targeted at 
Hispanic and Immigrant workers? Have these programs been unsuccessful?
    Answer. OSHA has included an increase of $5,250,000 in its fiscal 
year 2004 budget to expand outreach and assistance activities, almost 
half of which will be dedicated to efforts to reach non-English 
speaking, hard-to-reach and contingent workers. This is in addition to 
a large number of ongoing programs designed to reach, train and educate 
these workers.
    The President is also requesting $4,000,000 for OSHA training and 
education grants in fiscal year 2004. We continue to believe that the 
emphasis for OSHA's training and education grants should be the 
development and distribution of training materials for the broadest 
possible audience. To meet the changing needs of employers, and to take 
advantage of new technologies, OSHA has outlined a revised grant 
program that would fund short-term grants to nonprofit organizations to 
develop, evaluate and validate safety and health training materials for 
OSHA that would primarily be distributed to the public via the Web. The 
training materials would be targeted principally to employees and small 
business employers and could be tailored to the varying needs of 
selected industries and workers. This change would make more materials 
available for employers and other interested parties to utilize for 
training their workers. These materials would also be a useful resource 
for OSHA compliance assistance specialists by complementing the 
services they provide. Rather than teaching a few workers at a time, we 
will be able to develop a variety of new training materials on a 
continuing basis to benefit more workers throughout the country.
    Question. What specifically does the Department propose to do under 
the new Hispanic Worker Initiative that is proposed? How will these 
initiatives differ from the programs that have been conducted under the 
training grant program?
    Answer. The Department is expanding its efforts to address the 
safety and health of employees in hard-to-reach sectors of the 
workforce, including young workers, as well as Hispanic and other non-
English-speaking workers. For example, OSHA plans to improve the 
operations of its toll-free number, which offers assistance in English 
and Spanish. OSHA will also expand its current web page for Spanish 
speakers and plans to create a Spanish version of many of the agency's 
information publications. A Spanish version of ``All About OSHA,'' the 
pamphlet that describes the agency's responsibilities and workers' 
rights, already exists. OSHA is also forming partnerships with groups 
like the Hispanic Contractors of America, INS., to raise awareness of 
safety and health assistance offered by OSHA and its state partners.
    The Department is also actively recruiting Spanish-speaking 
employees to work in front line positions. For example, OSHA currently 
has 180 Spanish-speaking employees in Federal and State OSHA programs.

           CONSOLIDATION OF EMPLOYMENT AND TRAINING PROGRAMS

    Question. The administration proposes consolidating adult, and 
dislocated worker funding under the WIA and Employment Service programs 
into a single block grant. An historic function of federal job training 
funding is to target dollars to areas and individuals of greatest need.
    The adult WIA program allocates funding according to poverty levels 
to help communities with large numbers of economically disadvantaged 
workers. Dislocated worker funding is targeted to communities with high 
unemployment, and it also provides for state Rapid Response programs to 
intervene early with help for workers and companies in trouble.
    The result of the administration's proposed block grant is to 
eliminate discrete programs that provide vital services to groups with 
special needs and could pit welfare recipients against unemployed 
workers in competition for limited funds.
    Why does the administration seek to block grant programs at a time 
when there is a continued need for targeted, fully-funded programs 
aimed at the special needs of disadvantaged and dislocated workers?
    Answer. The Administration's proposal is to consolidate the three 
separate funding streams that currently provide overlapping employment-
related services to adults into a single, more flexible, comprehensive 
and effective program. The three separate streams, while providing 
similar services, currently have separate funding formulas, eligibility 
criteria, performance measures, reporting requirements, and other 
elements that reduce efficiency, promote duplication of efforts, and do 
not enhance the provision of services. Consistent with the principles 
of program integration underlying the Workforce Investment Act of 1998 
(WIA), this consolidation of funding streams would simplify and enhance 
the delivery of services to adults.
    The critical services authorized under the current separate 
programs to meet the needs of special populations would continue to be 
authorized under the consolidated comprehensive program, but without 
the burdensome administrative requirements that currently result from 
having to track three separate streams of funding.
    Funds under the new program will be allocated to states by formula, 
and a portion will be held in reserve at the national level in a 
discretionary account for National Dislocated Worker Grants (currently 
``National Emergency Grants''), demonstration grants and technical 
assistance.
    At the state level, funds will be allocated to local areas. 
Governors would maintain a reserve for statewide activities, including 
rapid response, support for core services in the One Stop program, and 
demonstration projects.
    At the local level, the core, intensive and training services 
currently available under the separate programs would be available 
through One-Stop career centers under the new comprehensive program, 
with enhanced flexibility to determine the appropriate combination of 
services. Priorities with respect to providing intensive and training 
services would be given to the unemployed and, if local funding 
available to serve low-income individuals is insufficient, to low-
income workers. The core services would be available on a universal 
basis to job seekers and employers.
    The Administration believes this proposal enhances, rather than 
diminishes, the ability of States and local areas to tailor services to 
meet the special needs of disadvantaged, dislocated and other workers.
    Question. States have not used the flexibility they have right now 
to receive waivers and to transfer funds between adult and dislocated 
worker programs. So why does the administration feel the need to 
consolidate adult and dislocated worker programs when states haven't 
taken advantage of the flexibility they currently have?
    Answer. States have taken advantage of the waiver authority in the 
current law, with 36 states requesting waivers, and many of them 
requesting multiple waivers of a variety of provisions in the law. In 
addition, over half of the states have transferred funds between their 
adult and dislocated worker programs. It should also be noted that 
because the current waiver authority contains significant restrictions 
on the requirements that may be waived, the Department has been unable 
to approve a number of waiver requests that we have received. This 
experience indicates a significant interest on the part of the states 
for greater flexibility in the statute.
    The Administration believes the consolidation of the three funding 
streams (Adult, Dislocated Workers, and Wagner-Peyser) into a single, 
comprehensive program for adults would provide significant flexibility 
that will result in enhancing the provision of services to job seekers 
and employers.

          ELIMINATION OF THE UNITED STATES EMPLOYMENT SERVICE

    Question. The administration proposes to eliminate the 60-year-old 
United States Employment Service (ES), a federal-state partnership that 
provides assistance in matching job seekers with employers. This 
proposal will replace the ``honest broker'' function of the ES with 
myriad organizations whose purpose will be driven by profit, not public 
service.
    The U.S. Employment Service provides a nationwide public labor 
exchange for all workers and employers. How does the Department expect 
fifty states to carry out this national purpose without compromising or 
undermining the principle of universal access and a free, public 
national labor exchange?
    Answer. The universal labor exchange services currently provided 
under the Wagner-Peyser Act are also required to be provided under the 
current WIA adult formula program, and labor exchange services for 
dislocated workers are required to be provided under the WIA dislocated 
worker formula program. All three programs are to make these services 
available through the One-Stop delivery system established in each 
local area under WIA.
    Rather than have these overlapping and duplicative requirements for 
the provision of labor exchange services under three different 
programs, the Administration believes the three funding streams should 
be consolidated into a single, comprehensive program for adults which 
includes as a key element the availability of universal public labor 
exchange services for all job seekers and employers. Rather than 
undermining or compromising the principle of universally accessible 
labor exchange services, the Administration believes the consolidation 
would strengthen and enhance the provision of those services.
    Question. The U.S. Employment Service provides a range of services 
in addition to labor exchange including special assistance to migrant 
and seasonal farmworkers and veterans. It also conducts important labor 
market research and labor certification functions. How will the 
Department ensure that these functions are continued?
    Answer. The functions described in the question will continue to be 
carried out.
    The assistance to migrant and seasonal farmworkers will be carried 
out through the One-Stop delivery system under the consolidated WIA 
adult program. Similarly, the special programs for veterans, the 
Disabled Veterans Outreach Program (DVOP) and Local Veterans Employment 
Representatives (LVER) program, that assist veterans in job placement 
will be carried out in coordination with the consolidated adult program 
through the One-Stop delivery system.
    Other initiatives funded through the America's Labor Market 
Information System (ALMIS)/One-Stop line item would also continue. 
These initiatives create the foundation for a Workforce Information 
System that provides for the data collection, aggregation, formatting, 
and delivery needed for day-to-day decision-making by our One-Stop 
partners and for the efficient delivery of information and labor 
exchange services through a set of Internet-based electronic tools. The 
funds are also used to insure that our information delivery is up to 
the high-quality standards set for e-Government.
    The ALMIS/One-Stop budget for fiscal year 2004 has been re-aligned 
with ETA's priorities and strategic plan. The budget requested will 
provide sufficient funding for a comprehensive Workforce Information 
System and for the continued development and delivery of information 
through the Career One-Stop set of national electronic tools.
    The Department of Labor will continue to provide funds to State 
Workforce Agencies to continue to perform certain alien labor 
certification functions.

               TRADE ADJUSTMENT ASSISTANCE (TAA) PROGRAM

    Question. The new TAA program significantly increased the number of 
workers who are eligible for training, income support, and health care. 
Estimates are that the TAA program enrollments will double. Congress 
authorized $10 million for TAA health care programs in fiscal year 2004 
yet the administration proposes no new funding to provide states with 
the resources necessary to administer the new health care tax credit 
and provide interim coverage for TAA-eligible individuals.
    Given the expected demand for services, how can the Department of 
Labor expect the already strapped National Emergency Grant (NEG) 
program under WIA to provide states with resources to administer a 
complicated health care tax credit program and to provide interim 
health coverage to the thousands of TAA-eligible participants?
    Answer. As you know, the Trade Adjustment Assistance Reform Act of 
2002 established new mechanisms by which certain TAA participants, as 
well as eligible Pension Benefit Guaranty Corporation pension 
recipients, can receive assistance in covering the cost of health 
insurance.
    These mechanisms include two different types of National Emergency 
Grants (NEGs). The first NEG is authorized under the new section 173(f) 
of WIA and is primarily to provide administrative support to the States 
in carrying out the health tax credit (HCTC). The second NEG is 
authorized under the new section 173(g) of WIA and is primarily to 
provide interim assistance in paying for qualified coverage until the 
HCTC is available on an advanceable basis. Since the law requires that 
the advanceable credit be available not later than August 1, 2003, we 
do not believe additional resources will be needed in fiscal year 2004 
and thereafter for the interim assistance NEG. Fifty million was 
appropriated to carry out that NEG in fiscal year 2002 and remains 
available.
    For administrative support NEGs the Congress appropriated $10 
million in fiscal year 2002 and $30 million in fiscal year 2003. Since 
the program is new, it is difficult to determine the appropriate level 
of resources that will be needed in future fiscal years. Beginning in 
fiscal year 2004 the Administration believes that in lieu of a separate 
appropriation this NEG would be better administered if funded under the 
same source of funding as the other NEGs for dislocated workers. This 
would provide the Secretary with appropriate flexibility in managing 
NEG funds so that the Secretary could shift more funds to these HCTC 
activities if needed, or if additional resources are not needed, to use 
the funds for other dislocated worker assistance.

