Department of Labor: Status of Achieving Key Outcomes and
Addressing Major Management Challenges (15-JUN-01, GAO-01-779).
This report reviews the Department of Labor's fiscal year 2000
performance report and fiscal year 2002 performance plan required
by the Government Performance and Results Act. GAO found that
Labor appears to be making progress in achieving the key outcomes
in its strategic plan. Labor has increased its target levels for
some goals for fiscal year 2002 and generally provided sound
strategies for achieving these new targets. GAO continues to have
concerns about some of the measures Labor uses. GAO is most
concerned about the way in which Labor addresses two of its
management challenges--information technology and strategic human
capital management. Given the breadth of these goals, goal
achievement cannot be fully assessed with the performance
indicators Labor proposes. Without better indicators that more
accurately and comprehensively measure performance toward the
goal, Labor will be unable to fully assess its progress in these
areas.
-------------------------Indexing Terms-------------------------
REPORTNUM: GAO-01-779
ACCNO: A01090
TITLE: Department of Labor: Status of Achieving Key Outcomes and
Addressing Major Management Challenges
DATE: 06/15/2001
SUBJECT: Agency missions
Information resources management
Performance measures
Personnel management
Reporting requirements
Strategic planning
DOL H-1B Visa Program
DOL H-2A Program
DOL Welfare-to-Work Grant
Government Performance and Results Act
GPRA
JTPA Dislocated Worker Program
North American Free Trade Agreement
Transitional Adjustment Assistance
Program
OSHA Voluntary Protection Program
OSHA Workplace Consultation Program
Temporary Assistance for Needy Families
Program
Trade Adjustment Assistance Program
******************************************************************
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GAO-01-779
Report to the Ranking Minority Member, Committee on Governmental Affairs, U.
S. Senate
United States General Accounting Office
GAO
June 2001 DEPARTMENT OF LABOR
Status of Achieving Key Outcomes and Addressing Major Management Challenges
GAO- 01- 779
Page i GAO- 01- 779 Labor's Status of Achieving Key Outcomes Letter 1
Appendix I Observations on the Department of Labor?s Efforts to Address Its
Major Management Challenges 25
Appendix II Comments from the Department of Labor 32
Tables
Table 1: Fiscal Year 2000 Goals and Measures Under Outcome On Job Training
Participants Getting and Keeping Jobs 9 Table 2: Fiscal Year 2000 Goals and
Measures Under Outcome on
Worker Benefits 12 Table 3: Major Management Challenges 25
Abbreviations
GPRA Government Performance and Results Act of 1993 JTPA Job Training
Partnership Act NAFTA- TAA North American Free Trade Agreement- Transitional
Adjustment Assistance OIG Office of Inspector General PBGC Pension Benefit
Guaranty Corporation PWBA Pension and Welfare Benefits Administration SAVER
Savings Are Vital to Everyone?s Retirement Act TAA Trade Adjustment
Assistance TANF Temporary Assistance for Needy Families UI Unemployment
Insurance WIA Workforce Investment Act Contents
Page 1 GAO- 01- 779 Labor's Status of Achieving Key Outcomes
June 15, 2001 The Honorable Fred Thompson Ranking Minority Member Committee
on Governmental Affairs United States Senate
Dear Senator Thompson: As you requested, we reviewed the Department of
Labor?s fiscal year 2000 performance report and fiscal year 2002 performance
plan required by the Government Performance and Results Act of 1993 (GPRA)
to assess the agency?s progress in achieving selected key outcomes that you
identified as important mission areas for the agency. 1 These are the same
outcomes we addressed in our June 2000 review of the agency?s fiscal year
1999 performance report and fiscal year 2001 performance plan to provide a
baseline by which to measure the agency?s performance from year to year. 2
These selected key outcomes are as follows:
Fewer workplace injuries, illnesses, and fatalities occur.
Job training participants get and keep jobs.
Worker benefits are protected.
Individuals successfully transition from welfare dependency to
selfsufficiency. As agreed, using the selected key outcomes for Labor as a
framework, we (1) assessed the progress Labor has made in achieving these
outcomes and the strategies the agency has in place to achieve them; and (2)
compared Labor?s fiscal year 2000 performance report and fiscal year 2002
performance plan with the agency?s prior year performance report and plan
for these outcomes. Additionally, we agreed to analyze how Labor addressed
its major management challenges, including the governmentwide high- risk
areas of strategic human capital management and information security, that
we and Labor?s Office of Inspector General (OIG) identified. Appendix I
provides detailed information on how Labor
1 This report is one of a series of reports on the 24 Chief Financial
Officers (CFO) Act agencies? fiscal year 2000 performance reports and fiscal
year 2002 performance plans. 2 See Observations on the Department of Labor?s
FY 1999 Performance Report and FY 2001 Performance Plan (GAO/ HEHS- 00-
125R, June 30, 2000).
United States General Accounting Office Washington, DC 20548
Page 2 GAO- 01- 779 Labor's Status of Achieving Key Outcomes
addressed these challenges. (App. II contains Labor?s comments on a draft of
this report.)
Labor reported making progress in achieving its key outcomes. Labor?s fiscal
year 2000 performance report showed that most of the goals associated with
these outcomes were met. In general, Labor?s strategies for achieving these
outcomes appear to be clear and reasonable but seldom incorporated human
capital management because the agency addressed this issue largely through
agencywide management goals. Specifically:
Planned Outcome: Workplace injuries, illnesses, and fatalities are reduced:
Labor reported making progress in achieving this outcome. Labor reported
that it did not meet one goal, substantially achieved another goal, and met
the remainder. Assessing fiscal year 2000 progress for some goals was
complicated because Labor does not always clearly indicate when it is using
fiscal year 1999 data and targets. When current data are not available, OMB
guidance calls for agencies to identify the goals for which complete data
are not available and, among other things, indicate when the data will be
available. Although Labor generally followed these guidelines, the
discussion was sometimes confusing and it was not always clear what target
level was being assessed. The strategies used to achieve the goals appear to
be clear and reasonable, and include efforts related to information
technology.
Planned Outcome: Job training participants get and keep jobs: Labor reported
making progress in achieving this outcome, with performance meeting most of
the goals. However, assessing progress for some goals has been complicated
by the transition from one employment and training program to another and by
the lag in available performance data. While the strategies Labor will use
to achieve these goals appear to be reasonable, it is not always clear how a
strategy will achieve a given outcome. For example, Labor did not adequately
explain how work incentive grants would be used to help people with
disabilities improve their employability and employment through one- stop
centers. Some goals use information technology as strategies, and one goal
incorporates human capital management strategies.
Planned Outcome: Worker benefits are protected: Labor reported making
progress in achieving this outcome, meeting all but one of the goals we
reviewed. Labor?s plan retains a goal we previously criticized because it
measured changes in private pension plan coverage that are outside Results
in Brief
Page 3 GAO- 01- 779 Labor's Status of Achieving Key Outcomes
Labor?s control. In addition, Labor changed one of its goals in a way that
will make it difficult to assess whether the goal is actually being met. The
strategies Labor proposes to achieve these goals often appear to be clear
and reasonable. However, some strategies are not specific or clear enough to
be able to assess whether they would help Labor achieve the goal.
Planned Outcome: Individuals successfully transition from welfare dependency
to self- sufficiency: Labor reported making progress in achieving this
outcome, meeting its only goal under this outcome. Labor improved the goal
from last year?s report by incorporating a measure for job retention and one
for increased earnings. The strategies identified to achieve the goal appear
to be clear and reasonable and incorporate program evaluation. However,
Labor provided little information that would help assess the impact of the
Welfare- to- Work grants.
Labor improved its fiscal year 2000 performance report from its fiscal year
1999 report by providing more complete information on the quality and
credibility of performance data and on its efforts to address major
management challenges. However, the fiscal year 2000 report did not include
useful information on future plans as did last year?s report, and we
encourage Labor to include this information in future reports. Labor
improved how it reports on goals that are assessed using the previous year?s
data and target levels when current information is not available, and
followed OMB guidance in presenting such goals. However, the report could be
improved by also including the fiscal year 2000 goal and target. In
addition, Labor used a new assessment category-? substantially achieved?-
when at least 80% or more of the goal was attained. Although the goals Labor
identified as substantially achieved were nearly met and actual performance
was fully disclosed, the use of this category may give an impression of
successful performance across all goals or on a specific goal when actual
performance might be as much as 20 percent below the target.
Labor made limited substantive changes in the fiscal year 2002 performance
plan as compared with the fiscal year 2001 performance plan. Generally, the
plan continues to provide a clear progression toward intended outcomes: many
goals remain the same while increasing their numeric targets, allowing Labor
to demonstrate progress over time. Labor?s fiscal year 2002 plan improved
its discussion of its efforts to verify and validate performance data as
compared with the fiscal year 2001 plan. However, it still lacks sufficient
information on how it will address certain data limitations, such as
timeliness and coverage limitations found in Unemployment Insurance (UI)
data required to track performance for
Page 4 GAO- 01- 779 Labor's Status of Achieving Key Outcomes
several employment and training programs, such as those under the Workforce
Investment Act. A weakness in Labor?s plan is that the broad goals Labor
developed to address human capital and information technology challenges
rely on performance indicators to assess performance that do not accurately
measure progress toward the goal. In addition, it is not clear how the
indicators will be aggregated to assess overall goal achievement. We are
recommending that Labor revise its performance goals on strategic human
capital management and information technology so that the performance
indicators more accurately and fully measure efforts to achieve the goal.
