[Senate Hearing 113-768]
[From the U.S. Government Publishing Office]



 
  DEPARTMENTS OF LABOR, HEALTH AND HUMAN SERVICES, AND EDUCATION, AND 
          RELATED AGENCIES APPROPRIATIONS FOR FISCAL YEAR 2015

                              ----------                              


                        WEDNESDAY, APRIL 9, 2014

                                       U.S. Senate,
           Subcommittee of the Committee on Appropriations,
                                                    Washington, DC.
    The subcommittee met at 10:06 a.m., in room SD-192, Dirksen 
Senate Office Building, Hon. Tom Harkin (chairman) presiding.
    Present: Senators Harkin, Merkley, Moran, Alexander, and 
Johanns.

                          DEPARTMENT OF LABOR

                        Office of the Secretary

STATEMENT OF HON. THOMAS E. PEREZ, SECRETARY


                opening statement of senator tom harkin


    Senator Harkin. The Appropriations Subcommittee on Labor, 
Health and Human Services, Education, and Related Agencies will 
come to order.
    Today, we welcome to our subcommittee our Secretary of 
Labor, Secretary Tom Perez.
    Again, I want to thank you, Mr. Secretary, for joining me 
in Iowa this past weekend. We had an interesting visit with the 
Job Corps Center in Ottumwa, one of the newer Job Corps 
Centers. It is kind of unique in how it is combined with the 
community college. It is one of those new setups, and it is 
working out really well. So I appreciate you coming out and 
looking at that, Mr. Secretary.
    I also want to say your commitment to working Americans is 
reflected in the subject we will discuss today, and that is the 
President's budget for fiscal year 2015 for the Department of 
Labor (DOL).
    This budget proposes critical investments that will equip 
Americans with the skills they need for today's jobs, something 
I know that you have been a great leader on.
    It recommends also increased funding to ensure that working 
Americans are paid what they have earned and not denied 
benefits to which they are entitled.
    As the Secretary knows, there are some tough choices to be 
made in our nondefense discretionary spending cap. The fiscal 
year 2015 spending cap is roughly the same as for the current 
fiscal year. It is tough. It is not draconian, but it is tough.
    Again, I hope that we can continue on with that budget, 
rather than the budget set forth by the Budget Committee in the 
House, which would cut nondefense discretionary spending by $43 
billion, or 9 percent, in fiscal year 2016. That would make it 
very, very tough on this subcommittee to do its job, and for 
you, I think, to do your job, if we were to have that kind of a 
huge cut in 1 year.
    Now, I won't be in the Senate for the fiscal year 2016 
appropriations process, but I think we can and must do better 
than to just continue to disinvest in programs critical to 
working families.
    I might, just at the outset, say I think one of the good 
places to start would be to replace the sequester. I have 
advocated for a long time just get rid of the darn thing, get 
it over with, and move on.
    I am also pleased to see several proposals in the 
department's budget request that address important priorities 
for working families, increases for protecting the rights of 
workers to take family and medical leave, ensuring that workers 
are paid what they have earned, enhancing oversight of the 
subminimum-wage program for workers with disabilities. I will 
have a question about that.
    These are important investments that build on key 
accomplishments of this department and this subcommittee.
    For example, the department's Wage and Hour Division has 
returned over $1 billion. Think about that. The Wage and Hour 
Division has returned over $1 billion in wages to more than 1.2 
million workers who have earned it, but had not been paid. This 
includes over 100,000 workers who had not been paid the minimum 
wage for all of the hours that they had worked.
    The budget also continues to invest in key employment and 
training activities, including increased funding to build on 
the success of the Reemployment and Eligibility Assessments 
(REAs) program. Since 2005, this subcommittee has provided more 
than $400 million for this activity.
    Research shows that REAs can help connect unemployment 
insurance beneficiaries with jobs faster. The budget request 
would expand and enhance services to help prevent these workers 
from joining the ranks of the long-term unemployed. I look 
forward to hearing more about this. Again, this is something 
that has endured through both Republican and Democratic 
administrations.
    So again, Secretary Perez, I want to thank you for your 
dynamic leadership of the Department of Labor and for being 
here today to discuss how the budget impacts American workers 
and what we can do to assist them in helping strengthen the 
middle class in America.
    And with that, I will turn to Senator Moran for his opening 
statement.


                    statement of senator jerry moran


    Senator Moran. Mr. Chairman, thank you.
    Mr. Secretary, it was a pleasure to meet you this morning 
and I look forward to developing a good working relationship 
with you and your department. And we would welcome you to visit 
Kansas so that I can have stories to tell like the chairman 
does. Thank you very much.
    We all know we have a struggling economy and unemployment 
remains way too high. And my concern is that the 
administration's budget is not prioritizing employment and 
training programs that put Americans back to work.
    The unemployment national rate is 6.7 percent, and the 
fiscal year 2015 budget request provides virtually level 
funding for Workforce Investment Act programs, which are the 
cornerstone of our Nation's employment training.
    There have been significant increases during this 
administration's time in office that fund regulatory aspects of 
the Department of Labor, such as OSHA (Occupational Safety and 
Health Administration) and mine safety, and the Wage and Hour 
Division.
    But in looking at those numbers, there is a stark contrast 
to employment and training programs, which have decreased by 10 
percent. And I just want to emphasize that, for getting 
Americans back to work, we will be looking toward employment 
and training programs to help accomplish that goal, and that 
too often it seems to me that the regulations are part of the 
problem in creating job opportunities for Americans.
    It seems to me that really since 2010, the primary function 
and responsibility of Congress and the President is to put 
together an effort to create an environment in which more jobs 
are created, which Americans feel more secure and safe in their 
jobs and have a sense that they have an opportunity for 
economic mobility. And we want to make certain that the focus 
is on training and job creation, to begin with, and then 
training people to meet those jobs and their qualifications.
    A couple things that have happened in the last few months 
that I would like to highlight, and we can visit about during 
the questions, is the President's executive order directing the 
Department of Labor to redefine and expand current overtime 
regulations. I am worried that this move could drastically 
increase Labor costs and uncertainty for employers as well as 
employees.
    And also, it seems to me you have taken some steps to 
address this issue, and I am interested in hearing about it, 
the regulatory action that OSHA took against a Nebraska farm 
that has a consequence that is based upon, perhaps, a 
redefinition of what a farm is, as exempted under those labor 
laws.
    Again, 5 years of high unemployment, it seems to me that we 
have to focus on finding ways to work with employers to create 
a safe environment without creating penalties and fines and 
uncertainty. And I look forward to hearing your thoughts about 
the role of those regulators in that regard.
    Again, I look forward to working with you as we try to find 
ways to make certain that Americans feel safe and secure, have 
greater job opportunities, and can advance to the benefit of 
themselves and their families.
    Thank you for your presence today.
    Senator Harkin. Thank you, Senator Moran.
    It is my honor to welcome Secretary Perez to his first 
appearance before this subcommittee.
    Secretary Perez became the 26th Secretary of Labor on July 
23, 2013. Secretary Perez has experience serving in all levels 
of government, both at the county level, in Montgomery County 
nearby, also at the State level as the Secretary of Maryland's 
Department of Labor, Licensing, and Regulation. He was a member 
of the Montgomery County Council. And then at the Federal 
level, Secretary Perez served as a career attorney at the 
Department of Justice, as well as the Deputy Assistant Attorney 
General for Civil Rights in the Clinton administration. And 
just before this appointment, he was Assistant Attorney General 
for Civil Rights, again, at the Department of Justice.
    And again, the most important part of Secretary Perez's 
entire career was when he worked for this committee--no, on the 
HELP (Health, Education, Labor, and Pensions) Committee, not 
this committee. I always get confused which committee I am 
chairing here. On the HELP Committee.
    So, Secretary Perez, thank you very much for your lifetime 
of devotion to public service and for your stewardship now at 
the Department of Labor. Your statement will be made a part of 
the record in its entirety, and please proceed as you so 
desire.


               summary statement of hon. thomas e. perez


    Secretary Perez. Thank you, Mr. Chairman. And thank you, 
Senator Moran. It has been an honor to meet you, and I look 
forward to sitting down with you.
    Senator Alexander, it is great to see you again.
    Senator Harkin, Mr. Chairman, thank you for the visit last 
weekend to Iowa. And much more importantly, thank you for your 
service.
    As I said to the kids at the Job Corps Center, they have a 
Senator who has done great service to Iowa, has done a great 
service to America, and has done great service to vulnerable 
people around the world. And we will miss you dearly.
    Your common decency is one thing that I will always take 
away from you, and my experience being mentored by you. So 
thank you for everything that you have done for so many people.
    We also have a retirement. This woman to my right, Teri 
Bergman, has been around. This is her last approps cycle before 
she enters retirement; she refuses to allow me to tell you how 
many years of service. So I will just say she has been here 
awhile as well, and I want to thank Teri for her service.
    Senator Harkin. She is smiling.
    Secretary Perez. She is smiling. I asked if she was happy 
or sad today, and she said probably happier than sad. But we 
have valued from her service. You all know that you are only as 
good as your staff, and we have a great staff at the Department 
of Labor. We are going to miss Teri.


                  fiscal year 2015 president's budget


    The budget that we present today, like any other, is more 
than a compilation of dollar figures; it is an expression of 
our values. The Labor Department's values include helping 
people acquire the skills they need to succeed in the jobs of 
today and tomorrow, helping employers to get those skilled 
workers so they can grow their business; ensuring 
nondiscrimination in the workplace; making sure hard work is 
rewarded with a fair wage; and enhancing our enforcement 
capacity to protect workers' wages, benefits, and safety on the 
job.
    Our budget calls for the funding necessary to make 
meaningful progress toward these goals, and I would like to 
take a few minutes to highlight some of the key items.
    We continue our investment in training and employment 
services to more than 20 million Americans at our 2,500-plus 
American job centers nationwide.
    At the height of the recession, these centers were the 
Nation's emergency room for jobseekers, administering the 
critical care necessary to restore economic health and get 
people back to work.
    The American Job Centers are resources for businesses as 
well. During the State of the Union, the President singled out 
Andra Rush, a small-business woman from Detroit. Her 
manufacturing firm is thriving because she found roughly 700 of 
her workers through the local American Jobs Center. We 
effectively served as her human resources department. I often 
like to think of the Department of Labor as playing a Match.com 
kind of role, helping workers and employers find the right fit. 
And in that case, we were able to find the right fit for over 
700 people who are now thriving and have punched their ticket 
to the middle class.


                review of the nation's training programs


    During my 8 months on the job, I have spent a lot of time 
speaking to dozens of business leaders and CEOs (chief 
executive officers). And to a person, they are bullish about 
the future.
    They also tell me that in order to grow and expand, they 
need a steady pipeline of skilled workers. So we need to build 
on our success, and we need to fix what is in need of being 
fixed.
    And that is why the President has tasked Vice President 
Biden with conducting a review of our Nation's training 
programs. I was with the Vice President recently, in New 
Hampshire, as part of this initiative.
    This review will be guided by the principle of job driven 
workforce investment. The goals of this effort are, number one, 
expanding employer engagement and ensure that our system is 
truly demand driven. If you are going to create jobs, you have 
to talk to the job creators. No more train and pray. We are not 
going to train widget makers if no one is hiring widget makers. 
We learn who is hiring for what by making sure we expand and 
sustain our employer engagement.
    Number two, making it easier for people to acquire those 
in-demand skills necessary to punch their ticket to the middle 
class.
    Number three, spurring innovation at all levels of the 
workforce system.
    Number four, promoting what works in the workforce settings 
and fixing what isn't working.
    And number five, growing and transforming registered 
apprenticeship programs to meet the increasing and exciting 
needs.
    I have had the good fortune of working on these issues at 
the local, State, and Federal level. In my experience, these 
issues have never been partisan issues. They don't need to be 
partisan issues.
    Senator Moran, I listened to what you said very carefully, 
and I would love to have a conversation with you, not only 
today, but in the weeks and months ahead, about how we can work 
together in a bipartisan fashion on the critical issue of 
making sure people have the skills to succeed.
    Our Opportunity, Growth, and Security Fund addresses many 
of the training concerns that you have brought to our attention 
here today.


                    combating long-term unemployment


    One of the most vexing challenges we are confronting is the 
plight of the long-term unemployed. Frankly, having met so many 
long-term unemployed, it is probably the one issue on my plate 
that keeps me up at night more than anything, because they keep 
telling me how hard they are working, in terms of looking for 
work.
    I had a guy in Cleveland last week who said to me, ``I have 
got no quit in me.'' When someone says that to you, and looks 
you in the eye, you are not going to quit on them. I had 
another person in New Jersey who said, ``I fought and licked 
cancer. Fighting cancer was far easier than fighting long-term 
unemployment.''
    So, I applaud the efforts in the Senate and the passage of 
the bipartisan bill on Monday. I hope the House follows suit.
    Unemployment benefits like this, while very important, 
certainly, aren't the end of the story. We need to work 
together on ways to get people back on the job and back in the 
workforce.
    Toward that end, I am very excited about the $158 million 
request for an enhanced, integrated, and expanded Reemployment 
and Eligibility Assessment and Reemployment Services program, 
which will use an evidence-based approach to help long-term 
unemployed workers and returning veterans find work faster.
    We also request $15 million in grants to support sector 
strategies, helping the long-term unemployed, and other 
targeted populations, receive the training or other services 
they need for careers in these areas. These recommendations are 
built on a growing understanding of what works. You can be 
assured that the budget assumes that we are incorporating 
rigorous evaluations in everything we do.
    We are measuring what we are doing to make sure it works. 
If it doesn't work, we either fix it, or we don't do it 
anymore.
    I hope we can work together to invest in these and other 
programs that have a demonstrated record of effectiveness in 
helping people get back on their feet.


              opportunity, growth, and security initiative


    Although it is not before the committee, the President's 
2015 budget also sets forth an Opportunity, Growth, and 
Security initiative that includes a robust investment in our 
community colleges, one-third of which would be used to promote 
greater use of apprenticeships, a proven workforce development 
strategy that is still undervalued in the United States.
    We really need to change the national mindset on 
apprenticeships. A 4-year college degree is the right choice 
for so many people, but it isn't the only way to punch your 
ticket to the middle class. So, we need to let young people and 
their parents know that there is a bright future in America for 
people who want to work with their hands. Training and skills 
development is just one piece, an important piece, of the Labor 
Department's work.


       protecting employee wages, safety, and retirement security


    As I have said before, we play a critical role in making 
sure that Americans get paid the wages they are due, that they 
are safe on the job, and that their benefits are secure.
    Our budget includes an increase of almost $30 million for 
the Wage and Hour Division to cover the cost of hiring new 
investigators. These resources will be used to ensure that 
people who work get paid a fair wage, and that employers who 
play by the rules aren't undercut by those who don't. No worker 
should have to sacrifice their life for their livelihood.
    So the 2015 budget calls for substantial investments in the 
ability of OSHA and its State partners to keep workers safe.
    To safeguard the retirement of American workers, we also 
request $188 million to protect more than 141 million people 
covered by the benefits plans together, which hold over $7 
trillion in assets.
    Mr. Chairman, we have come a long way since the depths of 
the great recession. The private sector has now created roughly 
9 million jobs over the past 49 months of consecutive private 
sector job growth. The economy is moving in the right 
direction, but there is no doubt that we need to pick up the 
pace.


