[Congressional Record Volume 140, Number 91 (Thursday, July 14, 1994)]
[Senate]
[Page S]
From the Congressional Record Online through the Government Printing Office [www.gpo.gov]


[Congressional Record: July 14, 1994]
From the Congressional Record Online via GPO Access [wais.access.gpo.gov]

 
                         ADDITIONAL STATEMENTS

                                 ______


                               JOB CORPS

 Mr. SIMON. Mr. President, I would like to recognize the Job 
Corps Program for its 30 years of success in providing extremely 
disadvantaged youth with vocational training and job placement 
assistance that breaks the cycle of poverty, dependence, despair and, 
often, crime. Each year, Job Corps assists more than 60,000 young 
people in becoming productive, economically self-sufficient members of 
society. Few employment and training programs target high-school 
dropouts with low reading levels, and fewer still have had their 
effectiveness documented in as rigorous an independent evaluation as 
has Job Corps. Unfortunately, there appears to be some confusion and 
concern about the findings of a report issued several years ago by the 
Department of Labor's inspector general. I would like to insert in the 
Record a letter from Secretary Reich that addresses in detail each 
concern cited by those who have been critical of this program. Given 
Job Corps' proven track record of success, 17 of my colleagues and I 
have asked the Appropriations Committee to retain the increase in 
funding requested by the administration. I would like to insert a copy 
of this letter in the Record as well.
  The material follows:
                                              Department of Labor,
                                    Washington, DC, July 12, 1994.
     Hon. Paul Simon,
     U.S. Senate,
     Washington, DC.
       Dear Senator Simon: As a supporter of the Job Corps 
     program, I wanted to bring to your attention a recent 
     development. Last week we received a copy of the June 30 
     letter sent to Senator Byrd by Senators Kassebaum (KS) and 
     Kerrey (NE) in which they propose that the FY 1995 Job Corps 
     budget be frozen at the FY 1994 level and that the expansion 
     of the program be suspended. I have urged the Senate 
     Appropriations Committee to reject this proposal.
       Given the importance of the Job Corps program to the 
     disadvantaged youth of this country, I thought it was 
     important to set the record straight on issues that have been 
     raised by Senators Kassebaum and Kerrey. Citing reports 
     issued back in 1990-1991 by the Department's Inspector 
     General, Senators Kassebaum and Kerrey suggest that Job Corps 
     does not provide effective training and employment-related 
     services to its target population. They have also called into 
     question the integrity of the program and its local 
     administrators. In both areas, I must disagree.
       The Job Corps program is America's oldest, largest, and 
     most comprehensive residential training and education program 
     for young, unemployed, and under-educated youth. Designed for 
     severely disadvantaged youth, the program breaks the cycle of 
     poverty and welfare dependence by providing the vocational 
     training and job placement that youths need to become 
     taxpaying citizens. The program is administered through a 
     network of 111 centers, each year serving more than 60,000 
     young people located in 46 States, Puerto Rico, and the 
     District of Columbia.
       The $1.0 billion program boasts a proven track record. A 
     highly regarded evaluation of the program in the early 1980s 
     found that Job Corps resulted in a savings for society due to 
     increased earnings, reduced government assistance, and 
     reductions in serious crime, with a net benefit to society of 
     $1.46 for every $1.00 invested in the program.
       Enclosure 1 contains detailed responses to each of the 
     specific concerns that have been raised by Senators Kassebaum 
     and Kerrey. Most of these issues are being raised on the 
     basis of either erroneous information or misinterpretations 
     of isolated facts and statistics taken from Inspector General 
     reports. Enclosure 2 details the programmatic impact of the 
     House-passed FY 1995 budget for Job Corps.
       Your continued support of this successful program is 
     important. Please feel free to contact Chris Moseley of my 
     staff (219-6141) if you have any questions.
           Sincerely,
                                                  Robert B. Reich,
                                               Secretary of Labor.
                                  ____