                         H-1B TRAINING PROGRAMS

    Question. The Administration will not seek to renew the H-1B 
training program, which created a $98 million training fund for U.S. 
workers, paid for through employers' H-1B visa application fees. At the 
same time, the budget requests an increase of $49.5 million to expedite 
processing of permanent foreign labor certifications.
    How can the administration abandon worker training in skill 
shortage occupations when H-1B visas will still be provided to 
thousands of foreign workers?
    Answer. The Administration is not abandoning job training in skill 
shortage occupations. That is one of the important functions of all of 
the job training programs administered by the Department, including the 
formula programs administered by States and local areas under title I 
of WIA. The Department is continuing to work to ensure job training is 
linked to occupations in demand, particularly skill shortage 
occupations.
    It may also be noted that Department has awarded over $218 million 
through 90 H-1B technical skills training grants. In January 2003, the 
Department issued a revised Solicitation for Grant Applications, and 
approximately $200 million in additional funding is available for 
grants.
    We will continue to make funds available for H-1B Technical Skills 
Training Grants, as authorized under the law, until the funds are 
expended.
    Grants for the H-1B technical skills grants program have been 
awarded under the authority of Section 171 of the Workforce Investment 
Act (WIA), which requires programs and activities carried out under 
that section be thoroughly evaluated. An evaluation being conducted by 
Lee Bruno and Associates and Westat Research is examining all aspects 
of the program, including how grantees have innovated to develop 
effective tools and approaches; the extent to which participants have 
achieved increased skill levels resulting in degrees, licensures, 
certifications, or occupational/wage upgrades; and the feasibility of 
examining the programs' net impact on the employment-related outcomes 
of trainees and the employment of foreign workers with H-1B visas.
    It is the Department's intent, based on this and other studies, to 
examine what strategies do and do not work in technical high skill 
training. We plan to share the knowledge gained through these studies 
with States and local Workforce Investment Boards who administer the 
WIA program, so that knowledge can be applied in the administration of 
the job training activities that are funded at the State and local 
level under WIA, and to other programs administered by the Department, 
such as Trade Adjustment Assistance.

                           WIA YOUTH PROGRAMS

    Question. At a time when increasing numbers of young people are at-
risk in the labor market, the administration proposes to cut youth 
training programs and to phase out the Youth Opportunity Grants 
program, which provides at-risk youth education and training 
opportunities in high-poverty areas. It also proposes to limit WIA 
Youth Activities formula program to out-of-school youth.
    Why has the administration cut funding for programs designed to 
help the most at-risk students, including those in- and out-of-school?
    Answer. Reaching out to out-of-school youth is very important and 
not the focus of other Federal youth programs. School dropouts and 
other out-of-school youth deficient in basic skills need help in 
reconnecting with the education system and getting the necessary skills 
to find employment. Our proposal will target this hardest-to-reach 
population, which is most in need of services, while the Administration 
has proposed that the Department of Education focus on in-school youth.
    This program will target DOL's formula resources to out-of-school 
youth programs, providing services that have proven effective in 
assisting such youth. Our youth investments will focus on providing 
young people with a strong, core academic foundation in conjunction 
with post secondary skills certifications or degrees, and transitions 
to career path employment.
    We will apply what we have learned regarding how to better 
coordinate with local community and faith-based organizations in 
serving these youth; and how to work with the local private sector to 
set up internships and other employment experience opportunities for 
these youth.
    We will also apply what we have learned to enhance coordination 
with the local juvenile justice system to serve youth returning home 
from correctional facilities and youth being put on probation and how 
to better coordinate with major employers such as UPS and Federal 
Express to provide employment opportunities for out-of-school youth.
    Question. Why is the administration abandoning help to at-risk, in-
school youth? Answer. The Administration's budget does not abandon help 
to at-risk, in-school youth. The proposal targets resources to those 
youth most in need of assistance to reconnect to the education and 
workforce systems-specifically school dropouts and other out-of-school 
youth who are basic skills deficient. The Administration has proposed 
that the Department of Education focus on in-school youth. The new WIA 
Youth program would be funded at $1.001 billion in fiscal year 2004. 
Seventy-five percent of the funds will be allocated by formula to 
states to serve out-of-school youth. It may be noted that the remaining 
25 percent will be reserved for national challenge grants, which may be 
used for a number of activities to assist youth in acquiring the 
skills, credentials, and employment experience necessary to succeed in 
the labor market. Those grants could include services to some at-risk 
in-school youth. However, the primary purpose of the revised youth 
program is to target resource to out-of-school youth who are currently 
underserved and most in need of the assistance the WIA youth program 
can provide.

                           PENSION OPERATIONS

    Question. The President's fiscal year 2004 budget includes a 
provision to eliminate the limit on administrative expenses of the 
Pension Benefit Guaranty Corporation (PBGC). Shouldn't we be tightening 
up on the definition of the administrative expense limitation, instead 
of ceding control to the Executive Branch to determine spending?
    Answer. Although the President's budget proposes eliminating the 
administrative expenses limitation for the Pension Benefit Guaranty 
Corporation (PBGC), it actually would provide a greater degree of 
Congressional oversight for PBGC's entire budget than under the current 
process by:
  --Simplifying PBGC's budget structure with a single funding source 
        and making it more transparent to its stakeholders in terms of 
        cost of administration for terminated pension plans and the on-
        going pension insurance program.
  --Providing a more meaningful presentation of all of PBGC's 
        operational expenses.
  --Reviewing mid-year operating budget adjustments necessitated by 
        termination of large pension plans not identified in the annual 
        budget request process.
    Currently, Congress reviews PBGC's entire operational budget each 
year as part of its appropriations process following submission of the 
President's Budget. Over 90 percent of PBGC's work is now devoted to 
the termination, trusteeship and administration of failed pension plans 
in the private sector. Funding for this work comes from PBGC's trust 
funds, which are made up of the private assets transferred to PBGC from 
terminated pension plans when PBGC assumes responsibility for their 
administration. These are not appropriated funds.
    For several years, PBGC has had two operational budgets: one coming 
from the trust funds for plan termination-related work and the second 
coming from PBGC's collected premium revenues paid by on-going, defined 
benefit pension plans. The premium revenues constitute a permanent 
appropriation. As PBGC's plan termination work has escalated in recent 
years, the amount of its operational expenses paid by the trust funds 
has also risen to over 90 percent.
    Continuing to manage two operational budgets for a relatively small 
agency has proved both burdensome and confusing to stakeholders not 
dealing with internal budget matters. The President has proposed to 
simplify PBGC's operational budget by providing a single source of 
funding coming from the trust funds. In addition, he has proposed that 
Congress be able to review PBGC reapportionment requests from OMB when 
a major pension plan termination(s) cause PBGC's operations to expand. 
These reapportionments have in recent years resulted in substantial 
increases in PBGC's budget coming from the trust funds in order to 
quickly support processing of very large terminated pension plans such 
as TWA and LTV Steel. Over the years, PBGC has used its reapportionment 
flexibility in only the most serious situations. Although this use has 
resulted in substantial increases, PBGC expenses per participant have 
substantially decreased over the last 10 years.
    Under the new proposal, PBGC's full annual budget request would be 
subject to Congressional review--not just during the normal 
appropriations cycle but throughout the year. Congress would receive 
advance notice of reapportionment requests, which would afford it an 
opportunity it does not currently have to raise questions and request 
additional information before any new funds could be used.

                            YOUNG OFFENDERS

    Question. Your budget justification material states that the United 
States has experienced rapid growth in the number of people who are 
incarcerated or under supervision of the criminal justice system. It 
further states that an estimated 500,000 inmates will return to 
communities this year. Yet you are proposing termination of the 
Responsible Reintegration of Young Offenders program, which currently 
serves 10,400 participants with a budget of $55 million.
    Shouldn't we be expanding this pilot program, and not terminating 
it?
    Answer. In 1998, the Department of Labor initiated a five-year 
Youth Offender Demonstration Project to assist the reentry needs of ex-
offenders and at-risk youth. The program is currently in it fifth year.
    We are applying what we have learned from the Youth Offender 
Program to the reauthorization of the WIA youth formula program, which 
will target resources to out-of-school youth, including youth coming 
out of the juvenile justice system and will integrate Youth programs 
with the One-Stop system. We believe this targeted approach to the WIA 
youth program will enhance the effectiveness of our efforts to help 
those served by the Youth Offender Program, as well as school dropouts 
and other out-of-school youth.
    Question. What other resources are available to assist these young 
people?
    Answer. During 2004, the Department will provide technical 
assistance to transition the Youth Offender Demonstration Project 
directly to state and local workforce agencies. We will share the 
demonstration findings and disseminate information to local communities 
about best practices for serving youth offenders in the existing One-
Stop delivery system, using formula WIA, Wagner-Peyser Act and other 
funds that have been shown through research to strengthen and expand 
local partnerships and enhance One-Stop services to such youth.
    This year, the Department, in partnership with the Departments of 
Justice and Health and Human Services and other cabinet agencies, 
supported a companion effort called the Serious and Violent Offender 
Reentry ``Coming Home'' Initiative, which provided grants to 68 
communities totaling $100 million ($48 million of which is Department 
of Labor funds) to address the reentry problems of the most serious ex-
offenders.