                           prepared statement


    We need to do more. We need to invest in more skills for 
workers so they can get back on their feet. And the Labor 
Department stands ready to play a critical role in creating and 
expanding that opportunity.
    And with that opening statement, I look forward to hearing 
your questions and responding. Thank you very much, and thank 
you for your leadership.
    [The statement follows:]
               Prepared Statement of Hon. Thomas E. Perez
    Chairman Harkin, Ranking Member Moran and members of the 
subcommittee, thank you for the invitation to testify today. I 
appreciate the opportunity to appear before you to discuss the fiscal 
year 2015 budget request for the Department of Labor.
    President Obama's 2015 budget builds on his vision of opportunity 
for all Americans of which he spoke in January in the State of the 
Union address. The President's budget sets forth concrete, practical 
investments and proposals to achieve his vision by growing the economy, 
strengthening the middle-class, and empowering all those hoping to join 
the ranks of the middle-class. It is an agenda of opportunity, action, 
and optimism. It is the agenda for our work at the Department of Labor 
over the next 3 years.
    The core principle is as American as they come--if you work hard 
and play by the rules, you should have the opportunity to succeed. In 
America, your ability to get ahead should be determined by hard work 
and personal responsibility--not by the circumstances of your birth.
    Making good on the promise of opportunity has always been central 
to the Labor Department's mission to help create jobs and build a 
stronger middle class, to invest in human capital to build a skills 
infrastructure that supports business growth, to give every American 
the chance to retire with dignity and a measure of economic security, 
to promote a fair wage and safe working conditions, to help our 
Nation's veterans find a place in the civilian economy, and to help 
historically marginalized populations, like immigrant communities and 
people with disabilities, move into the economic mainstream. But now, 
more than ever, as the President's agenda is our agenda, working to 
fulfill the promise of opportunity is fundamental to what we do, and 
the budget proposal would provide the investments necessary to enable 
us to help fulfill the promise.
    We have come a long way since the depths of the Great Recession. We 
have seen 48 consecutive months of private sector job growth, which has 
added 8.7 million jobs, and the unemployment rate has reached its 
lowest point in over 5 years. Moreover, our manufacturing sector is 
experiencing the largest and most consistent growth since the mid-
1990s. Over 600,000 manufacturing jobs have been added since February 
2010. We have cut our deficits by more than half to their lowest share 
of GDP since before President Obama took office.
    By those measures, we are well on our way to a full recovery. But 
the statistics do not tell the whole story as economic growth is still 
hamstrung by stubbornly high unemployment. They are cold comfort to the 
underemployed construction worker who continues to be laid off in 
between sporadic jobs. They do not encourage the factory worker whose 
application never gets a second look after the human resources 
department sees she has been unemployed for 6 months; or the waitress 
or bank teller who works full-time but must depend on public assistance 
to feed her family. They do not help the country's youth for whom so 
much depends on that critical first job. So while we have come a long 
way, much work remains.
    The President's budget outlines a comprehensive agenda to make 
America a magnet for middle class jobs and business investment. 
Equipping workers with the skills they need and for which employers are 
hiring is not just a workforce development issue, it is an economic 
development issue. No matter what your political party, we can all 
agree on one thing: good jobs and low unemployment are good for the 
country. As part of the effort to achieve this shared goal, the 
President is acting on a set of specific, concrete proposals that will 
make sure American workers have the skills they need for in-demand jobs 
of today and the jobs of tomorrow. These initiatives will allow 
industry to identify the skills and credentials required for jobs they 
are seeking to fill now and tomorrow; give workers and job seekers 
access to education and training that meets those needs; and provide 
employers with easy ways to find workers who have or can acquire those 
skills. Some of these proposals will require new legislation while 
others can be done within existing program authorities. I am eager to 
work with all who are willing to roll up their sleeves with me to enact 
these critical programs.
    The President's budget also supports the extension of emergency 
unemployment benefits for the long-term unemployed. If not extended, 
3.6 million additional people are estimated to lose access to extended 
UI benefits by the end of 2014, despite remaining unemployed and 
looking for work.
    As I will explain, the President's budget request creates 
opportunity for all Americans while continuing long term deficit 
reduction through:
  --Opportunity, Growth and Security Initiative.
  --Investing in a Competitive Workforce.
  --Protecting American Workers and their Income and Retirement 
        Security.
              opportunity, growth and security initiative
    While the 2015 budget will adhere to the spending levels agreed to 
in the Bipartisan Budget Act of 2013 and reflect the tradeoffs that are 
required to maintain those levels of spending, the budget also presents 
the President's vision for an economy that promotes opportunity for all 
Americans. As part of this vision, the budget sets forth a fully paid 
for Opportunity, Growth, and Security Initiative (OGSI), which will 
include additional policies to grow the economy and create jobs without 
adding a dime to the deficit. The OGSI would increase the fiscal year 
2015 discretionary caps to make room for priority defense and 
nondefense investments, paying for $56 billion in funding with a 
balanced package of spending reforms and closed tax loopholes. It will 
increase employment, while achieving important economic outcomes in 
education, research, manufacturing and public health and safety. 
Although not included in our budget totals before the Committee, the 
OGSI envisions a significant role for the Department. At DOL, the OGSI 
includes:
  --Community College Job-Driven Training Fund.--The OGSI includes $1.5 
        billion per year to support a 4-year investment in a Community 
        College Job-Driven Training Fund that will offer competitive 
        grants to partnerships of community colleges and other entities 
        to reform curricula and launch new training programs. Of this 
        amount, $500 million per year will go toward a dedicated 
        apprenticeship training fund to provide grants to States and 
        regional consortia to work with employers to create new 
        apprenticeships and increase participation in existing 
        apprenticeship programs. Apprenticeship is a strategy that we 
        know works to provide good jobs and paths to the middle class. 
        This 4-year investment will support doubling the number of high 
        quality, registered apprenticeships in America over the next 5 
        years.
  --Supporting and Improving Training and Employment Services.--The 
        Initiative would provide $750 million to fully restore prior 
        cuts in job training and employment services, invest more 
        intensively in innovation, and target resources to populations 
        that face significant barriers to employment.
  --State Paid Leave.--The OGSI also proposes an additional $100 
        million for the State Paid Leave Fund to support States that 
        wish to establish paid leave programs. Currently, only 
        California, New Jersey, and Rhode Island offer such programs, 
        which they call family leave insurance. More States should have 
        the chance to follow this example.
                  investing in a competitive workforce
    To continue the economic recovery, the 2015 budget proposes a set 
of initiatives that would reduce long-term unemployment and hasten 
reemployment including the New Career Pathways program (formerly the 
Universal Displaced Workers initiative), reemployment services and 
eligibility assessments and services, and the three-pronged Job-Driven 
Training legislative proposal comprising the following programs: Bridge 
to Work; Back to Work Partnerships; and Summer Jobs Plus.
  --New Career Pathways.--The 2015 budget proposes mandatory funding 
        for a New Career Pathways (NCP) program that will provide 
        workers with a set of core services by combining the best 
        features of both the Trade Adjustment Assistance for Workers 
        (TAA) and Workforce Investment Act (WIA) Dislocated Worker (DW) 
        programs. Upon enactment, NCP will streamline administrative 
        steps and integrate proven practices, service delivery 
        platforms, and infrastructure of the TAA and WIA DW programs to 
        offer a universal suite of training and reemployment services 
        to a broader number of displaced workers.
    To invest in the Nation's youth and the long-term unemployed, the 
2015 budget also includes a package of mandatory funding for job-driven 
training proposals. These proposals would be designed with employer 
needs in mind, putting an end to what I call the ``train and pray'' era 
of training workers for jobs with limited demand or with credentials 
employers do not value. This $8.5 billion package of proposals 
includes:
  --Bridge to Work.--The $2 billion Bridge to Work program is designed 
        to provide States with flexible funding to implement Bridge to 
        Work and other innovative reemployment initiatives targeted to 
        the long-term unemployed and to design, develop, and implement 
        their own path-breaking strategies to encourage reemployment.
  --Back to Work Partnerships.--The Back to Work Partnerships will 
        support partnerships between education and training 
        institutions and businesses to get the long-term unemployed 
        back to work. Funded with $4 billion over 2 years, the program 
        would provide competitive grants that support promising and 
        innovative local work-based job and training strategies to 
        place low-income adults and youth in jobs quickly. Such 
        strategies include on-the-job training; sector-based training; 
        training in collaboration with an industry sector partnership; 
        connections to immediate work opportunities; career academies; 
        and/or adult basic education and integrated basic education and 
        training models.
  --Summer Jobs Plus.--This is a $2.5 billion one-time investment to 
        support opportunities for hundreds of thousands of low-income 
        youth. The first component is a $1.5 billion formula grant 
        program that will provide funds to States, available up to 2 
        years, to support summer and year-round jobs for 600,000 youth. 
        The second component is a $1.0 billion innovation fund to 
        provide competitive grants to support promising and innovative 
        employment and training strategies designed to improve outcomes 
        for low-income youth.
    I am working closely with the Vice President to continue other 
evidence-based efforts to replicate approaches that have been proven to 
work, move funds from those that have not, and continue to encourage 
and evaluate innovative and promising strategies. As that process 
unfolds, there are steps that we can take right away. The budget 
proposes to maintain a strong foundation with funding for existing 
programs, while taking steps to foster innovation and improvement. The 
budget includes:
  --Training and Employment Services.--The 2015 budget includes more 
        than $3 billion in formula and other grants to States and 
        localities to provide training and employment services to more 
        than 20 million Americans at over 2,500 American Job Centers 
        across the country. The budget maintains the State-wide reserve 
        at 8.75 percent, as enacted in fiscal year 2014.
  --Workforce Innovation Fund.--The 2015 budget proposes $60 million to 
        support innovative State and regional approaches to the design 
        and delivery of employment and training services that generate 
        long-term improvements in the performance of the public 
        workforce system, both in terms of employment outcomes and 
        cost-effectiveness.
  --Incentive Grants.--The 2015 budget requests $80 million for 
        revamped Incentive Grants for States and tribal governments. 
        These funds will be used to reward States and tribal 
        governments that demonstrate the greatest success in their WIA 
        programs serving subpopulations facing significant barriers to 
        employment, such as the long-term unemployed, disconnected 
        youth, individuals with disabilities, and veterans. A limited 
        number of grants would be awarded based on the extent to which 
        eligible entities improve their performance relating to 
        employment outcomes. Combined with the Workforce Innovation 
        Fund, the grants would invest an amount equal to 5 percent of 
        WIA formula grants to drive innovation and better performance 
        at the State and local level.
  --Reemployment and Eligibility Assessments/Reemployment Services 
        (REA/RES).--For those who have lost their jobs, the budget 
        request would reconnect unemployed workers to jobs more quickly 
        through an investment of $158 million in discretionary funds 
        for reemployment and eligibility assessments and reemployment 
        services (REA/RES), an evidence-based approach to speed the 
        return to work of UI beneficiaries. Research has shown that 
        when reemployment eligibility assessments are delivered 
        seamlessly with reemployment services, they are significantly 
        more effective, with claimants less likely to exhaust their UI 
        benefits, shorter UI durations and lower benefits paid, and 
        faster returns to work with higher wages and job retention. 
        Savings attributable to the program were almost three times 
        higher than the cost. Included in this proposal is dedicated 
        funding to ensure that all recently separated military 
        personnel receiving Unemployment Compensation for Ex-
        Servicemembers (UCX) get these services to help them 
        successfully transition to the civilian workforce. The request 
        is also sufficient to provide services to the top quarter of UI 
        beneficiaries most likely to exhaust benefits.
  --Sector Strategy.--The Department requests $15 million for grants to 
        States, consortia of States, or regional partnerships to 
        develop employment and training strategies targeted to 
        particular in-demand industry sectors in regional economies. 
        These grants will help ensure that the long-term unemployed and 
        other targeted populations receive the training they need for 
        careers for in-demand industry sectors.
  --Job Corps.--The 2015 budget proposes $1.7 billion for the Job Corps 
        program to prepare disadvantaged young people for jobs in high-
        demand occupations with good wage potential and to further 
        their education and training as well as their responsibilities 
        of citizenship and adulthood. The 2015 budget includes $13.8 
        million to open and fully enroll students in two new Job Corps 
        centers in New Hampshire and Wyoming, the last two States 
        without centers, and continues the Administration's commitment 
        to improving and reforming the Job Corps program. These reforms 
        include closing a small number of underperforming Job Corps 
        centers; focusing the program on the older youth for whom it 
        has been demonstrated to be effective; improving procurement 
        and financial oversight; modernizing operations with a revised 
        Policy and Requirements Handbook; and ongoing cost-savings 
        reforms.
 protecting america's workers and their income and retirement security
    Worker protection programs are crucial to protecting the health, 
safety, wages and working conditions of America's workers. The American 
people rely on the Department to fulfill our responsibility to make 
these protections not just words in the statute books, but real 
safeguards against threats to their lives and livelihoods. The budget 
includes nearly $1.9 billion for the Department's worker protection 
agencies. Some highlights of our worker protection request include:
  --Wage and Hour.--The 2015 budget proposes an increase of almost $30 
        million for the Wage and Hour Division (WHD) to hire 300 new 
        investigators to target the industries and employers most 
        likely to break laws that ensure workers receive a fair day's 
        pay for a fair day's work, including the minimum wage and 
        overtime pay, as well as the right to take leave to care for 
        their own or their families' medical needs. Included in this 
        increase are funds transferred from the Women's Bureau to 
        enhance enforcement of the Fair Labor Standards Act and the 
        Family and Medical Leave Act, two laws of critical importance 
        to women. An additional $0.8 million will be used to strengthen 
        the agency's training and professional development program, 
        ensuring that all new and existing investigators have the 
        information and skills they need to be effective. The budget 
        also provides $5.8 million for WHD to develop a new integrated 
        enforcement and case management system that will allow 
        investigators to better employ data analysis in identifying 
        violations, targeting investigations and compliance assistance 
        efforts, and evaluating the impact and quality of enforcement.
  --State Paid Leave Fund.--Too many American workers must make the 
        painful choice between the care of their families and a 
        paycheck they desperately need. While the Family and Medical 
        Leave Act allows many workers to take job-protected unpaid time 
        off, millions of families cannot afford this. A handful of 
        States have enacted policies to offer paid leave, but more 
        States should have the chance to follow their example. The 
        budget includes a $5 million State Paid Leave Fund to provide 
        technical assistance and support to States that are considering 
        paid leave programs. In addition, as discussed above, the 
        Administration's Opportunity, Growth, and Security Initiative 
        includes $100 million in additional funds for this Fund.
  --Employee Misclassification.--The 2015 budget provides nearly $14 
        million to help identify and combat the misclassification of 
        workers as independent contractors, which deprives workers of 
        the benefits and protections to which they are legally 
        entitled, such as minimum wage, overtime pay, unemployment 
        insurance, and antidiscrimination protections. This includes 
        $10 million in continued grants to States to recover unpaid 
        unemployment taxes and $3.8 million of the WHD increase for 
        personnel to investigate violations.
  --Occupational Safety and Health Administration.--No worker should 
        have his or her life on the line for a paycheck. Workers need 
        the Occupational Safety and Health Administration (OSHA) to 
        enforce their right to a safe and healthful workplace. The vast 
        majority of employers want to keep their workers safe and they 
        need OSHA to have the resources necessary to help them find the 
        best way to do so. The 2015 budget provides $565 million for 
        OSHA to inspect hazardous workplaces and foster employer 
        compliance with safety and health regulations. The request 
        includes an increase for State grants to ensure that State Plan 
        States can do the same. In addition, the request includes an 
        additional $4 million to strengthen OSHA's enforcement of the 
        22 whistleblower laws that protect workers against retaliation 
        for reporting unsafe and unscrupulous practices and to 
        centralize the agency's audit function and improve the 
        information technology used by investigators to collect case 
        data.
  --Mine Safety and Health Administration.--The 2015 budget requests 
        $377 million for the Mine Safety and Health Administration 
        (MSHA), to build on the remarkable progress MSHA has made to 
        bring the incidence of fatal injuries in the mining industry to 
        an all-time low in fiscal year 2013. The request includes 
        funding increases to improve the timeliness of special 
        assessments, support rulemaking activities, improve systems and 
        data analytics that support enforcement functions, and reform 
        Federal training delivery to help protect workers in one of our 
        Nation's most dangerous industries.
  --Federal Contract Compliance.--The 2015 budget proposes an 
        additional $1.1 million to strengthen efforts by the Office of 
        Federal Contract Compliance Programs (OFCCP) to combat pay 
        discrimination. OFCCP works to eliminate employment 
        discrimination on the basis of race, religion, color, national 
        origin, and sex, to eliminate employment discrimination for our 
        Nation's veterans and workers with disabilities, and to secure 
        equal employment opportunity for workers.
  --Defined Benefit Pension System.--The budget proposes to give the 
        Board of the Pension Benefit Guaranty Corporation (PBGC) the 
        authority to adjust premiums to take into account the risks 
        that different sponsors pose to their retirees and to PBGC. The 
        Board would be able to adjust premiums in both the single 
        employer and multiemployer programs. These premium increases 
        are crucial to improving solvency but will not be sufficient to 
        address the complex challenges facing these plans, and the 
        Administration looks forward to working with Congress on a more 
        comprehensive solution.
  --Employee Benefits Security Administration.--To protect the health 
        and retirement benefits of America's workers, the Department is 
        requesting $188 million for the Employee Benefits Security 
        Administration (EBSA). These funds will protect more than 141 
        million people covered by an estimated 684,000 private 
        retirement plans, 2.4 million health plans and a similar number 
        of other employee welfare plans, which all together hold $7.8 
        trillion in assets.
    In addition, the budget request includes legislative proposals to 
modernize two worker benefit programs to improve the operation of both 
programs.
  --Federal Employees' Compensation Act (FECA).--The fiscal year 2015 
        request for the Department of Labor proposes once again to act 
        on longstanding recommendations from the Government 
        Accountability Office, Congressional Budget Office, and DOL's 
        Inspector General to improve the Federal Employees' 
        Compensation Act (FECA), which has not been substantially 
        updated since 1974. These reforms will help workers return to 
        the dignity of work and will generate government-wide savings 
        of more than $340 million over 10 years.
  --Unemployment Insurance (UI) Reform.--The combination of chronically 
        underfunded reserves and the economic downturn has placed a 
        considerable financial strain on States' UI operations. It is 
        important to enhance the UI system's solvency and financial 
        integrity while maintaining benefits for job seekers. The 
        budget proposes to provide immediate relief to employers to 
        encourage job creation now, improve State fiscal responsibility 
        going forward, and work closely with States to eliminate 
        improper payments.
                         additional priorities
    The Department's budget request also includes other programmatic 
increases outside the training and employment services and worker 
protection areas that support the well-being of American workers.
  --Bureau of Labor Statistics (BLS).--BLS is the principal Federal 
        statistical agency responsible for measuring labor market 
        activity, working conditions, and price changes in the economy. 
        Its mission is to collect, analyze, and disseminate essential 
        economic information to support public and private 
        decisionmaking. These policies and decisions affect virtually 
        all Americans. The budget request of $610 million includes an 
        increase of $1.6 million to add one annual supplement to the 
        Current Population Survey that would collect information 
        relevant to labor force trends, including data on contingent 
        work and alternative work arrangements, and workplace 
        flexibility and work-family balance. The budget also includes 
        an increase of $2.5 million for the Consumer Expenditure (CE) 
        Survey to support the Census Bureau in its development of a 
        supplemental statistical poverty measure using CE data.
  --Information Technology Modernization.--The goal of the Department's 
        IT Modernization effort is to provide the foundation for the 
        technology needed to transform the way the Department provides 
        services to, and interacts with, the American public. It 
        continues the integration of the Department's many 
        infrastructures and consolidation of data centers to provide a 
        more robust, reliable, cost-effective, and energy-efficient 
        computing environment. Additional resources are being requested 
        for a new Digital Government Integrated Platform, which will be 
        used to provide a foundation of mobile computing and open data 
        services that can be leveraged by agencies to enhance and 
        deploy mission-specific applications and capabilities. These 
        services will contribute to improved customer service and 
        collaboration opportunities and maximize the return on 
        investment in technology to support agency business operations.
  --Evidence and Evaluation.--The Department continues its evidence-
        based approach incorporating rigorous evaluation in all 
        agencies and in every discretionary grant program, ensuring the 
        best and most secure technology is used to make administrative 
        data available for program management and evaluation. The 2015 
        budget proposes to continue the provision for a setting aside 
        funding for Departmental evaluations, preserves dedicated 
        funding for Labor's Chief Evaluation Office, and also includes 
        an additional $2.4 million and 5 FTE to create a department-
        wide data analytics unit, to create the capacity for the 
        Department to use its administrative data to assess 
        performance, analyze trends, and better target it work.
  --Legal Services.--The 2015 budget proposes an increase of $6.6 
        million to support initiatives proposed for the Wage and Hour 
        Division, OSHA's Whistleblower Protection Program, EBSA's 
        Health Benefits Security project, and to enable SOL to continue 
        to provide a full range of legal services to OWCP's Division of 
        Coal Mine Workers' Compensation.
  --Adjudication.--The 2015 budget proposes an increase of $2.0 million 
        for the Office of Administrative Law Judges to support 
        productivity increases and alleviate the growing backlog of 
        cases before the judges; an increase of $1.3 million from the 
        Black Lung Disability Trust Fund to fully fund adjudication of 
        claims under the Black Lung Benefits Act; and $0.2 million for 
        the annual maintenance and support funding of the DOL Appeals 
        Management initiative for the Adjudicatory Boards.
                               conclusion
    In fiscal year 2015 the Department of Labor will strive to advance 
our mission of serving American workers and employers and to build the 
foundation for our next 100 years. Our request helps create 
opportunities for working Americans by investing in skills and our 
enforcement infrastructure. The budget will help ensure that the 
Department has the resources to lead the job-driven workforce system to 
hone the job skills of American workers; bolster efforts that address 
long-term unemployment; maintain safe and healthy workplaces; 
strengthen worker voice in the workplace; safeguard critical minimum 
wage and overtime protections for workers; and ensure secure 
retirements. The Department's budget request is really a request to 
invest in the opportunity and potential of the American people.
    That's why I am so eager to tackle these challenges every single 
day. As it's been for all 101 years of our existence, I believe the 
work of the Labor Department is the work of America.
    Mr. Chairman, thank you for inviting me today. I look forward to 
working with you during the coming year and I am happy to respond to 
any questions that you may have.

    Senator Harkin. Thank you, Mr. Secretary.
    We will begin with a round of 5-minute questions.

