Workforce Investment Act: Better Guidance and Revised Funding	 
Formula Would Enhance Dislocated Worker Program (11-FEB-02,	 
GAO-02-274).							 
                                                                 
Under the Workforce Investment Act, local workforce areas are	 
likely to offer dislocated workers services that are tailored to 
local needs and that emphasize a quick return to employment. Nine
of the local workforce areas that GAO visited emphasized a quick 
return to work and enrolled fewer dislocated workers into	 
training than were enrolled under the Job Training Partnership	 
Act (JTPA). Five local areas enrolled into training an equal or  
greater number of dislocated workers than were enrolled under	 
JTPA. States used the act's flexibility to decide how much of	 
their set-aside funds to spend on rapid response for dislocated  
workers and how much to spend on other statewide activities. Most
of the 50 states that responded to a GAO survey on rapid response
activities said that their state unit provided services when	 
layoffs and plant closings involved 50 or more workers and that  
the state generally relied on local workforce area officials to  
provide rapid response services for layoffs affecting fewer	 
workers. Workforce officials in several states expressed concern 
that the act's dislocated worker funding formula causes dramatic 
fluctuations in funding that are unrelated to the number of	 
dislocated workers in the state.				 
-------------------------Indexing Terms------------------------- 
REPORTNUM:   GAO-02-274 					        
    ACCNO:   A02610						        
  TITLE:     Workforce Investment Act: Better Guidance and Revised    
Funding Formula Would Enhance Dislocated Worker Program 	 
     DATE:   02/11/2002 
  SUBJECT:   Education or training costs			 
	     Employment 					 
	     Federal/state relations				 
	     Labor force					 
	     Labor law						 
	     State/local relations				 
	     Training utilization				 
	     JTPA Dislocated Worker Program			 

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GAO-02-274
     
United States General Accounting Office

GAO

Report to Congressional Requesters

February 2002

WORKFORCE INVESTMENT ACT

Better Guidance and Revised Funding Formula Would Enhance Dislocated Worker
Program

GAO-02-274

Contents

Letter

Results in Brief
Background
With Greater Flexibility, Local Workforce Areas Tailored Services

to Meet Dislocated Worker Needs
WIA Flexibility Allowed States To Use Set-Aside Funds for Various

Statewide Activities in Addition to Rapid Response
Funding Formula Is Problematic
Conclusions
Recommendation for Executive Action
Matter for Congressional Consideration
Agency Comments

                                     1

                                    3 5

                                     8

15 24 29 30 31 31

Appendix I Objectives, Scope, and Methodology 34

Site Visits 34
Surveys 36

Appendix II Use of Dislocated Worker Funds for Rapid Response in 42 States

Appendix III Combined Set-Aside  Funds Available for Statewide Activities in
52 States

Appendix  IV  Percentage  of  Statewide Set-Aside  Funds  Used  for  Various
Activities

Appendix V Detailed Listing of the Federal Funding Formula for
Dislocated Workers 57

Appendix VI Comments from the U.S. Department of Labor 65

Appendix VII GAO Contacts and Staff Acknowledgments 68

GAO Contacts 69 Staff Acknowledgments 69

Related GAO Products

Tables

Table 1: Changes in Rapid Response under WIA for 20 States

Table 2: Activities Funded by 43 States That Combined Their Adult, Youth,
and Dislocated Worker Set-Aside Funds for Statewide Activities in Program
Year 2000

Table 3: Dislocated Worker Funding and Dislocation Activity for Selected
States

Table 4: Local Workforce Areas Selected for Visits

Table 5: Program Year 2000 Dislocated Worker Allotment and Rapid Response
Set-Aside Funds in 42 States

Table 6: Program Year 2000 WIA Allotments and Maximum 15 Percent Combined
Set-Aside for Statewide Activities for 52 States

Table 7: Dislocated Worker Allotments for Program Years 1997 through 2001,
by State

Table 8: Percentage Change in Total Dislocated Worker Allotments for Program
Years 1998 through 2001, by State

Table 9: States with Excess Unemployment for Program Years 1997 through 2001

Table 10: Percentage Change in Long-Term Unemployment Allotments from Prior
Year, by State

Table 11: Total Dislocated Worker Allotment per Unemployed Worker for
Program Years 1997 through 2001, by State

                                     21

                                     23

                                   35 35

37

39 57 58 60 61 63

Figures

Figure 1: Number of Dislocated Workers Registered in Program

Year 1999 under JTPA and in Program Year 2000 under

WIA in 14 Local Areas 11 Figure 2: Number of Dislocated Workers Enrolled in
Training at 14 Local Areas in Program Year 1999 under JTPA and in Program
Year 2000 under WIA 12

Figure 3: Program Year 2000 Dislocated Worker Funds Obligated

for Rapid Response Activities in 42 States 16 Figure 4: Providers of Various
Rapid Response Services 18 Figure 5: Ten States with the Largest Percentage
Change in

Dislocated Worker Allotments from Program Year 2000 to Program Year 2001 25

Figure 6: Number of States That Received Dislocated Worker Allotments Based
on Excess Unemployment in Program Years 1997 through 2001 26

Figure 7: Two States with the Largest Percentage Change in Long-Term
Unemployment Allotments for Program Years 2000 and 2001 28

Figure 8: Five-Year Dislocated Worker Allotments per Unemployed Resident for
Three States with Similar Program Year 1997 Allotments 29

Figure 9: Percentage of Statewide Set-Aside Funds Spent on Disseminating
State List of Training Providers 41 Figure 10: Percentage of Statewide
Set-Aside Funds Spent on Conducting Evaluations of Programs or Activities 42
Figure 11: Percentage of Statewide Set-Aside Funds Spent on Providing
Incentive Grants to Local Areas 43 Figure 12: Percentage of Statewide
Set-Aside Funds Spent on Providing Technical Assistance to Local Areas 44

Figure 13: Percentage of Statewide Set-Aside Funds Spent on Assisting in the
Establishment or Operation of One-Stop Delivery Systems 45

Figure 14: Percentage of Statewide Set-Aside Funds Spent on Additional
Assistance for Local Areas with a High Concentration of Eligible Youths 46

Figure 15: Percentage of Statewide Set-Aside Funds Spent on Operating Fiscal
and Management Accountability Information Systems 47