                     NATIONAL LABOR RELATIONS BOARD

    Question. The National Labor Relations Board (NLRB) is an 
independent federal agency (under Relateds, not under Labor) which was 
created in Congress in 1935 to administer the National Labor Relations 
Act. The two primary functions of the NLRB are to: (1) prevent and 
remedy statutorily defined unfair labor practices; and (2) to conduct 
secret-ballot elections to determine whether employees wish to be 
represented by a union. Due to lack of FTEs and being unable to hire 
new staff because of the fiscal year 2002 levels of last year, the 
backload of unfair labor practice cases has increased dramatically.

------------------------------------------------------------------------
                                               Fiscal year--
                                  --------------------------------------
                                                                 2003
                                       2001         2002      (estimate)
------------------------------------------------------------------------
Case Backload by the end of......          970        1,496        2,346
------------------------------------------------------------------------

    The NLRB's main function is to help solve disputes regarding unfair 
labor practices, thus often acting as a liaison between the Unions, and 
company management. However, the backlog in unfinished cases is growing 
annually. We recognize that this is a federal agency completely 
independent from your own, however their role in labor matters is 
vital. Can you give us an idea of the workload of cases that the NLRB 
handles and their budgetary needs? What importance do you place on 
increased funding for this independent agency? Of what importance would 
you judge this agency in helping mediate and settle labor practices, 
and to act as this sort of liaison?
    Answer. While the Department is aware of the important role played 
by the NLRB in resolving issues under the National Labor Relations Act, 
that agency is, as your question recognized, completely independent. 
The Department is not involved in the preparation of the budget for the 
NLRB and has no supervisory role with respect to the operations of that 
agency. Accordingly, the Department is not in a position to comment on 
the NLRB's workload or budget needs.

                           ERGONOMICS BUDGET

    Question. What level of funding has been targeted to support your 
``comprehensive approach'' to ergonomics in the fiscal year 2003 budget 
and the fiscal year 2004 budget request? For which activities has 
funding been requested?
    Answer. The resources utilized to address ergonomics in both the 
fiscal year 2003 and fiscal year 2004 budget request are contained 
within all of OSHA's budget activities and are not separately 
identified or earmarked to address ergonomics or any other specific 
issue. Rather, the comprehensive approach to ergonomics involves 
focused activity by the entire agency in addressing the four prongs of 
the ergonomics policy: industry specific and task-specific guidelines, 
strong enforcement, outreach and assistance, and research.
    Question. How many FTE's have been assigned to work on ergonomics?
    Answer. The agency has not specifically identified or tracked the 
number of staff working on ergonomics. The staff necessary to address 
ergonomic concerns is available as needed within the ongoing 
enforcement, outreach, and regulatory activities of the agency.
    Question. How many ergonomists does OSHA currently employ? What are 
their responsibilities?
    Answer. Although there is no formal Federal job classification 
titled ``ergonomist,'' OSHA currently employs three Certified 
Professional Ergonomists. Two of these ergonomists are employed in two 
different Regional Offices and the third works at our Salt Lake 
Technical Center. Their responsibilities include providing training and 
assistance to compliance staff, outreach and assistance to the 
regulated community, and serving on the Ergonomics Response Team. The 
agency also employs six compliance officers who have advanced degrees 
in industrial engineering, with concentrations in ergonomics; nearly 30 
regional personnel who have extensive training in ergonomic 
interventions in specific industries, such as meat-packing and 
textiles; and three Health Response Team members with extensive 
ergonomics expertise and training.

                 ERGONOMICS ENFORCEMENT AND GUIDELINES

    Question. How many enforcement actions has OSHA taken pertaining to 
ergonomic hazards during fiscal year 2002 and fiscal year 2003 to date?
    Answer. Inspections under OSHA's National Emphasis Program (NEP) 
for Nursing and Personal Care Facilities, which focuses on patient-
handling hazards, began on September 17, 2002. Over the past winter, 
Regional and Area Offices implemented Local Emphasis Programs (LEPs) to 
address ergonomics in several other industries with high rates of 
musculoskeletal disorders.
    In all, OSHA has assessed ergonomic conditions in 675 of the 
inspections opened between January 1, 2002 and March 31, 2003. Of these 
inspections, 469 have been in nursing and personal care facilities 
pursuant to the NEP for this industry and 156 have been in other 
industries, including 50 inspections in industries targeted by 
ergonomic-related Local and Regional Emphasis Programs.

------------------------------------------------------------------------
                                                              Number of
          Inspection type                  Time period       inspections
------------------------------------------------------------------------
Nursing Homes under the Nursing      September 17, 2002              469
 Home NEP.                            through March 31,
                                      2003.
Ergonomic Related--Non-Nursing       January 1, 2002                 106
 Homes.                               through March 31,
                                      2003.
LEPs--Ergonomic Related............  December 15, 2002                50
                                      through March 31,
                                      2003.
------------------------------------------------------------------------

    Question. Specifically, how many hazard warning letters have been 
issued on ergonomic hazards, and how many general duty clause--
5(a)(1)--citations have been issued?
    Answer. Although many of the ergonomic inspections are still 
ongoing, those that have concluded have resulted in 88 ergonomic 
related Hazard Alert Letters (EHALs) (55 to nursing homes and 33 to 
establishments in other industries) and six 5(a)(1) citations for 
ergonomic hazards. Each EHAL recommends ways to reduce ergonomic 
hazards, and indicates that OSHA may conduct a follow-up inspection to 
assess the extent to which the employer has taken such action.
    Question. Please provide a list of the establishments for which 
hazard warning letters or 5(a)(1) citations have been issued, and the 
date of their issuance.
    Answer. Alpha Health Services, Inc. received three of the citations 
for hazards at three different facilities. Alpha Health Services was 
inspected under the NEP for Nursing and Personal Care Facilities. Other 
establishments receiving 5(a)(1) citations included Security Metal 
Products, which manufactures door frames; SuperValu; and Brown 
Printing.
    OSHA is in the process of creating a list of the 88 establishments 
to which EHALs have been sent, including the date of issuance. Once we 
have created this list, we can provide it to the Committee.
    Question. How many inspections on ergonomic hazards does OSHA plan 
in fiscal year 2003 and fiscal year 2004?
    Answer. In general, OSHA does not have a pre-determined number of 
inspections under which we target ergonomics. OSHA's efforts are geared 
towards targeting establishments with the highest injury and illness 
rates. OSHA's Site-Specific Targeting Program focuses our inspection 
efforts on those employers who report the highest rates of injuries and 
illnesses. Because many of these injuries and illnesses are caused by 
ergonomic hazards, ergonomics will continue to be a focus of our 
inspections. Among the occupations with the highest numbers of days 
away from work were nurses' aides and orderlies. Under the current NEP 
for Nursing and Personal Care Facilities, we plan to inspect 1,000 
nursing home establishments from September 17, 2002 through September 
30, 2003. If this program is renewed, we will continue to focus on 
injuries that result from resident handling in nursing homes.
    Question. To date OSHA has issued one final ergonomics guideline 
for the nursing home industry and announced that guidelines for 3 other 
industries (retail grocery, poultry and shipyards) will be developed. 
What is the schedule for the issuance of these guidelines in proposed 
form and final form? What other ergonomic guidelines does OSHA plan to 
issue in fiscal year 2003 or fiscal year 2004, and what are the 
schedules for issuance of these guidelines?
    Answer. OSHA published the nursing home guidelines less than a year 
after the announcement of the agency's four-pronged approach to dealing 
with ergonomics and after engaging in a public process that stressed 
stakeholder participation. OSHA has also released for public comment 
the draft retail grocery guidelines, and poultry processing guidelines. 
The agency intends to publish both of these guidelines in final form 
later this year. OSHA is working on the shipyard guidelines, and hopes 
to publish draft guidelines this fall with final guidelines completed 
early in 2004. The next topics to be addressed have not yet been 
determined but plans for additional guidelines will be announced in the 
next few weeks, as we complete work on draft guidelines for grocery 
stores and poultry processing.

                             OSHA STANDARDS

    Question. One of OSHA's primary responsibilities is to set new 
safety and health standards to protect workers from injuries and 
illnesses. It is my understanding that there are several rules that 
have gone through the rulemaking process and are pending final action. 
These include rules on tuberculosis and employer payment for personal 
protective equipment. Both of these are important standards. The TB 
rule would protect health care workers not only from TB, but also other 
infectious agents like the new virus SARS. The payment for PPE rule 
would not impose any new requirements, but simply clarify that it is 
the employers' responsibility to pay for protective equipment provided 
by OSHA standards. This is particularly important for low-wage 
immigrant and Hispanic workers who are at increased risk of injury and 
death, who cannot afford to pay for their own protective equipment.
    It is very disturbing that the Administration has repeatedly put 
off action on these two rules. Why has the Administration failed to act 
on these rules and when do you plan to issue the final rules on TB and 
Payment for Personal Protective Equipment?
    Answer. In the current regulatory agenda, both the tuberculosis and 
employer payment for personal protective equipment (PPE) rulemakings 
were slated for a decision on the next step. We are continuing to 
review the records of both rulemakings. As appropriate, the agency will 
update the status of these and other rulemaking proceedings in the next 
regulatory agenda.
    Question. What other proposed or final rules does the 
Administration plan to issue in fiscal year 2003 and fiscal year 2004, 
and what is the projected schedule for issuing these rules?
    Answer. In fiscal year 2003, OSHA has issued proposals for: 
Commercial Diving Operations; Fire Protection in Shipyards; and 
Standards Improvement Project. During the remaining months of fiscal 
year 2003, proposals are expected to be published for: Assigned 
Protection Factors for Respiratory Protection; Controlled Negative 
Pressure Fit Testing Protocol; Vertical Tandem Lifts; General Working 
Conditions in Shipyards; and Electrical Safety. A proposal for Electric 
Power Generation, Transmission, and Distribution is currently in the 
SBREFA panel process, and should be published later this year. A 
proposal addressing Confined Spaces in Construction will also begin the 
SBREFA panel process soon.
    OSHA has issued final rules for Exit Routes and parts of the 
Occupational Injury and Illness Recording and Reporting Requirements in 
fiscal year 2003. The agency expects to issue another final rule in 
fiscal year 2003 for Occupational Injury and Illness Recording and 
Reporting, as well as a final rule for Commercial Diving Operations.
    With regard to fiscal year 2004, the current regulatory agenda does 
not provide commitments throughout that year. It is expected that final 
rules for Fire Protection in Shipyards and the Standards Improvement 
Project will be issued in the first quarter of fiscal year 2004.
    Question. Last year as part of a reorganization of OSHA, the 
Directorate of Safety Standards and the Directorate of Health Standards 
were merged and the charge of the new combined directorate expanded to 
include the development of voluntary guidance. The proposed standard 
setting budget for fiscal year 2004 of $14.5 million is $1.6 million 
less than what was appropriated for standard setting in fiscal year 
2003 ($16.1 million). Why are you proposing to cut the standard setting 
budget? What percent of the budget will be used to develop and issue 
mandatory standards and rules and what percentage will be used to issue 
voluntary guidelines?
    Answer. OSHA's fiscal year 2004 budget for the Directorate of 
Standards and Guidance is sufficient to support the proposed regulatory 
agenda and develop other non-regulatory approaches to dealing with 
safety and health hazards.
    The work involved in developing standards is similar to that 
involved in developing guidelines. As a consequence, the agency does 
not distinguish in its budget between standards development and the 
development of guidance materials.