    IMPROVING EMPLOYMENT OPPORTUNITIES FOR PEOPLE WITH DISABILITIES

    Mr. Secretary, I would just like to lead off with something 
I am sure you know has been an intense interest of mine for all 
my adult life, and that is the employment of people with 
disabilities.
    We worked together in fiscal year 2010 here to initiate the 
Disability Employment Initiative. This effort is helping to 
improve the physical and programmatic accessibility of our 
Nation's workforce system for individuals with disabilities.
    More than $80 million has been awarded to 26 States under 
this effort, from this committee. Last year, the Department of 
Education awarded grants for 11 States to undertake the PROMISE 
(Promoting the Readiness of Minors in Supplemental Security 
Income) Initiative, a more than $200 million effort.
    Your department has collaborated on this important 
initiative designed to improve education and employment 
outcomes for 14- to 16-year-olds with disabilities and their 
families.
    Now, again, we are working very hard. Senator Alexander and 
I and others have been working for a long time on the Workforce 
Investment Act bill to get it reauthorized. We are still 
working on it. Our staffs will be working on it while we are 
gone for the next 2 weeks. We hope to have something together 
shortly on this.
    Part of that will be focused on this issue of making sure 
that young people with disabilities get access to, or 
encouragement for, support for, integrated what we call 
competitive employment.
    I would just like to get your thoughts on the Department of 
Labor and how can we be more helpful to realize employment 
outcomes for people with disabilities, and ensuring that they 
just aren't all in 214(c) or 14(c) subminimum wage programs.
    I would just like to hear your thoughts on what the 
Department of Labor is looking ahead to do.
    Secretary Perez. Sure. Well, first of all, thank you for 
your leadership on this issue, Senator. You take a backseat to 
no one on this. When I think of the ADA (Americans with 
Disabilities Act), I think of Tom Harkin.
    I remember the 10-year anniversary when I was working in 
the Clinton administration. It was at the FDR Memorial, and you 
did your entire speech, you signed it, and I will never forget 
that.
    I will never forget the 20th anniversary where I got to 
celebrate it when I was in my old job with Governor Thornburgh, 
because he has become a good friend and he was a champion 
because this issue has always been bipartisan. And I want to 
commend President George Herbert Walker Bush for his 
leadership.
    And that tradition continues.
    Senator Harkin. Just to interrupt you, I want to say, last 
Friday, I was at the George H.W. Bush Library in College 
Station, Texas, for the 25th anniversary of the Bush 
presidency. You might say, what were you doing there?
    Secretary Perez. I know exactly what you were doing there.
    Senator Harkin. I was invited down by Fred McClure, who 
runs that, and Boyden Gray, and others. The first panel they 
had on Friday was on the ADA, so we had Lex Frieden, John 
Wodatch, Boyden Gray, and myself on the panel, talking about 
it. The President was there. And Barbara, the First Lady, was 
there. A huge crowd.
    And it was just wonderful to see the old crowd together 
again. The Dick Thornburghs and Lou Sullivans and the people 
who worked so much on getting the ADA passed. It was just an 
uplifting day last Friday. I just wanted to throw that in.
    Secretary Perez. We have come such a long way, not only 
eliminating physical barriers, but attitudinal barriers, and it 
is a result of the bipartisan leadership.
    However the area where I think we have a long way to go is 
in the area of employment of people with disabilities.
    Just yesterday, the Department of Justice, my old office, 
we had been working together with them on this, announced a 
statewide settlement with the State of Rhode Island. I want to 
commend Governor Chafee, because he was a big proponent of the 
settlement, which addresses the exact issue that you are 
talking about: People with disabilities, who can do so much 
more, were basically segregated into the sheltered workshops.
    What I have said repeatedly, and you said it last weekend 
when we were together, people with disabilities don't want 
pity; they want opportunity. The settlement yesterday that we 
reached, which has gotten a lot of good coverage, is based on 
the notion that if you can do the work, you should be allowed 
that opportunity to do so. And we have given people a 
significant raise, because they are no longer in the subminimum 
wage.

 WORKING WITH THE BUSINESS COMMUNITY TO EMPLOY PEOPLE WITH DISABILITIES

    Other things that we are doing, in addition to cases like 
that, is the 503 reg. I am very proud of the work we have done 
there. I am very appreciative of the leadership in our OFCCP 
(Office of Federal Contract Compliance Programs) office.
    Frankly, we have been doing a lot of outreach to the 
business community on this. Governor Ridge wrote an op-ed 
talking about how the process in the 503 reg is a model of how 
regulations should be produced.
    We are continuing to work there, and I want to commend 
Walgreens, because I have visited their place in Connecticut. 
This is their distribution center, Senator, that distributes 
all the Walgreens products from Maine down to Baltimore, and I 
think 45 percent of their employees are people with 
disabilities. It is the most productive facility that they 
have. Everyone is making a minimum of, I think, $14 an hour 
plus benefits.
    It was a remarkable experience, and I again commend the CEO 
of Walgreens, who has made an unflagging commitment to the 
empowerment of people with disabilities.
    Senator Harkin. Greg Wasson. He is wonderful, the CEO of 
Walgreens.
    My time is running out, but looking ahead, the business 
community has really stepped forward on this. I am having the 
CEO of Procter & Gamble in tomorrow at our hearing. A lot of 
them have visited that facility up there in Connecticut. I have 
been there myself.
    And so the business community is really moving ahead. I 
just would like to say, again, I hope you and the department 
will join together with the business community in making sure 
that they have people with disabilities that they can hire when 
they get out of school.
    There is a role for the Department of Labor to play in 
that, and I hope that we can join forces with these great 
leaders in the business community.
    Secretary Perez. And I will be meeting with many of them at 
the end of the month, because we are continuing that outreach.
    And Greg, I refer everybody to him, because if he can do 
it, you can do it. That is our mantra.
    Senator Harkin. Exactly. Thank you.
    Senator Moran.
    Senator Moran. Mr. Secretary, thank you again. I want to 
refer first to the farming activities and OSHA regulations, and 
then I want to talk to you about the fiduciary rule and ERISA 
(Employee Retirement Income Security Act).

   APPLICATION OF THE OCCUPATIONAL SAFETY AND HEALTH ACT TO FARMING 
                 OPERATIONS WITH LESS THAN 10 EMPLOYEES

    From 1976 forward, Congress has included specific 
appropriations language prohibiting OSHA from using taxpayer 
funds to apply requirements under the Occupational Safety and 
Health Act to farming operations with less than 10 employees in 
our Labor-HHS bill.
    In 2011, the director of OSHA's enforcement program issued 
a memorandum indicating that rider did not preclude OSHA from 
conducting enforcement activities, regardless of the type of 
operation performed on the farm.
    You have heard from 43 Senators in an effort led by the 
Senator from Nebraska, Senator Johanns, regarding this policy, 
expressing some concerns.
    And my question really is, and my understanding is: You 
have taken a step back, indicated that you do not want to 
change the intent of that rider, that the department is not 
intending to expand or to violate the intent of that rider 
since 1976. And I just would like for you to bring me up-to-
date on where this issue is within the department and in OSHA.
    Secretary Perez. Sure. Yes, sir.
    We have removed the memo, that is the 2011 memo, which was 
the source of confusion. We take these riders very, very 
seriously. We have instructed the team at OSHA that when you 
are in a circumstance where you discover that it is a family 
farm under 10 employees, that is the end of statement, and case 
closed.
    Senator Moran. I appreciate that answer.

REWRITING THE RULE DEFINING FIDUCIARY UNDER EMPLOYEE RETIREMENT INCOME 
                              SECURITY ACT

    Let me then turn to the fiduciary rule. This goes back to a 
proposed rule in 2010. The Department of Labor proposed 
regulations regarding the definition of a fiduciary, which is 
regulated under ERISA.
    According to the department, the intent of the proposed 
rule was to define more broadly the circumstances under which a 
person or entity is considered a fiduciary when giving 
investment advice to an employee benefit plan or the plan's 
participants.
    There was significant bipartisan opposition concerns raised 
with expanding the definition of fiduciary. And again, a rider 
was included in the Labor-H appropriation bill. That rider 
prohibited the department from moving forward with its proposed 
rule.
    And my questions here are, because of that rider--I assume 
you would say the same thing; you take those riders seriously; 
you can't go forward with that rule--but does the department 
intend to propose a rewrite of the rule?
    Secretary Perez. The original proposed rule was withdrawn, 
and the process has been slowed down at my direction 
significantly, because we wanted to take a step back, listen, 
and learn from everyone.
    The issue that we are trying to address, Senator, is the 
following: The most important two financial decisions that 
people make in their lives are the decision to buy a home, and 
now with the transformation from defined benefit plans to 
401(k) and others, the decision of how to invest your 
retirement nest egg.
    In both contexts, we want to make sure that people make 
informed decisions and that the person giving you that advice 
is working in your best interest. And so that is the needle 
that we are trying to thread. That is the goal that we are 
trying to achieve.
    The reason that we slowed this process down is that I want 
to make sure that we hear from everybody. We have been engaged 
in a significant amount of outreach, and I have met with a 
number of Senators on both sides of the aisle, and a number of 
Members of Congress on both sides of the aisle. We are going to 
continue to do that, because I am learning a lot.
    As I mentioned before, when Senator Ridge wrote about the 
work that we did, and the process that we undertook in the 
section 503 reg, that is the process that we want to undertake 
in everything we do. I am a big believer that you get the best 
results when you build a big table and make sure that 
everyone's voice is heard.
    Senator Moran. I appreciate that.
    How would you describe the status of that process now? You 
are taking input. Is there a draft of a rule in the works?
    Secretary Perez. We continue to take input, and again, I 
have had a number of meetings with folks in Congress, et 
cetera, and we are looking carefully at the best way to address 
this issue.
    One thing I would say to you, or ask of you, really, is, if 
you have a constituent that contacts you and says, ``I have 
been trying to talk to DOL, and I have been having trouble,'' I 
hope you will let me know, because I want to make sure that we 
hear every voice.
    Senator Moran. Let me ask this, I think for a second time, 
but maybe I wasn't clear the first time: Is there a rule that 
is being written now, or are you only in the stage of 
soliciting information about the possibility of a rule? Do you 
plan on writing a rule?
    Secretary Perez. Well, we are taking in all the information 
right now, because I want to hear from people in terms of what 
their perspectives are, what their thoughts are. The rider 
language allowed for a re-proposal, as I read it.
    This is different from the farm rule, which I interpret as 
pretty clear in terms of what you can and can't do. I think 
this is equally clear.
    That is what we are doing right now, trying to listen and 
learn.
    Senator Moran. No rule is being written at the moment?
    Secretary Perez. Well, again, we are taking in information 
right now, so that we can figure out what the best course of 
action is, and that is exactly where we are in the process.
    Again, we are also consulting with the SEC (Securities and 
Exchange Commission), because one of the sets of feedback I 
heard, Senator, was that the SEC has equities in this. I agree. 
The SEC has equities, and as recently as a week ago, I had a 
conversation with Chair Mary Jo White, and we continue to talk 
on a regular basis.
    We will continue to do that. I have read all the letters of 
concern. I have had numerous meetings on this. I probably have 
spent as much time on this as just about any issue, because I 
appreciate the stakes.
    Whenever you do a rulemaking, you have to be concerned with 
what I call the doctrine of unintended consequences. You are 
trying to solve a problem. In the course of solving a problem, 
you don't want to create new problems.
    Senator Moran. I almost appreciate your entire answer, and 
particularly appreciate the part about unintended consequences.
    I think we use that excuse way too often in Congress, in 
the administration. ``Well, that is an unintended 
consequence.'' ``Well, our job is to determine what the 
consequences----''
    Secretary Perez. Anticipate them.
    Senator Moran. Correct.
    Secretary Perez. Absolutely. I couldn't agree more.
    Senator Moran. So I appreciate your answer. I know that 
working with the SEC is important. They had some criticism of 
the proposed rule in the first place.
    Mr. Chairman, thank you very much.
    Secretary Perez. Thank you, Senator.
    Senator Harkin. Thank you, Senator.
    I will go to Senator Alexander, and then I will go to 
Senator Merkley, and then Senator Johanns.
    Senator Alexander. Welcome, Mr. Secretary.
    Secretary Perez. Good morning. Good to see you again, 
Senator.
    Senator Alexander. Good to see you again.
    I want to use my 5 minutes to talk just a little bit more 
about the fiduciary rule and some about what is going on with 
the overtime letter from the President.
    Secretary Perez. Sure.
    Senator Alexander. On the fiduciary rule, this seems to me 
to be the case, you talked about you have a background in 
States. And my experience is, with all respect, that States 
have a way of being more pragmatic. Sometimes up here, we are 
more ideological in Washington. And your experience in the 
State might be well-served as you try to deal with this 
fiduciary rule.
    Without relitigating an old issue, one of the unintended 
consequences we may have learned from the Affordable Care Act 
is that even though it sounds like a good idea to require 
people to buy more benefits with a health insurance policy, 
they end up costing more and get outside their budget.

         STRATEGIES FOR REWRITING THE DEFINITION OF A FIDUCIARY

    And in thinking about the fiduciary rule and the way you 
work on this, I think about the difference between the 
Government as an enabler and the Government as a mandater.
    I mean, we have maybe 75 million households who get 
investment advice from somebody. And what we are really talking 
about is the difference between the conversation they might 
have with an investment adviser and the conversation they might 
have with a fiduciary, someone who has a duty--a legal duty--to 
them to give them a certain amount of responsibility.
    Now all these people can have a fiduciary responsibility, 
if they want to pay for it. I mean, it is available, if they 
want to pay for it. But many don't want that much advice. Or 
they don't need that kind of fiduciary advice, and they can't 
afford that kind.
    So it would seem to me that one of the strategies for 
dealing with this might be to let people know that a higher 
level of advice is available to them, if they want it and if 
they want to pay for it, but not to suddenly turn just your 
everyday investment advice conversation into one that is 
fraught with all the legal responsibilities of the fiduciary 
duty, which is available to anybody who wants to pay for it, 
and who can afford to pay for.
    Is that a promising strategy?
    Secretary Perez. Senator, I very much agree with what you 
said at the outset, when you said that working at the State 
level sometimes is a useful set of experiences. What was useful 
about my experience as the Labor Secretary in Maryland is I was 
the Governor's point person on the foreclosure crisis.
    Working together with all the stakeholders, we enacted a 
series of forward-leaning reforms, all of which had virtually 
unanimous support in the State Senate and the State House and 
the support of the industry. The way we got there was: We built 
a big table.
    Points like the point you are making, I spent a lot of time 
with mortgage brokers, because there were a lot of concerns 
raised about whether brokers were providing information to 
potential lenders that was in that lenders' self-interest, or 
if they were trying to, frankly, line the brokers' pockets.
    We had a lot of open and frank conversations about this. We 
were able to thread the needle in a way that had the support of 
the brokers at the end, the support of the lenders, the support 
of the consumer groups.
    That is the process that we are undertaking here, listening 
to your points----
    Senator Alexander. I have about 30 seconds to ask----
    Secretary Perez. No, no. So your point is very well-taken, 
and those are examples of the types of things that we need to 
consider moving forward.
    Senator Alexander. I would encourage that. We have some big 
ideological differences on this committee, but we also get a 
lot done, sometimes unanimously, because we go through that 
process.
    Secretary Perez. I agree.

                    UPDATING REGULATIONS ON OVERTIME

    Senator Alexander. Now, what is going on here with the 
overtime? Normally, under the law, if you are going to change 
overtime regulations, which affect a maximum of 130 million--
you know, everybody, working Americans.
    The law says you are supposed to come out once in the 
spring and once in the fall with these big regulatory changes. 
And you typically, I am paraphrasing here, but basically, you 
summarize what you are about to do, and you often indicate a 
schedule of when you are going to do it. And it lets people all 
over the country know what you are going to do.
    But here came a memo from the President that was outside 
the law that was basically making it look like it came from his 
State of the Union Address, where he said, if Congress won't do 
it, I am going to do it anyway.
    There is a law here that says if you are going to affect 
overtime rules, there is a way to do it. Why aren't you doing 
it that way?
    Secretary Perez. Well, we are. In fact, it is my 
understanding that the day the President announced this, we 
contacted your staff and offered to brief them.
    Senator Alexander. Well, that has nothing to do with a law 
that says twice a year these kinds of regulations are supposed 
to be included in a document that is public to everybody, once 
in the spring and once in the fall.
    Shouldn't you get this back on that kind of track?
    Secretary Perez. Well, Senator, we are moving forward with 
the overtime rule, and we are doing so, and will continue to do 
so, in a way that is very consistent with how we did 503, and 
with how we are doing the other issue that you asked about, in 
terms of the conflict of interest.
    We have a long way to go. I have spoken to a lot of 
business leaders. I have spoken to other informed stakeholders, 
because I want to make sure that we get it right.
    We received your letter last night asking about this. We, 
certainly, intend to respond to you in short order. I read that 
letter at roughly 8 o'clock or so last night, and I will make 
sure that we respond to all your questions on the overtime 
rule.
    Senator Alexander. But what about the Regulatory 
Flexibility Act. Shouldn't you be doing this within the terms 
of the Regulatory Flexibility Act, which is a law?
    Secretary Perez. Well, we intend to have, and will continue 
to make sure that we are compliant with all of the regulatory--
--
    Senator Alexander. It is a yes or no, isn't it? Shouldn't 
you only be doing that within the terms of the law and not 
freewheeling this?
    Secretary Perez. Well, I wouldn't describe anything that we 
are doing as freewheeling, sir. Again, there is a reason why we 
offered to brief you the day that we announced it, because we 
wanted to go on a bipartisan basis----
    Senator Alexander. It does not say in the law, ``Go brief 
Senator Alexander.''
    Secretary Perez [continuing]. And we went above and 
beyond----
    Senator Alexander. This is a law. Do this according to the 
terms of this act. And so far as I know, you haven't done it. 
If you are doing it, I would like to know it.
    Secretary Perez. Well, sir, we received your letter last 
night, and we will respond as soon as possible to your letter.
    I am confident that this process is going to mirror the 
processes that we undertake in all of our regulatory work.
    Senator Alexander. Thank you.
    Senator Harkin. Thank you.
    Senator Merkley.
    Oh, I am just told we have a vote at 11 a.m. So Senator 
Merkley and then Senator Johanns.
    Senator Merkley.
    Senator Merkley. Thank you very much, Mr. Chairman.
    And thank you, Mr. Secretary.
    Secretary Perez. Good morning, Senator.

PROHIBITING WORKPLACE DISCRIMINATION ON THE BASIS OF SEXUAL ORIENTATION 
                           OR GENDER IDENTITY

    Senator Merkley. Last month, I joined more than 200 Members 
in the House and Senate to send a letter to President Obama 
renewing our request that the President issue an Executive 
order banning contractors from receiving Federal Government 
contracts unless they have a policy of prohibiting 
discrimination on the basis of sexual orientation or gender 
identity.
    According to various reports, your department has completed 
its preparatory work, and that decisionmaking now rests with 
the White House.
    Understanding that the department would play a critical 
role in implementing any Executive order, are there any 
additional actions the department is taking to prepare or that 
it could take to prepare for the possibility of such an order?
    Secretary Perez. I recall the letter. I read the letter. I 
believe we actually responded to the letter, if my memory 
serves me, or we are in the process of responding.
    I appreciate your longstanding leadership not only on ENDA 
(Employment Non-Discrimination Act), but on the whole issue of 
nondiscrimination.
    We are working very hard on this issue. I worked very hard 
on this issue at the Department of Justice (DOJ). The first 
hearing I had after I was confirmed to DOJ was on ENDA, the 
bill that you introduced, and was one of the original 
cosponsors of.
    We are going to continue those efforts, because I want to 
make sure that everybody gets judged by the content of their 
character and the quality of the work that they do and no 
irrelevant factors. This matter continues to be a matter of 
significant importance to the administration, to me, and to the 
Department or Labor.
    Senator Merkley. Thank you. I appreciate that.
    And I will just use this occasion to continue my urging 
that--I was very pleased that the Senate, on a bipartisan, 2-
to-1 basis, said it was time to end discrimination in the 
workplace.
    It doesn't appear that bill is going to get a vote in the 
House. I wish there would be a vote. There should be a vote on 
something as key to our Constitution as equality and 
opportunity.
    But in the absence of such action, I want to continue my 
encouragement for the President to consider issuing an 
Executive order in this regard.