Figure 16: Percentage of Statewide Set-Aside Funds Spent on Carrying Out
General State-Level Administrative Activities 48

Figure 17: Percentage of Statewide Set-Aside Funds Spent on Providing
Capacity Building to Local Areas through Training of Staff and Development
of Exemplary Program Activities 49

Figure 18: Percentage of Statewide Set-Aside Funds Spent on Conducting
Research and Demonstration Projects 50 Figure 19: Percentage of Statewide
Set-Aside Funds Spent on Implementing Incumbent Worker Training 51

Figure 20: Percentage of Statewide Set-Aside Funds Spent on Implementing
Programs Targeted to Empowerment Zones and Enterprise Communities 52

Figure 21: Percentage of Statewide Set-Aside Funds Spent on Providing
Support for the Identification of Eligible Training Providers 53

Figure 22: Percentage of Statewide Set-Aside Funds Spent on Implementing
Programs for Displaced Homemakers 54

Figure 23: Percentage of Statewide Set-Aside Funds Spent on Implementing
Training Programs for Nontraditional Employment Positions 55

Figure 24: Percentage of Statewide Set-Aside Funds Spent on Other Activities
56

Abbreviations

JTPA Job Training Partnership Act UI unemployment insurance WIA Workforce
Investment Act

United States General Accounting Office Washington, DC 20548

February 11, 2002

The Honorable Edward M. Kennedy
Chairman

The Honorable James M. Jeffords
Committee on Health, Education, Labor, and Pensions
United States Senate

In the past, the nation's job training system was fragmented, consisting of
overlapping programs that did not serve job seekers or employers well.
Then, in 1998, the U.S. Congress passed the Workforce Investment Act
(WIA), seeking to create a system connecting employment, education, and
training services to better match job seekers to labor market needs. WIA
specifies separate funding sources for each of the act's main client
groups-adults, youths, and dislocated workers. In general, dislocated
workers are those who have been laid off and are unlikely to return to
their previous employment. During program year 2000,1 the Congress
appropriated about $950 million to provide services to adults, $1.2 billion
to provide services to youths, and $1.6 billion to assist states in
providing
services to some of the 3.3 million people laid off from their jobs each
year. The dislocated worker program under WIA has taken on increased
importance because the economy, which had entered a recession in March
of 2001, took a sharper downturn with the loss of an estimated 415,000
jobs during the month following the terrorist attacks of September 11,
2001-the largest employment decrease in a single month in more than 20
years.

When WIA replaced the Job Training Partnership Act (JTPA), it changed
the definition of who is targeted for services and the way that the services
are funded and delivered. The new legislation introduced a greater degree
of state and local flexibility that allows training and employment programs
to be designed and managed at the local level to meet the unique needs of
local businesses and individuals. Under WIA, states can set aside up to 25
percent of their dislocated worker allotment to provide "rapid response"
to layoffs and plant closings. States can also set aside up to 15 percent of

1 A program year begins on July 1 of a year and ends on June 30 of the
following year. A program year is designated by the year in which it begins.
Thus, program year 2000 began on July 1, 2000, and ended on June 30, 2001.

their dislocated worker allotment and combine these funds with similar funds
from their adult and youth allotments to support a variety of other
statewide activities. States allocate the remainder of the dislocated worker
funds to local workforce areas. Because states did not implement many of
WIA's provisions until July 1, 2000, little information has been available
on how WIA changed the way that services are provided to dislocated workers.
To determine how states and local workforce areas are assisting dislocated
workers under WIA, you asked us to determine

* How WIA has affected the services provided to dislocated workers at the
local level

* How funds set aside for rapid response and other statewide activities are
used to assist dislocated workers under WIA

* Whether the dislocated worker funding formula distributes funds to states
in relation to their dislocated worker population

To determine how services are provided to dislocated workers, we sent two
surveys to 50 states, the District of Columbia, and Puerto Rico2 and visited
14 local workforce areas located in 6 states. One survey focused on how
states used dislocated worker set-aside funds for rapid response activities,
and the other survey focused on how states used combined set-aside funds
from the adult, youth, and dislocated worker programs. We received 50
responses to each survey. We also visited six states (California, Illinois,
Louisiana, Maryland, Massachusetts, and Minnesota) that provided variety in
terms of program year 2000 funding, number of dislocated workers, and
geographic dispersion. Within each state, we visited two local workforce
areas, except in California where we visited four areas. We judgmentally
selected these workforce areas to represent a range of funding amounts and
urban and rural areas. We also interviewed, either in person or by
telephone, state officials and representatives of the local Workforce
Investment Boards in each local area that we visited. (App. I contains a
more detailed discussion of our scope and methodology.) We performed our
work between December 2000 and December 2001 in accordance with generally
accepted government auditing standards.

2 Hereinafter, the term "states" will refer collectively to the 50 states
plus the District of Columbia and Puerto Rico.

Results in Brief

With the greater flexibility granted by WIA, local workforce areas are
likely to offer services to dislocated workers that are tailored to local
needs and that emphasize a quick return to employment. Some local workforce
officials have tailored their programs to meet the specific needs of
dislocated workers in their areas. For example, one local workforce area
established a separate career resource center to assist the area's
professional workers who have been dislocated as well as employers seeking
such applicants with experience in areas such as software development and
biotechnology. Nine of the local workforce areas that we visited emphasized
a quick return to work and enrolled fewer dislocated workers into training
than were enrolled under JTPA, while five local areas enrolled an equal or
greater number of dislocated workers into training than were enrolled under
JTPA. Collectively in the 14 local workforce areas, 52 percent fewer
dislocated workers (about 1,500 workers) received training during the first
year under WIA than received training during the previous year under JTPA.
In addition, while Labor has provided guidance and technical assistance to
state and local workforce officials in transitioning from JTPA to WIA,
guidance concerning basic program requirements has been limited, resulting
in some confusion for state and local workforce officials responsible for
implementing the program.