                            OSHA ENFORCEMENT

    Question. The Administration has proposed $165.3 million for 
federal OSHA enforcement for fiscal year 2004. While this represents a 
small increase in dollars over the fiscal year 2003 appropriated 
levels, it is not sufficient to maintain the number of FTEs budgeted in 
fiscal year 2003. How many FTEs for Federal enforcement are currently 
filled? How many are vacant? Please provide the number of FTEs and a 
list of the positions that will be eliminated if the Administration's 
fiscal year 2004 budget request for federal OSHA enforcement is 
adopted.
    Answer. There are currently 1,603 employees filling positions in 
Federal Enforcement. OSHA has requested 1,581 FTE for Federal 
Enforcement for fiscal year 2004, a total of 31 less than the fiscal 
year 2003 authorized level. This reduction will not affect the number 
of safety and health inspections or the number of front-line OSHA 
enforcement staff. Consistent with the Department's workforce 
restructuring plans, which seek to streamline decision making processes 
and eliminate unnecessary overhead positions, OSHA proposes to 
eliminate field and national office positions that provide 
administrative and management support.
    With the fiscal year 2004 Budget, OSHA has committed to achieving 
significant safety and health improvements--specifically a 5 percent 
reduction in the fatality rate, and an 8 percent reduction in the 
injury and illness rate. OSHA's proposed staff allocation enables it to 
meet those goals.
    Question. In March, OSHA announced a new ``Enhanced Enforcement'' 
policy to focus attention on employers who were persistent serious 
violators of OSHA safety and health standards. Based upon agency press 
statements, it appears that this policy will consist largely of 
enhanced oversight. During previous administrations, including the 
Reagan and Bush I Administrations, OSHA instituted similar enhanced 
enforcement policies including the egregious policy which significantly 
increased penalties on egregious violators through the application of 
instance by instance citations and penalties.
    Does the new enhanced enforcement policy include any provisions for 
enhanced citations or penalties? If so, what provisions are included? 
And if not, why aren't these employers being treated more severely with 
respect to citations and penalties than other employers?
    Answer. Many of the specifics of the new Enhanced Enforcement 
Program are still being developed and will be embodied in a directive 
that OSHA will be issuing in the near future; they will, however, 
conform to the approach announced by the Secretary in March. The main 
intent of the program is to give OSHA a better targeting tool so we can 
focus resources on the employers who have shown the least regard for 
worker safety and health.
    The new program will focus on employers whose inadequate attention 
to worker safety and health results in high-gravity citations. In these 
cases, OSHA will make sure that the employer's corporate headquarters 
receives copies of the citations. Additional inspections of workplaces 
affiliated with the same corporation will be more likely. When these 
employers choose to settle citations, we will use the settlement 
process to encourage the employers to implement systemic improvements 
to their safety and health practices. Finally, strong consideration 
will be given to Federal Court enforcement under Section 11(b) of the 
OSH Act. Although, in keeping with the law, the actual citation 
characterizations and penalty amounts will depend on the nature and 
circumstances of each violation cited, we will consider using all 
applicable OSHA sanctions, including instance-by-instance citations and 
penalties.

                 EXTENDED BENEFITS FOR AIRLINE INDUSTRY

    Question. I was very disappointed to learn yesterday of the 
President's opposition to a temporary extension of unemployment 
insurance benefits to help unemployed airline industry workers who have 
lost their jobs. But I was heartened to see that 67 House Republicans 
joined all of the House Democrats to instruct the Appropriations 
conferees to help our workers.
    As the Secretary of Labor, do you agree with the Administration 
that the government should provide billions of dollars in federal aid 
to ailing industries while doing nothing to support workers who have 
played by the rules, but have still lost their jobs?
    Answer. The Administration has supported two federal extensions of 
unemployment benefits to workers who have not been able to find new 
jobs before exhausting regular state unemployment benefits. While we 
have concerns about providing a more generous level of benefits to 
workers in a particular industry, the Administration will continue to 
work with Congress to determine how these workers can be assisted in 
finding reemployment.

                 EXTENSION OF UNEMPLOYMENT COMPENSATION

    Question. If economic conditions do not rebound by the summer will 
you support an extension of unemployment compensation benefits to allow 
additional time for job growth to occur?
    Answer. The President and I are focused on job creation. The 
Administration proposed a Jobs and Economic Growth Plan, including tax 
relief and Personal Reemployment Accounts, to provide meaningful 
stimulus for the economy. Additionally, we will work with the Congress 
to help unemployed workers who have exhausted their benefits before 
finding new jobs.

                      TRADE ADJUSTMENT ASSISTANCE

    Question. In the letter Mitch Daniels sent to Congressional 
Appropriations leaders yesterday, he said the White House opposed the 
Murray airline workers amendment because, ``To provide benefits for a 
specific industry would be unusual, unfair and potentially harmful to 
our national unemployment system.''
    Is it the Administration's position that Trade Adjustment 
Assistance which provides benefits to specific industries is also 
unusual and unfair?
    Answer. The Trade Adjustment Assistance Program does not provide 
benefits to specific industries. The program is not industry-based and 
is available to any worker group impacted by foreign trade.
    Worker groups in virtually all industries have been certified for 
TAA benefits at one time or another. Workers whose firms are adversely 
affected by increased imports or a shift in production to a country 
which has a free trade agreement with the United States or a country 
under certain specified Acts are potentially eligible for TAA 
certification. Further, workers who are found to be secondarily-
impacted, as defined in the Act, may also be eligible.

              MIGRANT AND SEASONAL FARMWORKERS ELIMINATION

    Question. It appears that the Department no longer believes that a 
national program for migrant and seasonal farm workers is needed.
    How will we avoid burdening Governors and local One-Stops with the 
responsibility of trying to serve workers who may work and reside in 
their states for brief periods during this time of huge and growing 
state deficits?
    Answer. The Workforce Investment Act (WIA) created the federally-
funded One-Stop Career Center system, designed to provide an integrated 
system of workforce investment services at the local level and to 
provide universal access to these services for all customers. The 
Administration's fiscal year 2004 budget proposal seeks to tap the 
system's potential to serve more migrant and seasonal farmworkers by 
providing job training services for them through the One-Stop delivery 
system and turning to other appropriate agencies to provide social and 
supportive services, housing, and other related assistance.
    To facilitate the transition, we have been working with the current 
National Farmworker Jobs Program (NFJP) grantees to identify 
initiatives that can be undertaken to support the One-Stop delivery 
system's efforts to be responsive to farmworkers. We are considering 
pilot and demonstration projects to test new ways to increase 
farmworkers' employment and earnings, and training and technical 
assistance to states and localities to meet the challenge of providing 
universal and effective workforce services.
    We believe that workforce investment services organized through the 
One-Stop delivery system play a vital role in building strong local 
economies, and that providing services to farmworkers through the One-
Stop delivery system will increase the number served and have a 
positive employment and earnings impact on those who receive services.

                      ASBESTOS TAINTED VERMICULITE

    Question. I remain concerned that workers across the country are 
still being exposed to unacceptably high levels of asbestos. I am 
particularly concerned that workers are being exposed to asbestos-
tainted vermiculite, which may still be in as many as 35 million homes.
    Do you believe OSHA and EPA need to do more to warn workers and 
homeowners not to disturb this product?
    Answer. Since OSHA's inception in 1971, the agency has used its 
authority for standard-setting, enforcement, and compliance assistance 
to protect workers from the threat of asbestos.
    In addition to the final asbestos rule issued in June 1972, the 
agency issued two subsequent emergency standards, the last of which 
published two final asbestos standards, one for general industry and 
one for construction; added shipyards as a covered industry; and 
lowered the PEL to 0.1 fibers per cubic centimeter. All employers are 
required to communicate information about asbestos hazards to all 
potentially affected employees at a worksite.
    OSHA enforces the current asbestos standard through routine, random 
or targeted inspections. Many of the several thousand inspections 
conducted by Federal or State OSHA programs, in which violations of the 
standard were cited, were initiated as a result of employee complaints 
and referrals from Federal or State agencies.
    OSHA provides compliance assistance to employers and employees to 
help them understand the dangers of asbestos, and how to minimize or 
eliminate the threat. OSHA's Web page connects computer users to 
concise and easy-to-read publications on asbestos, which are available 
to the public free of charge. Pamphlets explain the requirements of the 
standards for both general industry and construction. Included in each 
is a list of sources of assistance. OSHA's Web page also includes 
reports, links to other Web sites, slides, and information about taking 
samples and controlling exposure to asbestos. OSHA offers an intensive 
course covering the recognition and control of asbestos at its Training 
Institute in Illinois.
    OSHA has also developed software that can be downloaded from its 
Web site to provide interactive expert advice for building owners, 
managers and lessees, as well as for contractors of building 
renovation, maintenance and housekeeping services. Once installed on a 
computer, the software asks questions about a building site. It then 
asks follow-up questions based on answers, and produces a report on 
responsibilities under the asbestos rules.
    In all 50 states, OSHA's free on-site consultation program is 
available and provides expert assistance on asbestos to small 
businesses.