Labor included goals and measures in its fiscal year 2000 report and fiscal
year 2002 plan to address the major management challenges identified by us,
which are generally similar to the key selected outcomes. The agency also
included goals and measures to address the governmentwide, highrisk area of
strategic human capital management in its fiscal year 2000 report and fiscal
year 2002 plan. Although Labor did not have goals related to the high- risk
area of information security, it described its efforts and progress to
resolve this challenge in its current performance report and plan.
In commenting on the draft report, Labor generally agreed with our findings
and recommendation to revise its performance goals regarding strategic human
capital management and information technology.
GPRA is intended to shift the focus of government decisionmaking,
management, and accountability from activities and processes to the results
and outcomes achieved by federal programs. New and valuable information on
the plans, goals, and strategies of federal agencies has been provided since
federal agencies began implementing GPRA. Under GPRA, annual performance
plans are to clearly inform the Congress and the public of (1) the annual
performance goals for agencies? major programs and activities, (2) the
measures that will be used to gauge performance, (3) the strategies and
resources required to achieve the performance goals, and (4) the procedures
that will be used to verify and validate performance information. These
annual plans, issued soon after transmittal of the President?s budget,
provide a direct linkage between an agency?s longer- term goals and mission
and day- to- day activities. 3 Annual
3 The fiscal year 2002 performance plan is the fourth of these annual plans
under GPRA. Background
Page 5 GAO- 01- 779 Labor's Status of Achieving Key Outcomes
performance reports are to subsequently report on the degree to which
performance goals were met. The issuance of the agencies? performance
reports, due by March 31, represents a new and potentially more substantive
phase in the implementation of GPRA- the opportunity to assess federal
agencies? actual performance for the prior fiscal year and to consider what
steps are needed to improve performance and reduce costs in the future. 4
The role of the Department of Labor is to promote the welfare and economic
security of the nation?s workforce and ensure that workplaces are safe. To
carry out its mission, the agency oversees a broad array of programs, from
those that help students? transition into the workforce to those that
inspect the workplace or ensure the integrity of pension plans for retirees.
These activities affect more than 100 million workers and more than 10
million employers.
This section discusses our analysis of Labor?s performance in achieving its
key selected outcomes and the strategies the agency has in place, relating
to human capital 5 and information technology, for achieving these outcomes.
Labor reported making progress toward its outcome of reducing injuries,
illnesses, and fatalities in the workplace. Labor reported that it met four
of the six goals we reviewed under this outcome and substantially achieved
another goal. In several cases, Labor exceeded the goal. For example, since
fiscal year 1995, injury and illness rates declined by 20 percent in almost
68,000 workplaces where Labor intervened through efforts such as
inspections, exceeding the target goal of 50,000 workplaces. In addition,
for many of the goals, Labor presented data showing performance trends over
a number of years. However, assessing progress for some goals was
4 The fiscal year 2000 performance report is the second of these annual
reports under GPRA. 5 Key elements of modern strategic human capital
management include strategic human capital management planning and
organizational alignment; leadership continuity and succession planning;
acquiring and developing staffs whose size, skills, and deployment meet
agency needs; and creating results- oriented organizational cultures.
Assessment of Labor?s
Progress and Strategies in Achieving Selected Key Outcomes Workplace
Injuries, Illnesses, and Fatalities
Page 6 GAO- 01- 779 Labor's Status of Achieving Key Outcomes
difficult because it was not always clear which fiscal year goal and target
level was being assessed.
Like last year, Labor did not meet its fiscal year 2000 goal to reduce
fatalities in the construction industry. However, Labor provides a plausible
explanation for why external factors may have contributed to this shortfall-
demand for more construction workers in a booming economy that likely
resulted in a workforce with less experience combined with an increased pace
and volume of work. Labor also provides clear strategies that appear likely
to achieve the goal in the coming year, such as providing grants to develop,
conduct, and expand safety and health training and partnering with local
contractor organizations to raise safety awareness and bring training to
Spanish- speaking contractors.
Another goal under this outcome was reported by Labor as ?substantially
achieved,? a new category used in the fiscal year 2000 report when at least
80 percent of the goal is attained. 6 The goal is in two parts: to reduce
nonfatal mining injuries and to reduce mining fatalities. Labor met the
first part of the goal but did not meet the second part of the goal to
reduce fatalities below the targeted 5- year average of 89 fatalities. There
were 89 fatalities, bringing Labor very close to achieving the goal. Labor
fully described actual progress toward the goal and identified the probable
cause of the shortfall.
Assessing progress on three of the goals under this outcome was complicated
because complete fiscal year 2000 data were unavailable. For these goals,
Labor reported progress using fiscal year 1999 data and targets instead of
fiscal year 2000 data and targets. For example, Labor?s fiscal year 2000
report stated that the fiscal year 1999 goal to reduce injuries and
illnesses by 3 percent in industries characterized by high hazards was
exceeded based on calendar year 1999 data. Labor could not assess
achievement of its fiscal year 2000 goal with a target level of 7 percent
because the necessary data would not be available until December 2001. Where
complete data were not available, Labor followed OMB guidance calling for
agencies to indicate when the data will be available, include performance
information from the preceding year, and include the actual information in
the subsequent report. However, tracking progress
6 Although Labor reported certain goals as ?substantially achieved,? for
purposes of our review, we considered these goals not met because they were
not fully achieved.
Page 7 GAO- 01- 779 Labor's Status of Achieving Key Outcomes
can be confusing because the fiscal year 2000 report lists only the fiscal
year 1999 target level and omits the fiscal year 2000 target level.
Strategies to achieve goals under this outcome appear to be clear and
reasonable and often used information technology, coordination with other
federal agencies, and program evaluation to achieve the goals. None of the
goals involved human capital strategies. Labor addressed strategic human
capital management through agency- wide management goals rather than linking
such strategies to specific programmatic goals or outcomes. Labor reported
that it will use information technology, including Web- based courses, to
provide safety and health training and interactive computer systems to help
employers improve hazardous conditions in the workplace. In addition, Labor
has been evaluating the effectiveness of the various interventions- such as
inspections- it uses to reduce injuries and illnesses. Labor?s fiscal year
2002 plan calls for more program evaluations of its safety and health
programs, policies, and specific standards to assess how effectively they
reduce workplace injuries and illnesses. Other strategies mentioned in the
fiscal year 2002 plan include coordination with other federal agencies, such
as the Small Business Administration, to improve workplace safety and
health. The importance of coordinating with other federal agencies is
highlighted in our previous work on safety at hazardous material facilities.
In October 2000, we reported that Labor and at least three other federal
agencies were not coordinating requirements, such as training for hazardous
material workers. 7 We recommended various ways to improve coordination,
such as determining whether agency agreements were effective and
consolidating training requirements. Labor acknowledged points of overlap
regarding worker training and did not object to the recommendations.
Some of the strategies described in Labor?s fiscal year 2002 plan were more
clearly linked to achieving goals than in the 2001 fiscal year plan. For
example, in our prior review of Labor?s fiscal year 2001 plan, we found that
Labor did not sufficiently explain how certain programs, such as the
?Consultation? and ?Voluntary Protection Programs,? would reduce injury and
illness rates. The fiscal year 2002 plan now explains how these strategies
will be effective.
7 See Worker Protection: Better Coordination Can Improve Safety at Hazardous
Material Facilities (GAO- 01- 62, Oct. 26, 2000).
Page 8 GAO- 01- 779 Labor's Status of Achieving Key Outcomes
Labor?s 2002 performance plan retained many of the same performance goals
from the fiscal year 2001 plan, and for 2002, Labor added a new goal
measuring the effectiveness of voluntary, cooperative efforts between
employers and Labor in reducing injuries, illnesses, and fatalities. For
several of the goals it retained, Labor raised the target levels, allowing
the agency to demonstrate progress toward achieving its overall strategic
goals. This includes increasing the target level for its unmet goal to
reduce construction industry fatalities from 11 percent in 2001 to 15
percent in 2002, even though Labor did not meet its previous target of 3
percent in fiscal year 1999 and 7 percent in 2000. Labor acknowledges that
this is an ambitious target but indicates that recent program initiatives
are expected to yield positive results in fiscal year 2001.
Labor reported making progress in achieving its outcome to ensure that job
training participants get and keep jobs, with performance meeting many of
the goals and often exceeding them. For example, Labor?s Women?s Bureau, in
collaboration with other organizations, prepared 31,588 women for the
workforce, exceeding the target level of 25,000. Labor presented data
showing performance trends over a number of years for some of the goals.