  IMPLEMENTING REASONABLE BREAK TIME FOR NURSING MOTHERS PROVISION OF 
                          AFFORDABLE CARE ACT

    Let me turn to a second issue. The Affordable Care Act 
included a section called Reasonable Break Time for Nursing 
Mothers. It is a provision I took from work that I have done in 
Oregon State, that women going back to work who have just had 
babies have the privacy and flexibility and break time to 
express breast milk, which is not only wonderful for the health 
of the baby but is also wonderful for the health of the mother 
and has been widely embraced in Oregon.
    We have a clause that allows a company to exempt itself, 
and not a single company has exempted itself. They have all 
found ways to make this work.
    So it has been implemented at the national level through 
your department, and I just want to check in to see if 
appropriate resources for educating companies, assisting 
companies to find a way to make sure that this bill could work, 
are occurring, and whether you have any insights in the 
implementation.
    Secretary Perez. Well, again, thank you for your leadership 
on this. This is one of those really important issues that 
confront working mothers.
    I recall, when I was at DOJ, we took steps prior to passage 
of the Affordable Care Act to address these issues, because it 
was the right thing to do, and it was the smart thing to do.
    We continue to take our responsibility in this regard very 
seriously.
    I would say that our experience has been identical to how 
you describe your experience in Oregon, Senator, which is that 
technical assistance and education have been very, very 
successful. Employers recognize that this is, again, the right 
thing to do, the smart thing to do, and they are doing it.
    Senator Merkley. Thank you. And if there are challenges 
that arise, I, certainly, would like to hear about them, as we 
think about how to expand this, not just from the current law, 
which is for wage-earning workers, but we like to expand it to 
cover salaried workers as well.
    And I won't ask you now, but if you have any thoughts on 
challenges on such an expansion, it would be appreciated.
    Secretary Perez. Sure.

 CONVERTING THE EXPERIMENTAL CONSUMER PRICE INDEX FOR THE ELDERLY INTO 
                      AN OFFICIAL PUBLISHED INDEX

    Senator Merkley. With the balance of my time, I wanted to 
ask about the Consumer Price Index (CPI)-E (for the elderly). I 
would like to see the Department of Labor convert the 
experimental CPI-E into a fully official published index.
    The CPI-W (Urban Wage Earners and Clerical Workers) only 
represents about 32 percent of the U.S. population. It doesn't 
reflect the inflation experience of older Americans. And 
according to the Congressional Research Service, the cost of 
living under CPI-W rose at an average rate of 2.9 percent over 
that period of time, while the cost of living for seniors rose 
at 3.2 percent, or roughly, if you will, a 0.3 percent 
difference.
    Over time, that makes a difference, a significant 
difference, as we think about having accurate indexes for areas 
that it might be applied, such as in Social Security.
    So I just would like to express this interest in seeing the 
department pursue that conversion from the experimental to the 
officially published index, and whether you have any insights 
or comments on that.
    Secretary Perez. Sure. Well, this is not the first time I 
have heard this, and it is an important issue. I appreciate you 
bringing it to our attention. I meet regularly with the head of 
BLS (U.S. Bureau of Labor Statistics) to have this discussion.
    One of the challenges that we are working through is that 
there are some design issues, cost issues. However, I also 
recognize the point that you are making, and I look forward to 
talking to you and really getting your insight as we move 
forward to figure out what the best course of action is in this 
area.
    Senator Merkley. Thank you very much.
    Senator Harkin. Senator Johanns.
    Senator Johanns. Thank you, Mr. Chairman.
    Secretary Perez. Good morning, Senator.
    Senator Johanns. Good to see you, Mr. Secretary.
    Secretary Perez. Good to see you, Senator.

   FAMILY FARM EXEMPTION UNDER THE OCCUPATIONAL SAFETY AND HEALTH ACT

    Senator Johanns. Let me, if I might, just ask a question or 
two to follow-up on the questions that Senator Moran asked you 
about the family farm exemption.
    I thank the Senator from Kansas for bringing this up, 
because this is a very important issue, and not just in 
Nebraska, but across the country.
    As Senator Moran pointed out, for about 35 years, Congress 
has looked at this area and put language in that basically 
said, if you employ more than 10 outside employees, then you 
are subject to OSHA. If not, then you are not.
    And lo and behold, that world changed, and I appreciate the 
fact that the memorandum has now been pulled back, and I know 
the enforcement actions have been pulled back.
    Let me ask you this, just so I understand your testimony 
relative to what you were asked by Senator Moran. You said that 
if there are fewer than 10 outside employees, the inquiry is 
over. Is that the current position of the Department of Labor?
    So you are working with a farm, fewer than 10 outside 
employees, you take no further action?
    Secretary Perez. If it is a farming operation with fewer 
than 10 people, that is my understanding of what the rider was 
intended to get at, and that is the end of the story.
    Senator Johanns. Okay. And so long as that language is in 
the rider, that will continue to be the position of the 
Department of Labor?
    Secretary Perez. Yes, sir.
    Senator Johanns. Okay. Do you have any current plans, as 
you know, I would say, you were attempting or your department 
was attempting to get around this language by classifying 
certain pieces of the farming operation as not a part of the 
farming operation.
    In this case, it would be grain storage. Theoretically, it 
could be a whole host of things.
    Do you have any current plans that your goal would be to 
separate certain operations that I would regard as farming 
operations from that definition and thereby go in and regulate?
    Secretary Perez. We don't have current plans. What I have 
learned from my experience getting up to speed on this is that 
sometimes answering the question of whether you are a family 
farm is easier said than done.
    I spend a lot of time in rural Wisconsin. That is where my 
in-laws live, and we go up there two or three times a year. It 
is all farm country. And what we have seen in some cases is 
that when we go in, there was one facility that had a tomato 
canning operation on the side. There were others where their 
grain silos were actually servicing a number of other farms in 
the area. There was another case where when they were asked to 
define their operation, they used a code that was above and 
beyond what the definition of a family farm was.
    One of the things I have learned from this is that it is 
easier said than done. What we are trying to do, and make sure 
we do a better job of, is determine, at the outset, what is the 
operation that we are seeking to go into, and get that answer. 
If the answer is as we just discussed, then that is the end of 
the issue.
    The thing that was motivating us in this case, and I think 
we all have a shared interest, is making sure that we prevent 
deaths in grain silos; that was the issue that was out there. 
We have done a lot of work, very collaboratively, with farmers 
and associations to prevent these very tragic deaths that were 
the impetus for some of this work.
    Senator Johanns. Yes, and we, certainly, share that. I grew 
up on a farm myself. I have been around grain bins, power 
takeoff shafts, all of those things.
    Secretary Perez. Right.
    Senator Johanns. But having said that, here is what I am 
getting to: When it comes to family farms, haven't we, as 
Congress with this rider language, basically told you what we 
believe the situation is in terms of how to define a family 
farm? We have said, if you have more than 10 outside employees, 
guess what, you are no longer a family operation. According to 
our view of the world, you are something else, and subject to 
OSHA jurisdiction. If you are under 10, on the other hand, you 
are a family farming operation.
    Would you agree with that?
    Secretary Perez. I would agree with that. I would also note 
that you instructed us to consult with USDA (U.S. Department of 
Agriculture) on this issue and make sure that we have guidance 
that is consistent with your directive. I can tell you that we 
are in the middle of doing that as well, and that we have begun 
that process, pursuant to your request. That has been very, 
very helpful, so that we can make sure that we understand the 
situations that you have clearly defined, that the Department 
of Labor, OSHA should not be in, and that we can ensure we are 
in compliance.
    Senator Johanns. Right. Here is my thought on that, and I 
am out of time, so I will wrap up here very quickly, no one 
wants these deaths to occur. They are just hugely tragic. 
Oftentimes, they involve young people, and we don't want that 
to happen.
    I think if you would work with us, USDA, the Farm Bureau, 
FFA (Future Farmers of America), 4-H, on and on, about a 
program that says, look, here are some practices we would like 
to talk about in terms of protecting yourself, and kind of a 
self-education, education awareness program.
    I was in FFA growing up, 4-H, both. And I just think they 
would embrace it. I think they would say to you, yes, that 
makes so much sense to us. And they probably have programs like 
that going on anyway.
    That is where I really want you to focus your attention, 
because I think we have defined family farms as something less 
than 10 employees, outside employees.
    So I will continue to encourage you the way I did in my 
letter. Reach out, work with us. That is really what we are 
trying to achieve here, a safer environment for that kind of 
process.
    Secretary Perez. I look forward to working with you on 
that, because we have learned a lot and we have actually had 
some success working collaboratively. I would like to go to 
school on your experience, so that we can really fulfill our 
shared interest in preventing tragic deaths.
    Senator Johanns. Great. Thank you.
    Secretary Perez. Thank you.

                 FARM SAFETY FOR JUST KIDS ORGANIZATION

    Senator Harkin. If I might, I just want to add to that, I 
would encourage you, Mr. Secretary, and your staff, to reach 
out to an organization called Farm Safety for Just Kids. It was 
started by Marilyn Adams about, oh, about 30 years ago, I 
guess. Her son lost his life in a grain silo accident.
    So she started an organization to start teaching farmers 
about farm safety. A lot of kids work on farms. And kids, 
nothing can hurt you when you are a kid, you know. They take 
all kinds of chances.
    They have built up a great deal of expertise over the 
years. It has become a national organization. I don't know if 
their headquarters are still in Iowa or not, or where it is.
    Senator Johanns. I think in Iowa.
    Senator Harkin. It is still there? They have done great 
work in teaching farmers and farm families how to set up 
systems so that kids don't get hurt, young people don't get 
hurt.
    I will just say, as long as you are pursuing this thing, to 
check with that group. They really have developed a lot of 
expertise.
    Secretary Perez. I will make sure that we do that.
    Senator Johanns. Mr. Chairman, I am so glad you mentioned 
that, because she is outstanding. I met with her when I was 
Secretary of Agriculture.
    Senator Harkin. Is that so?
    Senator Johanns. This came about because of a very tragic 
event, but she has taken that as kind of a catalyst to really 
engage here. She has laid a tremendous foundation.
    I wasn't thinking about that when I was talking about whom 
to partner with here, but that would be perfect.
    Senator Harkin. Yes. I just found out she retired, so now 
the organization has taken on different people. It was taken 
over and continues, so she built quite an organization.
    But I just say, have your people look at that, because they 
have a lot of good background information on this.
    Secretary Perez. We have been doing a lot, and we can learn 
a lot more from all of you. So we look forward to doing that.
    Senator Harkin. I know we are going to be called for a vote 
pretty soon. I just have one short question, and that is on 
employee misclassification.
    Secretary Perez. Yes.

          IDENTIFYING AND COMBATING EMPLOYEE MISCLASSIFICATION

    Senator Harkin. You mentioned that the budget provides for 
$14 million to identify and combat misclassification, and you 
say this includes $10 million in continued grants to States to 
recover unpaid unemployment taxes at $3.8 million of the Wage 
and Hour Division increase for personnel to investigate 
violations.
    Is the total amount that you are putting in for employee 
misclassification $14 million? Or is it $27 million or $28 
million? I am trying to figure out----
    Secretary Perez. $14 million, sir.
    Senator Harkin. $14 million. Again, I just want to 
encourage you, I hear so much about employee misclassification, 
both as the chairman of the authorizing committee, but as a 
Senator from Iowa, too. I just hear a lot about this, about 
misclassification, and how workers are really, well, I will say 
it frankly, being cheated out of what they should be paid, 
because of misclassification. I encourage you to really pursue 
this.
    Secretary Perez. Thank you. I hear this as much as anything 
from business owners. There was a guy, he develops residential 
housing, and he tells me, ``Tom, I am playing by the rules. I 
am paying my employees. I pay their workers comp. I do all 
that. The guy down the road who is competing with me is paying 
everyone under the table. I keep getting undercut. I can't do 
this, and I don't want to cheat.''
    There are three victims: There is the worker, himself or 
herself; there are the business owners who are playing by the 
rules; and there is the tax collector.
    And I saw this in Maryland. We called it workplace fraud in 
Maryland.
    Senator Harkin. That is what it is.
    Secretary Perez. Because ``misclassification'' feels like a 
clerical error. You have to call it what it is.
    We are doing partnerships with States. We have MOUs 
(memoranda of understanding) with States across this country, 
and it is not a red state/blue state thing. We have 
partnerships with Utah. We have partnerships with other States, 
because it is a real issue across this country.
    Senator Harkin. A big issue.
    That is all I have.
    Senator Moran. Do I have time for one more?
    Senator Harkin. Sure you do.

            IMPROVING EMPLOYMENT OPPORTUNITIES FOR VETERANS

    Senator Moran. Mr. Secretary, what do we need to do to 
significantly improve the opportunities for veterans' 
employment? You have a number of tools. The Department of 
Veterans Affairs (VA) works on these issues. But we continue to 
have a significant challenge in this country with our veterans 
returning, with our military men and women returning and 
becoming veterans and unable to find employment.
    Secretary Perez. This is one of those things that I spend 
as much time on as any, Senator. There are a lot of tools in 
the toolbox.
    One of the tools, as it relates to the fiscal year budget 
request for this coming year, is the enhanced RES (Reemployment 
Services)/REA, that is targeted at two populations. It will 
enable us to target two populations, veterans coming out of 
service and the long-term unemployed, so that we can help them 
get the training they need.
    One other thing we are doing, and I know you have to run to 
a vote, but we are working very closely with the VA and DOD 
(Department of Defense) to get people further upstream. With 
the mandatory discharge, as the drawdown in Afghanistan picks 
up, what we are trying to do now is get them 6 months before 
they are actually out of the service, and then figure out, what 
are your goals? We don't want to get them for the first time 
when they are doing transition assistance a week before they 
are leaving. We want to get them 6 months upstream, so that we 
can help connect them perhaps to the apprenticeship program, so 
when they leave, they are ready to work.
    We are doing a lot of work upstream. We are doing a lot 
more work through the First Lady's office with the business 
community. We just had an event with the construction industry, 
and we have a lot of individual employers who stepped up.
    However, in the construction industry, what they did was 
they said that we are going to embed veteran hiring into the 
DNA of all of what we do, not just the ABC Company, but every 
employer.
    You have Helmets to Hardhats that the labor unions and 
others have put forth.
    I am really heartened by what I see in terms of the level 
of interest. The demand is growing and growing, and that is why 
this has been an all-hands-on-deck enterprise for the 
administration.
    I welcome any ideas you have about how we can do it better, 
because nobody has a monopoly on good ideas in this.
    Senator Moran. Mr. Secretary, let me suggest to you that a 
concept that I have a lot of interest in is entrepreneurship, 
the ability to start a business. We have worked with the 
Department of Veterans Affairs in trying to have them focus 
some of the benefits that a veteran is entitled to for 
education, for training, on the ability to create the capital 
necessary to start a business.
    And if there are ways that we can work with the Department 
of Labor to create an environment in which a startup, a new 
business origination, it very well may be a veteran's choice, 
but may not have the tools to accomplish that.
    So while I ask about employment, and that would lend itself 
to thinking about training and education, in addition to that, 
if you put into your broad thinking, are there ways to help a 
veteran who has an entrepreneurial idea pursue the American 
dream in their garage or their barn, take an idea to market? We 
want to explore those opportunities with the Department of 
Labor as well.
    Secretary Perez. I love it, and I would love to brainstorm 
with you.
    Senator Moran. Thanks very much.
    Secretary Perez. Great. Thank you.
    Senator Moran. Mr. Chairman, thank you.
    Senator Harkin. Thank you.
    Thank you, Mr. Secretary.

                           CLOSING STATEMENTS

    First, before you all leave, I also want to recognize Terri 
Bergman for all your years of public service, both at DOL, but 
also on the Hill when you were here and working with us and 
when you were over on the House side. You have been, I 
shouldn't say, just a familiar face; you have been an integral 
part of a lot of our appropriations processes for a long, long 
time.
    I understand you are retiring and relocating to Cape Cod. 
Let me know how it is up there. I am retiring next year, 
myself.
    But again, you have been a tremendous asset as the Deputy 
Assistant Secretary on our Congressional and Governmental 
Affairs. And I know I can speak on behalf of all of our staff 
in saying we are going to miss you. You have been a great asset 
to the smooth functioning of this process, and we thank you for 
your years of public service. We wish you well in your 
retirement.