           Responses to Statements in Kassebaum-Kerrey Letter

       There is no new OIG report on the Job Corps. The following 
     statements by Kassebaum and Kerrey refer to OIG reports that 
     were issued in 1990-1991.
       Statement. High compensation for Job Corps center 
     executives. The IG found 5 of 11 CEOs of individual program 
     sites earned salaries and bonuses amounting to more than 
     $160,000 annually. One center director earned $327,352.
       Response. This statement is not true. The December 3, 1990 
     OIG report referenced clearly indicates that compensation for 
     center directors ranged from a low of $32,615 to high of 
     $87,012.
       The CEOs referred to are not directors of individual 
     program sites. They are CEOs of major corporations or 
     subsidiaries which have contracts to operate Job Corps 
     centers along with a variety of other businesses (e.g. 
     Teledyne and ITT). The $327,352 cited as a center director's 
     salary is actually the total compensation of the President of 
     a firm whose principal business is in the defense industry. 
     Only a small prorata share of that CEO's salary is paid by 
     Job Corps. Apportioning executive level compensation among a 
     number of different contracts is a required accounting 
     procedure for such indirect costs that are incurred under 
     government contracts.
       The 1990 OIG report states specifically ``* * * the 
     majority of the executives, as individuals, appeared to 
     receive reasonable compensation.'' In addition, Job Corps 
     conducted a study which indicated that Job Corps executives 
     are compensated at rates well below industry averages. All 
     salaries for employees covered by Job Corps contracts are 
     specifically reviewed and approved before the contracts are 
     awarded.
       Statement. There is no performance criteria for bonuses 
     paid.
       Response. While this finding did apply to some contractors 
     during the period covered by the 1990 OIG report, Job Corps 
     and the Office of Cost Determination responded immediately 
     and have insured that all bonus plans are now documented and 
     strongly correlated with center performance.
       Statement. Five operators improperly charged the bonuses as 
     indirect costs to the program.
       Response. Payments of these bonuses were not improper and 
     there were no disallowed costs. The OIG directed that these 
     expenses be classified as direct rather than indirect. This 
     is an accounting distinction only. Job corps has required all 
     contractors to adhere to the correct accounting procedures in 
     this area. Indirect cost allocations are reviewed and 
     approved through regular reviews by the Department's Office 
     of Cost Determination.
       Statement. Extremely high trainee dropout rates. Out of 
     approximately 60,000 students who started the PY 1992 
     program, more than 25,000 (43%) dropped out and were not 
     placed or their whereabouts were unknown. The majority of 
     those left the program within the first 90 days.
       Response. This statement leads to the inappropriate 
     conclusion that an early dropout rate in this range 
     represents poor program performance. This is not the case. 
     The apparently high dropout rates exist because of the strict 
     discipline and behavioral codes at Job Corps that are part of 
     its success. The Mathematical evaluation shows substantial 
     overall gains in earnings for enrollees even after averaging 
     the performance of those who dropped out early. The social 
     benefits still greatly outweigh the costs.
       Job Corps serves severely disadvantaged youth. The typical 
     enrollee is an 18 year old economically disadvantaged 
     minority male who is a high school dropout who reads at the 
     seventh grade level and has never held a full time job. In 
     addition, a substantial number of these youth have had prior 
     contact with the criminal justice system, test positive for 
     substance abuse and come from families receiving public 
     assistance.
       Job Corps data for PY 1992 indicate that 69% of these 
     severely disadvantaged students stay beyond the early dropout 
     period of 3 months. The great majority of students are 
     therefore successful in adjusting to a disciplined, regulated 
     residential program. In order to obtain substantial 
     reductions in the early dropout rate, it would be necessary 
     to pre-screen otherwise eligible young people on the basis of 
     likelihood to succeed--a practice referred to as creaming.
       While early dropouts do not generally obtain GED's or 
     complete vocational training, they do receive placement 
     services. Even the OIG report indicates that only 15% of 
     dollars invested are for participants who receive no 
     measurable results. Moreover, relatively few dollars are 
     spent on short-term stayers.
       The placement results for these early dropouts are included 
     in the overall Job Corps placement rate and other performance 
     statistics.
       Statement: Only 14,445 (about 24 percent) of the starting 
     class completed one of the vocational skill programs, which 
     is a primary goal of Job Corps.
       Response. This statement is factually incorrect. Job Corps 
     data for PY 1992 indicate that 19,731 students (32 percent of 
     all terminees) completed their vocational training. In 
     addition, 10,931 (18 percent of all terminees) obtained a 
     GED, which is another important Job Corps goal. Job Corps 
     strives continually to increase these positive outcomes.
       Statement. Low (12 percent) job-trade match placement of 
     trainees and Job Corps' questionable accounting procedures of 
     these placements.
       Response. The goals of Job Corps are to raise employment 
     rates, increase earnings, increase educational attainment and 
     reduce involvement in crime. The Mathematica evaluation shows 
     that it has succeeded admirably at doing this. Training in a 
     particular trade is a means towards these real goals, not an 
     end in itself. If training in a particular field motivates a 
     young person to get more education and/or leads to success in 
     another field, then we still consider that a success. By any 
     reasonable measure, Job Corps is successful at doing this.
       More important than job training match placements, the 
     issue is whether the Job Corps curriculum and approach 
     increase earnings and employment, reduce serious criminal 
     activity, and other socio-economic outcomes for participating 
     youth relative to what they would have been without Job Corps 
     and whether it does so in a cost effective manner. The 
     evaluation evidence indicates that Job Corps does perform 
     well in this regard.
       A major new longitudinal evaluation study to update these 
     findings is currently underway. Annual program outcomes data 
     have been consistent since the last study.
       Looking at the issue from the narrow job-trade match 
     placement perspective, the Job Corps data shows that 38 
     percent of those who obtained jobs did so in training-related 
     occupations. The 12 percent figure cited above 
     inappropriately measures training-related placements against 
     all terminees, including those who entered college or other 
     educational institutions, as well as those who were not 
     successfully placed.
       Statement. Insufficient job placement performance 
     measurement--A trainee is considered placed if he/she is 
     verified to have worked 20 hours during the first week on the 
     job. No other follow up is required.
       Response. The Job Corps termination placement definition is 
     correct as stated and meets or exceeds the measurement 
     employed by other Federal employment and training programs. 
     The placement definition is currently under review by Job 
     Corps in light of JTPA amendments and government-wide efforts 
     to develop common core data elements for all training 
     programs.