            CUTS IN EMPLOYMENT AND TRAINING SERVICES AND GAO

    Question. In the past, you have argued that cuts in employment and 
training services can be accomplished without impacting service 
delivery because of a carryover of funds in WIA formula programs.
    The General Accounting Office (GAO) recently conducted an 
investigation and found that the Administration's argument was not 
accurate. It said, ``Our analysis of Labor's data shows that states are 
rapidly spending their funds--in fact nationwide states have spent 90 
percent within 2 years, even though the law allows 3 years to spend the 
money.'' In fact, my state was found to have spent 98 percent of their 
formula funding in fiscal year 2001.
    Would you now agree that cuts in funding will mean cuts in 
services?
    Answer. Absolutely not. The President's 2004 Budget and the 
Administration's WIA reauthorization proposal not only would maintain, 
but allow for increases in, job training participation. As the 
Assistant Secretary for Employment and Training said in the Department 
of Labor's (DOL) February 7th response to GAO's report, DOL does not 
dispute that states are exceeding the minimum requirements for spending 
under the Act. However, DOL and the Administration believe that it is 
important to look beyond the minimum expectations when making these 
workforce investment decisions. The Department has never questioned 
whether these funds will be spent over time. What concerns us is the 
amount that is carried over from one program year to the next that 
could have been used for program services during the year for which the 
funds were appropriated. For the past few years, large and record-level 
amounts of WIA state grants have remained unspent and in the Treasury 
at the end of the year. For fiscal year 2004, these balances still will 
be an estimated $1.7 billion. So, while the state under-spending 
problem has improved somewhat, the fiscal year 2004 budget request 
takes into account these continuing large amounts of unexpended carry-
over funds.
  --The recent GAO report (GAO-03-239) found that states are spending 
        their WIA funds much faster than required under the law. 
        However, our own analysis of state spending data indicates that 
        spending rates of available funds continue to increase only 
        marginally as state programs become more established and 
        financial reporting procedures are improved.
  --Despite improved spending rates, there remain large amounts of 
        state unexpended carryover funds from the previous two years 
        that compel us to prudently keep our fiscal year 2004 budget 
        request at roughly the fiscal year 2003 levels. This budget 
        would provide adequate funding to maintain and even increase 
        services in the coming year. Any need for additional funding in 
        local communities can be addressed within the flexibility of 
        other provisions in WIA.
  --Further, the Administration's fiscal year 2004 job training policy 
        provides new authority to the Secretary and states to 
        reallocate funds to the few states and localities that have 
        exhausted the resources available to them. The Administration 
        proposes to recapture funds from states with more than 30 
        percent of all funds that were available for expenditure during 
        the prior program year (including carry-in funds from previous 
        years) that remain unexpended, compared to the current law 
        provision which only recaptures funds from states with more 
        than 20 percent of funds from the prior program year's 
        allotment that remain unobligated. The proposal more directly 
        targets areas where there are significant levels of under-
        spending.

                     PERSONAL REEMPLOYMENT ACCOUNTS

    Question. The President's Economic Stimulus package proposes to 
spend $3.6 billion on a new untested program called Personal 
Reemployment Accounts. This proposal has received criticism from the 
workforce community and Republicans and Democrats in the Congress.
    Given the unlikely enactment of this new scheme by the Congress, 
why not use this money to more adequately fund programs for adults, 
youth and dislocated workers that are part of the already well 
established Workforce Investment Act?
    Answer. The President's 2004 Budget and the Administration's WIA 
reauthorization proposal not only would maintain, but allow for 
increases in, job training participation. The concept of the Personal 
Reemployment Accounts (PRA) initiative, and particularly its elements 
of greater flexibility and customer choice, are important to the 
President and considered key to the success of today's unemployed 
workers in reattaching to the labor market. Even if the Congress fund 
the PRA initiative, the Administration proposes to offer PRAs as a 
service option using funds available through a reauthorized Workforce 
Investment Act (WIA).

                         WIA FORMULA AMENDMENTS

    Question. Last week DOL's Employment and Training Administration 
(ETA) released the state formula allocations for fiscal year 2003 for 
the WIA formula funded programs. Despite having the second highest 
state unemployment rate in the nation Washington received a cut of over 
$33 million in its WIA formula funds, with most of the reduction ($29 
million) coming in the dislocated worker account.
    Clearly the Workforce Investment Act (WIA) formula factors do not 
accurately reflect current economic conditions in a state.
    Madame Secretary, will you work with me during the reauthorization 
of WIA to develop formula factors that more accurately reflect and are 
responsive to current economic conditions in a state?
    Answer. Yes. We are aware the current statutory formulas are 
outdated and are hopeful that changes will be made as part of the WIA 
reauthorization process. The Administration's reauthorization proposal 
consolidates three funding streams (Adult, Dislocated Worker, and 
Employment Services) into a single comprehensive funding stream 
designed to provide services to adults. Under current law, funds under 
each of the three separate streams are distributed according to 
specific statutory formulas based on a range of factors (such as 
unemployment, civilian labor force, etc.).
    The Department recognizes a need to develop a new formula. The 
development of a new formula is also consistent with a recent GAO study 
that found that the current statutory language dates back to programs 
run in the 1970s and are outdated and inconsistent with current 
programmatic goals. Under the Administration's recommended formula, 
states will no longer experience the dramatic funding swings that 
currently exist from year to year under the Dislocated Worker program.

                           YOUTH PROGRAM CUTS

    Question. Why is the Administration proposing to cut youth formula 
training programs, which currently serve less than 10 percent of the 
eligible youth and to phase out the Youth Opportunity Grant (YOG) 
program, which provides at-risk youth education and training 
opportunities in high poverty areas, at a time when research has shown 
that nearly 50 percent of those Americans who have lost their jobs over 
the last two years are under 25 years of age?
    Answer. Proposed funding for youth programs under WIA is $1 billion 
for fiscal year 2004. The proposal targets resources to those youth 
most in need of assistance to reconnect to the education and workforce 
systems-specifically school dropouts and other out-of-school youth who 
are basic skills deficient. Seventy-five percent of the funds will be 
allocated by formula to the states to serve out-of-school youth. This 
program will provide services that have proven effective in assisting 
such youth. Our youth investments will focus on providing young people 
with a strong, core academic foundation in conjunction with post 
secondary skills, certifications or degrees, and transitions to career 
path employment
    It may be noted that the remaining 25 percent will be reserved for 
national Challenge Grants, which may be used for a number of activities 
to assist youth in acquiring the skills, credentials, and employment 
experience necessary to succeed in the labor market. Those grants could 
include services to some at-risk in-school youth. However, the primary 
purpose of the revised youth program is to target resources to out-of-
school youth who are currently underserved and most in need of the 
assistance the WIA youth program can provide.
    The Youth Opportunity Grants were five-year demonstration grants 
and every grantee received their five-year commitment. Although we 
currently do not have outcome results, we intend to use lessons learned 
from the Youth Opportunity Grant initiative and other demonstrations in 
designing the new Challenge Grants. We will incorporate proven 
strategies and build upon the positive features of the Youth 
Opportunity Grants while addressing problems of the program. For 
example, we will seek to increase the current 15 percent diploma rate 
for out-of-school youth. Other improvements include greater private 
sector involvement, and enhanced coordination with other local 
agencies, including community and faith-based organizations.

                         YOUTH OPPORTUNITY CUTS

    Question. If you do not support the Youth Opportunity Grants 
because it is a discretionary grant program targeted to 30-40 
communities, why are you asking Congress to fund a new, untested Youth 
Challenge Grant Program that will be targeted to a small number of 
sites, while reducing the youth formula funding by 25 percent ?
    Answer. The Administration will build on the lessons learned in 
Youth Opportunity Grants as we implement the new Challenge Grants. We 
believe that we will be improving on Youth Opportunity Grants and other 
past investments in several ways. First, there will be much stronger 
private sector involvement. Second, matching requirements will result 
in stronger local ownership and commitment to the program because DOL 
will require matching resources. Third, there will be more of an 
emphasis on placement and training in demand occupations. Fourth, there 
will be an emphasis on strategies of demonstrated effectiveness in the 
areas of improving educational and labor market outcomes.
    The Administration's WIA proposal reserves 25 percent of the youth 
activities appropriation for Youth Challenge Grants, 80 percent would 
be available for competitive grants and 20 percent would be available 
for discretionary grants. Generally, competitive grants will be aimed 
at geographic areas of substantial need, and discretionary grants will 
be awarded to programs of demonstrated success.
    The purpose of the competitive grants is to promote collaboration 
and innovation in providing activities to assist youth in acquiring the 
skills, credentials, and employment experience necessary to succeed in 
the labor market.
    The competitive grants may be awarded to States, local boards, 
recipients of Native American program grants, and public or private 
entities (including consortia of such entities) applying in conjunction 
with local boards. Initial awards would be made for one year, with four 
additional years available depending upon satisfactory progress and 
availability of funds. The Secretary would be authorized to require 
that grantees provide a nonfederal share of the cost of activities 
carried out under a grant, and may require that such share be provided 
in cash or noncash resources.
    Youth ages 14 through 19, as of the time the eligibility 
determination is made, may be eligible to participate in activities 
provided under these grants. Funds would be used for the activities to 
assist youth in acquiring skills, credentials, and employment 
experience, including training and internships in high-growth sectors 
for out-of-school youth; after-school dropout prevention programs for 
in-school youth; activities to assist special youth populations, such 
as court-involved youth and youth with disabilities; and activities 
combining remediation of academic skills, work readiness training, and 
work experience, and including linkages to postsecondary education, 
apprenticeships, and career-ladder employment.
    To be eligible, an entity must submit an application to the 
Secretary that includes a description of the activities the eligible 
entity will provide to eligible youth; a description of the programs of 
demonstrated effectiveness on which the provision of the activities are 
based, and a description of how such activities will expand the base of 
knowledge relating to the provision of activities for youth; a 
description of the private and public, and local and State resources 
that will be leveraged to provide the activities described; and the 
levels of performance the eligible entity expects to achieve with 
respect to the indicators of performance for youth.
    Factors to be considered in awarding these grants include the 
quality of the proposed project, the goals to be achieved, the 
likelihood of successful implementation, the extent to which the 
project is based on proven strategies or the extent to which the 
project will expand the knowledge base on activities for youth, other 
Federal and non-Federal funds available for similar purposes, and the 
additional State, local or private resources that will be provided.
    In addition, discretionary grants for youth activities would be 
authorized that will assist youth in preparing for, and entering and 
retaining, employment. These grants are intended to provide the 
flexibility to assist a variety of entities and organizations in 
providing innovative and effective activities for eligible youth, 
including special populations. The Secretary may award discretionary 
grants to public or private entities that the Secretary determines 
would effectively carry out activities relating to youth.
    The Administration believes these grants would provide enhanced 
opportunities to replicate proven strategies in assisting youth and to 
apply such strategies in innovative ways.