Table 1 shows the goals we considered under this outcome. 8
8 For this outcome, we reviewed only those goals that relate to job training
and job training outcomes. We did not review goals that focus primarily on
employment outcomes, such as those involving the Employment Service or
Veterans? Employment and Training Service. Job Training Participants
Getting and Keeping Jobs
Page 9 GAO- 01- 779 Labor's Status of Achieving Key Outcomes
Table 1: Fiscal Year 2000 Goals and Measures Under Outcome On Job Training
Participants Getting and Keeping Jobs
Goal/ Measure FY 2000
Status
64% of JTPA adult disadvantaged terminees will be employed one quarter after
program exit with average weekly earnings of $292. Met a The new Work
Incentive Grant program will be implemented by September 30, 2000, with
plans for 20 to 40 awards in state and local areas to enhance services for
people with disabilities in the One- Stop Center environment.
Met Prepare 25,000 women for the labor force by providing tools and
education on equal pay, occupational segregation, pension benefits,
dependent care, nontraditional occupations, safe and healthy workplaces, and
rights in the workplace.
Met 77% of JTPA youth terminees will be employed or obtain advanced
education or job skills. Met a 75% of Job Corps trainees will get jobs or
pursue further education, with those obtaining jobs having an average
starting wage of $6. 50 per hour. Met a At least 25 communities will be
awarded Youth Opportunity grants, and collectively enroll 3,000 youth by the
end of FY 2000. Met Under JTPA for dislocated workers, 74% of program
terminees will be employed at an average wage replacement of 93% at
termination; 76% will be employed one quarter after program exit at an
average wage replacement rate of 97%.
Not Met a 72% of TAA and NAFTA- TAA participants will be employed upon
termination and achieve at least 80% of their pre- separation wage. Not Met
a Based on fiscal year 1999 target levels and program year 1999 performance
data. These programs
are forward- funded and follow a program year that begins 9 months after the
fiscal year for which program funding was received.
Source: U. S. Department of Labor Annual Report, Fiscal Year 2000
Labor reported meeting six goals and substantially achieving two goals.
These two goals focused on worker retraining- one related to the Job
Training Partnership Act (JTPA) dislocated worker program and another
related to the Trade Adjustment Assistance (TAA) and North American Free
Trade Agreement- Transitional Adjustment Assistance (NAFTA- TAA) program.
For both goals, the target level for the average wage replacement rate was
exceeded, but the portion of the goal addressing employment rates fell
short. The target level to employ JTPA dislocated workers was 74 percent,
but actual performance was 71 percent; the employment target level one
quarter after JTPA program exit was 76 percent, but actual performance was
slightly lower at 75 percent. Labor notes that it did not fully meet the
goal because several states that were high performers under JTPA could not
be included in the calculation for fiscal year 2000. These states no longer
collect data under JTPA; they collect data under the newly implemented
Workforce Investment Act (WIA).
Page 10 GAO- 01- 779 Labor's Status of Achieving Key Outcomes
For the goal related to the TAA and NAFTA- TAA programs, Labor reported that
the target level to employ NAFTA- TAA program participants was 72 percent,
but actual performance was about 65 percent. Labor attributes the shortfall
to continued difficulties in getting complete and accurate data. The report
discusses efforts to improve reporting and explains how the revised
reporting system for fiscal year 2001 should help states provide more
complete and accurate information. Our ongoing work on NAFTATAA may help
shed light on the need for comprehensive performance data to determine the
efficacy of training and job placement approaches. In our prior work, we
recommended that Labor establish: (1) an effective performance measurement
system for these programs, (2) procedures to allow Labor to certify workers
within required time frames, and (3) more effective internal controls and
oversight procedures to decrease the likelihood that ineligible workers are
given benefits. 9 Labor appears to be making significant efforts to respond
to these recommendations. Labor is redesigning its data reporting system to
match the system used in WIA and is developing a detailed manual on data
reporting for states and localities. Labor has also established processing
procedures to improve the time frame within which petitions are reviewed.
Although Labor is reviewing data to identify ineligible recipients, the
performance report does not identify what steps are being taken to develop
internal controls.
Assessing progress toward meeting the goals under this outcome has been
complicated by the transition from JTPA to WIA and the lag in available
performance data for fiscal year 2000. Labor provides a reasonable
discussion of its fiscal year 2000 performance and its plans for
transitioning to WIA performance measures for the coming year. However, a
clearer description of the challenges posed by this transition would help to
assess whether its plans are sufficient to facilitate meeting next year?s
goals. In addition, the three JTPA goals and the Job Corps goal were
assessed using fiscal year 1999 target levels and not target levels set in
Labor?s fiscal year 2000 plan. This lag in available data arises because the
programs run on a program- year basis that begins 9 months after the fiscal
year for which program funding is received. Finally, the goal to assist
women in the workforce is very broad, and the performance measure fails to
capture what services participants are receiving or accessing- a weakness we
observed in our previous review of Labor?s performance report.
9 See Trade Adjustment Assistance: Trends, Outcomes, and Management Issues
in Dislocated Workers Programs (GAO- 01- 59, Oct. 13, 2000).
Page 11 GAO- 01- 779 Labor's Status of Achieving Key Outcomes
The strategies Labor uses to achieve the goals we reviewed under this
outcome are largely clear and reasonable. Some goals use strategies related
to information technology; one goal includes strategies related to human
capital management. Labor provides a clear explanation for training needs
when discussing its goal to award Youth Opportunity grants, explaining that
experienced staff coaches will help train case managers, teach youth
development strategies, and assist in building relationships with other
organizations that serve youth. Yet other strategies are unclear. In the
fiscal year 2000 report, when discussing efforts to improve data integrity
in the JTPA disadvantaged adult program, Labor mentions ?providing system-
wide staff training, where necessary,? without adequately explaining what
types of training might be required or how they will assess when and where
training will be needed. Finally, our previous review noted that the
discussion of this goal contained very little information on the quality of
performance data used to assess it; however, this year?s report is improved
because it provides information on Labor?s efforts to validate the program
data it is using.
In its fiscal year 2002 performance plan, Labor continues to focus its
efforts on increasing the earnings of participants in certain programs.
Target levels are raised for several fiscal year 2002 performance goals,
allowing Labor to demonstrate progress toward achieving its goals over time.
However, the transition from JTPA to WIA will make performance on some goals
difficult to compare. In spite of transition problems, Labor anticipates
that the implementation of WIA will significantly improve its reporting
capabilities and program outcomes. The incorporation of job retention
measures in its fiscal year 2002 plan for WIA goals provides an important
dimension of program performance, and our ongoing work on WIA performance
measures may help Labor assess the effectiveness of the measures proposed
for WIA.
Labor reported making progress toward its outcome of protecting worker
benefits. Labor reported meeting all but one of its fiscal year 2000 goals
related to protecting worker benefits. Table 2 shows the goals we reviewed
for this outcome. For example, Labor reported making significant progress in
its goal of reducing the average time frame to decide final benefit levels
for participants in pension plans taken over by the Pension Benefit Guaranty
Corporation (PBGC). By focusing its newly streamlined case processing
strategies on the oldest cases during fiscal year 2000, PBGC reduced the
average time frame from between 5 and 6 years to between 4 and 5 years. In
its 2002 performance plan, Labor reports that its goal is to further reduce
this timeframe to 3 years. In its Worker Benefits
Page 12 GAO- 01- 779 Labor's Status of Achieving Key Outcomes
annual report, Labor presented data showing performance trends over a number
of years for several goals. The performance plan shows that it has increased
target levels for some goals under this outcome, modified others, and
discontinued one. However, in some cases, the discussion of the impact of
these changes was incomplete or unclear, as was the discussion of the
strategies Labor proposes to accomplish the goals.
Table 2: Fiscal Year 2000 Goals and Measures Under Outcome on Worker
Benefits Goal/ Measure
FY 2000 Status
Unemployed workers get fair Unemployment Insurance benefit eligibility
determinations and timely benefit payments. Not met Increase by 1% the
number of workers covered by a pension plan sponsored by their employer,
particularly women, minorities, and workers in small businesses.
Met a Return federal employees to work after an injury as early as
appropriate as indicated by a 9% reduction from baseline in average number
of production days lost due to disability. Reduce the number of lost days to
173 in Quality Case Management cases; establish baseline for all cases.
Met Produce $66 million in cumulative first- year savings (FY 1999 - 2000)
through Periodic Roll Management. Met In the Federal Employees? Compensation
Act (FECA) program, save an additional $5 million over FY 1999 compared to
amounts charged through full- year implementation of fee schedules for
inpatient hospital and pharmacy services; save $1. 5 million compared to
amounts charged for physician services through the Correct Coding Initiative
(CCI).
Met Timely and accurate Davis- Bacon wage determinations: Survey each area
of the country for all 4 types of construction at least every 3 years, with
wage determinations validly reflecting locally prevailing wage/ benefits.
For FY 2000, implement scanning technology/ develop knowledge management
technology; complete analysis of Bureau of Labor Statistics data, and decide
whether a reengineering or reinvention approach will be pursued in FY 2001.
Met Reduce by 1 year the average timeframe to send final, accurate benefit
determinations to participants in defined benefit pension plans taken over
by PBGC.