States used the flexibility under WIA to decide how much of their set-aside
funds to spend on rapid response for dislocated workers and how much to
spend on other statewide activities. Most of the 50 states answering our
survey on rapid response activities said that the state rapid response unit
provided services when layoffs and plant closings involved 50 or more
workers and that the state generally relied on local workforce area
officials to provide rapid response services for layoffs affecting fewer
workers. On average, states obligated 12 percent of their dislocated worker
funds to provide rapid response services. Obligations varied substantially,
however, ranging from those of Hawaii and Wyoming, which obligated less than
one percent of their dislocated worker funds for rapid response, to those of
Georgia and Rhode Island, which obligated the maximum 25 percent. Some
states provided only general information about benefits and available
services to workers during the rapid response visit, while other states
provided workshops covering such topics as rï¿½sumï¿½ writing, interviewing, and
stress management. In addition, under WIA, states have the flexibility to
set aside up to an additional 15 percent of their dislocated worker funds to
support statewide activities other than rapid response, such as maintaining
a management information system. Of the 50 states responding to our survey
on the use of these set-aside funds, 43 states combined funds from the
dislocated worker set-aside with funds

from the adult and youth set-asides to support a variety of statewide
activities and programs. For example, Virginia spent the majority of its
combined funds to support the development and operation of a statewide
management information system, Missouri spent the majority of its combined
funds on establishing one-stop centers, and Iowa spent nearly two-thirds of
its combined funds on statewide administrative activities.

The dislocated worker funding formula distributes funds to states in a
manner that does not recognize fluctuations in state dislocated worker
populations. Workforce officials in several states expressed concern that
the dislocated worker funding formula specified in WIA and created in 1982
under JTPA causes dramatic funding fluctuations not related to the number of
dislocated workers in a state. The primary causes of funding volatility
appear to be related to two parts of the formula: the number of excess
unemployed (the number of unemployed individuals greater than 4.5 percent of
the labor force) in a state and the number of long- term unemployed
individuals (individuals who have been unemployed for fifteen weeks or
longer) in a state. The number of states receiving any funding based on
excess unemployment declined from 36 states in program year 1997 to 13
states in program year 2001. Fewer eligible states combined with increasing
funding over this period resulted in more funding for those states still
eligible. For example, Mississippi's nearly 130 percent increase in funding
was largely due to the decrease in the number of states eligible for funding
under this criterion. The part of the funding formula that incorporates the
number of long-term unemployed persons is particularly problematic, because
a state's long-term unemployment data can vary significantly from year to
year and is not representative of the number of dislocated workers in a
state. For example, in program year 2000, the long-term unemployed in New
Hampshire increased by more than 85 percent and in the following year
declined by nearly 45 percent. The volatility created by this part of the
formula is also quite problematic in that the long-term unemployed are no
longer automatically eligible for the dislocated worker program.

We are recommending that the secretary of Labor provide additional guidance
to local workforce areas as they further define their policies and
procedures and that the secretary disseminate timely information on best
practices being developed by local areas to meet the needs of their
dislocated workers. We are also suggesting that the Congress consider
modifying the existing dislocated worker funding formula and direct the U.S.
Department of Labor (Labor) to undertake a study that would provide options
for better distributing dislocated worker funds to minimize

funding volatility and better distribute program funds to states in relation
to their dislocated worker population.

                                 Background

WIA specifies one funding source for each of the act's main client
groups-adults, youths, and dislocated workers. Labor estimated that
approximately 927,000 dislocated workers would be served with these funds in
program year 2000. A dislocated worker is an individual who (1) has been
terminated or laid off, or who has received a notice of termination or
layoff, from employment; is eligible for, or has exhausted entitlement to,
unemployment insurance or is not eligible but has been employed for a
sufficient duration to demonstrate attachment to the workforce; and is
unlikely to return to previous industry or occupation; (2) has been
terminated or laid off, or has received a notice of termination or layoff,
from employment as a result of any permanent plant closure of, or
substantial layoff at, a plant, facility, or enterprise; (3) was self
employed but is unemployed as a result of general economic conditions in the
community in which the individual resides or because of natural disasters;
or (4) is a displaced homemaker.3

The secretary of Labor retains 20 percent of the dislocated worker funds in
a national reserve account to be used for emergency grants, demonstrations,
and technical assistance and allots the remaining funds to each of the 50
states, the District of Columbia, and Puerto Rico according to a specific
formula. The formula, first adopted in 1982 under the Job Training
Partnership Act, was grandfathered into the dislocated worker program under
WIA. According to the formula, of the total funds that Labor allots to the
states, one-third is based on each of the following:

* the number of unemployed in the state compared with the total number of
unemployed in all states,

* the number of excess unemployed in the state compared with the total
number of excess unemployed in all states (i.e., the number of unemployed
greater than 4.5 percent of the total civilian labor force in each state),
and

3 A displaced homemaker is an individual who has been providing unpaid
services to family members in the home and who (a) has been dependent on the
income of another family member but is no longer supported by that income
and (b) is unemployed or underemployed and is experiencing difficulty in
obtaining or upgrading employment.

* the number of individuals unemployed for 15 weeks or more in the state
compared with the number of individuals unemployed for 15 weeks or more in
all states.

Upon receiving its allotment, each state can reserve no more than 25 percent
of its dislocated worker funds to provide "rapid response" services to
workers affected by layoffs and plant closings. The funds set aside by the
states to provide rapid response services are intended to help dislocated
workers transition quickly to new employment. In its regulations, Labor
divides rapid response activities into the following three categories:

Required services. These include immediate and on-site contact with the
employer experiencing layoffs as well as with employee representatives to
assess the needs of affected workers and to provide information to the
affected workers about unemployment insurance (UI) and other services.

Optional services. These include developing programs for layoff aversion and
incumbent worker training and for analyzing economic dislocation data.

Additional assistance. This includes providing aid to local areas that are
experiencing increased unemployment, to pay for direct services such as
training.

Under WIA regulations, each state is required to have a rapid response unit
with responsibility for rapid response services. The staff in these units
may deliver services directly by providing orientations or workshops for
dislocated workers, or they may supervise the provision of such services. In
the latter capacity, the state unit staff would assign the delivery of
direct services to other personnel such as local area staff or private
contractors.