                          ELIMINATION OF H-1B

    Question. The skills gap in this country keeps growing wider. The 
training component of the H-1B program, which represents a key 
investment in American workers, is set to expire this year. The GAO 
issued a report this fall which said the program is meeting specific 
workforce needs. Despite this positive report your Department is not 
seeking reauthorization for the program, but is seeking additional 
funding to process alien certification applications from foreign 
workers.
    Should the Labor Department be expediting the importation of more 
foreign labor into this country, while refusing to support proven high 
skills training for American workers?
    Answer. The Administration is committed to job training in skill 
shortage occupations as a key element of all of the job training 
programs administered by the Department, including the formula programs 
administered by States and local areas under title I of WIA.
    In addition to providing training linked to occupations in demand 
under WIA, TAA and other employment and training programs, the 
Department of Labor will continue to make approximately $200 million in 
collected employer fees available for H-1B Technical Skills Training 
Grants until the funds collected as the employer fees for this program 
are fully expended. The authorization for that program expires 
September 30, 2003.
    The Department also administers the labor certification 
requirements of the work-based permanent immigration and temporary visa 
programs and attempts to do so in a timely and effective manner. The 
2004 Budget funds the first part of a two-year effort to eliminate 
unacceptable backlogs that have grown under the permanent program in 
recent years while, in 2003, the Department will implement reforms in 
the program to help eliminate future backlogs. Effective, efficient 
processing of labor certification applications for the H1-B and other 
programs meets the legislative intent to protect jobs for American 
workers while responding to employers' legitimate need for staff to 
meet limited skill shortages.

                        ONE STOP INFRASTRUCTURE

    Question. When I visit local One-Stop Career Service Centers in my 
state the first question that workforce managers ask is, ``Why can't 
the federal government reinstitute a dedicated One-Stop infrastructure 
funding stream to assist in real estate acquisition, management 
information system updates, staff development and other non-service 
delivery issues?''
    Madame Secretary, how do you answer that question?
    Answer. Through WIA reauthorization, the Department proposes that 
part of the operational cost of the certified One-Stop centers be 
financed through dedicated ``One-Stop infrastructure'' funding. Each 
partner program would contribute a portion of their funds to the 
Governor to be allocated for One-Stop infrastructure funding in the 
State. This approach would create a greater sense of partner 
``ownership'' of the system than currently exists and would move toward 
comprehensive workforce system reform by using existing dollars to 
support an integrated service delivery system at the state and local 
level.
    The portion of funds to be provided by each One-Stop partner would 
be determined, subject to certain limitations, by the Governor after 
consultation with the State board, which includes representatives from 
the One-Stop partner programs. In making the determination regarding 
the funds to be contributed, the Governor would be required to consider 
the proportionate use of the One-Stop Career Centers by each partner, 
the costs of administration unrelated to the use of the One-Stop Career 
Centers by each partner, and other relevant factors that are also to be 
considered in developing the allocation formula for these funds, such 
as the number of certified One-Stop Career Centers in the local area, 
the services provided by the centers, and other factors relating to the 
performance of the centers.
    In those States where the State constitution places policymaking 
authority in an entity or official that is independent of the authority 
of the Governor for the adult education and literacy program under 
title II of WIA and postsecondary vocational education program under 
the Carl D. Perkins Vocational and Technical Education Act of 1998, the 
Governor would make the determination of the funds to be contributed by 
those programs with the entity or official that has the independent 
authority.
    In addition, the funds provided by the One-Stop partner programs 
for the infrastructure costs are to be provided from funds available 
for administrative costs under each program, and those funds are 
subject to whatever administrative cost limits are applicable to each 
program. There would be a specified limit for the contributions that 
may be required of the Vocational Rehabilitation program of 0.75 
percent of the funds provided for such program to the State for a 
fiscal year. There would also be a limitation that the contributions 
required of Federal direct spending programs (such as TANF, the Child 
Support Enforcement program, and the Food Stamps Employment and 
Training program) may not exceed the amount equal to the proportionate 
use of the One-Stop Career centers by those programs.
    The formula for allocating these funds to the local areas for the 
certified One-Stop centers would be developed by the State board, 
including factors such as those described above. The infrastructure 
funds would be used to pay for the non-personnel costs that are 
necessary for the general operation of the certified One-Stop Career 
centers, including the rental costs of the facilities, the costs of 
utilities and maintenance, and equipment (including adaptive technology 
for individuals with disabilities).
    While the infrastructure funding would address the primary common 
costs of operating the One-Stop Career Centers, there would remain some 
common costs that would not be covered by these funds. These additional 
common costs would be funded using the procedures that currently apply 
to all operating costs and the provision of core services. The partners 
would provide funding or noncash resources, to cover the costs of 
providing the core services that are applicable to the participants 
from each program and other common costs, such as infrastructure costs 
in excess of the amount provided by the new infrastructure grants, and 
other common costs not included in the infrastructure definition (such 
as personnel). The local memorandum of understanding among One-Stop 
partners would remain the vehicle for determining these common costs 
and how to allocate these costs since these costs would be more locally 
variable. The State board would provide guidance to facilitate the 
determination of appropriate funding allocation in local areas

                   ELIMINATION OF EMPLOYMENT SERVICE

    Question. The U.S. Employment Service provides a nationwide public 
labor exchange for all workers and employers.
    With the proposed elimination of the Employment Service, how does 
the Department expect 50 states to carry out this national purpose 
without compromising or undermining the principles of universal access 
and a free, public, national labor exchange?
    Answer. The job search assistance services provided under the 
Wagner-Peyser Act are also required to be provided as a core service 
for all adults under the WIA Adult program and for all dislocated 
workers under the WIA Dislocated Worker program. All three programs are 
to make these services available through the One-Stop delivery system 
established in each local area under WIA. Rather than have these 
overlapping and duplicative requirements for the provision of these 
labor exchange services under three different programs, the 
Administration believes the three funding streams should be 
consolidated into a single, comprehensive program for adults which 
includes as a key element the availability of universal public labor 
exchange services for all job seekers and employers. Rather than 
undermining or compromising the principle of universally accessible 
labor exchange services, the Administration believes the proposed 
consolidation would strengthen and enhance the provision of those 
services.

                        FAIR LABOR STANDARDS ACT

    Question. The Department's decision to abandon the two-tiered 
salary test, which provides greater protections to salaried workers 
with lower earnings than to those who earn more, makes it easy for an 
employer to manipulate job duties in order to deny overtime protection 
to many low-wage earners. How does the DOL justify a proposed salary 
threshold that will allow employers to deny overtime pay to many who 
need and rely on it?
    Answer. The Department has not abandoned the two-tiered salary 
level tests, and the Department's proposed salary threshold will not 
deny overtime pay to employees who need and rely on it. To the 
contrary, the Department's proposed regulatory changes will increase 
overtime protections for 12 million employees--including an additional 
1.3 million low-wage salaried workers who will be guaranteed overtime 
protections for the first time.
    The current regulations establish two different salary levels for 
each of the exemption categories: Employees paid below the minimum 
salary level of $155 a week are not exempt from overtime regardless of 
their duties. Employees paid above the minimum salary level of $155 a 
week are only exempt if they meet the ``long'' duties test. Employees 
paid above a higher ``upset'' salary of $250 a week are exempt if they 
meet a ``short'' duties test.
    The Department has long recognized that salary level may be the 
best indicator of whether an employee is a bona fide executive, 
administrative or professional employee. Because the salary levels have 
not been raised in 28 years, since 1975, the existing salary levels 
have become meaningless. Under the current minimum salary level of $155 
a week, only employees who make less than $8,060 a year are guaranteed 
overtime pay. By contrast, a minimum wage employee who works 40 hour a 
week earns over $10,700 a year. Thus under the current regulations, a 
minimum wage employee can be classified as an exempt executive. This 
perverse result demanded action by the Department of Labor.
    The Department's proposed regulations would raise this minimum 
amount to $425 a week, or $22,100 a year--a $270 a week increase and 
the largest increase in the 65 year history of the FLSA. The largest 
prior increase was by only $50 a week. As in the current regulations, 
employees who earn less than this minimum salary level are guaranteed 
overtime pay. This increase in the minimum salary level will guarantee 
overtime pay to 1.3 million additional low-wage workers.
    Under the Department's proposal, similar to the current 
regulations, employees earning more than $425 per week can only be 
classified as exempt if they also meet a ``standard'' duties test. The 
proposed standard duties test would streamline the current regulations 
by replacing the separate ``long'' and ``short'' duties tests with one 
test representing a middle ground between the current long and short 
tests. The Department believes this change will make the regulations 
easier for both employees and employers to understand who is entitled 
to overtime pay under the FLSA.
    Although the proposal replaces the ``long'' test and ``short'' test 
terminology, the proposal does not eliminate the two-tier salary 
structure. As noted above, the current regulations contain a ``special 
proviso for high salaried'' employees (see, e.g., Sec. 541.119)--the 
so-called ``short test''--which currently requires a salary of only 
$13,000 a year. The Department's proposed special provision for higher 
compensated employees would require guaranteed compensation of $65,000 
a year. The Department has proposed to minimize the duties requirements 
that must be met before an employee earning more than $65,000 a year 
may be classified as exempt. However, the $65,000 annual guarantee is 
well above the current $13,000 requirement. The $65,000 annual 
guarantee is also well above the $43,000 salary level requested by the 
AFL-CIO in a letter to the Department as the increase necessary to 
fully correct the current $13,000 level for inflation since 1975.
    The Fair Labor Standards Act was intended to set minimum salary and 
overtime standards to protect the most vulnerable, low-wage workers in 
our society. Because so many years have passed since the Department 
updated the Part 541 regulations defining exempt executive, 
administrative and professional employees, the protections intended by 
the FLSA have been severely eroded. The Department's proposal will 
strengthen minimum wage and overtime guarantees for the low-wage 
workers the FLSA was designed to protect. In addition, by simplifying 
and clarifying the rules, the proposed regulations will allow the 
Department to more strongly enforce the FLSA minimum wage and overtime 
provisions. The Department expects and welcomes public comment on the 
proposed salary levels and proposed duties tests.