                     ADDITIONAL COMMITTEE QUESTIONS

    Now, Mr. Secretary, thank you again for being here, for 
your forthrightness and your openness in responding to our 
questions.
    The record will remain open for additional statements and 
questions for 10 days.
    [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 Tom Harkin
  bureau of international labor affairs efforts to combat child labor 
                             abuses abroad
    Question. Mr. Secretary, as you know, I have been a strong 
supporter of the Bureau of International Labor Affairs' (ILAB) efforts 
to protect labor rights and combat the worst forms of child labor 
around the world. In fact, you and I were together last week with the 
Ivorian and Ghanaian government representatives assessing some of the 
progress with have made in reducing the worst forms of child labor in 
the cocoa sector as a result of some technical assistance programs 
funded through ILAB. I want to give you an opportunity to comment on an 
element of ILAB's work that is particularly close to my heart: ILAB's 
technical assistance projects. Would you please share some of the ways 
that these projects are making a difference on the ground and, discuss 
some of the safeguards in place to ensure that project funds are well 
spent on this critical mission?
    Answer. ILAB's technical assistance funding is an essential element 
of its successful efforts to advance worker rights and livelihoods 
throughout the world. Since 1995, DOL has funded 278 projects in 94 
countries to address child labor. Currently, DOL is funding 37 active 
projects in 64 countries, worth over $240 million. These projects use 
an integrated approach that helps remove and prevent children from 
exploitative work, while offering them schooling alternatives and 
livelihood support for their families, so that they can overcome 
reliance on the labor of their children to meet basic needs. To date, 
DOL-funded child labor reduction projects have rescued approximately 
1.7 million children from exploitative child labor. DOL projects also 
play a major role in building the capacity of governments and other key 
actors to combat child labor at the national, district, and community 
levels. In addition, DOL projects train labor inspectors and law 
enforcement officials to improve child labor law enforcement.
    In addition, ILAB funds technical assistance projects that address 
broader worker rights issues, particularly in those countries with 
which the United States has free trade agreements and trade preference 
programs. These projects promote the effective enforcement of labor 
laws by strengthening labor inspections systems, raising awareness and 
capacity of employers to comply with labor law and of workers to 
exercise and claim their rights, improving occupational safety and 
health, promoting productive labor-management relations, and 
strengthening social safety nets for vulnerable workers.
    We consider oversight of technical assistance funding to be one of 
ILAB's most important responsibilities. We use a variety of tools to 
ensure proper oversight. Projects funded by DOL are required to submit 
regular technical and financial progress reports. DOL uses these 
reports to track the grantees' use of funds and implementation of 
agreed upon project activities. DOL also contracts with independent, 
external evaluators and auditors, who are charged with assessing 
project performance and compliance with required regulations. Through 
the use of this combination of oversight tools, DOL seeks to ensure 
proper use of USG funds and to maximize project benefits for workers, 
children, and families in target communities.
    wage and hour division plans to prevent abuses of workers with 
                              disabilities
    Question. Mr. Secretary, the Department plays a critical role in 
promoting ramps and ladders of opportunity for all Americans and in 
protecting their rights in the workplace. That's why I know you share 
my outrage about the abuse of workers with disabilities that occurred 
in Atalissa, Iowa. Please tell me what your specific plans are for 
making sure we never have another situation like that at Henry's Turkey 
Service?
    Answer. Since 2010, the Department has initiated a full review of 
its procedures for enforcement and administration of section 14(c). A 
number of changes have already been made. For example, Henry's Turkey 
Service allowed their certificate authorizing the payment of subminimum 
wages pursuant to section 14(c) to lapse and indicated they would 
choose to pay the full minimum wage equivalent to all workers, but we 
later learned that they did not do so. The Department's strategic 
enforcement protocols for 14(c) now includes a sampling of lapsed 
certificate holders to ensure these former certificate holders are not 
continuing to pay subminimum wages in violation of the law. In 
addition, the Department has initiated action to revoke certificates in 
certain circumstances, and is currently developing standardized 
protocols for dissemination to all staff on revocation of certificates 
for egregious or willful violations of the law. With an increase in FTE 
for the enforcement of section 14(c), the Department will be able to 
increase its directed enforcement activity and further develop 
strategies to address the most egregious violators.
    The Department also partners with other Federal agencies such as 
the Department of Justice, the Department of Education, and the 
Department of Health and Human Services to ensure that employers with 
14(c) certificates provide adequate protections to individuals with 
disabilities. These collaborations help to ensure that all protections 
are available to workers with disabilities as a part of a comprehensive 
and vigorous enforcement program.
    In addition to its enforcement efforts, the Department is committed 
to ensuring that all our stakeholders--employers, community 
rehabilitation programs, advocates, and workers--fully understand the 
rules that apply to employing workers with disabilities at subminimum 
wage rates. We have increased our outreach to stakeholders, conducting 
at least 10-day-long seminars on section 14(c) each year since 2012. 
These seminars are free and open to all interested parties. Finally, 
the Department has recently added a senior advisor to enforcement 
agency staff to help promote and connect the work we do in section 
14(c) with national, regional, and local organizations who work with 
people with disabilities. This key staff member will help ensure the 
agency has an open line of communication for workers and their 
advocates.
                  reemployment eligibility assessments
    Question. Mr. Secretary, since 2005, this subcommittee has provided 
more than $400 million to support Reemployment and Eligibility 
Assessments (REAs). As you know, the President's budget request 
includes $158 million, an increase of $78 million, to expand the 
existing REA program to include reemployment services. This enhanced 
model would provide personalized assistance to unemployed workers and 
target services to UI claimants most likely to exhaust their benefits 
and to all returning service members who are receiving unemployment 
benefits. Can you explain why the model of combining REAs and 
reemployment services as proposed in the President's budget is 
effective in helping people get jobs faster and preventing long-term 
unemployment?
    Answer. There is a compelling rationale for supporting an expanded 
integrated Reemployment Services and Reemployment and Eligibility 
Assessment (REA) program to support rapid reemployment of UI claimants 
and to reduce UI improper payments. Research has shown that both REAs 
and the provision of reemployment services to UI claimants--and 
particularly the combination of the two--are effective at reducing UI 
costs. Both models reduce UI duration and save UI trust fund resources 
by helping claimants find jobs faster and eliminating payments to 
ineligible individuals. REAs have been found to be effective in 
reducing duration and total benefits received by claimants in Florida, 
Idaho, and Nevada. Nevada's model was particularly effective in 
reducing benefit costs. A further study of the Nevada model, which 
delivered REAs seamlessly with reemployment services, found it to be 
significantly more effective than the other states studied in the 
following ways: \1\
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2487∓=y&start=21&sort=7
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  --Claimants were significantly less likely to exhaust their benefits;
  --Claimants had significantly shorter UI durations and lower total 
        benefits paid (1.82 fewer weeks and $536 lower total benefits 
        paid);
  --Claimants were more successful in returning to work sooner in jobs 
        with higher wages and retaining their jobs; and
  --The savings from the program were almost 3 times higher than the 
        cost.
    This integrated approach was also explored in the implementation of 
the Emergency Unemployment Compensation (EUC) program when it was 
extended through December of 2013.
    In addition, on February 14, 2014, Nevada's REA model was 
recognized as a ``Near Top Tier Initiative'' by the nonprofit, non-
partisan Coalition for Evidence-Based Policy.
                                 ______
                                 
                Questions Submitted by Senator Jack Reed
                  job corps program year 2012 surplus
    Question. The Job Corps Program ended Program Year (PY) 2012 with a 
substantial surplus. In January, 20 of my colleagues and I sent a 
letter urging the Employment and Training Administration (ETA) to 
prioritize increasing the number of students served with the surplus 
funds. We also asked that ETA develop a plan for increasing On Board 
Strength (OBS) in a transparent manner, in collaboration with Job Corps 
stakeholders. Please provide information on:
  --The exact dollar amount of the PY 2012 surplus;
  --The factors that led to the surplus;
  --How the surplus funds will be utilized, including the dollar 
        amounts that will be allocated for specific activities;
  --The plan for increasing OBS, including the timing and allocation by 
        Job Corps center of additional OBS; and
  --The steps that the Department is taking to maximize OBS for PY 2013 
        and PY 2014.
    Answer. The Exact Dollar Amount of the PY 2012 Surplus.--In 
consultation with the contractors, the Department determined that there 
were PY 2012 funds that remained unspent and uncommitted on the center 
operators' contracts for PY 2013. After an evaluation of the balances 
remaining on the contracts and negotiations with the contractors, we 
were able to reduce center operators' funding PY 2013 needs by 
$40,060,523 due to funds remaining available on these contracts and the 
ability to spend funds across fiscal or program years. This reduction 
in center operator needs in PY 2013 allows Job Corps to use the funds 
to address additional critical needs.
    The Factors That Led to the Surplus.--The underrun occurred due to 
cost savings measures implemented in Program Year (PY) 2012 and the 
slower than anticipated enrollment of students after the enrollment 
suspension was lifted in April 2013. Expenditures by contractors were, 
in a majority of cases, less than what was obligated to the contracts, 
and that funding remained available on those contracts after the end of 
PY 2012. DOL worked with the contractors to quantify how much funding 
remained available on their contracts, as well as to determine their 
funding needs for the remainder of both the contract year and PY 2013. 
This collaborative process resulted in the identification of 
approximately $40 million in obligated but unspent and uncommitted 
funds that remained on the contracts. We reached agreement with the 
contractors that this amount would be reduced from their remaining PY 
2013 allocations, allowing Job Corps to repurpose the money for the 
remainder of PY 2013.
    How the Surplus Funds Will Be Utilized, Including the Dollar 
Amounts That Will Be Allocated for Specific Activities.--As a result of 
the cost savings, Job Corps will re-allocate some PY 2013 funds for 
crucial needs, including ramping up on-board strength (OBS) to the 
proposed PY 2014 level, improving Job Corps infrastructure, examining 
program design, and strengthening procurement support.
    Because we are committed to ensuring that the Job Corps program 
serves as many students as affordable under the appropriation, we have 
allocated a portion of the recaptured funds to begin to ramp up to the 
PY 2014 OBS level supported by the Consolidated Omnibus Appropriations 
Act (Public Law 113-76). We recently announced the plan for increasing 
OBS to the PY 2014 levels, and have begun working with the Job Corps 
operators to implement it. The methodology considers performance, 
center capacity, and prioritization of high-performing Career Technical 
Training (CTT) programs.
    In addition to increasing OBS to the level that can be afforded in 
PY 2014, we are using the recaptured funds to make important 
investments in the Job Corps program that have not occurred in recent 
years due to the budget constraints. These program investments include:
  --Job Corps Infrastructure.--Job Corps has implemented a much-needed 
        modernization of equipment and technology at Job Corps Centers. 
        A recent survey of Job Corps operators indicated specific 
        equipment needs at Job Corps Centers, many of which were items 
        that are worn, broken, outdated, or have created safety 
        concerns. These equipment purchases were prioritized to help 
        ensure that our students have a safe and effective learning 
        environment where the students are trained on equipment that 
        can continue to meet accreditation standards. This investment 
        includes not only training equipment, but educational and 
        information technology (IT) upgrades that will benefit current 
        and future students.
  --Program Redesign and Streamlining.--The Program and Requirements 
        Handbook (PRH), the key guiding document for Job Corps 
        activities, is cumbersome and outdated. We are reexamining the 
        program's design to create a more cost-effective program model, 
        while also updating operational standards to better serve 
        today's students. We are dedicating a small portion of the 
        funds to a complete review of the program design and a revision 
        of the 1,371-page PRH. This will be a collaborative and open 
        process, and we have already begun collecting input from Job 
        Corps' many stakeholders.
  --Procurement Support.--A small portion of the funds is being 
        invested towards responding to a recommendation from the Office 
        of the Inspector General's Job Corps financial audit. This 
        funding will be used to acquire expert assistance through 
        contractors to assist with the preparation of Independent 
        Government Cost Estimates (IGCEs). See Federal Acquisition 
        Regulation (FAR) 15.404-1. An IGCE is the government's own 
        assessment of what a particular scope of work, activity, 
        service, or product needed should cost based on an evaluation 
        of a similar scope of work, activity, service, or product 
        available in the private marketplace. As part of the 
        acquisition process, this expertise will improve the 
        Department's estimate of the operating costs of contracts for 
        Job Corps centers, outreach and admissions, and career 
        transition assistance for students. This is one of many steps 
        we continue to take to ensure contracting integrity and sound 
        financial management.
  --Contract Closeouts.--ETA is working with Job Corps center operators 
        to reconcile historical obligations to actual costs incurred, 
        such as direct costs for serving students and adjustments to 
        indirect cost rates. We are currently working to review close-
        out claims submitted by contractors and want to ensure we have 
        funds available to pay all liabilities owed.
    The Plan for Increasing OBS, Including the Timing and Allocation by 
Job Corps Center of Additional OBS.--ETA recently announced the plan 
for increasing OBS to the PY 2014 levels, and we have begun working 
with the Job Corps operators to implement it.
    The Steps That the Department Is Taking to Maximize OBS for PY 2013 
and PY 2014.--The reduction in contracted OBS in PY 2012 was a critical 
step undertaken to ensure financial stability within the program and 
establish an OBS level for PY 2013 that was supportable under the 
fiscal year 2013 appropriation, including sequestration. We are 
continuing to monitor contractor expenditures against OBS levels as we 
evaluate the efficacy of our OBS levels and contract amounts. Based on 
an increased appropriation in fiscal year 2014 and reviews of the 
contract expenditures and OBS levels, DOL plans to increase OBS levels 
to a level supportable in PY 2014 to ensure the program serves the most 
students possible within the appropriation.
        revision of program requirements handbook for job corps
    Question. The Department has indicated that it plans to undertake a 
full revision of the Program Requirements Handbook for the Job Corps 
program. Please provide a detailed plan for the review process, 
including timelines, staffing requirements, and the estimated cost.
    Answer. Job Corps has launched an initiative to re-examine its 
policies and practices to create a more streamlined, focused and 
efficient system for the delivery of essential residential, job-based 
training services to youth to ensure they are prepared with the 
industry-recognized education and technical credentials to enter and 
remain attached to the workforce. The process is collaborative, 
leveraging the depth and breadth of knowledge and experience within the 
Job Corps community. It will result in a full revision of the program's 
Policy and Requirements Handbook (PRH). The process, timeline, staffing 
requirements and estimated costs are as follows.

------------------------------------------------------------------------
                  Action                              Timeline
------------------------------------------------------------------------
Initiate plan: develop scope, action plan   Complete
 & guiding principles.
Procure Support Contract: develop scope,    Spring 2014
 conduct procurement, award contract.
Launch initiative: conduct webinar series.  Complete
Collaborate with ETA partners: Contracting  Ongoing
 & Budgeting offices to address policy
 change implications.
Solicit Job Corps community input:
    --Conduct Opinion Request to solicit    Complete
     field policy recommendations.
    --Conduct series of Listening Forums    Complete
     to prioritize policy issues.
    --Hold policy discussions with Federal  Spring 2014
     Management Team.
    --Establish PRH Modernization           Spring 2014--ongoing
     Workgroup with operator
     representation. Conduct in-person &
     virtual meetings.
    --Develop and launch Web-based Job      Spring 2014--ongoing
     Corps Community of Practice.
Conduct policy review:
    --Form expert field practitioner        Summer 2014
     workgroups.
    --Review existing policy & develop new  Summer 2014
     policy recommendations.
    --Identify performance expectations,    Fall 2014
     assessment strategies, technical
     assistance resources.
    --Organize & consolidate all policy     Fall 2014
     recommendations.
Review& assess policy content               Winter 2014
 recommendations: Field review & comment;
 management decisionmaking.
Modify accountability systems to align      Fall 2014-Spring 2015
 with revised policy: outcome measures,
 student accountability, reporting;
 financial management.
Conduct training for the Job Corps
 Community:
    --Design & conduct face-to-face         TBD
     training conferences.
    --Develop virtual and online training   TBD
     courses.
Develop transition strategy:
    --Develop procurement transition        TBD
     timeline & revised Statement of Work.
    --Establish transition period & target  TBD
     date for implementation.
------------------------------------------------------------------------

    Staffing Requirements.--The work will be accomplished primarily 
within existing Federal and contract operator staffing resources. 
Assistance in soliciting input, organizing and conducting workgroups, 
consolidating recommendations, revising and indexing content to ensure 
consistency, and designing and conducting training for the Job Corps 
system will be provided through a National Office PRH support contract 
with approximately five FTE, as follows:

Project Director..........................  1 FTE
Project Assistant.........................  1 FTE
Senior Policy & Program Specialist........  2 FTE
Subject Matter Experts....................  1 FTE
 

    Cost.--We are still working on developing the scope of the 
solicitation, but we anticipate the base contract to be no more than $1 
million.
                                 ______
                                 