      additional statements in kassebaum and kerrey press releases

       Statement. Job Corps claims a 70% placement rate of its 
     graduates in jobs or colleges, but the IG has disputed that 
     figure. The IG has argued that that actual total placement is 
     about 57% and a majority of those placed end up in low pay, 
     entry level jobs they could have obtained without the 
     program.
       Response. The DOL Congressional budget submittal for 1995 
     projects a 70% placement rate. This is based on new 
     management emphasis on placement activities and represents a 
     modest increase over the 65% percent actual level that has 
     been reported for PY 1992, the most recent year for which 
     complete data are available.
       An overall placement rate in PY 1992 of 65% represents 
     nearly 40,000 young people moving from dependency to 
     employment or full-time education. The overall placement rate 
     represents a combination of terminees who are located after 
     leaving the centers plus an estimate of placements that occur 
     among the relatively small portion of terminees who cannot be 
     located after termination. The estimating procedure assumes 
     that only 34% of those not located obtain jobs. This is a 
     conservative estimating procedure that reflects only the self 
     placement experience of terminees generally.
       The 57% OIG figure does not accurately portray the Job 
     Corps placement rate. This figure was developed by OIG on the 
     assumption that none of the terminees who could not be 
     located obtained jobs. The latest OIG report addresses the 
     estimating procedure currently being employed and argues only 
     for an alternative methodology.
       Given the severely disadvantaged nature of Job Corps 
     students, even if the OIG methodology for determining the 
     placement rate were accepted, a placement rate of 57% should 
     be considered a success. A 57% placement rate for youth who 
     are all economically disadvantaged, reading on average at the 
     7th grade level, and often have a history of drug abuse or 
     involvement in the criminal justice system should be a 
     success by any standard. It is the reason Job Corps was and 
     continues to be one of the model programs for the past 30 
     years and the reason the Administration proposes to expand 
     this success.
       Statement. Job Corps placement contractors are paid for 
     placements, even when students find their own jobs.
       Response. This statement is incomplete. The unit cost 
     payments stated in terms of placements are intended to cover 
     costs that go beyond those for direct placements. These unit 
     cost payments are structured to reimburse a wide range of 
     services, including job development, gathering information 
     from former students, contacts with employers for placement 
     verification, documentation of placement results and report 
     submission.
       Statement. Consistently poor performing Job Corps centers 
     continue to operate without improvement or a decision to 
     close them.
       Response. This statement does not reflect actual practice. 
     For the 79 privately-operated contract centers, performance 
     assessment is an integral part of the Job Corps procurement 
     process. Job Corps centers are closely evaluated against 
     formal performance standards and reviewed on an annual basis 
     for compliance and quality. An assessment of poor performance 
     impacts contracting decisions regarding continued operation 
     of a center as well as the firm's prospects in competing for 
     other center contracts. Contracts for operating centers are 
     let for a two year base period and include three option 
     years, for maximum duration of five years.
       The impact of Job Corps emphasis on performance in 
     procurement is demonstrated as follows: In the past two 
     years, 20 contracts were terminated prior to their maximum 
     duration, most of these on the basis of unfavorable 
     performance assessments.
       During the same period, 27 procurements were conducted for 
     center operations contracts. In 16 of these, incumbents were 
     challenged and new center operators were selected in 7 
     instances.
       This approach to remedying poor performance at privately 
     operated contract centers by changing center operators makes 
     more sense than closing centers and abandoning a 20+ million 
     dollar taxpayer investment in training facilities.
       Thirty centers are operated by other Federal agencies, the 
     Department of Interior and the Agriculture Department, under 
     an interagency agreement. In cases of poor performance by any 
     of these federally-operated centers, the Department of Labor 
     works closely with agency management to improve performance. 
     When that fails stronger measures are taken. For example, Job 
     Corps had to close a center (for more than a year) in one 
     situation and temporarily discontinue student enrollment in 
     several others. Unlike the contracted centers, the Department 
     of Labor is not able to bring in new organizations to operate 
     these federally-administered centers in the case of poor 
     performance.
       Statement. Daily absenteeism of 50% of trainees on 
     residential sites.
       Response. This statement is incorrect. Job Corps data 
     indicate that, on average, 88% of all students are present on 
     center. The remaining 12% are absent from the Job Corps 
     center for reasons such as illness, family emergencies, 
     annual leave or unexcused absences.
                                  ____