In addition to the dislocated worker funds that are set aside for rapid
response, WIA allows states to set aside up to 15 percent of their
dislocated worker allotment to support statewide activities other than rapid
response. These may include a variety of activities that benefit adults,
youths, and dislocated workers statewide, such as providing assistance in
the establishment and operation of one-stop centers, developing or operating
state or local management information systems, and disseminating lists of
organizations that can provide training. WIA also permits states to combine
the set-aside from the dislocated worker allotment with similar set-asides
from their adult and youth allotments. After states set aside funds for
rapid response and for other statewide

activities, they allocate the remainder of the funds-at least 60 percent- to
their local workforce areas. Approximately 600 local workforce areas exist
throughout the nation to provide services to dislocated workers.

When the Congress passed WIA in 1998, the dislocated worker program was
changed in ways that have important implications for dislocated workers.
Unlike JTPA, WIA ensured that some job search and placement assistance is
offered to anyone who seeks it, whether or not he or she is eligible for the
dislocated worker program. WIA also created three sequential levels of
service-core, intensive, and training. In order to move from the core level
to the intensive level and from the intensive level to training, an
individual must be unable to obtain a job that allows him or

4

her to become self sufficient.

Under WIA, the initial core services-including job search and placement
assistance, the provision of labor market information, and preliminary
assessment of skills and needs-are available to everyone, whether or not he
or she is a dislocated worker. If a dislocated worker is determined to be
unable to find a job or has a job that does not lead to self-sufficiency
after core services, he or she can receive intensive services, which include
comprehensive assessments, development of an individual employment plan,
case management, and short-term prevocational services.5 A dislocated worker
cannot receive intensive services until he or she is officially registered
in the program. A dislocated worker who is determined to be unable to find a
job leading to self sufficiency after intensive services can move on to
training. At this level, a dislocated worker can receive occupational skills
training, on-the-job training, and customized training.6

4 The criteria for determining whether employment leads to self-sufficiency
are set by either state or local workforce boards and, for dislocated
workers, may include employment that pays a percentage of the layoff wage or
employment that pays a specified wage established for the local area.

5 Short-term prevocational services prepare individuals for employment or
training and include development of learning skills, communication skills,
interviewing skills, punctuality, personal maintenance, and professional
conduct.

6 Customized training is designed to meet the special requirements of an
employer and is conducted with a commitment by the employer to hire the
individual upon successful completion of the training, for which the
employer pays not less than 50 percent of the cost.

With Greater Flexibility, Local Workforce Areas Tailored Services to Meet
Dislocated Worker Needs

With the greater flexibility granted by WIA, local workforce areas are
likely to offer services tailored to local needs and services that emphasize
a quick return to employment. Many of the local areas that we visited
tailored services or designed programs to meet the needs of dislocated
workers in their areas. Some workforce areas had also adopted a work-first
approach to their services and required individuals to dedicate a set amount
of time or a specific number of tasks to finding employment before receiving
additional services, such as training. This meant that more individuals
returned to work before being registered in the dislocated worker program.
Thus, fewer dislocated workers were registered in the program and fewer were
enrolled in training. Although WIA was intended to provide local workforce
officials with greater flexibility, it also increased their need for timely
and accurate information concerning the provisions of the legislation that
they are required to implement. Labor has provided guidance and technical
assistance to help states transition from JTPA to WIA. Despite these
efforts, state and local officials cite an ongoing need for guidance
concerning basic program requirements and how to interpret them.

Several Local Areas Used Flexibility to Tailor Services to the Needs of
Their Dislocated Workers

Several of the local areas we visited tailored their services or designed
programs to meet the particular needs of the dislocated workers in their
areas. For example, staff at the one-stop centers that we visited provided
general orientation about available services to all interested individuals.
However, one local area in California designed an orientation program
exclusively for dislocated workers. At this two-hour orientation, benefits
and requirements specific to dislocated workers were described and
counselors met one-on-one with interested workers for more in-depth needs
assessments and strategy development. Unlike other local areas that we
visited, this area had two staff members who were responsible for providing
a range of services only to dislocated workers.

Another local area in California established a separate career resource
program to assist the area's professional workers who have been dislocated
and employers seeking qualified job applicants in areas such as software
development, biotechnology, communications, and human resources. The
program, tailored to professional and high-tech dislocated workers, provided
the dislocated workers with their own one-stop center where job information
and computers were available. In addition, regular meetings were held to
share information on job leads and career fairs as well as for moral
support. This program also had its own Web site where participating
dislocated workers could post their rï¿½sumï¿½s. Employers looking for qualified
professional or high-tech applicants were able to

search the Web site for potential candidates by means of key words, such as
"Web design," and obtain a list of all rï¿½sumï¿½s containing those key words.

A local area in Maryland that we visited was administering a 3-year
$20-million dislocated worker demonstration grant tailored to local employer
needs. The training programs consisted of customized training with extensive
involvement from employers in designing the programs to train 3,000 people
for high-tech jobs in a metropolitan area covering three states. The program
focused on entry-level information technology and telecommunication jobs
and, to date, has established training programs for Web developers and cable
technicians. This same local area also developed a career transition
workshop to help dislocated workers cope emotionally with being laid off and
plan for the future.

A local area in Louisiana facing a major plant closing tailored a program to
meet the needs of the 1,300 workers being laid off. Workers in this plant
were primarily from two adjacent workforce areas. Staff from these two areas
joined together to establish a transition center on site at the employer's
location. Staff and computers were available around the clock to advise the
workers of available services; provide job search and placement assistance,
career counseling, and vocational assessments; and register workers into the
dislocated worker program under WIA.

Some Local Areas Emphasized Job Search and Placement, Leading to Fewer
Dislocated Worker Registrations

The emphasis placed by some local workforce areas on individuals finding a
job and the availability of job search and placement assistance prior to
enrolling in the dislocated worker program has reduced the number of people
registering in the dislocated worker program in those areas. Some local
officials have interpreted WIA's requirements as supporting a work-first
philosophy. In four of the local areas we visited, officials required
individuals to spend a certain amount of time or perform a specific number
of tasks related to finding employment before registering in the dislocated
worker program and receiving additional services. In its March 2001 Status
of WIA Readiness Implementation Report,7 Labor acknowledged that many local
areas have adopted some form of a work-first approach to the delivery of
services that stresses the importance of a quick entry or reentry into the
workforce. Officials from several of the

7 See U.S. Department of Labor, Employment and Training Administration,
Office of Field Operations, Status of WIA Readiness Implementation Report
(Washington, D.C.: 2001).

local areas that we visited confirmed that they viewed WIA as a work-first
program that emphasizes returning dislocated workers to the workforce. For
example, a counselor from a local area in Massachusetts told us that if a
client has a marketable skill, he or she must reenter the workforce
regardless of any desire for training for a career change.