Met Increase by 2% benefit recoveries for individuals that are achieved
through the assistance of Pension Benefit Advisors to $53 million. Met
Increase by 2.5% both the number of closed investigations of employee
pension and health benefit plans where assets are restored (to 819) and the
number where prohibited transactions are corrected (to 301).
Met a Based on fiscal year 1999 data. Target levels were unchanged from 1999
to 2000. Source: U. S. Department of Labor Annual Report, Fiscal Year 2000.
Labor reported that it failed to meet only one of its performance goals in
the area of protecting worker benefits- paying UI claims fairly and
promptly- which it reported as ?substantially achieved.? Labor established
two separate criteria for this goal- one that judged whether
Page 13 GAO- 01- 779 Labor's Status of Achieving Key Outcomes
eligibility was determined fairly and another that judged whether workers
received their UI benefits on schedule. Out of a goal of 24 states, 23 met
the criteria for determining eligibility fairly. Labor reports that an
additional six states came very close. For the other portion of the goal-
workers receiving their UI benefits on schedule- Labor reported that it met
the goal of 47 states. Labor explains that the lower performance level for
fairly determining eligibility reflects, in part, states? focus on
costsaving efforts, such as telephone claims- taking. Furthermore, Labor has
been tightening the underlying review process making it harder for states to
meet the criterion. Despite missing the goal, Labor reported that it has
increased the threshold for fiscal year 2002- 30 states must meet the
eligibility fairness criteria and 49 states must provide UI benefits on
schedule. Labor provides reasonable strategies that appear likely to help
achieve this goal, such as engaging in ongoing discussions with states,
employers, and UI claimants to improve communication, identify issues, and
promote input in the design of the programs.
One of the goals that Labor reported meeting in fiscal year 2000, through
the efforts of the agency?s Pension and Welfare Benefits Administration
(PWBA), was to increase by 2.5 percent both (1) the number of closed
investigations of employee pension and health benefit plans where assets are
restored (to 819) and (2) the number where prohibited transactions are
corrected (to 301). During fiscal year 2000, Labor combined the data for
pension and health benefits, but tracked separate goals for each element-
assets restored and prohibited transactions corrected. Beginning in its
fiscal year 2001 plan and continuing in its 2002 plan, Labor has created two
separate goals- one for pensions and another for health benefit plans. This
move could make it easier to track outcomes for the two separate benefit
components. However, Labor aggregated goals for the individual elements into
a single targeted goal that covers both assets restored and prohibited
transactions corrected. In addition, it added two more elements to this
aggregate goal- the number of cases in which participant benefits are
recovered and the number in which plan assets are protected from
mismanagement. As a result, it will be difficult to assess whether the goal
is actually being met, because success in one element of the goal may
obscure failure in another.
Performance goals for 2002 raise the target levels for several measures and
include a new goal to promptly review applications for foreign labor
certifications to ensure that aliens admitted to work will not adversely
impact domestic workers? wages or working conditions. The importance of this
goal was highlighted in our earlier work on the H- 2A program for
agricultural workers and the H- 1B program for highly skilled foreign
Page 14 GAO- 01- 779 Labor's Status of Achieving Key Outcomes
workers. Additionally, in our major management challenges series, we cited
weaknesses in strategic planning and resulting problems in organizational
alignment that could affect the agency?s ability to protect worker benefits.
10 Specifically, we found that having multiple agencies manage these
programs resulted in program inefficiencies that confuse participants and
delay the application process. We recommended ways to simplify and shorten
the H- 2A application process and better protect H- 2A and domestic workers,
including a recommendation that Labor collect data on its performance in
meeting deadlines and use these data to monitor and improve its performance.
11 We also recommended that Labor consolidate program authority for H- 2A
workers into a single agency within Labor to increase the effectiveness of
enforcement. Labor has made efforts to implement these recommendations, and
has completed some. In a September 2000 report, we suggested that the
Congress consider eliminating Labor?s role in reviewing H- 1B petitions
because its review is limited by law and duplicates the efforts of the
Immigration and Naturalization Service. 12 Labor disagreed with this
suggestion.
As a result of accomplishing a portion of the goal related to establishing
prevailing wage rates for the construction industry as required by the
Davis- Bacon Act, Labor reported that it is undertaking a reengineering
effort to apply new information technologies and processes to the existing
Davis- Bacon survey program to improve its accuracy, timeliness, and
participation. Labor discontinued the goal for fiscal year 2002; but neither
Labor?s fiscal year 2002 performance plan nor its fiscal year 2000
performance report discussed how it plans to monitor the law?s survey
requirements in the interim.
In its fiscal year 2002 performance plan, Labor continues a goal for
protecting workers? benefits that we previously criticized- increasing by 1
percent the number of workers who are covered by a pension plan sponsored by
their employer. In our review of Labor?s fiscal year 1999 performance report
and fiscal year 2001 plan, we said that Labor could develop a more useful
measure by focusing on the proportion of the total
10 See Major Management Challenges and Program Risks: Department of Labor
(GAO- 01- 251, Jan. 2001). 11 See H- 2A Agriculture Guestworker Program:
Changes Could Improve Services to Employers and Better Protect Workers (GAO/
HEHS- 98- 20, Dec. 31, 1997). 12 See H- 1B Foreign Workers: Better Controls
Needed to Help Employers and Protect Workers (GAO/ HEHS- 00- 157, Sept. 7,
2000).
Page 15 GAO- 01- 779 Labor's Status of Achieving Key Outcomes
workforce covered by pensions. In addition, the number of workers with
pensions is affected by a multitude of factors outside of Labor?s control
and, as a result, it is unlikely that a valid relationship exists between
Labor?s efforts and the outcome as measured. We have suggested that Labor
use program evaluation methods to determine whether such a relationship
exists and that Labor develop intermediate outcomes or output- oriented
indicators that have a clearer relationship with the activities it
undertakes. In its fiscal year 2002 performance plan and fiscal year 2000
report, Labor does not mention such efforts and continues to rely upon
educating customers regarding the importance of retirement planning as the
primary strategy for achieving this outcome. Our ongoing work to assess
Labor?s retirement savings education efforts under the Savings Are Vital to
Everyone?s Retirement Act (SAVER) of 1997 may shed light on this issue.
Labor?s fiscal year 2002 plan describes several program- specific strategies
for achieving the outcome of protecting worker benefits. The strategies
often appear to be clear and reasonable; none directly address human capital
management. Some strategies emphasize the use of new information
technologies, such as the use of new document imaging hardware to convert
older paper files into electronic files. Other strategies in the plan were
not specific or clear enough to be able to assess whether they would help
Labor achieve the goal. For example, to improve the fairness and timeliness
of UI benefits, Labor proposes developing and implementing a UI performance
management system ?? to enhance performance planning, facilitate performance
achievement, and assess the effectiveness of program improvement efforts
through capacity building, technical assistance, best practices, and other
key initiatives.? Similarly, in last year?s review, we noted that this
strategy did not sufficiently explain how Labor will achieve this goal.
Labor?s 2002 performance plan does not discuss several strategies it is
undertaking to serve pension plan participants more effectively and
efficiently. In prior work, we found weaknesses in PBGC?s contract
management- such as inadequate links between contracting decisions and long-
term strategic planning and a lack of centralized performance data to
monitor contractor performance- and we made several recommendations to
address these problems. 13 For example, we recommended that PBGC
13 See Pension Benefit Guaranty Corporation: Contract Management Needs
Improvement (GAO/ T- HEHS- 00- 199, Sept. 21, 2000); and Pension Benefit
Guaranty Corporation: Contracting Management Needs Improvement (GAO/ HEHS-
00- 130, Sept. 18, 2000).
Page 16 GAO- 01- 779 Labor's Status of Achieving Key Outcomes
undertake a comprehensive review to better link staffing and contracting
decisions to its long- term strategic planning process so that it will be
prepared for future workload changes and that it compile performance data
centrally to better manage contractors. PBGC has begun work on these
efforts, but these efforts are not reflected in the performance plan because
Labor does not consider them to be a key strategy in achieving this goal.
Labor reported that it made progress toward the key selected outcome of
transitioning individuals from welfare dependency to self- sufficiency. For
this year, Labor?s single goal under this outcome has incorporated a measure
for job retention and one for increased earnings, which are critical
dimensions of program performance. This is an improvement over the fiscal
year 1999 measure, which did not address job retention and targeted wage
rates. Labor reported that it exceeded the goal with 84 percent remaining in
the workforce for six months with an average earnings increase of 59
percent, surpassing the target levels of 60 percent that remained in the
workforce with an average earnings increase of 5 percent. Labor acknowledged
data limitations in the earnings increase rate of 59 percent, reporting that
this rate may be inflated due to inconsistent reporting by Welfare- to- Work
grantees. It is working to improve reporting methods by grantees and will
issue revised reporting instructions. This is an improvement over Labor?s
fiscal year 1999 report which, as noted in our previous review, did not
provide information on the quality of performance data.
Although Labor reported that it exceeded the goal, it did not provide
detailed information on how many participants have been served, which would
clarify the impact the program has had to date- a weakness we observed in
our previous performance review. At the same time, Labor acknowledges that
participation levels lag and has requested and received congressional
approval to extend the period over which grantees may expend their funds.