           Expanation of House-Passed Job Corps Funding Level

       The Administration's FY 1995 request for Job Corps calls 
     for a continuation of steady expansion of this high-return 
     investment in our nation's disadvantaged youth. The House-
     passed level includes $1,107 million for the program, an 
     increase of $67 million over the FY 1994 level ($49 million 
     below the President's original request).
       The requested increase is largely related to needed funding 
     for the existing centers and construction funding for the 
     eight new centers (announced in early 1994) that Congress 
     approved in the FY 1993 and 1994 appropriations. Only a small 
     portion ($15 million) of this increase is related to further 
     expansion of the program to six new centers.
       Included in this request is an increase of $36 million to 
     simply cover increased operating costs at the existing 111 
     Job Corps Centers. Most of this cost increase is of an 
     uncontrollable nature, e.g., negotiated salary increase, 
     inflationary increases in the costs of food, clothing, 
     utilities, etc. A portion of the increase is also needed to 
     cover planned increases in capacity with centers where new 
     dorm construction will be completed between new and FY 1995. 
     Without these funds, fewer students will be served.
       The House-passed level includes $36 million--an increase of 
     $16 million over the FY 1994 level--for construction funds 
     for new centers. This action simply follows through on the 
     commitments Congress has made over the past two years to 
     program expansion. Without these additional funds, 
     construction of the eight new Centers cannot be completed. 
     This request includes the funds to continue progress on 
     construction for the following eight new Centers: Loring AFB; 
     Maine; Fort Devens, Massachusetts; Homestead AFB, Florida; 
     Memphis, Tennessee; Montgomery, Alabama; Flint, Michigan; 
     Chicago, Illinois; and Treasure Island Naval Station, 
     California.
       Finally, the House-passed level includes an increase of $15 
     million to initiate six additional centers. These funds are 
     needed to order to continue the long term expansion 
     initiative known as the ``50/50'' plan. This amount 
     represents first year facility funding to initiate these six 
     additional centers. Without these funds, no new Centers can 
     be selected this year.
                                  ____



                                                  U.S. Senate,

                                     Washington, DC, July 8, 1994.
     Hon. Tom Harkin,
     Chairman, Labor-HHS-Education Appropriations Subcommittee, 
         Washington, DC.
       Dear Tom: We are writing to ask that you retain the 
     Administration's request for an increase in funding for Job 
     Corps, our nation's largest, most comprehensive and effective 
     residential vocational and educational program for unemployed 
     and undereducated youth. Job Corps helps America's hardest to 
     employ youths become responsible, productive, independent 
     citizens.
       Job Corps stands out as one of our country's most 
     successful job training programs. It serves approximately 
     65,000 students each year in 108 centers throughout the U.S. 
     Job Corps has a successful placement rate of 65 percent.
       The average Job Corps student is 18 years old, reads at a 
     seventh grade level, has a disruptive home life, has never 
     held a full-time job, and comes from a family with an income 
     of under $7,000. More than 80 percent are high school 
     dropouts.
       More than 1.5 million Job Corps participants have been 
     prepared for jobs, the military, and advanced educational 
     opportunities since its inception in 1964. We are pleased 
     that last year Job Corps announced its expansion to nine new 
     centers, serving an additional 3,600 youth who are most at-
     risk. Nevertheless, in Illinois, for every student enrolled 
     in Job Corps there are 65 young people who are eligible and 
     in need but who go unserved.
       According to the Mathematica Policy Research study, for 
     every dollar invested in Job Corps, $1.46 is returned to the 
     economy through reduction in income maintenance payments, the 
     costs of crime and incarceration, and through increased taxes 
     paid by Job Corps graduates. In addition to improving their 
     future earnings ability, Job Corps participants are less 
     dependent on welfare and unemployment insurance.
       As you know, the President has requested an 11 percent 
     increase in Job Corps appropriations for next year. We think 
     this is a crucial investment.
       Thank you for your consideration.
           Cordially,
         Paul Simon, Edward M. Kennedy, Bob Graham, Barbara Boxer, 
           Harris Wofford, George Mitchell, Howard Metzenbaum, Jim 
           Sasser, Carl Levin, Harlan Mathews, Carol Moseley-
           Braun, Richard C. Shelby, Howell Heflin, Herb Kohl, 
           William S. Cohen, Donald Riegle, Orrin Hatch, Harry 
           Ried.

                          ____________________