Unlike JTPA, which required that an individual be enrolled as a participant
before receiving any services, WIA requires the provision of core services
to all adults who seek them, regardless of program eligibility. All of the
one-stop centers that we visited had a resource area where individuals could
access labor market information, review job openings, create rï¿½sumï¿½s, and
even attend some workshops, with topics such as interviewing techniques,
without registering for the dislocated worker program. Some local program
officials believe that many individuals found employment through these core
services and that they therefore did not go on to seek other services that
would have required program registration. Because program participation is
not recorded before receipt of these preliminary services, the total number
of people who used them and found employment is not known. Collectively, the
14 locations that we visited registered nearly 3,000 fewer dislocated
workers during the first year of WIA than they had registered under JTPA
during the previous program year (5,603 vs. 8,462). Of these locations,
eight registered fewer dislocated workers under WIA and six registered more
dislocated workers (see fig.1).

Figure 1: Number of Dislocated Workers Registered in Program Year 1999 under
JTPA and in Program Year 2000 under WIA in 14 Local Areas

3000 Number of Dislocated Workers

MA,

HampdenCounty

CA CA,

CityLos Angeles

CA,

North Santa Clara

CA,

RiversideCounty

Western Baltimore

Maryland,MD

LA,

Hennepin

etteyLafa

arish,P

IL,

LA goOrleans Chicaarish, CityP

IL,

,BristolCounty

MA City/County

,City

MD Minnesota,MN County

                                LA RocCounty

,alleV

Local Workforce Area

Officials from the local workforce areas that registered more dislocated
workers under WIA than during the previous year under JTPA cited various
reasons for the increase. For example, officials from two local workforce
areas said that they had more dislocated worker funds available in program
year 2000 and thus were able to provide services to more workers, while
another official said that the local workforce area experienced several
plant closings that resulted in more workers' needing assistance.

In Some Local Workforce Under WIA, the 14 local workforce areas that we
visited enrolled 52 Areas, Fewer Dislocated percent fewer dislocated workers
in training than they had enrolled under Workers Received Training JTPA.
Collectively, about 1500 fewer dislocated workers were enrolled in

training under WIA than were enrolled in training under JTPA (1,427 vs.

2,967). Of these areas, nine enrolled fewer dislocated workers and five

enrolled an equal or  greater number of dislocated workers in training under
WIA (see fig. 2).

Figure  2: Number  of Dislocated  Workers Enrolled  in Training at  14 Local
Areas in Program Year 1999 under JTPA and in Program Year 2000 under WIA

1000 Number of Dislocated Workers

MA,

HampdenCounty

CA CA,

CityLos Angeles

CA,

North Santa Clara

CA,

RiversideCounty

Western Baltimore

Maryland,MD

LA,

Hennepin

ettey

Lafarish,aP

IL,

LArish,

OrleansaP

,BristolCounty

MA City/County

,City

MD Minnesota,MN County

                                     LA

goCityChica

IL,

                                  RocCounty

,

lleaVLocal Workforce Area

The decrease in the percentage of dislocated workers entering training is
tied to local requirements that dislocated workers spend a certain amount of
time receiving services or complete a certain number of tasks before being
enrolled in training. Although the act requires individuals to receive
sequential services, Labor has not imposed a required minimum period of
participation in the core or intensive services, leaving this decision
instead to the discretion of local workforce boards. Four local areas have
set requirements for the amount of time or the number of tasks that a
dislocated worker must complete at each level of service before he or she
can move to the next level. Officials in three of these areas required
dislocated workers to spend at least three weeks searching for a job and

documenting their attempts at finding employment. Officials in the fourth
local area required dislocated workers to complete a certain number of
tasks, such as documenting 12 unsuccessful job applications or five case
management appointments, before moving to the next level of service.

The decrease in the percentage of dislocated workers being trained is also
tied to the wages of the jobs they may be offered during the job search
required before training. The receipt of future services-specifically,
training-hinges on a dislocated worker's ability to find a job leading to
self-sufficiency. Only those who are unable to find such a job can continue
to training. Among the locations we visited, self-sufficiency was defined
differently. Because the definition, within certain parameters, is left to
the discretion of state or local workforce boards, the dislocated workers
who are allowed to continue to training vary from area to area. For example,
a local area in Maryland defined self-sufficiency as having a job that pays
$8.50 per hour, while a local area in Louisiana had recently increased its
self-sufficiency standard to having a job that pays $16.39 per hour. Three
other local areas we visited had no set standard at all. The lower the
standard, the harder it is for a worker to qualify for training, because it
is easier for the worker to find a job meeting the criterion.

In three of the local areas that had an equal or greater number of
dislocated workers enrolled in training under WIA than during the previous
year under JTPA, officials said that the numbers being trained under WIA
merely reflect the training needs of the dislocated workers in program year
2000. An official from a fourth local area said that more workers were
enrolled in training in program year 2000 because local area officials had
decided to limit the number of workers enrolled in training during the final
year of JTPA. An official from the fifth local area said that the increased
federal funds in program year 2000 allowed them to enroll more dislocated
workers in training in that year

Some Local Workforce Officials Expressed Confusion about Some Dislocated
Worker Requirements under WIA

State and local workforce officials, uncertain as to the act's new
requirements or how to interpret them in a manner consistent with that of
Labor's Office of Inspector General, sought specific guidance from Labor to
assist them in implementing the act. Several officials in the states and
local workforce areas that we visited voiced a need for more guidance. They
said that they felt uncertain about when individuals should be registered
into the dislocated worker program, how to determine when training is an
appropriate service strategy, and how to use rapid response funds to provide
additional assistance to local workforce areas. For example, a rapid
response official in the state of Maryland told us that he

would like additional guidance from Labor concerning the extent to which a
state could use rapid response funds to provide additional assistance to
local workforce areas experiencing layoffs. Labor's guidance, however, does
not adequately address this issue. In addition, WIA created a new mindset
for workforce development professionals and makes substantial changes in how
dislocated workers receive services. Unlike the more prescriptive dislocated
worker program under JTPA, state and local workforce officials must
continually interpret WIA's requirements in order to meet the constantly
changing needs of the workers and employers they serve. However, all local
workforce officials were not prepared to meet this challenge. For example,
Labor's February 2001 final interim report on the early state and local
progress toward WIA implementation noted that state and local workforce
officials would like to have more guidance on how to interpret the
requirements of the act.8