               Questions Submitted by Senator Jerry Moran
      inspector general's report/corrective actions for job corps
    Question. Mr. Secretary, the Job Corps program ran significant 
funding shortfalls in Program Year 2011 and 2012. As a result, 
enrollment freezes and reductions in on-board strength occurred at Job 
Corps centers. The Department of Labor's Inspector General released an 
audit report in May 2013 that reviewed the internal controls in place 
and found that programmatic, budgetary, and managerial problems as a 
well as a lack of proper program integrity controls contributed to the 
budget shortfalls. The fiscal year 2014 Senate Labor/HHS report 
directed the Department to provide a report no later than December 1, 
2013, on the progress of the Department's implementation of the 
Inspector General's recommendations. While this report is delayed, I 
hope you can update us on the Department's progress.
    What changes have been made in the financial system after the 
budget shortfalls?
    Answer. The Department has implemented strong oversight and cost-
saving measures to ensure that the Job Corps program remains solvent 
and is able to deliver education and vocational services to 
participants served. ETA's Office of Financial Administration (OFA) has 
instituted several initiatives to strengthen and coordinate existing 
controls and create new controls to ensure that obligations stayed 
within budget and to track contractor expenditures against their 
submitted spend plans. Working closely with ETA's Office of Contracts 
Management (OCM), which was created in 2010 to consolidate all ETA 
contracting in the national and regional offices, OFA ensures that Job 
Corps' centers cost reimbursements are accounted for in a more timely 
and accurate way. The added coordination between OFA and OCM has 
resulted in significant improvements in the financial oversight of Job 
Corps. In addition, funds have been set aside to integrate the Job 
Corps program's financial reporting systems with those of ETA to 
further this critical coordination. Finally, additional training has 
been provided to staff members who monitor Job Corps contracts to 
enable them to provide better oversight and improve their ability to 
monitor these contracts.
    Progress toward resolving the issue has been a priority. Of the six 
recommendations in the Office of the Inspector General's (OIG) report, 
four are classified by the OIG as ``Resolved and/or Closed.'' ETA is 
committed to resolving the remaining two recommendations as soon as 
possible. Below is the status of the six recommendations. Additional 
details are available on the Job Corps Web site: http://
www.jobcorps.gov/AboutJobCorps/performance_planning/oigreport.aspx.
      1. Resolved.--Establish necessary criteria and thresholds for 
        detecting potential financial and program risks to be routinely 
        documented and communicated, and identify the appropriate 
        personnel within DOL to receive this periodic information.
      2. In Progress.--Develop and implement formal policies and 
        procedures or enhance existing policies and procedures.
      3. Resolved.--Conduct a formal assessment of human capital 
        resources needed for processes and internal controls over Job 
        Corps funds, and periodically update the assessment.
      4. In Progress.--Periodically review and update the policy for 
        developing cost models applied in determining the IGCE used in 
        Job Corps center contracting activities to incorporate the use 
        of more current guidance and assumptions.
      5. Resolved.--Formally reconcile data on a routine basis between 
        NCFMS, JFAS, and JC-FMS.
      6. Resolved.--Evaluate the cost-benefit of creating system 
        interfaces between NCFMS, JFAS, and JC-FMS.
    ETA currently is refining the process for OJC planning, 
requirements determination, budgeting, and evaluation in order to 
enhance internal controls beyond the actions already taken. This effort 
will lay out a more defined process for all aspects of OJC financial 
and contractual activity for a program year well in advance of the 
start of the year and allow for a more rapid response to OJC budget 
changes.
    Question. What assurances can you give us that additional budget 
shortfalls will not occur?
    Answer. In recent years, we faced a serious challenge when the 
Office of Job Corps projected a funding shortfall and was temporarily 
forced to suspend new student enrollment. Job Corps has adopted 
recommendations made by the Office of Inspector General (OIG) and has 
undertaken a variety of measures to strengthen contract oversight and 
financial management of the program. In particular, Job Corps and the 
Department's Office of the Chief Financial Officer (OCFO) have 
established mechanisms for detecting potential financial and program 
risks to improve related policies, procedures, and internal controls, 
and to routinely reconcile accounting systems data. In addition, Job 
Corps has adjusted student on-board strength OBS to levels that are 
sustainable within its appropriation and is using improved processes to 
prevent similar issues in the future as DOL takes steps to increase the 
OBS. The Employment and Training Administration (ETA) has developed a 
new on-board strength cost model to help the Job Corps program better 
track operational costs by center and project differences between 
centers' spending plans and actual expenditures. These actions, taken 
together, will ensure that Job Corps can prevent future issues and 
correct for past deficiencies. We are also committed to reviewing the 
contracting approaches for the program, and determining what type of 
contracts will allow us to deliver services at the lowest risk and best 
value to the Federal Government.
    Question. What steps have been taken to prevent Job Corps' 
financial problems from re-emerging?
    Answer. ETA has undertaken a variety of measures to strengthen 
contract oversight and financial management of the Job Corps program. 
These include thorough analysis and monitoring of programmatic and 
financial data; aligning the number of students with the levels 
supportable under the program's appropriation; improving communication 
between program, contracting, fiscal, and agency leadership; and 
improving contract administration and oversight as well as providing 
additional training for contracting staff. These necessary changes will 
ensure that we will not have this problem in the future.
                       job corps center closures
    Question. The Administration has stated in both the fiscal year 
2014 and fiscal year 2015 budget requests that it plans to close a 
``small number of centers that are chronically low-performing.'' In 
January 2013, the Department issued a notice seeking public comment on 
the proposed methodology for closing centers. However, no further 
public action has been taken. Yet, the President's fiscal year 2015 
budget request assumes a savings for the Job Corps program of $11.6 
million resulting from the closure of centers. Mr. Secretary, does that 
figure mean that the Department will close centers in fiscal year 2015?
    Answer. The Department continues to finalize the closure 
methodology and plans to issue a Federal Register Notice responding to 
comments received from the public and announcing the revised proposed 
methodology as the next public action. The Department has not yet 
established a date for publication of the final closure methodology.
    Question. If so, how many centers will close?
    Answer. The Department continues to finalize the closure 
methodology and has not yet determined the exact number of centers for 
closure or the individual centers that will be closed.
    Question. What methodology will be adopted for closing centers?
    Answer. The Department continues to finalize the closure 
methodology and will issue a Federal Register Notice responding to 
comments received from the public.
    Question. How will the slots at the centers closing be 
redistributed throughout the Job Corps program?
    Answer. We have not yet made a final decision about slot 
redistributions. As we move forward with this process, we will work 
with the Job Corps stakeholder community to take these considerations 
into account.
                 job corps new on-board strength model
    Question. In Program Year 2012, the Employment and Training 
Administration formulated a new on-board strength model. How will the 
new on-board strength model help the Job Corps program to better 
account for operational costs and prevent future budgetary shortfalls?
    Answer. The new on-board strength (OBS) model recognizes the 
relationship between students and costs. The key results of this 
recognition allowed Job Corps to create a methodology to better account 
for operational costs, prevent future budgetary shortfalls, and avoid a 
repeat of past ``savings drills.'' The model provides a new method for 
Job Corps' budgeting, provides a logical basis for decisionmaking, and 
recognizes that the center funding level should be based on OBS level--
i.e. number of student slots. This model was developed and implemented 
in February-March 2013. The assumptions of the model are listed below:
  --Relationship between center costs and the number of students;
  --Variation by each of Job Corps' 29 cost categories for each Center;
  --Tie inflation increases to projected increases in the budget;
  --Restore reductions to critical academic support areas;
  --Base Job Corps student slots on the appropriation level in each 
        Program Year.
    While the new model is essential to the continuity of operations, 
it requires a stable program of operation and accurate and timely 
submission of costs by Job Corps contractors to be evaluated. The 
Department continues to work on refining and improving the model.
    Question. Were stakeholders consulted in the process of developing 
this new on-board strength model?
    Answer. The on-board strength (OBS) model was developed to identify 
the affordable levels of OBS based on data supplied by contractors and 
the appropriated budget. A center's OBS level was initially based on 
the centers' previous OBS level. ETA and the Job Corps community have 
established a workgroup to examine current financial management 
reporting practices in the Job Corps community. ETA has shared the OBS 
model with that workgroup, though no decisions will come from the 
workgroup. This workgroup is comprised of Job Corps contractors and 
other stakeholders. Job Corps is committed to continued open 
communication with the Job Corps community to harness their expertise.
    Question. If so, how were they consulted?
    Answer. ETA and the Job Corps community have established a 
workgroup comprised of Job Corps contractors and other stakeholders to 
examine current financial management reporting practices in the Job 
Corps community, and ETA has shared the OBS model with that workgroup, 
though no decisions will come from the group. In addition, the 
Department has briefed Congressional staff on the model and continues 
to work with the contractor community on improving the data used in the 
model.
                           sector strategies
    Question. The President's fiscal year 2015 budget requests $15 
million for a new Sector Strategies competitive grant initiative that 
would encourage development and implementation of sector strategies, or 
partnerships, of local businesses, regional workforce boards, and 
educational organizations to support and develop the workforce needs of 
specific industries in that area. A January 2012 GAO report entitled 
``Innovative Collaborations between Workforce Boards and Employers 
Helped Meet Local Needs,'' highlighted Sector Strategies as an 
important workforce approach for meeting the skill needs of workers and 
employers within local or regional economies. Will you share with us 
the details of the Department's new Sector Strategies initiative?
    Answer. The Department's request for $15 million for a new Sector 
Strategies competitive grant initiative will provide funds to states, 
regions, or localities to implement sector-based strategies that meet 
the needs of small, medium, and large businesses in in-demand sectors.
    The Department anticipates awarding competitive grants to implement 
sector-based strategies to meet the dual goals of meeting the needs of 
businesses while providing training and career advancement 
opportunities for targeted populations. These grants would support the 
development of partnerships between the workforce system, business, 
community colleges, economic development, and others such as organized 
labor, the adult basic education system, and supportive service 
providers. The grants also would be used to modify existing training 
based on business demand as well as train and provide career 
advancement opportunities for targeted populations such as acutely or 
chronically long term unemployed, low-wage workers, new labor market 
entrants, and veterans.
    In addition, the Department will award smaller capacity building 
grants to States to support or promote the development of sector 
partnerships. State applicants would identify a local or regional area 
that would pilot the capacity-building activities during the grant 
period.
    Question. In particular, how many grants will be awarded and at 
approximately what amount per grant?
    Answer. Through the Sector Strategies competitive grant initiative, 
the Department anticipates awarding four to five grants potentially 
ranging in size from $2-3 million to implement sector-based strategies 
to meet the dual goals of meeting the needs of businesses while 
providing training and career advancement opportunities for targeted 
populations. The Department also anticipates awarding approximately 
five, smaller capacity building grants to states to support or promote 
the development of sector partnerships.
    Question. How do you plan to involve local industry leaders in this 
initiative?
    Answer. Local industry leaders would be partners and valued 
customers for all Sector Strategies competitive grants. These leaders 
would identify critical, immediate workforce needs, inform curriculum 
design and delivery, provide work-based learning opportunities, and 
receive integrated business services that meet their workforce needs. 
Integrated business services are the range of workforce development, 
economic development, regulatory compliance, and other services 
available from a variety of Federal, State, and local resources that 
meet business' needs.
        job-driven training for workers presidential memorandum
    Question. For the last several years, the Government Accountability 
Office (GAO) has cited duplication across job training programs. In 
addition to GAO's work, concerns have been raised by the subcommittee 
about evaluations of job training programs. It is my understanding that 
the Department continues to work on a ``Workforce Investment Act Gold 
Standard Evaluation,'' which it has been undertaking since 2011. 
However, the evaluation's first findings are not expected until the 
fall of 2015, and final impact findings will not be released until the 
summer of 2017. Can you explain how the new Job-Driven Training for 
Workers Presidential Memorandum will accomplish in 180 days what your 
Department has already been working on for 3 years and will not 
complete for three more?
    Answer. DOL views the Workforce Investment Act Gold Standard 
Evaluation and the overall job training review that is directed by the 
Presidential Memorandum as complementary but not identical efforts.
    In his State of the Union address, President Obama laid out a 
vision based upon the principle of opportunity for all. Key parts of 
that vision are helping people get the skills they need to succeed in 
good-paying jobs and ensuring that America's employers have the skilled 
workers they need to successfully compete in the global economy. On 
January 31, 2014, the President issued a memorandum tasking Vice 
President Biden to conduct a broad review of our Nation's employment 
and training programs to make this vision a reality, focusing on making 
workforce programs and policies throughout the government more focused 
on imparting relevant skills, more easily accessed by both employers 
and job seekers, and more accountable for positive employment and 
earning outcome results. This review is guided by the principle of job-
driven training for workers. The review will result in an action plan 
that identifies steps to make sure that programs throughout the Federal 
Government deliver on the promise of job-driven training for workers 
and for employers. The Department of Labor is working with the Vice 
President and our colleagues at the Departments of Commerce, Education, 
Health and Human Services, and in other agencies to implement this 
review and identify concrete ways to help more of American's workers on 
a faster path to valuable skills and credentials, good jobs, and 
meaningful careers.
    In contrast to the Vice President's review, the Gold Standard 
evaluation is a long-term evaluation that will determine the impact of 
services provided to adults and to dislocated workers under the 
Workforce Investment Act of 1998. The evaluation will produce the first 
impact estimates in December 2015 as scheduled, and the final impact 
results in the summer of 2017. The Vice President's review is also 
focused on improving the accountability for the outcomes of training 
programs.
    I look forward to discussing with the Committee the results of the 
Vice President's review.
    Question. Why have the reports from GAO on job training duplication 
not spurred any significant budget proposals from the Department on 
consolidation?
    Answer. The GAO report does not recommend that training and 
employment programs be consolidated. Rather, it recommends better 
collaboration across programs. The Administration is focused on 
improving coordination and alignment in the workforce system as GAO has 
suggested. The Vice President is currently leading an across-the-board 
review of employment and training programs. One of the key goals of 
that review is to improve workforce system coordination across program 
funding streams.
    The Administration is also taking steps to improve service delivery 
and increase coordination and alignment within its current authority as 
well as through proposals in the President's budget. For example, the 
Workforce Innovation Fund, launch last year, supports State, regional, 
and local efforts to wok across program silos to produce better 
employment outcomes for job seekers and workers. The latest 
solicitation for grant applications was released in mid-May of this 
year. The 2015 President's budget requests $60 million for the 
Workforce Innovation Fund in 2015. In addition, the budget requests $80 
million for WIA Incentive Grants, which would provide grants to states 
that demonstrate strong performance in serving populations with 
barriers to employment. Since these individuals are likely to be served 
by multiple programs, States that improve program coordination and 
alignment will be more likely to receive these grants. The 
Administration has also sought greater flexibility to blend funding in 
exchange for greater accountability for outcomes. The proposed 
Performance Partnership authority was enacted in the 2014 and will 
permit greater cross-program work to achieve better outcomes for 
disconnected youth. A slightly expanded version of this authority was 
reproposed in the 2015 budget.
    The 2015 President's budget also includes some proposals to 
consolidate employment and training programs in a targeted way that 
protect the most vulnerable populations. The public workforce system, 
authorized by the Workforce Investment Act, provides States and local 
areas flexibility in determining how best to implement their job 
training and employment programs by tailoring the system to meet the 
needs of local jobseekers and employers and support regional economic 
growth. Further, the Department's job training and employment programs 
are geared to serve diverse individuals with specific needs, including 
veterans, dislocated workers, individuals with disabilities, women, low 
income youth, Indians and Native Americans, and migrants and seasonal 
farmworkers. The Department is committed to working with its Federal 
partners to ensure access to services.
    Further, the fiscal year 2015 budget request includes several plans 
to streamline or align workforce and training services, and it also 
emphasizes building on what is working and encouraging innovation to 
improve service delivery and performance. We have proposed to transfer 
the Senior Community Service Employment Program to the Department of 
Health and Human Services, Administration for Community Living, placing 
the program in an agency that shares the mission of helping older 
Americans maintain their independence (both economic independence and 
living arrangements) and actively participate in their communities. 
Additionally, the budget proposes to consolidate the Trade Adjustment 
Assistance for Workers and the WIA Dislocated Worker programs into a 
single New Career Pathways program that will streamline the delivery of 
training and reach as many as one million displaced workers a year with 
a set of core services.
    The Department has also already eliminated some employment and 
training programs that it viewed as duplicative, including the 
Community-Based Job Training Grants and the Veterans Workforce 
Investment Act programs.
        community service employment for older americans program
    Question. The President's fiscal year 2015 budget requests $380 
million in funding for the Community Service Employment for Older 
Americans program. The budget also proposes transferring the program to 
the Department of Health and Human Services, which the subcommittee has 
consistently rejected. Mr. Secretary, how does this budget request 
account for the President's proposed minimum wage increase?
    Answer. The number of participants that can be served under the 
Senior Community Service Employment Program (SCSEP) depends on minimum 
wages at the national, State or local levels. Consistent with standard 
practices, the fiscal year 2015 Budget request assumes current law in 
estimating the number of participants served. As Congress considers 
raising the minimum wage, the Department of Labor, in conjunction with 
the Department of Health and Human Services, would be glad to discuss 
with Congress how various implementation and timing options for a 
minimum wage increase would affect SCSEP slots.
    Question. How would an increase in the minimum wage affect the 
number of slots available to program participants?
    Answer. At the fiscal year 2015 request level, an increase in the 
Federal minimum wage would increase the participant wage rate and 
decrease the number of participant slots in areas where the current 
minimum wage is not at least $10.10. As Congress considers raising the 
minimum wage, the Department of Labor, in conjunction with the 
Department of Health and Human Services, would be glad to discuss with 
Congress how various implementation and timing options for a minimum 
wage increase would affect SCSEP slots.
                           h-1b visa program
    Question. As part of the H-1B visa program, the Department of Labor 
currently receives a portion of the fees assessed to companies who 
apply for these temporary, high-skilled worker visas to provide 
training to U.S. workers. These training programs are designed to 
assist American workers in gaining the skills needed to obtain or 
advance employment in high-growth industries. In addition to annual H-
1B fees, the Department of Labor received additional funds from the 
American Recovery in Reinvestment Act (ARRA) to train Americans. Please 
provide the subcommittee the following information:
    What is the dollar amount distributed from H-1B fees to the 
Department of Labor for the past 5 fiscal years?
    Answer. The Department of Labor collected $668,231,275 in H-1B fees 
from fiscal year 2009 through fiscal year 2013 for the Job Training for 
Employment in High Growth Industries program. The distribution of 
collections by year follows:

----------------------------------------------------------------------------------------------------------------
                                                                    Fiscal year
                                 -------------------------------------------------------------------------------
                                       2009            2010            2011            2012            2013
----------------------------------------------------------------------------------------------------------------
H-1B collections................    $110,820,955    $114,026,359    $130,975,268    $161,232,760    $151,175,933
----------------------------------------------------------------------------------------------------------------

