[Senate Hearing 108-218]
[From the U.S. Government Publishing Office]
DEPARTMENTS OF LABOR, HEALTH AND HUMAN SERVICES, AND EDUCATION, AND
RELATED AGENCIES APPROPRIATIONS FOR FISCAL YEAR 2004
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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.]