Although this time period has been extended, the Welfare- to- Work grant
program was only funded in fiscal years 1998 and 1999 and no new funding is
expected. In future plans, Labor might consider discussing the limited
nature of the program and providing longterm strategies for serving this
population when funding expires in future plans.
In general, Labor?s strategies for meeting the goal in fiscal year 2002 are
plausible. None of the strategies involved the use of human capital
management. Labor plans a pilot program to fund employers to upgrade
Transitioning Individuals
From Welfare Dependency to Self- Sufficiency
Page 17 GAO- 01- 779 Labor's Status of Achieving Key Outcomes
the skills of Temporary Assistance for Needy Families (TANF) participants,
allowing the employers to then backfill entry level positions with Welfare-
to- Work participants. In addition, Labor will target development of whole
family programs to help participants, primarily fathers, focus on their
children and help the custodial parent access community resources to achieve
self- sufficiency. The strategies also involved program evaluation to assess
the effectiveness of Welfare- toWork initiatives, including those undertaken
by both formula and competitive grantees. A set of recently issued
evaluation reports tell us that program implementation has advanced, but
that participation remains low and the projected scale of the programs
continues to be modest. 14
Labor?s report does not explicitly state why performance goals have been
revised; however, it appears that Labor is seeking increasingly higher
levels of performance for this goal, allowing the agency to demonstrate
progress toward achieving its overall strategic goals. Labor has raised the
target to 67 percent of participants who will be employed for 2 consecutive
quarters after placement, with an average earnings increase of 7 percent.
For the selected key outcomes, this section describes major improvements or
remaining weaknesses in Labor?s (1) fiscal year 2000 performance report in
comparison with its fiscal year 1999 report and (2) fiscal year 2002
performance plan in comparison with its fiscal year 2001 plan. This section
also discusses how the agency?s fiscal year 2000 report and fiscal year 2002
plan address concerns raised by GAO and OIG.
14 Early Implementation of the Welfare- to- Work Grant Program: Findings
From Exploratory Site Visits and Review of Program Plans, Department of
Health and Human Services (February 2000); and Further Progress, Persistent
Constraints: Findings From a Second Survey of the Welfare- to- Work Grants
Program, Department of Health and Human Services (May 2000). Comparison of
Labor?s Fiscal Year 2000 Performance Report and Fiscal Year 2002 Performance
Plan With the Prior Year Report and Plan for Selected Key Outcomes
Page 18 GAO- 01- 779 Labor's Status of Achieving Key Outcomes
Labor made improvements to its fiscal year 2000 performance report from its
fiscal year 1999 performance report. In our review of Labor?s fiscal year
1999 report, we identified as a weakness the lack of information the agency
presented concerning the quality or credibility of performance data relative
to the performance goals. Labor?s fiscal year 2000 report greatly improves
its presentation of such information by identifying performance data
challenges, steps it will take to verify and validate its performance data,
and the implications of data limitations for assessing performance. For
example, the agency reported that it completed an audit of the validity and
reliability of its workplace injury and illness data and found the data to
be reasonable and accurate. The agency will improve the audit program by,
among other things, maintaining a standard sampling universe so that trends
in the universe estimates can be tracked. As previously noted, Labor also
recognized that Welfare- to- Work data may be subject to error due to
misinterpretation of reporting guidance by grantees, resulting in
overestimates of increased earnings rates for participants. Labor describes
a major effort it will undertake to gauge the extent of inaccurate
reporting, correct these reports, and improve the reporting instructions and
format.
In our previous review, we observed that the fiscal year report did not
directly or comprehensively address its progress in resolving major
management challenges identified by GAO and Labor?s OIG. The fiscal year
2000 report makes significant improvement by including a summary of the most
serious management and performance challenges identified by OIG, as required
by the Reports Consolidation Act of 2000, and discussing strategies Labor
will use and progress it has made in resolving these challenges.
Labor more clearly identified when it reported on goals that were assessed
using older data and target levels when current fiscal year 2000 data were
not available. Specifically, last year?s report listed goals in the appendix
as met or not met, but did not clearly indicate on which fiscal year goal
and target level the assessment was based. This year?s report clearly
indicates the year of the data and target level on which the goal was
assessed. In addition, Labor?s fiscal year 2000 report also followed OMB
guidance calling for agencies to identify the goals for which complete data
are not available, indicate when the data will be available, include
performance information from the preceding year, and include the actual
information in the subsequent report. However, tracking progress is still
difficult because the fiscal year 2000 report does not always list the
fiscal year 2000 target level when the agency had assessed a goal using
older data and target levels. Comparison of Labor?s
Performance Report for Fiscal Years 1999 and 2000
Page 19 GAO- 01- 779 Labor's Status of Achieving Key Outcomes
One concern about Labor?s fiscal year 2000 report is that Labor added the
category ?substantially achieved? to its assessment categories ?met? and
?not met? when at least 80 percent or more of the targeted goal was
attained. Although OMB allows agencies to use a third category to assess
goals when the difference between the target level and actual performance is
slight, Labor should be aware of the potential risk in using the category
substantially achieved. Relying on this indicator could mask an
understanding of actual progress in achieving goals and affect an agency?s
vigilance in its efforts to achieve progress. It could give an impression of
successful performance across all goals or on a specific goal when actual
performance might be as much as 20 percent below the target. OMB guidance
calls for agencies to compare actual performance with the projected
performance level set out in the plan and explain why the goal was not met.
We found that, for most of the goals we reviewed that Labor assessed as
substantially achieved, the agency was very close to meeting the goal,
reported its actual performance against planned performance, and explained
the shortfall.
Another concern with this year?s report regards Labor?s presentation of its
future plans. Last year?s performance report included a section entitled
?Goal Assessment and Future Plans? that highlighted, among other things,
strategies that would be used to achieve a goal in the future. This year?s
fiscal year 2000 report eliminated information on future plans, calling the
section ?Goal Assessment.? Labor officials told us that, due to the
transition in the administration and uncertainty about the agency?s future
direction and goals, they determined that any discussion of future plans
would be premature and could be subject to change. We understand Labor?s
concern; however, we are hopeful that future performance reports will return
to the format included in the fiscal year 1999 report because it provides
more linkage between the performance report and subsequent performance plans
and reports.
We found a limited number of substantive changes between Labor?s fiscal
years 2001 and 2002 performance plans. Generally, the fiscal year 2002 plan
continues to provide a clear progression toward intended outcomes. For
example, for several goals aimed at reducing injuries, illnesses, and
fatalities, only the numeric targets have changed (from 11 percent to 15
percent from the baseline in selected industries and occupations) and not
the goals themselves, allowing Labor to demonstrate progress toward
achieving its outcomes. In addition, the fiscal year 2002 plan now links
budget authority and outlays to both the strategic and outcome goals. This
Comparison of
Performance Plans for Fiscal Years 2001 and 2002
Page 20 GAO- 01- 779 Labor's Status of Achieving Key Outcomes
will provide a basis for assessing how the resources are contributing to
accomplishing the expected levels of performance.
In our previous review of Labor?s fiscal year 2001 performance plan, we
observed that Labor did not adequately discuss the steps it will take to
verify and validate performance data, as well as the implications of data
limitations for assessing performance. Labor significantly improved its
fiscal year 2002 performance plan by providing more detailed information and
by expanding its discussion to include data systems that were not cited in
the 2001 plan. However, the plan still lacks sufficient information on how
Labor will address the implications of certain data limitations. For
example, employment and training programs, such as WIA, are increasingly
relying on UI data to measure outcomes. However, these data suffer from
significant time lags, are not readily shared from state to state, and do
not cover all employment categories. While the 2002 plan cites the
anticipated completion of a data system to track performance for key
employment and training programs, it does not address the implications of
these UI data limitations for assessing program performance or how these
factors will be mitigated.
The fiscal year 2002 performance plan could be improved by revising its
information technology goal. Because the goal is broad and not directly
measurable, it must include performance indicators that are specific,
measurable, and related to the goal, according to GPRA, OMB Circular A- 11,
and related guidance. In addition, goals and indicators should be objective
and quantifiable or defined in a way that allows an accurate determination
to be made of how actual performance compares to the goal. Labor developed
one broad performance goal for its outcome of improving organizational
performance and communication through information technology: Improve
automated access to administrative and program systems, services, and
information. The goal uses eight indicators to measure and assess progress
toward the goal. But these indicators are not always specific enough to be
able to assess the agency?s plans or progress toward achieving its goal and
do not allow for consistently accurate measurement of performance. For
example, it is not clear that replacing the Remote Terminal Network (RTN)-
one of the indicators- will help achieve the goal and improve access to
information technology. Furthermore, it is not clear how the indicators will
be aggregated to determine whether the goal has been achieved, which is
especially important when the broader goal is not quantifiable or directly
measurable.
Page 21 GAO- 01- 779 Labor's Status of Achieving Key Outcomes
This section discusses Labor?s efforts to address major management
challenges identified by GAO. This includes two governmentwide, highrisk
areas- strategic human capital management and information security- and
three major management challenges facing Labor that were identified in our
performance and accountability series.