Labor has provided guidance and technical assistance to aid state and local
workforce officials in transitioning from JTPA to WIA ranging from training
sessions conducted by headquarters and regional office staff to the
dissemination of guidance concerning WIA's technical requirements. This
guidance, in addition to information about best practices, is generally
available via the Internet. According to some workforce officials, however,
Labor's guidance has generally been too broad for them to use when
implementing WIA's requirements9 and the information available on the
Internet is often outdated. According to Labor officials, the guidance that
it has provided to state and local workforce officials on a range of WIA
topics has been intentionally nonprescriptive to allow state and local
workforce officials to use the flexibility that the act allows to design
programs that will accomplish state and locally established goals.

Despite Labor's efforts to provide state and local workforce officials with
program guidance, misunderstandings still exist concerning some of WIA's
dislocated worker program requirements. In its March 2001 Status of WIA
Readiness Implementation Report,10 Labor found that some dislocated

8 See U.S. Department of Labor, Employment and Training Administration, A
Report on Early State Progress Toward WIA Implementation: Final Interim
Report (Washington, D.C.: 2001).

9 See U.S. General Accounting Office,Workforce Investment Act: Better
Guidance Needed to Address Concerns Over New Requirements, GAO-02-72
(Washington, D.C.: October 4, 2001).

10 See U.S. Department of Labor, Employment and Training Administration,
Office of Field Operations, Status of WIA Readiness Implementation Report
(Washington, D.C.: 2001).

WIA Flexibility Allowed States To Use Set-Aside Funds for Various Statewide
Activities in Addition to Rapid Response

worker program requirements were being interpreted incorrectly. In
particular, the report, which was based on Labor's WIA Readiness Review of
all states and 126 local workforce areas, identified the need for additional
guidance in the areas of program eligibility and registration, the sequence
of services, training, the eligible training provider list, and the consumer
report system.

States used the flexibility under WIA to decide how much of their set-aside
funds to spend on rapid response for dislocated workers and how much to
spend on other statewide activities. All states provided some rapid response
services, but there was variation in the amount of dislocated worker funds
they obligated for rapid response and in the services they provided. Most
states, however, have not changed the way they provide rapid response
services since implementing WIA. During program year 2000, state set-aside
obligations for rapid response averaged 12 percent and ranged from less than
1 percent to the maximum allowable 25 percent. When providing rapid
response, most states responded primarily to layoffs and plant closings
affecting at least 50 workers and provided, at a minimum, basic
informational services for affected workers. Many states also offered other
services such as group workshops on job search and used a portion of their
rapid response funds to provide additional assistance to local areas
experiencing an increase in unemployment. In addition, as allowed by the
act, most states combined funds from the 15-percent dislocated worker
set-aside with set-aside funds from the adult and youth programs to support
a variety of statewide activities and programs. Some activities, such as
disseminating a list of eligible training providers, are required by the
act, while others, such as conducting research and demonstration projects,
are optional.

Rapid Response Funding and Services Varied among States

States differed in how much of their dislocated worker funds they used for
rapid response during program year 2000 and what services they funded with
this money. Nearly a third of the 42 states11 that provided program year
2000 data in their survey responses said that they obligated 5 percent or
less of their dislocated worker funds for rapid response activities.12

11 Although 50 states responded to our survey, eight states could not
separate program year 1999 carryover funds from program year 2000 funds in
their reporting.

12 Rapid response activities include specific rapid response services as
well as additional assistance provided to local workforce areas.

Overall, the amount obligated for rapid response in the 42 states ranged
from less than 1 percent in Hawaii and Wyoming to the maximum allowable 25
percent in Georgia and Rhode Island (see fig. 3). On average, these states
obligated about 12 percent of their dislocated worker funds for rapid
response activities. Appendix II shows each state's dislocated worker
allotment and the amount obligated for rapid response activities.

Figure  3: Program  Year 2000  Dislocated Worker  Funds Obligated for  Rapid
Response Activities in 42 States

                            20 Number of States

5.0-0

10.0-

5.1

15.0-

10.1

20.0-

15.1

25.0-

20.1

Percentage of Dislocated Worker Funds Obligated for Rapid Response

Any rapid response funds not used in program year 2000, up to the 25-percent
ceiling, could be distributed to local areas13 or carried over to the
following program year to conduct rapid response activities. For example,
Maryland reallocated to its local workforce areas $1 million of the $4.2
million it had set aside for rapid response activities, and Louisiana
carried over into the next program year $5.1 million of the $6.1 million it
had set aside for rapid response.

13 Each  state must  allocate at least  60 percent of  its dislocated worker
funds to  local  workforce areas according  to a formula  established by the
state.

Rapid response services almost always include the provision of basic
information for workers being laid off, and in many states, additional
services such as group workshops are available. Forty-five of the 50 states
that responded to our survey had a rapid response unit consisting of state
employees who delivered at least some direct services to the workers being
laid off. Almost all of these state units contacted employers experiencing
layoffs to explain available rapid response services and provided
orientations for workers being laid off. State staff often delivered these
services in conjunction with local area staff. In the six states that we
visited, orientation sessions provided information to workers on topics such
as UI benefits, services available at the local one-stop centers, and
training opportunities. In many states, services in addition to orientation
are also available to dislocated workers.14 These services, including group
workshops on topics such as job search and stress management and one-on-one
meetings to discuss subjects such as financial planning, were provided
usually by local area staff but sometimes in conjunction with the state unit
or private contractors, such as unions (see fig. 4).

14 These services are not provided by all local workforce areas within a
state, nor are they necessarily provided for all layoffs and plant closings
within a local workforce area.