                       LM-2 FINANCIAL DISCLOSURE

    Question. Under your LM-2 financial disclosure proposal, a labor 
organization would have to itemize every disbursement made to an entity 
or individual that reaches a threshold of between $2,000 and $5,000 in 
one of eight categories. The organization also would have to itemize 
aggregate disbursements to an entity or individual that reach this 
threshold over the reporting period. Within these parameters, I am 
advised that it would not be unusual for a medium-sized union to report 
9,000 individual disbursements during a given year. Add to that 
separate disbursements that aggregate to $2,000 and the potential 
exists for a significant amount of numbers to report.
    How would this then practically conform with 67 Fed. Reg. at 79281, 
that the reported information provide ``union members with useful data 
that will enable them to be responsible and effective participants in 
the democratic governance of their unions?'' Will this information be 
useful to union members?
    Answer. The Department received many comments regarding the 
itemization thresholds and we are still reviewing those comments. When 
that review is completed, we hope to be better able to address these 
questions. The proposal, however, was based upon certain facts that may 
be helpful in understanding the likely impact of an itemization 
requirement, if it is adopted. For example, it should be noted that the 
median LM-2 filer has approximately $650,000 in annual receipts. 
Assuming that the annual receipts of a union are roughly equal to its 
annual disbursements, and if $2,000 itemization threshold were adopted, 
a union with $650,000 in disbursements is likely to have no more than 
325 itemized transactions. In practice, however, the number of itemized 
transactions would actually be lower because a number of transactions 
are likely to be more than $2,000. Moreover, not all disbursements will 
be subject to itemization. If roughly half of all disbursements fall 
into categories that would not require itemization these unions might 
have to itemize fewer than 150 disbursements per year. If a $5,000 
itemization threshold were adopted, an average union might have to 
report less than 60 itemized transactions.
    For the average LM-2 filer union, that has approximately $2.8 
million in annual receipts, and a roughly equivalent amount in annual 
disbursements, a $2,000 itemization threshold would be likely to 
require the reporting of less than 650 itemized transactions. If a 
$5,000 itemization threshold were adopted, a union with $2.8 million in 
disbursements might only have to report less than 260 itemized 
transactions. Less than 675 unions, or just 2.3 percent of all unions 
and 12.4 percent of all LM-2 filers, have annual receipts of $3.0 
million or more.
    Even in those cases where there may be many itemized transactions, 
not all commenters agree that union members will not find the 
information useful in any event. The proposed LM-2 contains summary 
data in aggregate categories that reflect the services performed by 
unions for their members so that union members would continue to be 
able to assess the overall status of the union by looking at just a 
couple of pages. In addition, the Department's proposal indicated that 
the requirement that these reports be filed electronically would make 
it easier to provide union members with easy access to detailed 
information regarding the major transactions of their union by using an 
online, searchable database that will display only those transactions 
of interest to the member. The intent of the Department's proposal is 
to better enable union members to judge the financial health and 
integrity of their unions and to hold their leaders accountable for the 
financial condition of their union.
    Question. Additionally, unions would have to itemize their 
officers' and employees' salaries. How is this information useful to 
union members?
    Answer. Officers' and employees' salaries have always been itemized 
or individually reported on the forms; the law requires it. Although 
the proposed salary schedules would require the salaries of officers 
and employees to be allocated to the appropriate disbursement 
categories, to reduce reporting and recordkeeping burdens the 
Department has proposed that officers and employees be allowed to 
estimate their time to the nearest 10 percent, rather than requiring 
them to make exact calculations and keep daily records of their time. 
Because salaries are often the largest disbursement for many unions, 
the Department proposed this requirement to improve the transparency 
and accountability of labor organizations to their members and better 
enable them to exercise their democratic rights of self-governance.
    Question. Mandatory electronic filing is at the heart of your 
proposal. As I understand it, the computer software is what will make 
it financially possible for labor organizations to comply with the new 
disclosure requirements. However, I am advised that this software does 
not yet exist.
    Will you complete development of this software before requiring 
unions to comply with the proposed regulations? Can the proposed 
regulations be promulgated prior to development of the software?
    Answer. The purpose of the software is to reduce the reporting 
burden on unions and to reduce the cost of disseminating the 
information on the Internet to union members. It is important to note, 
that the software to be provided by the Department is not a bookkeeping 
system. The software has no impact on the burden of collecting data for 
the LM-2. The implementation of the reporting software will come in two 
phases. First, the Department will provide a Data Specifications 
Document before the effective date of the reform that will give unions 
the information they will need to interface with the software and 
report their information to the Department electronically. The 
Department is also going to establish a help line to answer any 
questions and will make other compliance assistance available. Second, 
the software will be provided to the unions well before they will have 
to use it to file their report, which will give the Department plenty 
of time to conduct compliance assistance and answer questions posed by 
the filing community. Moreover, all of the information that unions will 
need to update their internal recordkeeping and reporting requirements 
for the proposed Form LM-2 will be contained in the final rule that is 
published in the Federal Register.
    Question. In your response to my April 2, 2003, letter, you cite 
the finding of a 1998 hearing of the House Education and Workforce 
Subcommittee on Oversight and Investigations that ``the current LM-2 
Form is inadequate to prevent and uncover financial corruption, and the 
form should therefore be substantially revised.''
    How does requiring unions to itemize most of their expenses deter 
fraudulent activity?
    Answer. Increased transparency and disclosure is a natural 
deterrent to criminal activity and financial mismanagement. The more 
detailed information is reported regarding specific transactions, the 
more difficult it is for an unscrupulous person to conceal their 
activities and the easier it is for union members and the Department to 
uncover fraudulent activity. Again, the intent of the Department's 
proposal, including the proposed itemization requirement, is to help 
meet the objectives of the statute by providing union members with 
useful data that will enable them to be responsible and effective 
participants in the democratic governance of their unions. As 
Representative Robert Griffin, a cosponsor of the LMRDA, stated: ``. . 
. [I]n a larger sense, the effectiveness of the Act will depend also 
upon the rank-and-file union members themselves. For in the last 
analysis, it is they who must make the law meaningful by taking hold of 
the tools of democracy and using them to clean corruption out of their 
unions and to keep them clean.''
    Question. Has the Department considered requiring unions to undergo 
independent audits, as are SEC regulations currently require of public 
corporations?
    Answer. Yes, the Department has considered requiring audits. Some 
commenters suggested requiring audits; the Department is currently 
reviewing those comments and has not yet reached any final conclusions. 
It is important to note, however, that the laws enforced by the SEC are 
very different from those enforced by DOL.
    Question. In your response to my April 2, 2003, letter, you note 
that ``most of the Department's proposed changes affect only the 
largest 20 percent of unions subject to the Labor Management Reporting 
and Disclosure Act.''
    How would the proposed changes affect the smallest of those unions 
subject to the reporting requirements? Has the Department assessed what 
the cost would be for those unions to comply, particularly those which 
marginally exceed the $200,000 threshold? Has the Department taken any 
steps to minimize the cost to smaller unions?
    Answer. The Department is always conscious of the regulatory burden 
imposed on smaller entities. The smallest unions, over 81 percent of 
all labor organizations would not be affected by most of the reforms 
proposed. The Department's proposal would require all unions to file a 
new Form T-1 to report financial information for large trusts or other 
funds in which they have an interest, but only if the union contributed 
$10,000 or more to the trust during the year. The Department has 
received comments arguing that this requirement should be dropped, as 
well as comments arguing that all of the proposed changes should be 
applied to all unions. The Department has not yet made a final decision 
on any of these issues.
    The Department also requested comments on whether the filing 
threshold should be raised from $200,000 to adjust for inflation and 
those comments are being considered. The Department has estimated the 
costs for various sizes of LM-2 filers and the burden estimates were 
calculated as weighted averages of those groups of unions. Under the 
proposed rule the average burden for the smallest group of LM-2 filers 
for the first three years would be 81.7 percent less than the burden 
for the largest group of LM-2 filers.
    The Department's proposal also included many features to minimize 
the burden. First, the proposed levels of itemization of disbursements 
would ensure that small unions would have to identify very few 
transactions. For instance, a $2,000 itemization threshold is likely to 
require a union with $250,000 in disbursements to itemize less than 60 
transactions and a $5,000 threshold is likely to require a union with 
$250,000 in disbursements to itemize less than 25 transactions. Second, 
the filing software is being designed to fit the needs of the unions, 
so that small LM-2 filers will be able to simply type information in 
the forms or copy-and-paste, whereas larger LM-2 filers will be able to 
take advantage of greater automation and download information directly 
into the software. Finally, a union can apply for and be granted a 
hardship exemption to allow them to file a paper report if they can 
demonstrate that electronic filing would impose an unreasonable burden.
    Question. Has the Department consulted with the Small Business 
Administration Office of Advocacy to determine whether the proposed 
rules are in compliance with the Regulatory Flexibility Act of 1980 as 
amended (5 U.S.C. 601-612)?
    Answer. Yes. The Department took all required steps to ensure that 
the proposal is in full compliance with the provisions of the 
Regulatory Flexibility Act of 1980 as amended, and consulted informally 
with the SBA.
    Question. Has the Department considered drafting different 
regulations that reflect the different sizes of unions subject to 
compliance under the Labor Management Reporting and Disclosure Act?
    Answer. Yes, the Department's regulations already permit smaller 
unions to file simplified forms LM-3 and LM-4. Additionally, the 
Department took the concrete steps described above in the proposed rule 
to limit the burden on smaller LM-2 filers and is reviewing comments 
that it sought on whether the current $200,000 threshold for Form LM-2 
filers should be raised to $250,000 or some other amount, or, instead, 
whether it should be left unchanged.
    Question. Do you believe that the 90-day comment period for these 
proposed regulations was sufficient? Did your Department consider 
extending this period to fully accommodate suggestions and criticisms 
by those organizations that would be affected by the proposed 
regulations?
    Answer. Yes, the 90-day comment period was sufficient. The 
Department carefully considered all requests for an extension of the 
60-day comment period, and a 30-day extension was granted. The 
Department received nearly 36,000 comments, including many substantive 
comments from unions, non-profits, and others, indicating that 90 days 
was a sufficient period of time to comment on the rule. This timeframe 
is also consistent with other major rulemakings of the Department and 
other federal agencies.
    Question. In your response to my April 2, 2003, letter, you 
indicate that ``the regulatory regime governing financial reporting by 
small and large public companies is much more extensive than the system 
that exists for labor organizations.'' You then note that ``Government 
Accounting Office regulations governing accountability for federal 
funds mimic the extensive system of regular audits, extensive internal 
controls and disclosure of material qualitative and quantitative data 
that exist for publicly-traded companies.''
    I have been advised that some of the proposed LM-2 requirements 
mandate more extensive itemization of information than is required by 
the SEC under the Sarbanes-Oxley Act of 2002 and by the GAO. For 
example, under current LM-2 requirements, labor organizations subject 
to compliance are required to list all employees whose total salaries, 
allowances, and other direct and indirect disbursements from the union 
exceed $10,000 per year; the union must also detail the employees' 
position, affiliated organization, gross salary, allowances and 
disbursements. The proposed changes would additionally require that 
labor organizations report for each employee his or her net salary, 
withholding and direct taxes, disbursements for other withheld amounts, 
direct payroll taxes, and allocation of each employee disbursements 
into new functional categories. The SEC does not require this level of 
detailed information, only requiring salary information for top 
executives. Given your above statement, how do you explain this 
disparity between LM-2 and SEC reporting requirements?
    Answer. The laws and regulations governing corporations and unions 
serve very different purposes and are understandably quite different. 
The LMRDA established a unique financial disclosure regime for labor 
organizations designed to address concerns about unions that were 
highlighted by Congressional hearings on financial and other misconduct 
in labor unions. To the extent that a comparison is relevant, the 
regulatory regime governing financial reporting by small and large 
public companies is much more extensive than the system that exists for 
labor organizations. In addition to mandating the disclosure of certain 
types of quantitative data, the financial reporting scheme for public 
companies, as amended by the Sarbanes-Oxley Act, also requires the 
disclosure of qualitative information and imposes strict audits and 
detailed internal controls on public companies, their officers, 
directors, auditors, accountants and attorneys.
    The SEC only requires reporting of the salaries of ``top 
executives'' because that is what their statute mandates. OLMS requires 
reporting of the salaries of all officers and employees earning $10,000 
or more annually from the union because that is what our statute 
mandates. As for the specific information collected in the salary 
schedules, it would be inappropriate to discuss our specific views 
because the Department is in the process of analyzing and responding to 
the comments we received from the public on the NPRM. In general, the 
Department believes that the details contained in the LM-2 will be 
useful to union members and will fulfill the statutory requirements of 
the LMRDA. The SEC would have to respond to whether this sort of 
disclosure would be appropriate and useful under the statutes they 
enforce.
    Neither the current LM-2 reporting regime nor the Department's 
proposed rule require labor organizations to provide their members with 
any qualitative information, much less the detailed analysis public 
companies are required to disclose. Federal law also does not mandate 
that unions use governance structures that ensure independent oversight 
of financial operations, such as independent audit committees and union 
members have no comparable whistleblower rights to those provided 
employees under the Sarbanes-Oxley Act. Unions are not currently 
required, nor would they be required under the proposed transparency 
reforms, to provide any qualitative information to their rank-and-file 
membership about the financial health of their union, the strengths or 
weaknesses of any substantial investments by their union, the financial 
performance of any programs, contracts or cost centers managed by the 
union, or any future risks associated with the union's business 
relationships, including its main bargaining unit employers, membership 
composition or other factors. Considered in this context, the 
Department does not believe that the proposed LM-2 is overly burdensome 
when compared to corporate disclosure.
                                 ______
                                 