Regarding strategic human capital management, we found that Labor?s fiscal
year 2000 performance plan had goals and measures related to strategic human
capital management, and the fiscal year 2000 performance report explained
its progress in achieving these goals. Labor?s 2002 performance plan
includes a goal to measure key aspects of strategic human capital management
that had not been addressed in the 2000 report or plan. Furthermore, the
report has helpfully divided management goals into human capital, financial,
and information technology, making it easier to track progress from year to
year and more clearly focus efforts on these areas.
However, the fiscal year 2002 performance goal that addresses key aspects of
strategic human capital management- similar to Labor?s information
technology goal- is overly broad and vague and uses performance indicators
that do not sufficiently measure the goal. The goal- The right people in the
right place at the right time to carry out the mission of the department-
encompasses a wide range of human capital issues, from recruitment and
organizational alignment to skills training and workforce diversity. Given a
goal so broad, care should be taken to develop indicators that can gauge
whether the goal has been achieved. When goals are not measurable, OMB
guidance states that the performance indicators should set out specific,
measurable values related to the goal that will help determine goal
achievement. Unfortunately, the number and nature of indicators that Labor
proposes do not appear to provide all the data needed to fully assess goal
achievement. Not all aspects of the goal are adequately addressed through
the indicators Labor proposes, and those that are proposed are not always
clearly linked to the goal and do not allow for accurate assessment of
performance. For example, several indicators rely on opinion surveys to
measure performance, which may involve subjective considerations or
judgments. In addition, the indicators do not capture agency strategies that
will be used to achieve the goal. For example, although the 2002 performance
plan describes agency efforts to identify future workforce needs- such as
skill gaps- and ensure the development and skills of its workers, the
indicators do not reflect these efforts. Finally, it is not clear how the
indicators will be aggregated to determine whether the goal has been met.
Labor?s Efforts to
Address Its Major Management Challenges Identified by GAO
Page 22 GAO- 01- 779 Labor's Status of Achieving Key Outcomes
With respect to information security, we found that, while Labor?s fiscal
year 2000 performance plan did not have goals and measures related to
information security, it described the agency?s efforts to address this
challenge, and the fiscal year 2000 report described its progress on these
efforts. The agency identified information security as a long- term
management initiative in its fiscal year 2002 performance plan rather than a
specific goal. The plan states that Labor has developed (1) an information
security program that is being integrated into programs throughout the
agency, (2) security plans for all Labor?s agencies, and (3) a security
awareness program to train all employees.
In addition to these governmentwide management challenges, we identified
three major management challenges facing Labor:
increasing the employment and earnings of America?s workforce,
protecting the benefits of workers, and
fostering safe and healthy workplaces. These challenges are generally
similar to the key outcomes selected for Labor. Therefore, goals and
measures included in the fiscal year 2000 report and 2002 plan that address
these challenges are discussed under the outcomes.
In general, Labor appears to be making progress in achieving the key
outcomes. Labor has increased its target levels for some goals for fiscal
year 2002 and generally provided sound strategies for achieving these new
targets. We continue to have concerns about some of the measures Labor uses.
We are most concerned about the way in which Labor addresses two of its
management challenges- information technology and strategic human capital
management. Given the breadth of these goals, goal achievement cannot be
fully assessed with the performance indicators Labor proposes. Without
better indicators that more accurately and comprehensively measure
performance toward the goal, Labor will be unable to fully assess its
progress in these areas.
To ensure that progress toward performance goals can be accurately and fully
assessed, and that performance indicators effectively measure the goal, we
recommend that the Secretary of Labor
revise its performance goals regarding strategic human capital management
and information technology so that the performance indicators effectively
capture efforts to achieve the goal. Conclusions
Recommendations
Page 23 GAO- 01- 779 Labor's Status of Achieving Key Outcomes
As agreed, our evaluation was generally based on the requirements of GPRA,
the Reports Consolidation Act of 2000, guidance to agencies from OMB for
developing performance plans and reports (OMB Circular A- 11, Part 2),
previous reports and evaluations by us and others, our knowledge of Labor?s
operations and programs, GAO identification of best practices concerning
performance planning and reporting, and our observations on Labor?s other
GPRA- related efforts. We also discussed our review with Labor agency
officials in the Office of the Assistant Secretary for Administration and
Management. The agency outcomes that were used as the basis for our review
were identified by the Ranking Minority Member of the Senate Committee on
Governmental Affairs as important mission areas for the agency and generally
reflect the outcomes for all of Labor?s programs or activities. For these
outcomes, we identified goals that we believed to be clearly linked to the
outcomes. The major management challenges confronting Labor, including the
governmentwide, high- risk areas of strategic human capital management and
information security, were identified by GAO in our January 2001 performance
and accountability series and high- risk update and were identified by
Labor?s OIG in December 2000. We did not independently verify the
information contained in the performance report and plan, although we did
draw from other GAO work in assessing the validity, reliability, and
timeliness of Labor?s performance data. We conducted our review from April
through June 2001 in accordance with generally accepted government auditing
standards.
We provided a draft of this report to Labor for its review and comment.
Labor?s comments are in appendix II. Labor generally agreed with our
findings and was pleased with our acknowledgement of its efforts to improve
explanations about data quality and major management challenges. The agency
also agreed with our recommendation to revise the performance indicators
used to measure its progress toward achieving its goals on information
technology and strategic human capital management. With regard to the issue
we raised about using a third category- substantially achieved- Labor
maintained that it will continue to use this category, but only when
performance is very close to achieving the goal. We incorporated Labor?s
comments and clarifications where appropriate.
Labor commented on our observation that aggregating goals for individual
elements regarding PWBA?s investigations of health and welfare plans into a
single goal could make it difficult to assess performance. Labor plans to
examine this observation further, but is concerned that establishing Scope
and
Methodology Agency Comments
Page 24 GAO- 01- 779 Labor's Status of Achieving Key Outcomes
multiple, separate indicators would result in the selection of cases most
likely to achieve the best results rather than selection of the most
significant cases. Labor should be aware, however, that in using the
current, aggregate goal, case selection may similarly result in the
selection of cases from a range of categories for their potential to achieve
the overall goal. Labor also commented that revising the goal to increase
the number of workers covered by a pension plan to measure the percentage of
the workforce, as we suggested, could distort the measure?s reliability. We
disagree that revising the goal may hamper reliability, however, we are
pleased that Labor said it plans to explore ways to improve the measure and
evaluate which strategies most effectively expand coverage levels. Finally,
in response to our concern that Labor lacked sufficient information to
address certain data limitations, particularly the use of UI data, Labor
provided helpful information that illuminates its strategies. We encourage
Labor to incorporate this information in future plans.
As arranged with your office, unless you publicly announce its contents
earlier, we plan no further distribution of this report until 30 days after
the date of this letter. At that time, we will send copies to appropriate
congressional committees; the Secretary of Labor; and the Director, Office
of Management and Budget. Copies will also be made available to others on
request.
If you or your staff have any questions, please call me at (202) 512- 7215
or Dianne Blank at (202) 512- 5654. Key contributors to this report were
Ronni Schwartz, Abbey Frank, Mikki Holmes, and Bonnie McEwan.
Sincerely yours, Sigurd R. Nilsen, Director Education, Workforce and Income
Security Issues
Appendix I: Observations on the Department of Labor?s Efforts to Address Its
Major Management Challenges
Page 25 GAO- 01- 779 Labor's Status of Achieving Key Outcomes
The following table identifies the major management challenges confronting
Labor, which include the governmentwide, high- risk areas of strategic human
capital management and information security. The first column lists the
management challenges that GAO and Labor?s OIG have identified. The second
column discusses what progress, as discussed in its fiscal year 2000
performance report, Labor made in resolving its challenges. The third column
discusses the extent to which Labor?s fiscal year 2002 performance plan
includes performance goals and measures to address the challenges that GAO
and Labor?s OIG identified. We found that Labor?s fiscal year 2000 report
discussed its progress in resolving many of these challenges. Of the
agency?s 15 major management challenges, its performance plan had (1) goals
and measures that were directly related to 9 of the challenges, (2) goals
and measures that were indirectly applicable to 1 of the challenges, and (3)
no goals and measures related to 5 of the challenges, but discussed
strategies to address them or stated that these challenges, if not already
resolved, will be resolved by the end of fiscal year 2001.
Table 3: Major Management Challenges Major management challenge
Progress in resolving major management challenge as discussed in the fiscal
year 2000 performance report Applicable goals and measures in the
fiscal year 2002 performance plan GAO- designated governmentwide high risk
Strategic human capital management:
GAO has identified shortcomings at multiple agencies involving key elements
of modern strategic human capital management, including strategic human
capital planning and organizational alignment; leadership continuity and
succession planning; acquiring and developing staffs whose size, skills, and
deployment meet agency needs; and creating results- oriented organizational
cultures.
Labor reported that it exceeded its human capital goals to increase
participation in
?family- friendly? programs, and increase the use of career assistance and
continuous learning programs. It did not achieve its goals to reduce the
rate of lost production days due to accidents and injuries, and reduce
employees? injury and illness rate.