    Question. What is total amount of money provided to the Department 
of Labor from the ARRA?
    Answer. The Department of Labor received $4,806,000,000 in 
discretionary funds from the American Recovery and Reinvestment Act of 
2009.
    Question. What evidence is there to demonstrate the training 
funds--both H-1B fees and the ARRA funds--have resulted in meaningful 
employment for Americans?
    Answer. Since 2008, the Department has funded approximately $1.539 
billion through the following competitive grants using H-1B fees and 
American Recovery and Reinvestment Act of 2009 (ARRA) funds 
appropriated for high-growth and emerging industries (HGEI). 
(Approximately $750 million of ARRA funds were designated for HGEI 
grants, compared to over $4 billion in total ARRA funding for Training 
and Employment Services programs.) Several of these training grants 
include program evaluations, as described below:
High Growth Job Training Initiative (HGJTI)
    The High Growth Job Training Initiative, which began in 2001 and 
ended in 2013, engaged business, education, and the workforce 
investment system in the development of integrated solutions to the 
workforce challenges facing high-growth industries. These industries 
included Advanced Manufacturing, Geospatial Technology, Aerospace, 
Health Care, Automotive, Hospitality, Biotechnology, Information 
Technology, Construction, Retail, Energy, Transportation, and Financial 
Services. This program was funded by H-1B fees.
    The final report \2\ documents the national initiative, describes 
the structure and implementation of projects by selected grantees, and 
provides non-experimental analysis of the early training outcomes of 
HGJTI-funded programs, including some information on early impacts of 
job training activities. Some of these early impacts reported by the 
grantees demonstrate evidence of meaningful employment for 
participants. For example: 49 percent of 593 trainees in the Chicago 
Women in Trades program were placed in jobs with an average earnings of 
$17.62 per hour; 81 percent of 1,098 dislocated workers in the 
Community Center Learning Center entered jobs as full-time entry-level 
aircraft assembler positions earning $10 per hour, and 78 percent 
retained those jobs; and the High Plains Technology Center had 2,162 
training completers of which 74 percent were placed in jobs with an 
average wage of $14-$18 per hour for floor hands and $26 per hour for 
derrick hands.
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    \2\ Available at: http://wdr.doleta.gov/research/
eta_default.cfm?fuseaction=dsp_resultDetails
&pub_id=2478&bas_option=Title&start=1&usrt=4&stype=basic&sv=1&criteria=
High%20Growth.
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H-1B Technical Skills Training (TST)
    The H-1B TST Grant Program, which began in November 2011, provides 
education, training, and job placement assistance in the occupations 
and industries for which employers are using H-1B visas to hire highly-
skilled foreign workers on a temporary basis, and the related 
activities necessary to support such training. This program is intended 
to raise the technical skill levels of American workers so they can 
obtain or upgrade employment in high-growth industries and occupations. 
Over time, these education and training programs will help businesses 
reduce their use of skilled foreign professionals permitted to work in 
the U.S. on a temporary basis under the H-1B visa program. The grants 
represent significant investments in sectors, such as information 
technology, advanced manufacturing, and healthcare. These grants are 
currently active. The Department is funding an implementation study of 
this program that will provide a cross-cutting summary of grantees' 
program operations, including participant recruitment and enrollment 
practices, program services, and key partner roles and 
responsibilities, as well as detailed information on special topics of 
interest and lessons learned. The draft Final Report is expected in the 
spring of 2018.
H-1B Jobs and Innovation Accelerator Challenge (JIAC)
    The Jobs and Innovation Accelerator Challenge (JIAC), which began 
in October 2011, is designed to help regions achieve the demonstrated 
benefits of collaborative, cluster-based regional development. This 
initiative represents the implementation of Administration policy 
priorities to accelerate bottom-up innovation in urban and rural 
regions, as opposed to imposing ``one-size-fits-all'' solutions. The 
JIAC also meets Administration goals for smarter use of government 
resources through reduction of Federal silos and promotion of 
coordinated Federal funding opportunities that offer more efficient 
access to Federal resources. The three Federal funding agencies for 
this project include the Department of Labor, Employment and Training 
Administration (ETA); Department of Commerce, Economic Development 
Administration; and the Small Business Administration. These grants are 
currently active.
    The study being conducted of the JIAC is a process evaluation that 
focuses on the regional industry cluster implementation plans, as well 
as processes and strategies used to develop and accelerate regional 
economic development that translate into new jobs and increased wages 
through these regional partnerships. The draft Interim Report is due to 
ETA in November 2014, and the draft Final Report is expected in the 
spring of 2016.
H-1B Make it in America (MIIA)
    The Make it in America (MIIA) grant program, which began in October 
2013 and is funded by H-1B fees, seeks to encourage foreign and 
domestic businesses to build or expand their operations in the United 
States. This is intended to accelerate job creation by encouraging re-
shoring of productive activity by U.S. firms, foster increased foreign 
direct investment, encourage U.S. companies to keep or expand their 
businesses--and jobs--here at home, and train local workers to meet the 
needs of those businesses. The MIIA also meets Administration goals for 
smarter use of government resources through reduction of Federal silos 
and promotion of coordinated Federal funding opportunities that offer 
more efficient access to Federal resources. The three Federal funding 
agencies for this project include the Department of Labor, Employment 
and Training Administration; U.S. Department of Commerce's Economic 
Development Administration (EDA) and National Institute of Standards 
and Technology Manufacturing Extension Partnership (NIST MEP); and, 
Delta Regional Authority (DRA). These grants are currently active.
    The MIIA evaluation will examine partner infrastructures, strategic 
planning, technical assistance, workforce development resources used 
for workers to develop the needed skills, as well as the local 
community clusters. The evaluation will document successes in 
measureable project outputs, capacity-building outcomes, and realized 
outcomes that lead to building a highly skilled and diverse workforce 
to meet employer demand.
ARRA High growth and Emerging Industries (HGEI)
    Awarded through the Recovery Act, ARRA High Growth and Emerging 
Industries (HGEI) grants that focused on training and placement 
activities included the Energy Training Partnership Grants, Pathways 
Out of Poverty Grants, State Energy Sector Partnership and Training 
Grants, and Health Care Sector and Other High Growth and Emerging 
Industries Grants. These grants ended June 2013.
    ETA funded a random-assignment impact evaluation of four grants 
awarded from two of the ARRA Solicitations for Grant Applications 
(SGA): Pathways Out of Poverty/Green Jobs and Health Care Sector and 
Other High Growth and Emerging Industries SGA. The overall aim of this 
study is to determine the extent to which grantees' participants 
achieve increases in employment, earnings, and career advancement as a 
result of their participation in the training provided by the grantees, 
and to identify promising best practices and strategies for 
replication. The draft Interim Report is due to ETA in June 2015 and 
the draft Final Report is expected in December 2016.
Youth Career Connect
    These grants, awarded in April 2014, are designed to provide high 
school students with education and training that combines rigorous 
academic and technical curricula focused on specific in-demand 
occupations, particularly in science, technology, engineering, and math 
(STEM) related fields. An evaluation of these grants is in the early 
stages of planning at the Department.
H-1B Ready to Work Partnership Grants
    These grants, totaling approximately $150 million, are being 
competed in spring 2014 and expected to be awarded in fall 2014. They 
will be focused on providing long-term unemployed workers with 
individualized counseling, training and supportive and specialized 
services leading to rapid employment in occupations and industries for 
which employers use H-1B visas to hire foreign workers. The grants will 
support public-private partnerships that include the workforce 
investment system; training providers, such as community colleges and 
community-based and faith-based organizations; and businesses including 
at least three actively engaged employers. As part of its commitment to 
producing strong evidence on effectiveness its programs, the Department 
is requiring full participation in a planned impact evaluation as a 
condition of all grants awarded in this competition.
Quarterly Performance Reporting
    Grantees for the above programs report key outcomes (entered 
employment rate, employment retention rate, and average earnings) each 
quarter for participants who have exited the program. These outcome 
data are not yet available for the H-1B, TST, JAIC, or MIIA programs, 
as grantees complete a mandatory planning period before enrolling any 
participants, and most participants have not yet exited training 
programs. Quarterly performance outcomes from these programs will be 
posted as they become available at: http://www.doleta.gov/performance/
results/#etaqr. Archived outcome data are available at: http://
www.doleta.gov/performance/results/Archive_Reports.cfm for the HGJTI 
(see December quarterly reports for 2008-2012 and March 2013) and ARRA 
HGEI programs (see June 2013).
    Question. What percentage of individuals receiving H-1B funded 
training obtains employment after completing that training?
    Answer. Through the High-Growth Job Training Initiative (HGJTI) 
grants, which operated from 2003 through 2013, 63,716 participants 
completed training activities. Of these, 28,753 were placed into 
positions of new employment. The Entered Employment Rate for completers 
is 45 percent. Prior to new reporting requirements implemented in the 
quarter ending December 31, 2011, grantees only reported results for 
individuals who entered employment if those participants entered 
employment and completed training in the same quarter. As a result, the 
total number of individuals that ultimately entered employment and 
training-related employment are actually higher than the results above 
indicate.
    The current H-1B funded training grants, awarded at different times 
since October 2011, have served 43,606 participants as of December 31, 
2013, including 9,967 who were unemployed at enrollment. Of these 
unemployed participants, 8,835 began training by December 31, 2013, 
including 3,762 who completed training. Of these training completers, 
1,990 (52 percent) entered employment by December 31, 2013. These H-1B 
grants are at different stages of their grant periods of performance, 
including some that were still in the planning and startup phase and 
had not yet enrolled participants during the latest (December 2013) 
reporting period.
    Question. What is the average timeframe for receiving employment 
after receiving H-1B funded training?
    Answer. The Department cannot calculate an average time from 
training completion to entering employment because it does not collect 
data on individual hire dates. The Department tracks an entered 
employment rate based on the number of participants who are employed in 
the quarter after the quarter in which they exited the program. (See 
http://wdr.doleta.gov/directives/attach/TEGL17-05_AttachA.pdf.)
    Question. Does the Department collect data on whether individuals 
receiving H-1B funded training remain employed 1 year after they are 
trained?
    Answer. The Department collects employment retention data using the 
Common Performance Measures. The Employment Retention Rate is based on 
the number of people who were employed in the first quarter after they 
exited the program and are still employed up to 9 months after exit.
    For the current H-1B funded investments, the Employment Retention 
Rate (which includes both unemployed and incumbent worker participants) 
is 99 percent for the quarter ending December 31, 2013.
    Question. How does H-1B training help the long-term unemployed?
    Answer. Of the more than $340 million awarded in two rounds of H-1B 
Technical Skills Training (TST) grants in fiscal year 2012, the 
Department designated more than $200 million for grantees serving the 
long-term unemployed.
    In addition, in February 2014 the Department announced the Long-
term Unemployed H-1B Ready to Work (Ready to Work) Partnership grant 
program, currently open for solicitation of grant applications. The 
Ready to Work grant program will utilize approximately $150 million in 
H-1B funds for projects that recruit long-term unemployed workers and 
employ strategies that are effective in getting them back to work in 
middle to high-skill occupations. The Department is planning a rigorous 
evaluation of these grants.
                          governor's set-aside
    Question. The fiscal year 2014 omnibus increased the Governor's 
Set-Aside to 8.75 percent. This program has been successful with states 
that use the funding for state-wide or regional employment initiatives. 
In Kansas, it is my understanding that the State intends to use the 
additional funding from fiscal year 2014 to support employment services 
for veterans. Specifically, Kansas plans to hire a point person at Fort 
Riley, the state's largest military installation, to provide case 
management services to exiting service members. With improved 
coordination of services, the State is confident it can improve the 
employment outcomes of its veterans. However, there is concern from the 
State that until the Governor's Set-Aside is restored to its authorized 
level of 15 percent, limited resources will prevent the State from 
assisting more veterans in finding jobs as they transition to civilian 
life. Why does your Department not support restoring the Governor's 
State Set-Aside to its fully authorized level so that states will have 
the resources and flexibility they need to pursue promising ventures 
such as the one I have referenced?
    Answer. The 2015 budget adheres to the spending levels agreed to in 
the Bipartisan Budget Act of 2013, which was an important first step 
toward replacing the damaging cuts caused by sequestration with 
sensible long-term reforms. However, remaining at these levels 
necessitates difficult decisions, and means that we cannot accommodate 
additional investments in key areas like the job training formula 
grants. The Opportunity, Growth, and Security Initiative proposed in 
the 2015 budget acknowledges this, and included funds to restore prior 
cuts in the formula grants. The fiscal year 2015 budget does, however, 
request the continuation of the reserve at the fiscal year 2014 level, 
which allows for fundamental state oversight and accountability 
activities. Increasing the State reserve without increasing formula 
funding would cut into local funding. The Department will continue to 
work with States to identify ways to operate within these funding 
levels while continuing essential activities.
    The 2015 budget adheres to the spending levels agreed to in the 
Bipartisan Budget Act of 2013, which was an important first step toward 
replacing the damaging cuts caused by sequestration with sensible long-
term reforms. However, remaining at these levels necessitates difficult 
decisions, and means that we cannot accommodate additional investments 
in key areas like the job training formula grants. The Opportunity, 
Growth, and Security Initiative proposed in the 2015 budget 
acknowledges this, and included funds to restore prior cuts in the 
formula grants. The fiscal year 2015 budget does, however, request the 
continuation of the reserve at the fiscal year 2014 level, which allows 
for fundamental state oversight and accountability activities. 
Increasing the State reserve without increasing formula funding would 
cut into local funding. The Department will continue to work with 
States to identify ways to operate within these funding levels while 
continuing essential activities.
                                 ______
                                 
              Questions Submitted by Senator Thad Cochran
                 gulfport, mississippi job corps center
    Question. Secretary Perez, the Job Corps center in Gulfport, 
Mississippi was badly damaged during Hurricane Katrina in 2005. The 
former Secretary of Labor, Secretary Solis, committed to work with me 
to ensure that the Gulfport Job Corps Center is rebuilt and able to 
return to serving the number of young people that it once served. Here 
we are, nearly 9 years later, and this center has yet to be fully 
repaired. Is this acceptable to you?
    Answer. The Gulfport Job Corps Center was closed due to extensive 
damage caused by Hurricane Katrina in late 2005. The center occupies 
the former 33rd Avenue High School, which is eligible for inclusion in 
the National Registry of Historic Places as it dates back to 1921 as 
the only Gulfport high school that served African-American students 
until Gulfport schools were integrated in 1968. The property and 
buildings are owned by the City of Gulfport and leased to Job Corps. 
Work began in 2006 to determine whether existing buildings could be 
repaired and renovated. A determination was made in 2007 that this 
option was not feasible due to the condition of the structures and 
environmental remediation costs. DOL contracted a design/build 
contractor in 2008 to include demolition and construction of temporary 
modular facilities to reopen the Center. Temporary center facilities 
were completed in late 2009, a contract for a Center operator was 
procured, and the Center reopened with a reduced student population in 
2010 (the current OBS is 107). The construction design of the new 
permanent Center was completed and a construction contract was awarded 
in 2011. However, alumni of the 33rd Avenue school objected to the 
demolition of the historic buildings and invoked the historic 
preservation laws. DOL conducted extensive negotiations and meetings 
with the community, but when no agreement was reached, the construction 
contract was cancelled in March 2012. At the community's request, DOL 
hired a local contractor to assess issues regarding renovation and 
preservation, and the report was received in December 2013. Before the 
structural analysis can be completed, the site needs significant 
remediation to determine whether any of the buildings (or parts 
thereof) are structurally sound enough to be preserved. We are 
currently revising the scope of work for the assessment and 
stabilization of the buildings. Once the scope is completed, we 
anticipate issuing a request for proposal by June 30, 2014.
    Question. What are you doing to fix it?
    Answer. Job Corps has worked extensively to address the historic 
preservation concerns of the community. At the community's request, DOL 
hired a local contractor to assess options for renovation and 
preservation, and the report was received in December 2013. The site 
needs significant remediation before the structural analysis on whether 
any of the buildings (or parts thereof) are structurally sound enough 
to be preserved as part of the new Center can be completed. We are 
currently revising the scope of work for the assessment and 
stabilization of the buildings. Once the scope is completed, we 
anticipate a request for proposal by June 30, 2014.
    Question. Secretary Perez, we have three Job Corps centers in 
Mississippi that serve hundreds of underprivileged young people. How 
does the Department's budget request seek to resolve issues in the Job 
Corps program caused by poor planning by the Department so that Job 
Corps centers are not forced to continue to lay off employees and 
reduce the number of students they serve?
    Answer. In recent years, we faced a serious challenge when the 
Office of Job Corps projected a funding shortfall and was temporarily 
forced to suspend new student enrollment. Job Corps has adopted 
recommendations made by the Office of Inspector General (OIG) and has 
undertaken a variety of measures to strengthen contract oversight and 
financial management of the program. We have made necessary changes 
that will prevent similar issues in the future.
    In particular, Job Corps and the Department's Office of the Chief 
Financial Officer (OCFO) have established mechanisms for detecting 
potential financial and program risks to improve related policies, 
procedures, and internal controls, and to routinely reconcile 
accounting systems data. Improvements implemented since 2013 include 
thorough analysis and monitoring of programmatic and financial data; 
aligning the number of students with the levels supportable under the 
program's appropriation; improving communication between program, 
contracting, fiscal, and agency leadership; and improving contract 
administration and oversight as well as providing additional training 
for contracting staff.
    The reduction in contracted on-board strength (OBS) at the end of 
the enrollment suspension in April 2013, was undertaken to ensure 
financial stability within the program and establish an OBS level for 
Program Year (PY) 2013 that was supportable under the fiscal year 2013 
appropriation, including sequestration. Reducing OBS was a critical 
step in ensuring that we started PY 2013 with Job Corps' total 
financial and budgetary commitments aligned with our appropriation. We 
are continuing to monitor contractor expenditures against OBS levels as 
we evaluate the efficacy of our OBS levels and contract amounts to 
inform future discussions about increasing OBS system-wide.
    Question. Have you planned accordingly for the upcoming fiscal 
year?
    Answer. Yes, the reduction in contracted on-board strength (OBS) in 
2013 was undertaken to ensure financial stability within the program 
and establish an OBS level for PY 2013 that was supportable under the 
fiscal year 2013 appropriation, including sequestration. Reducing OBS 
was a critical step in ensuring that we started PY 2013 with Job Corps' 
total financial and budgetary commitments aligned with our 
appropriation. We are continuing to monitor contractor expenditures 
against OBS levels as we evaluate the efficacy of our OBS levels and 
contract amounts. Based on an increased appropriation and reviews of 
the contract expenditures and OBS levels, DOL plans to increase OBS to 
a level that is supportable in PY 2014.
                                 ______
                                 
            Questions Submitted by Senator Richard C. Shelby
                               h-2b rules
    Question. The Department has repeatedly proposed H-2B rules that 
would add regulatory burdens and costs to American businesses. In 
particular, the 2011 wage rule could have increased H-2B hourly wages 
by upwards of 50 percent. Many small businesses that use the H-2B 
program cannot afford this regulation and may ultimately close, which 
will result in more job losses, including putting the American jobs at 
those businesses at risk. The fiscal year 2012 Labor/HHS appropriations 
bill prohibited the Department from moving forward with this dangerous 
rule. That prohibition was continued through fiscal year 2013. However, 
since that time, the Department announced it will move forward with a 
re-proposal of the 2011 wage rule. Mr. Secretary, why is your 
Department moving forward with a re-proposal of the 2011 wage rule, 
despite overwhelming opposition from Congress, industry leaders, and 
stakeholder interests who feel this rule is unworkable and will 
ultimately undermine the program?
    Answer. The Department does not plan to ``re-propose'' the 
prevailing wage rule issued in 2011, but will work off of its 
provisions in developing a proposal for consideration by the regulated 
community and other interested parties on a final wage rule in the H-2B 
program. Following litigation in which a court invalidated the 
regulatory provision setting forth skill levels to set the prevailing 
wage in the H-2B program, the Department issued an interim final rule 
in April 2013 (2013 IFR) that eliminated the use of skill levels in 
setting the prevailing wage. Instead, where there is not a collective 
bargaining agreement that governs the wage determination, the 
Department will set the prevailing wage as the mean of the wages of 
similarly employed workers in the geographic area of employment. Under 
the 2013 IFR, the Bureau of Labor Statistics' Occupational Employment 
Statistics (OES) Survey is used to determine the mean wage of similarly 
employed workers in the geographic area, unless the employer requests a 
wage determination based on another source, such as wage surveys for 
workers employed under Federal government contracts or statistically 
sound private surveys. The Department invited public input on the 2013 
IFR and received over 300 public comments. In light of those public 
comments, recent developments in the H-2B program, Congressional 
actions, and judicial decisions, the Department has determined that 
further notice and comment on setting the prevailing wage in the H-2B 
program is warranted. Therefore, DOL intends to publish a notice of 
proposed rulemaking on the proper wage methodology for the H-2B 
program, working off of the 2011 Wage Rule as a starting point. The 
Department will review comments on the 2013 IFR, along with comments we 
receive after we publish the notice of proposed rulemaking prior to 
issuing a final rule.
                          governor's set-aside
    Question. The Governor's Workforce Investment Act set-aside allows 
15 percent of Workforce Investment Act funding to be used by the 
Governor, at the state-level, to pursue creative workforce development 
initiatives. Limiting the amount of funds available to Governors' 
workforce training initiatives stifles state-wide and regional 
employment training efforts. Governors are uniquely equipped to 
identify and address the workforce training needs of their state's 
local employers and should be given the tools necessary to do so. Why 
does the Department not support increasing the set-aside to 15 percent?
    Answer. The 2015 budget adheres to the spending levels agreed to in 
the Bipartisan Budget Act of 2013, which was an important first step 
toward replacing the damaging cuts caused by sequestration with 
sensible long-term reforms. However, remaining at these levels 
necessitates difficult decisions, and means that we cannot accommodate 
additional investments in key areas like the job training formula 
grants. The Opportunity, Growth, and Security Initiative proposed in 
the 2015 budget acknowledges this, and included funds to restore prior 
cuts in the formula grants. The fiscal year 2015 budget does, however, 
request the continuation of the reserve at this level, which allows for 
fundamental state oversight and accountability activities. The 
Department will continue to work with States to identify ways to 
operate within these funding levels while continuing essential 
activities.
    Question. Are you concerned that under the reduced set-aside 
Governors no longer have the flexibility to implement innovative 
statewide projects?
    Answer. Investments in innovation are essential to helping the 
public workforce system identify and implement more efficient and 
effective ways of equipping workers with the skills employers' need. 
The Department is committed to spurring innovation in the public 
workforce system, and the fiscal year 2015 budget request includes 
several initiatives that directly support innovation, such as the 
Workforce Innovation Fund. The Department has taken care to design 
these initiatives in ways that ensure states are positioned to compete 
for or otherwise leverage these resources through partnerships. In 
addition, the 2015 budget proposes a revamped WIA Incentive Grant 
program, which would provide grants to states that demonstrate the 
ability to achieve positive outcomes for populations with barriers to 
employment. States that are innovative and work across program siloes 
will be best positioned to receive these grants. Although structurally 
different from the Governor's reserve, these national initiatives 
support significant increases in partnership, flexibility, 
dissemination, and coordination of strategies.
              bureau of international labor affairs (ilab)
    Question. Mr. Secretary, since this Administration took office in 
2009, the Bureau of International Labor Affairs' (ILAB) has grown 
significantly. Comparing fiscal year 2009 funding to the budget 
requested in fiscal year 2015, ILAB's budget will have increased 6.2 
percent, with the office growing by 22 full-time employees, a 26.5 
percent increase. In this constrained budget environment, wouldn't the 
Department's funding be better spent on training workers in the United 
States as opposed to using taxpayers' dollars to establish labor unions 
abroad?
    Answer. The Department of Labor is committed to supporting workers 
in the United States and ensuring that those workers, and the 
businesses in which they are employed, have a fair playing field with 
respect to worker rights in the global economy. These efforts seek to 
prevent workers and businesses in the United States from facing unfair 
competition based on the violation of worker rights. ILAB promotes 
respect for internationally recognized worker rights, improves working 
conditions and workplace safety, and combats exploitive child labor, 
forced labor, and human trafficking in other countries, particularly 
among key trading partners.
    The increases in ILAB's budget beginning in fiscal year 2009 were 
preceded by several years of sharply declining budgets for the bureau--
from nearly $150 million in fiscal year 2003 to $82.5 million in fiscal 
year 2008. These budget reductions occurred in the context of an 
increasing workload for ILAB related to expanded trade agreement 
monitoring, congressionally required reporting, and ongoing technical 
assistance oversight responsibilities. In fiscal year 2009, ILAB's 
budget was increased to enable it to more effectively carry out its 
mandates and to address strategic areas. Since fiscal year 2010, ILAB's 
budget has remained stable or has declined. The budget request for 
fiscal year 2015 of $91.3 million and 105 FTE remains at approximately 
the same level as the fiscal year 2014 appropriations.
    To meet its mandates and address strategic areas, ILAB has added 
full time employees since fiscal year 2008 primarily to the following 
three areas:
  --Research and analysis to meet statutory reporting responsibilities 
        related to child and forced labor;
  --Monitor labor conditions in current or prospective U.S. trading 
        partners, enforcement of labor provisions of free trade 
        agreements, and labor eligibility criteria of trade preference 
        programs; and
  --Monitor, evaluate, and audit grant-funded projects to ensure 
        effectiveness, impact, and management and financial 
        accountability.
                       workforce innovation fund
    Question. Mr. Secretary, I remain concerned that as more workforce 
training programs become competitively awarded they will not reach 
those for whom training programs are intended. I also have reservations 
specific to the competitively awarded Workforce Innovation Fund. The 
fiscal year 2015 budget requests a fifth year of funding for a program 
whose outcomes are unknown. In a time when our national unemployment 
rate is 6.7 percent, the Workforce Innovation Fund does not provide any 
direct services to jobseekers. Wouldn't funding be better utilized on 
programs that directly serve jobseekers?
    Answer. Almost all WIF grants directly serve job seekers, youth, 
and/or business customers, with the exception of two grants focused on 
the delivery of workforce information and integration of performance 
data systems. The Workforce Innovation Fund (WIF) invests in innovative 
approaches to the design and delivery of employment and training 
services that generate long-term improvements in the performance of the 
public workforce system, outcomes for job seekers and employers, and 
cost-effectiveness. The 28 current WIF grantees are testing a variety 
of innovations in four categories: sector strategies and business 
engagement (including entrepreneurship training); career pathways and 
system alignment; data systems and online service delivery; solutions 
for targeted populations; and Pay for Success, an innovative funding 
model. In addition, WIF grants leverage significant funds from Federal, 
state, and local workforce development programs, to support long-term 
sustainability of effective innovations. The goal of these grants is 
for these innovations, products, and models to help make the broader 
workforce system more effective, leading to better, more cost-effective 
services for individuals across the system.
    Because the WIF grants are testing a variety of innovations, 
performance measures vary by project. Examples include the DOL common 
performance measures (entry to employment, employment retention, and 6 
months average earnings), credential attainment, businesses started, 
number of businesses served, employer satisfaction with job candidates, 
and participants that attain permanent housing. In aggregate, the 
current WIF grantees are expected to serve nearly 38,000 adults, 2,800 
youth, and 6,600 businesses. Details about the WIF grants can be found 
at innovation.workforce3one.org.
    Question. Are you concerned that the Workforce Innovation Fund 
siphons off funding that could otherwise be distributed to every state 
for training efforts, but now is instead only awarded to a few 
grantees?
    Answer. The Workforce Innovation Fund (WIF) makes efficient use of 
scarce resources by awarding funds competitively to experiment and 
build information about effective approaches, and disseminating this 
knowledge to the broader workforce system. WIF findings, products, 
models, and results are then shared widely with the workforce 
investment system. The resources are improving the quality and 
efficiency of the entire workforce system. For example, through the 
``Eye on Innovation Stakeholder Engagement Series,'' the Employment and 
Training Administration will share promising practices from WIF 
grantees on business services, systems alignment and career pathways, 
data systems, and online service delivery with other WIF grantees and 
the public workforce system throughout this summer. Technical 
assistance provided to the WIF grantees is available to the entire 
workforce system at innovation.workforce3one.org.
   occupational safety and health administration's regional emphasis 
                                program
    Question. Mr. Secretary, it is my understanding that the 
Occupational Safety and Health Administration (OSHA) has announced 
formation of a Regional Emphasis Program targeting auto parts supply 
manufacturers in Alabama, Georgia, and Mississippi. OSHA is looking at 
excessive ``workplace exposures to safety hazards'' in the Southern 
states' auto parts manufacturing industry. What defines ``excessive 
workplace exposure to safety hazards,'' what data do you have to 
support this claim, and how is that data collected?
    Answer. OSHA has been conducting Regional Emphasis Programs (REPs) 
since the early 1980s. They are designed to focus OSHA's resources in 
areas where a regional or local office has determined that special 
attention is needed.
    In order to determine which industries may need special attention, 
OSHA uses a combination of data resulting from OSHA's recent inspection 
activity in the industry in that area, as well as injury and illness 
rates, when available. Over the past 5 years, OSHA has been responding 
to worker complaints, fatalities, and injuries in the automotive parts 
manufacturing industry in Georgia, Alabama, and Mississippi. In 
response to the complaints and referrals, OSHA conducted inspections in 
these regions.
    For example, in 2013 a worker employed at a plant in Alabama that 
had been inspected by OSHA on more than one occasion since 2006, 
suffered a double amputation. OSHA found eight violations of safety 
standards in those inspections. Another plant covered by the emphasis 
program had seven inspections since 2009, with findings of serious and 
willful violations. Inspections like these led to the decision to start 
the Regional Emphasis Program.
    Worker injury and illness data supports the decision to focus on 
worker safety in the auto supply parts industry. The most recent Bureau 
of Labor Statistics (BLS) data show that the auto parts supplier 
industry in Alabama has a higher injury and illness rate--4.6 per 100 
full-time workers--than the same industry nationwide, which had a rate 
of 3.0 per 100 full-time workers.
    Below are the rates for the auto supply industry, both nationally 
and in Alabama (2010 was the last year that Alabama data was available 
for this industry.)