Figure 4: Providers of Various Rapid Response Services

50 Number of States

40

30

20

10

0

Contact with Orientations for Workshops for One-on-One Employer Workers
Workers Meetings with Workers

Type of Service

Rapid response units in some states were more involved in providing direct
services after a layoff than were units in other states. For example, in
Florida, the state rapid response unit provided a broader range of services
than did the units of most other states. The Florida unit directly provided
workshops and one-on-one meetings in addition to general informational
services. In Maryland, as in many states, the state unit played a more
limited role. The Maryland unit contacted employers experiencing layoffs and
participated, along with staff from local one-stop centers, in orientations
for the affected workers. Any services beyond the orientations, including
workshops and one-on-one meetings at the work-sites, were provided
exclusively by local staff. Louisiana had a state unit that met with
employers and conducted orientations but provided no other direct services.
To supplement the additional services provided by its local areas, Louisiana
contracted with a private agency to provide workshops on topics such as
rï¿½sumï¿½ development and stress management for dislocated workers around the
state. A state official explained that Louisiana hired this agency because
some local areas that experience

significant layoffs infrequently lack the experience to provide effective
rapid response services.

Five of the 50 states that responded to our survey delegated all
responsibility for direct rapid response services to staff in the local
workforce areas. For example, California had a state unit that informed
local areas of impending layoffs but delivered no direct services. The state
distributed a portion of its rapid response funds to the local areas to
provide direct services. State officials believed that the state's size and
diversity made local flexibility more feasible than a single, uniform
approach. Another advantage, according to a local official, was that
referrals of workers from rapid response units to one-stop centers were
smoother because rapid response staff were also local area staff. While the
state stressed local flexibility, it also encouraged coordination among
local areas that share a labor market. Ten local areas in northern
California were collaborating to standardize their rapid response services,
provide services jointly, and possibly contract with a private agency for
all rapid response. New York was another state where local workforce area
staff were generally responsible for delivering rapid response services.
Unlike California, however, New York did not provide the local workforce
areas with funding for these services. New York also had a $1 million
contract with representatives of organized labor to provide rapid response
assistance when their union members were affected by a layoff.

Most states provided rapid response primarily for larger layoffs and plant
closings affecting 50 or more workers. Responding to layoffs of 50 or more
workers appears to be related to the Worker Adjustment and Retraining
Notification (WARN) Act of 1988, which requires companies with 100 or more
full-time employees to notify state dislocated-worker staff of layoffs and
plant closures generally affecting 50 or more full-time workers. Of the 45
states using state staff to provide rapid response services, staff in 37
states generally provided rapid response services for layoffs affecting 50
or more workers, which, on average, represented 75 percent of the layoffs to
which each state unit responded during program year 2000. Workers affected
by dislocation events that are too small to trigger state unit involvement
may nonetheless receive local rapid response services. In fact, almost all
of the states that had a trigger for state rapid response said that local
staff in their states may have provided rapid response services for layoffs
and plant closings that were too small to trigger rapid response by the
state unit.

Illinois and Massachusetts illustrate different approaches to the use of a
trigger for state unit response. Illinois obligated about $2.4 million for

rapid response and had a unit of state employees that was responsible for
rapid response services statewide. These employees provided direct services
for all layoffs and closures affecting 50 or more workers and responded to
170 such events during program year 2000.15 Some local workforce areas
provided rapid response services for dislocation events affecting fewer than
50 workers, but the state did not require them to serve these smaller events
and did not distribute any rapid response funds to them for this purpose. On
the other hand, Massachusetts obligated about $1.2 million for rapid
response and had a unit of state employees that attempted to provide rapid
response for all layoffs regardless of size. During program year 2000, the
unit responded to 158 events affecting 50 or more workers and 149 events
affecting fewer than 50 workers.

In addition to providing direct rapid response services to workers affected
by a layoff or plant closing, 32 states said that they used a portion of
their rapid response set-aside funds to provide additional assistance to
local areas that experienced an increase in unemployment owing to plant
closings or mass layoffs. In the states for which data were available, more
than half of the $129.6 million that these states set aside for rapid
response was used to provide additional assistance to local workforce areas
(see app. II). Of the 32 states responding that provided additional
assistance, 15 states said that they provided additional assistance to local
areas only to help them address specific layoffs and required that local
areas spend the funds exclusively on workers affected by those layoffs. For
example, Maryland provided $250,000 in additional assistance to one local
workforce area that intended to provide training to a small number of
workers laid off from a bottled water plant, and Louisiana provided $72,531
in additional assistance to a local workforce area to set up a worker
transition center at a clothing plant that was closing. Another eight states
said that they provided additional assistance to local areas that
experienced a general rise in unemployment and did not tie the use of the
funds to specific layoffs. For example, California provided $3 million in
additional assistance to a local workforce area to provide comprehensive
services for its dislocated workers in a region with high job turnover. Nine
other states said that they awarded funds for both rapid response and
additional assistance during program year 2000.

15 Although states may have a policy for responding to specific layoffs,
situations may occur that prevent states from providing rapid response
services, such as an employer's not notifying the state unit that a layoff
is going to occur or an employer's not allowing the state unit on-site to
provide services.

Thirty of the 50 states responding to our survey have not changed the way
they provide rapid response since implementing WIA. The remaining 20 states
reported making changes in the way they provide rapid response as a result
of WIA, but few of these changes were significant and none were required by
the act or the regulations. The more significant changes involved giving the
state unit greater responsibility for direct services or developing new
programs to distribute set-aside funds to local workforce areas. For
example, Washington state and Kansas assigned state staff to each local
workforce area to coordinate and deliver rapid response services. Also,
Indiana developed a program to quickly distribute additional funds within
one or two days to local workforce areas experiencing mass layoffs to help
them provide rapid response services. Other changes included increasing
coordination between the state rapid response unit and other workforce
partners, changing the focus of orientations from training benefits to
available job search services, and shifting state units from one state
department to another. (See table 1.)

Table 1: Changes in Rapid Response under WIA for 20 States

                      Type of change Number of statesa

State unit assumed more active role

New program to distribute funds to local areas

Greater coordination with other workforce partners

Information provided in orientations changed

State unit moved to another department

Other

aThe total does  not add to 20 because some states made more than one change
in their rapid response program.

States Used Set-Aside Funds to Support a Wide Range of Services and Various
Programs

During program year 2000, most states took advantage of the flexibility
under WIA and combined dislocated worker set-aside funds with set-aside
funds from the adult and youth programs to support a variety of statewide
activities. Some activities, such as developing or operating a statewide
management information system, benefited dislocated workers along with other
types of workers such as adults and youths; other activities, such as career
training for at-risk youths, benefited a specific segment of the population
who were not dislocated workers.