Labor includes goals related to strategic human capital management. One goal
addresses key human capital issues but is overly broad and uses performance
indicators that do not sufficiently measure the goal.
Information Security:
Our January 2001 high- risk series update noted the agencies? and
governmentwide efforts to strengthen information security have gained
momentum and expanded. Nevertheless, recent audits continue to show federal
computer systems are riddled with weaknesses that make them highly
vulnerable to computer- based attacks and place a broad range of critical
operations and assets at risk of fraud, misuse, and disruption.
In its fiscal year 2000 performance report, Labor reported that it has taken
steps to strengthen its systems security. Specifically, it has (1) issued a
security handbook to provide direction and guidance in completing system
security plans and risk assessments, (2) worked with the agencies to
strengthen security training and guidance, (3) issued a System Development
Life Cycle (SDLC) manual to control the software change
None. However, the plan summarizes actions that Labor has taken to enhance
its information security program.
The Chief Information Officers Council in coordination with the National
Institute of Standards and Technology and the Office of Management and
Budget (OMB) has developed a framework for agencies to use in determining
the current status of information system
Appendix I: Observations on the Department of Labor?s Efforts to Address Its
Major Management Challenges
Appendix I: Observations on the Department of Labor?s Efforts to Address Its
Major Management Challenges
Page 26 GAO- 01- 779 Labor's Status of Achieving Key Outcomes
Major management challenge Progress in resolving major
management challenge as discussed in the fiscal year 2000 performance report
Applicable goals and measures in the
fiscal year 2002 performance plan
control process, and (4) established a multiyear strategy and program for
its continuity of operations.
In Labor?s fiscal year 2000 financial report, the OIG reported that Labor?s
systems environment was exposed to various weaknesses in management?s
procedures for assessing risk, implementing an effective security framework,
controlling software changes, maintaining and testing its continuity of
operations plans, and ensuring effective access controls. While Labor?s
performance report addresses actions to improve most of these security
areas, the report does not include specific actions to correct the access
control problems reported by the OIG.
controls and, where necessary, to establish a target for improvement. Labor
could use this framework as a means of measuring progress in improving its
information security program.
GAO- designated major management challenge Increasing the employment and
earnings of America?s workforce Discussed under outcomes in report.
Discussed under outcomes in report.
Protecting the benefits of workers Discussed under outcomes in report.
Discussed under outcomes in report.
Fostering safe and healthy workplaces Discussed under outcomes in report.
Discussed under outcomes in report.
OIG- designated major management challenge Financial Management:
Labor has not yet brought its Wage and Hour Back Wage System and its Wage
and Hour Civil Monetary Penalties System into compliance with the Federal
Financial Management Improvement Act (FFMIA) requirements.
Labor has unreconciled cash differences between the DOLAR$ general ledger
and the Treasury.
The Office of the Chief Financial Officer (OCFO) has worked closely with
several program agencies to resolve outstanding compliance issues. Labor
states that all but two of its FFMIA issues have been resolved. They expect
to resolve those this fiscal year.
Labor recognizes that cash reconciliations are necessary and should be
performed at least on a monthly basis. OCFO created a task force dedicated
to addressing cash reconciliations throughout Labor. Its primary
responsibility is to ensure that all the agencies are reconciling their
Funds with Treasury balances. The task force will also ensure that
documented procedures exist for the performance of reconciliations and the
preparation of supporting documentation.
Labor included a goal in the FY 2002 plan that all Labor systems meet the
standards set in the FFMIA and the Government Management Reform Act. Similar
goals were included in Labor?s FY 1999, 2000 and 2001 plans, and as a
result, Labor is continuing its focus on this area.
Labor did not include any goals or measures addressing this challenge in the
plan because it expects the problem to be corrected by the end of FY 2001.
Appendix I: Observations on the Department of Labor?s Efforts to Address Its
Major Management Challenges
Page 27 GAO- 01- 779 Labor's Status of Achieving Key Outcomes
Major management challenge Progress in resolving major
management challenge as discussed in the fiscal year 2000 performance report
Applicable goals and measures in the
fiscal year 2002 performance plan Implementation of the Workforce Investment
Act (WIA):
Labor needs to better monitor the implementation of the Workforce Investment
Act. Specifically, the OIG is concerned about: the use of individual
training accounts, establishment of eligibility criteria for training
providers, and the implementation of adequate systems to allocate costs
among the One- Stop partner programs and agencies. This is of particular
concern because it is becoming increasingly difficult to discern to which
program the participants belong and who should be paying the costs of the
services.
Labor has addressed many of the concerns regarding the implementation of
WIA, especially those relating to individual training accounts and
eligibility for training providers, through the statute and final
regulations. Also, the Employment and Training Administration (ETA) is
supporting an increased technical assistance program to facilitate
information exchange among practitioners. It developed a Technical
Assistance Workbook for state and local managers that includes guidance on
individual training accounts and eligible training providers, and offers
training courses on these topics in all ETA regions.
With regard to cost allocation and resource sharing for One- Stop partners,
Labor published draft guidance in June 2000 addressing these issues and
expects to publish revised final guidance in Spring 2001. 1 Labor is also
acting to address the allocation of administrative costs in the One- Stop
environment by developing a new definition of administrative costs,
publishing the definition as part of WIA final regulations, and holding
training sessions nationwide on the implementation of the new administrative
cost allocation procedures.
Labor states that it has already addressed this management challenge and,
therefore, did not include any goals or measures relating to this challenge
in its FY 2002 performance plan.
Effectiveness of the Welfare- to- Work Initiative:
Labor may not be able to properly gauge the effectiveness of its Welfare-
to- Work Initiative because there are questions about the consistency and
quality of the performance data reported by states and other grantees.
Labor has launched a major technical assistance effort to determine the
degree to which grantees may be reporting incorrectly, to correct any
inaccurate reports, and to resolve grantee?s reporting challenges.
Labor does not have goals or measures related to this challenge in its plan.
However, the Welfare- to- Work program is part of Labor?s data validity
project that is designed to provide accurate and reliable program outcome
data for performance goals. In FY 2002, Labor plans to continue efforts to
address four issues: the availability of data, validation of data,
timeliness of reporting, and the
1 Labor published final guidance on May 31, 2001.
Appendix I: Observations on the Department of Labor?s Efforts to Address Its
Major Management Challenges
Page 28 GAO- 01- 779 Labor's Status of Achieving Key Outcomes
Major management challenge Progress in resolving major
management challenge as discussed in the fiscal year 2000 performance report
Applicable goals and measures in the
fiscal year 2002 performance plan
The reporting requirements for the Welfare- toWork program are in flux.
Labor has revised the Welfare- to- Work
reporting instructions and formats to incorporate changes from the Welfare-
toWork amendments of 1999 and to clarify reporting instructions.
use of data for managing for results. Labor does not include any measures or
goals related to the reporting requirements because the final reporting
requirements were issued on April 1, 2001.
Quality of Program and Cost Data:
Labor is limited in its ability to access or control the quality of program
results data used to determine the attainment of its strategic plan goals.
Labor is limited in its ability to access Unemployment Insurance records and
Social Security Administration wage records of individual program
participants that are used for evaluating program effectiveness and
validating performance data in the employment and training area.
Labor is developing a managerial costaccounting system to accumulate the
specific costs for each program and link them to the program?s results. Two
of the largest departmental agencies, ETA and ESA, have not yet agreed to
participate. In order to gain the full benefit of the system, all agencies
must be included.
A number of Labor initiatives to improve performance measurement are in
progress and additional efforts are planned for FY 2002. During FY 2001,
Labor is planning a series of workshops and seminars on GPRA implementation
that will focus on best practices and issues related to performance
measurement.
Labor asserts that the unavailability of UI wage records pertains mostly to
the OIG?s office. ETA has access to the data for program evaluation
purposes, but a number of states require the OIG?s office to obtain a
subpoena to access their UI records. With regard to SSA data, routine access
to IRS wage data through SSA requires congressional action to amend the IRS
Code (see protection of workers benefits section).
The Office of the Chief Financial Officer (OCFO) began its managerial cost
accounting initiative during FY 2000. They chose to develop pilot programs
in each program agency area. To date, 9 out of the 17 program areas have
participated to some degree in pilot projects. While ETA and ESA were not
among the early pilots, they are currently participating and have
participated all along through involvement in briefings and meetings on
developing the cost- accounting system. Also, all agencies provided feedback
as
Labor does not have any goals or measures related to this challenge in the
FY 2002 performance plan. The plan discusses the broad need for improving
performance measurement and performance based management. In FY 2002, Labor
plans to increase the use of program evaluations to meet a variety of
performance management objectives, including supplementing information
available through routinely collected performance information, reviewing the
effectiveness of strategies in meeting key performance goals, and analyzing
the quality of data sources, indicators and reported program results.
Labor does not address this challenge in the FY 2002 plan because Labor
cannot solve this issue through its operations.
Labor does not discuss this challenge in the FY 2002 plan because ETA and
ESA are now participating in the managerial cost- accounting system.