               Question Submitted by Senator Thad Cochran

                           FARMWORKER HOUSING

    Question. The fiscal year 2003 Omnibus Appropriations bill includes 
$4.64 million for Department of Labor Farmworker Housing activities. In 
recent years, the Appropriations Committee has directed the Department 
of Labor to use these funds to continue the long-established network of 
local housing organizations working to plan, develop, and manage 
housing for migrant and seasonal farmworkers.
    What is the status of fiscal year 2003 funds, how will they be made 
available, and what steps are the Department taking to ensure that the 
current network of organizations remains in place?
    Answer. The $4.64 million pre-rescission appropriation for 
farmworker housing assistance grants is being awarded through an open 
competitive grants selection process. The Employment and Training 
Administration (ETA) recently published the Solicitation for Grant 
Applications (SGA) for the housing assistance grants and an SGA for the 
National Farmworker Jobs Program (NFJP) in the Federal Register, and 
the application period will close on May 16, 2003, and the awards will 
be announced before June 30, 2003.
    Every proposal submitted in response to the SGA, including those 
from current grantees, will be given full and fair consideration. They 
will be reviewed and rated on their merit by an impartial review panel.
                                 ______
                                 
           Questions Submitted by Senator Ernest F. Hollings

                        ASSOCIATION HEALTH PLANS

    Question. I would like to know how much Congress must appropriate 
for the Labor Department to effectively regulate Association Health 
Plans, if legislation to exempt them from state oversight is enacted. 
In 1997, Olena Berg, Assistant Secretary of Labor in the Clinton 
Administration, said that DOL did not have the resources to regulate 
AHPs and that it would take 300 years to complete a review of each 
existing pension and health plan. A recent GAO report found that it 
would take DOL's current investigative staff 90 years to do a baseline 
assessment of noncompliance for pension plans alone. An analysis of 
federal regulatory costs by Georgia State University found that it 
would cost $2.3 billion over a seven-year period for DOL to effectively 
take over the responsibility for regulation of AHPs. It does not appear 
that your budget includes any funding to regulate and oversee AHPs--
Does it?
    Answer. DOL's current budget does not include funding for AHP 
certification or enforcement because the legislation has not become 
law. If the legislation is enacted, we will dedicate the resources 
necessary to implement it effectively and administer AHPs successfully. 
As the legislation proceeds through Congress, the Department will work 
within the Administration to determine the appropriate resources 
necessary, depending upon the legislative requirements. The costs would 
depend on many factors, including the number of AHPs that are created, 
and how many are uninsured. The creation of AHPs may lower our costs in 
other areas, such as our activities related to Multiple Employer 
Welfare Arrangements (MEWAs).
    Question. How would you regulate AHPs and how much would it cost?
    Answer. Under the current legislative proposal, DOL would be 
responsible for certifying AHPs, and would have ongoing oversight and 
enforcement authority. For AHP that purchase policies from insurance 
companies, state insurance regulators would enforce solvency and 
consumer protection provisions. For self-insured AHPs, DOL would be 
responsible for overseeing solvency and the consumer protection 
provisions included in the bill, as well as ERISA's general 
requirements. Regarding cost, as the legislation authorizing AHPs has 
not been enacted, DOL cannot speculate on associated costs.
                                 ______
                                 
               Question Submitted by Senator Patty Murray

                      COAL INDUSTRY GRANT TO CHINA

    Question. Why has $6.4 million been awarded to promote the coal 
industry in China? What are the details on this grant?
    Answer. In the fall of 2002, the department awarded two grants to 
support activities in China--a $4.1 million grant supports programs 
that promote the labor rule of law, and a $2.3 million grant provides 
technical assistance in the enforcement of China's health and safety 
laws at coal mines. Neither of the two grants was to promote the coal 
industry in China.
    Both grants were awarded through an open and competitive process. 
The labor rule of law grant was awarded to a consortium formed by 
Worldwide Strategies, Inc., the Asia Foundation, and the National 
Committee on U.S.-China Relations. The mine safety and health grant was 
awarded to the National Safety Council, headquartered in Illinois.

                         CONCLUSION OF HEARINGS

    Senator Specter. Thank you all very much for being here. 
That concludes our hearings.
    [Whereupon, at 10:49 a.m., Wednesday, April 9, the hearings 
were concluded, and the subcommittee was recessed, to reconvene 
subject to the call of the Chair.]