----------------------------------------------------------------------------------------------------------------
                                                                           Annual
                DART Rates                 ---------------------------------------------------------------------
                                             2003   2004   2005   2006   2007   2008   2009   2010   2011   2012
----------------------------------------------------------------------------------------------------------------
NAICS 3363 US.............................    5.1    4.5    4.4    4.3    3.7    3.3    2.6    3.0    2.7    2.8
NAICS 3363 Alabama........................  .....  .....  .....    3.4    3.9    3.3    3.0    4.6
----------------------------------------------------------------------------------------------------------------

    Source: BLS SOII
    The all-industry private sector average injury and illness rate in 
Alabama and the United States in 2010 was 1.8 per 100 full-time 
workers, meaning that the Alabama auto supply industry has an injury 
and illness rate more than two and a half times higher than the overall 
injury and illness rate for all private workplaces in Alabama.
    Question. Your Department claims to have undertaken efforts to 
address these hazards through cooperative efforts and compliance 
assistance ``for several years'' prior to announcing formation of a 
Regional Emphasis Program. In exact terms, how many years did your 
department provide compliance assistance to these manufacturers?
    Answer. OSHA always stands ready to provide compliance assistance 
to businesses that request it. Most of OSHA's Area Offices have a 
Compliance Assistance Specialist whose sole job is to provide 
assistance to organizations that request assistance. You may also be 
aware that OSHA funds a free on-site consultation program for small and 
medium-sized businesses. (https://www.osha.gov/dcsp/smallbusiness/
consult.html)
    The REP was initiated after a long period of working cooperatively 
with the industry to address the safety and health problems in the 
workplace. OSHA began a partnership in 2005 with an auto manufacturer 
(Hyundai) and its suppliers. During the partnership, OSHA provided the 
auto supplier manufacturing industry with a great deal of compliance 
assistance and education to help correct serious safety and health 
hazards. OSHA, however, continued to find a high number of serious 
safety and health hazards during inspections (resulting from complaints 
or referrals) in the auto supplier manufacturing industry, so OSHA 
ended the partnership in 2010.
    OSHA's emphasis programs begin with compliance assistance. 
Employers are notified of the program and offered information and 
training on OSHA standards and the tools they need to assure that they 
can come into compliance before an OSHA inspection.
    Thirty days prior to launching the Regional Emphasis Program, OSHA 
sent a letter offering information about the hazards we were targeting, 
as well as training and presentations about how to prevent injuries and 
illness related to these hazards. This provided the employers the 
opportunity to seek assistance or contact the consultation services. 
The REP was also included in speeches presented by OSHA to different 
groups and organizations in the Southeast.
                                 ______
                                 
             Questions Submitted by Senator Lamar Alexander
                          proposed silica rule
    Question. My staff has heard from many different stakeholders who 
have testified during Occupational Safety and Health Administration's 
(OSHA) public hearing sessions, and each of these industries have 
signaled how difficult it would be to comply with the proposed rule.
    How can you assure us that OSHA will actually produce a Final Rule 
that reflects the concerns expressed at these hearings?
    Answer. OSHA carefully considers the concerns expressed by all 
stakeholders, along with supporting data and other evidence, in 
developing a final rule. The Occupational Safety and Health Act of 1970 
(the OSH Act) mandates that any final rule issued by OSHA must be 
feasible for affected industries, and must be supported by substantial 
evidence in the record considered as a whole [29 U.S.C. 655(b)(5); 29 
U.S.C. 655(f)]. Accordingly, OSHA will consider the concerns expressed 
by stakeholders regarding their ability to comply with the proposed 
rule in developing a final rule.
    Question. When do you expect OSHA to issue a Final Rule?
    Answer. OSHA has not established a target date for issuing a final 
silica rule. The Agency is accepting post-hearing comments on the 
proposed rule from hearing participants until June 3, 2014, and will be 
accepting post-hearing briefs until July 18, 2014. OSHA will then 
review the evidence in the record as a whole and develop a final rule, 
if appropriate, based on that evidence.
    Question. What would it cost a manufacturing plant, which operates 
in an enclosed environment, and employs 1,000 people, to comply with 
this proposed regulation?
    Answer. OSHA did not develop a cost estimate specific to the 
facility you describe. Manufacturing establishments vary enormously in 
their costs per employee depending on the nature of their operations.
    Question. The proposed rule requests commenters to submit 
information about their financial backers if they submit scientific or 
technical data. How many commenters have done that?
    Answer. After searching the public comments submitted to the silica 
docket, we found very limited information pertaining to such 
disclosures. Several commenters have either disclosed funding sources 
or indicated that they did not receive funding. We have also received 
general comments both supporting and objecting to OSHA's request for 
disclosure.
    Question. In what way has this information contributed to the 
rulemaking?
    Answer. The request for this information is voluntary, and not 
required for submitting comments. OSHA has a legal responsibility to 
review and consider all material submitted to the rulemaking record in 
its development of a final rule and supporting analyses and will do so. 
The Agency believes that this voluntary request will only serve to 
enhance the transparency of the process.
                 wage determinations on military bases
    Question. The National Restaurant Association said in a March 20 
letter to DOL, that the Wage and Hour Division, for the first time 
instituted a new health and welfare benefit of $3.81 per hour on fast 
food occupations under the Service Contract Act. These fast food 
franchises that operate on military installations, like Fort Campbell 
in Tennessee and Kentucky, or Fort Bragg in North Carolina provide 
military personnel and their families a fast alternative to eating at 
the cafeteria, while not to mention, employ a few dozen young workers 
at each location. This new health and welfare benefit, coupled with the 
President's Executive order increasing the minimum wage, has some fast 
food operators facing a 50 percent increase in wages.
    What is the reason for the first time application of this fringe 
benefit?
    Answer. The Department's Wage and Hour Division is responsible for 
determining what prevailing wages and benefits are under the Service 
Contract Act.
    In reviewing the fast food wage determinations last summer, the 
Wage and Hour Division determined that those fast food workers should 
receive fringe benefits. According to our long-standing regulations, we 
generally apply a standard fringe benefit amount of $3.81 to the wages 
of all workers covered by the Service Contract Act, and did so for fast 
food workers.
    Our regulations also provide that government agencies with 
contracts covered by the Service Contract Act may ask us to reconsider 
application of that nation-wide fringe benefit rate if they think that 
because of the special circumstances of a particular industry, a 
variation in fringe benefits is necessary and proper in the public 
interest or would avoid the serious impairment of government business. 
On May 16, 2014, we responded to a request from the Department of 
Defense that we review the wages, fringe benefits, and vacation/holiday 
pay for fast food workers on Federal contracts. After careful 
consideration of DOD's request, our regulations, and the relevant data, 
the Department determined that we will no longer require a fringe 
benefit rate of $3.81. Instead, contractors employing fast food workers 
on Federal contracts will be required to pay $.66 in fringe benefits, 
$.17 in vacation pay for workers who have been employed for more than a 
year, and $.09 in holiday pay. We believe that these wage and benefit 
rates more accurately reflect the conditions in the industry and the 
definitions of prevailing rates embodied in the statute.
    Question. Are you concerned that some fast food operators will have 
to close their location on military installations? And what will this 
do to small business operators?
    Answer. On May 16, 2014, we responded to a request from the 
Department of Defense that we review the wages, fringe benefits, and 
vacation/holiday pay for fast food workers on Federal contracts. After 
careful consideration of DOD's request, our regulations, and the 
relevant data, the Department determined that we will no longer require 
a fringe benefit rate of $3.81. Instead, contractors employing fast 
food workers on Federal contracts will be required to pay $.66 in 
fringe benefits, $.17 in vacation pay for workers who have been 
employed for more than a year, and $.09 in holiday pay.
                                 ______
                                 
              Questions Submitted by Senator Mike Johanns
        new whd rule and elimination of companionship exemption
    Question. In September 2013, the U.S. Department of Labor (DOL) 
announced a final rule that essentially eliminated the Companionship 
Exemption (minimum wage and overtime exemption for non-medical 
companion care workers). The new regulation is scheduled to go into 
effect on January 1, 2015. The final rule posted in the Federal 
register indicated that this new rule is likely to have an annual 
effect on the economy in excess of $100 million. Does your Department 
intend to issue further guidance to state Medicaid programs and other 
stakeholders on the complex implementation of this rule? If so, when 
does it plan to do so?
    Answer. The Department has been very active in providing compliance 
assistance to all stakeholders since issuing the companionship services 
rule, including webinars and meetings specifically for state Medicaid 
programs. The Department has also had a number of meetings and other 
communications with representatives from various states to discuss the 
regulation's impact on their particular Medicaid programs, and 
anticipates having more such conversations as implementation continues. 
The Department has engaged with the disability community around issues 
of particular importance to them, including the Medicaid services 
designed to allow people living with disabilities to remain in their 
homes and communities. The Department continues to develop and issue 
guidance, including the recent Administrator's Interpretation 
specifically regarding shared living arrangements, most of which are 
funded through Medicaid programs, and has additional webinars and 
meetings scheduled to further inform the regulated community about 
implementation matters. The Department will develop additional guidance 
as issues are brought to us for clarification. In all of these efforts, 
we continue to work closely with our colleagues at the Department of 
Health and Human Services, and in particular the Centers for Medicare 
and Medicaid Services.
    Question. Do you think that states will have enough time to 
implement this final rule without undermining quality and access to 
care for Medicaid beneficiaries?
    Answer. The Department adopted a 15-month delayed implementation 
when it published the regulation on October 1, 2013. This delayed 
effective date was intended to allow state Medicaid programs sufficient 
time to make adjustments to their programs so neither the quality of, 
or access to, the programs will be disrupted.
    Question. Would you consider delaying the rule if states assert 
that they will not have time to implement the rule without disrupting 
quality and access to care for Medicaid beneficiaries?
    Answer. The Department is constantly monitoring implementation of 
the companionship services rule and will make appropriate adjustments 
as indicated.
    Question. Under this final rule, do you believe it is likely that 
home care recipients will attempt to control costs by independently 
hiring caregivers other than those employed by home care companies?
    Answer. We have no information that indicates that consumers will 
hire home care providers directly rather than continuing to purchase 
these services through home care agencies.
    Question. If so, will this result in fewer caregivers being in a 
position to receive healthcare through an employer?
    Answer. We have no information that would indicate this result.
                 union presence during osha inspections
    Question. According to a February 2013 OSHA letter of 
interpretation, an unspecified number of employees in a nonunion 
workplace may designate a union as their representative during safety 
inspections, even though the majority of workers have not authorized 
the union as their representative for any purpose. Do you believe that 
OSHA inspectors can remain neutral enforcers of the law if they are 
accompanied by outside union organizers when they inspect nonunion 
employers' private property?
    Answer. The status of OSHA inspectors as neutral enforcers of the 
law does not change when they are accompanied by third party ``walk-
around'' representatives. Section 8(e) of the OSH Act provides that 
``[s]ubject to regulations issued by the Secretary, a representative of 
the employer and a representative authorized by his employees shall be 
given an opportunity to accompany the Secretary or his authorized 
representative during the physical inspection of any workplace . . . 
for the purpose of aiding such inspection.'' Allowing a third party 
representative to accompany OSHA compliance officers on an inspection 
is solely related to protecting workers by achieving an effective and 
thorough health and safety inspection and consistent with the law and 
long-standing OSHA regulations.
                    osha inspection of family farms
    Question. Regarding the inspection of family farms, in the letter I 
received from you dated February 10, 2014, you said ``DOL will issue 
new guidance after consulting with USDA and with organizations 
representing farmers.'' Could you provide me with a list of meetings 
and discussions you or your staff have had with USDA, farm 
organizations, and other relevant groups regarding revisions to the 
guidance on postharvest activities on farms with more than 10 
employees? Please include the name of the entity and the date of 
contact. I encourage you to actively consult with as many of the farm 
groups and producers throughout the country as possible before moving 
forward in this area. These are the people who know best what happens 
on a daily basis on America's farms. Finally, I encourage you to ensure 
that any revised guidance draws as bright a line as possible between 
OSHA regulations and farming operations with 10 or fewer employees in 
order to ensure that the agency abides by the law.
    Answer. On January 31st, Department of Labor staff met with 
representatives from the USDA to consult with them regarding OSHA's 
guidance defining farming operations. OSHA has developed draft revised 
guidance to ensure that OSHA inspectors understand the limitations on 
OSHA's authority to conduct enforcement activities involving farming 
operations and will consult with USDA and other groups before 
finalizing the guidance. OSHA is currently in the process of contacting 
other farming groups such as the Farm Bureau to discuss its revised 
guidance.
   redefining fiduciary under employee retirement income security act
    Question. As you know, there has been a lot of concern surrounding 
the Department of Labor's proposed rule to redefine who is a fiduciary 
for plans regulated under the Employee Retirement Income Security Act 
(ERISA). A rule was proposed and then withdrawn, and Assistant 
Secretary Borzi is reportedly working on a re-proposal. My colleagues 
and I, in a strong bipartisan fashion, have expressed concern about the 
rule's potential impact on small savers, investor choice and small 
business. All of us certainly want to ensure that beneficiaries receive 
unbiased financial advice and we want to protect investor interests, 
whether someone is saving for retirement or for a child's college 
education fund. Thus, we must ensure that a re-proposed rule will not 
ultimately harm the very beneficiaries we're trying to help. Can you 
assure us that the Department's re-proposal will not increase the cost 
of IRA accounts or harm investor choice?
    Answer. We have not made a decision on the proposed rulemaking, and 
we would not make any decisions before we had listened to all sides, as 
we have committed to do. We regularly engage with stakeholders and 
solicit their views on a range of issues, and we welcome input from 
those who want to help us improve this marketplace before we make any 
decisions. The President has been clear that he is committed to 
strengthening retirement security for all Americans and we continue to 
believe that the most secure retirement requires a three-legged stool 
of social security, pensions, and personal savings.
    Question. Will your expanded definition of fiduciary align with the 
SEC's definition? It is essential that any rule changes still allow 
broker-dealers to provide affordable financial advice to working class 
Americans.
    Answer. ERISA and the securities laws serve important 
complementary, but distinct, purposes. In July 2013, we renewed our 
Memorandum of Understanding (MOU) with the Securities and Exchange 
Commission (SEC) on sharing information on enforcement, policy, and 
regulatory projects related to retirement and investment matters. In 
line with standard process, DOL continues to consult with the SEC, 
consistent with its status as an independent agency. In addition to 
regular, ongoing staff-level discussions, I have spoken to Chair White 
on several occasions since I became Secretary.
    Question. Also, Ms. Borzi has said that the re-proposal will be out 
this year. When can we expect to see it?
    Answer. We have not made a decision, and we would not make a 
decision before we have listened to all sides, as we have committed to 
do.

                          SUBCOMMITTEE RECESS

    Senator Harkin. With that, the subcommittee stands 
adjourned.
    [Whereupon, at 11:10 a.m., Wednesday, April 9, the 
subcommittee was recessed, to reconvene subject to the call of 
the Chair.]