Appendix I: Observations on the Department of Labor?s Efforts to Address Its
Major Management Challenges
Page 29 GAO- 01- 779 Labor's Status of Achieving Key Outcomes
Major management challenge Progress in resolving major
management challenge as discussed in the fiscal year 2000 performance report
Applicable goals and measures in the
fiscal year 2002 performance plan
information on progress became available.
Security of Pension Assets:
Labor needs to ensure that pension assets are secure and protected from
organized crime, corrupt pension plan officials, and individuals who
influence the investment activity of pension assets.
Labor is conducting criminal investigations to detect violations that affect
employee benefit plans and to assist United States Attorneys and state
prosecuting attorneys in their prosecution of such cases. In addition, the
Pension and Welfare Benefits Administration is becoming more proactive in
the detection and prevention of criminal behavior through aggressive
outreach and education campaigns.
The FY 2002 plan includes a goal directly addressing this challenge. Labor
plans to increase the number of closed fiduciary investigations of employee
pension plans where assets were restored, prohibited transactions are
corrected, participant benefits are recovered, or plan assets are protected
from mismanagement and risk of future loss is reduced. Similar goals were
included in the performance plans for FY 1999, 2000, and 2001. Labor met the
goals for FY 1999 and 2000.
Protection of Worker Benefit Funds:
The Unemployment Insurance program is vulnerable due to the prevalence of
employer schemes, internal embezzlement schemes, fraudulent interstate
claims, and fraudulent collection of UI benefits by illegal aliens through
the use of counterfeit or unissued social security numbers. Also, systemic
weaknesses pose problems for the UI program, such as misclassification of
workers as independent contractors, employers who fail to report all wages
paid, or employers who misrepresent their claims experience.
Labor should improve the cost efficiency of the Federal Employees?
Compensation Act (FECA) program. Particularly, it should work to procure
access to IRS wage data through the Social Security Administration to
identify individuals who fraudulently conceal earnings.
Labor is sensitive to issues of fraud within the UI program and tries to
continually stay abreast of fraud schemes and work with states to prevent
them. Labor trains state employees in fraud detection to improve internal
program controls and improve enforcement. Labor also sponsors special
conferences that highlight new enforcement techniques.
In addition, ETA and OIG are negotiating an agreement with the IRS to
provide State Employment Security Agencies with access to the IRS
Miscellaneous Income data (form 1099) so they can better identify employers
who misclassify workers.
Labor recognizes that all programs are subject to some degree of fraud that
cannot be prevented. Labor believes that the OIG?s audit work demonstrates
that the internal controls instituted by the FECA program are generally
effective and reasonable. Labor agrees that routine access to IRS wage data
through the SSA to identify and remove claimants who fraudulently conceal
earnings would be beneficial. Currently, the Privacy Act prohibits SSA from
disclosing information without the claimant?s authorization, and ESA cannot
gain access to SSA or IRS wage information without statutory
Labor recognizes that all major benefit programs are subject to some degree
of fraud and has initiated a number of actions to protect the UI and FECA
programs. One measure broadly captures Labor?s efforts in this area: that
unemployed workers receive fair UI benefit eligibility determinations and
timely benefit payments. Although this does not directly address protection
of worker benefits, it could reduce the rate of program fraud by making fair
and accurate determinations.
Labor included three performance goals in the FY 2002 plan aimed at
improving the cost- effectiveness and efficiency of the FECA program. Labor
plans to return federal employees to work as early as possible, produce cost
savings through Periodic Roll Management, and reduce the overall average
medical service cost per case.
Appendix I: Observations on the Department of Labor?s Efforts to Address Its
Major Management Challenges
Page 30 GAO- 01- 779 Labor's Status of Achieving Key Outcomes
Major management challenge Progress in resolving major
management challenge as discussed in the fiscal year 2000 performance report
Applicable goals and measures in the
fiscal year 2002 performance plan
The Black Lung Trust Fund is in debt. As of FY 2000, the fund was $6.7
billion in debt to the U. S. Treasury.
authorization. Labor agrees with the OIG?s recommendation that the IRS Code
should be amended to allow this access.
Labor is aware of this challenge and worked closely with Treasury and OMB on
legislation that would resolve this issue. The Secretary of Labor submitted
the legislation to the Congress, but the 106th Congress did not take it up.
Labor will review the need to obtain the Administration?s support for
reintroducing the legislation again this year.
The FY 2002 plan does not include a goal on this issue: only a legislative
remedy can correct the problem, which Labor is pursuing.
Stewardship over Labor?s Information Technology Resources:
As mandated by P. L. 106- 398, Labor needs to ensure that all of its major
systems are secure against threats and loss of assets.
Labor needs to ensure that the new agencywide IT system architecture upgrade
is implemented in a careful and well thought out process.
Labor recognizes that employee awareness and strong integration of security
practices into the lines of business are essential to protect vital
information systems. The performance report discusses numerous projects that
have either been completed or are in their final stages of completion aimed
at addressing these issues.
Labor plans to develop expanded business plans, data applications, and
technology baselines.
Although no specific goal has been established to address the security of
Labor?s systems, it has initiated an enhanced information security program
that meets the intent of P. L. 106- 398. All agencies have developed
security program plans that establish milestones and detail the tasks
necessary to strengthen cyber security within the program areas. Also, see
discussion on information security.
Labor has a goal directly addressing this challenge, which seeks to improve
organizational performance and communication through the effective
deployment of IT resources.
The Integrity of Benefit Programs Must be Ensured in an Electronic
Environment:
As State Employment Security Agencies (SESAs) that administer the UI and Job
Service Programs at the state level become more automated, Labor needs to
ensure that security is not compromised as the programs become more
efficient and effective.
Labor acknowledges that security should not be compromised as a result of
increased automation and has instituted a number of initiatives aimed at
ensuring program integrity. Beginning in fiscal year 1999, ETA requested and
obtained additional funding from the Congress for integrity activities,
including $20 million that fiscal year and $35 million for fiscal years 2000
and 2001. The money has been used for detecting schemes to defraud the UI
system, regardless of the methods used to file claims.
Labor acknowledges that security should not be compromised as the UI and
Jobs Service Programs become more automated. It responds to this challenge
indirectly through the goal of having unemployed workers receive fair UI
benefit eligibility determinations and timely benefit payments. Labor
suggests that improving benefit determinations will assist the agency with
catching fraudulent claims, thereby protecting the integrity of the program.
The agency does not directly address increased security for these programs
but it would fall under Labor?s overall plan to increase information
security.
Appendix I: Observations on the Department of Labor?s Efforts to Address Its
Major Management Challenges
Page 31 GAO- 01- 779 Labor's Status of Achieving Key Outcomes
Major management challenge Progress in resolving major
management challenge as discussed in the fiscal year 2000 performance report
Applicable goals and measures in the
fiscal year 2002 performance plan Targeting of Dislocated Workers Program:
Labor needs to better monitor programs aimed at aiding dislocated workers to
ensure that the funds allocated for this purpose are actually being used to
assist the people whom the program is intended to serve.
ETA plans to increase dislocated worker program technical assistance and
monitoring activities and is developing a technical assistance guide to
ensure that State and local programs adequately document participants?
eligibility. ETA is also reviewing the current formula used for fund
allocation and may consider altering the formula. Labor has hired a
contractor to design and implement a data validation program to ensure that
the data collected for the dislocated worker program are accurate. Under
WIA, Labor will be using UI wage record data that will also help reduce data
errors identified in the OIG?s audit.
Labor includes goals and measures directly addressing the dislocated workers
program. Labor is also giving more attention to the quality of performance
data as discussed in the FY 2002 plan, which it suggests will help ensure
that funds are being used to assist the people for whom the program is
intended.
Challenges of Rapid Expansion of the Bureau of International Labor Affairs:
The Bureau of International Labor Affairs (ILAB), the bureau responsible for
spotlighting significant international child labor issues, has grown
sevenfold over the past 2 fiscal years. The exponential growth requires a
more formal structure within ILAB to monitor the appropriate expenditure of
federal funds.
Labor has resolved and closed all of the recommendations that OIG made for
the Child Labor Program. ILAB has also addressed all the identified
management issues and the proposed recommendations.
In addition, ILAB is continuing to refine its procedures and management
systems to ensure that the necessary controls are in place to support the
current program level and ensure fiscal accountability.
Labor does not address this challenge in its FY 2002 plan because it has
already been resolved.
Source: Prepared by GAO from Labor?s Annual Report, Fiscal Year 2000.
Appendix II: Comments from the Department of Labor
Page 32 GAO- 01- 779 Labor's Status of Achieving Key Outcomes
Appendix II: Comments from the Department of Labor
Appendix II: Comments from the Department of Labor
Page 33 GAO- 01- 779 Labor's Status of Achieving Key Outcomes
Appendix II: Comments from the Department of Labor
Page 34 GAO- 01- 779 Labor's Status of Achieving Key Outcomes
Appendix II: Comments from the Department of Labor
Page 35 GAO- 01- 779 Labor's Status of Achieving Key Outcomes
Appendix II: Comments from the Department of Labor
Page 36 GAO- 01- 779 Labor's Status of Achieving Key Outcomes (130040)
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