During program year 2000, states used their set-aside funds for statewide
activities for various purposes. Under WIA, states can set aside up to 15
percent of their dislocated worker allotment to support some required
statewide workforce investment activities. These activities include
providing additional assistance to local areas that have high

concentrations of eligible youths, assisting in the establishment and
operation of one-stop center systems, disseminating a list of eligible
providers of training services, and operating a management information
system. In addition, the act allows states to use the funds for other
allowable activities such as state administration, research and
demonstration projects, and innovative incumbent worker training programs
(i.e., programs to improve the skills of employed workers). Of the 50 states
responding to our survey, 43 said that they combined set-aside funds for
statewide activities from the dislocated worker allotment with similar funds
from the adult and youth programs. Appendix III lists each state's allotment
for their adult, youth, and dislocated worker programs and identifies the
maximum amount of funds that could be set aside to support statewide
activities. As allowed by the act, these states combined the funds and used
them for a variety of purposes. For example, 41 states reported that they
spent, on average, 25.7 percent of the combined set-aside funds on carrying
out general state-level administrative activities, while 37 states reported
spending, on average, 14.8 percent on assisting the establishment and
operation of one-stop centers (see table 2).

Table 2: Activities Funded by 43 States That Combined Their Adult, Youth,
and Dislocated Worker Set-Aside Funds for Statewide Activities in Program
Year 2000

 Number of states directly funding activitya Average percentage of set-aside
                                                    funds spent on activityb

Activities

                            Required activities

Assist in the establishment or operation of one-stop delivery systems

                                  37 14.8

Operate fiscal and management accountability information systems

                                  37 13.4

Provide
additional
assistance for
local areas with
a high
concentration of
eligible youths

24

Disseminate state list of training providers

32

                         Other allowable activities

Carry out general state-level 41 25.7 administrative activities

                Implement incumbent worker training 17 13.2

Conduct research and demonstration projects

14

Implement programs for displaced homemakers

6

Provide capacity building to local areas 33
through training of staff and
development of exemplary program
activities

Implement training programs for nontraditional employment positions

6

Implement programs targeted to empowerment zones and enterprise communities

5

Provide support for the identification of eligible training providers

19

                               Other 30 20.9

aThis column includes only states that identified a specific percentage of
funds for an activity. It does not include instances when states responded
that an activity may have been supported by funds associated with a
different activity and were unable to specify a specific percentage.

bFor states that reported directly funding an activity with set-aside funds,
we computed an average percentage of funds.

Several states are using the flexibility that WIA provides by spending the
majority of their combined set-aside funds on a single activity. For
example, Virginia spent over half of its $5.8 million combined set-aside

funds to operate a fiscal and management accountability information system.
Missouri used over half of its $6.7 million combined set-aside funds to
assist in the establishment and operation of one-stop centers. Iowa used
nearly two-thirds of approximately $900,000 of its combined set-aside funds
to carry out general state-level administrative activities. Appendix IV
shows the percentage of combined set-aside funds that the 43 states
dedicated to each activity listed in table 2.

In addition to funding the required and optional activities identified in
the act, 30 states funded other activities. Many of these activities were
directed to programs that benefit a specific group. For example, Arizona
used about 4 percent of its $6.6 million combined set-aside funds for older
worker training and support, Kentucky used about 19 percent of its $6.4
million combined set-aside funds for statewide youth programs, and Montana
used about 5 percent of its $2.2 million combined set-aside funds for adult
literacy and education.

Several of the states that we visited used the flexibility provided by the
act to fund projects that the states determined were most in need of
additional funding. In many instances, these projects were targeted to
specific groups. For example, of its $63 million combined set-aside,
California spent $6 million on a project to train veterans, $15 million on a
project to train caregivers who work with the aging and disabled population,
and $20 million to provide job training to targeted groups including at-risk
pregnant teens, homeless individuals, noncustodial parents, and farm
workers. Similarly, Illinois spent $1.3 million of its $13 million set-aside
to help individuals obtain their high school general equivalency diploma
over the Internet; Louisiana spent $1.5 million of its $10 million set-aside
on services for UI claimants who were projected to exhaust their UI benefits
(the projection is known as UI profiling); Maryland spent $330,000 of its $6
million set-aside to train at-risk youths for a career in the merchant
marine service.

The dislocated worker funding formula distributes funds that vary
dramatically from year to year and that do not recognize fluctuations in
state dislocated worker populations. State and local officials said that the
volatility in the allotment of formula funds could limit the ability of some
states to provide basic program services to dislocated workers. Without
stable funding levels that are tied to the number of dislocated workers,
states are unable to conduct the meaningful long- or short-term financial
planning that is necessary to develop and deliver high-quality services for
dislocated workers. Information obtained from Labor on state allotments

Funding Formula Is Problematic

between program years 1997 and 2001 also raises concerns about the
performance of the current funding formula (see app. V for a detailed
listing of the dislocated workers funding formula allotments by state). Many
states have experienced very substantial changes in funding from one year to
the next over this time period. For example, Mississippi's funding for
program year 2001, increased nearly 130 percent over that for program year
2000 (from $13.4 million to $30.7 million), while Arkansas's funding dropped
by more than 40 percent (from $12.4 million to $7.1 million). Figure 5
displays the ten states with the largest percentage changes in dislocated
worker funding allotments between program years 2000 and 2001. Such changes,
which do not seem to be in proportion to the number of dislocated workers in
a state, appear to corroborate concerns raised by state officials regarding
the volatility of the current formula.

Figure 5: Ten States with the Largest Percentage Change in Dislocated Worker
Allotments from Program Year 2000 to Program Year 2001

Percentage

140

120

100

80

60

40

20

0

-20

-40

-60 MSAKPRDEMNNENYID ARHI

State

The dislocated worker funding formula consists of three factors, each of
which determines one-third of the allotment given to a state. None of the
three factors is directly related to the dislocation activity in a state.
Two parts of this funding formula, however, contribute to the fluctuations
in state funding of the dislocated worker program. An analysis of the
funding formula reveals the primary cause of funding fluctuations to be the
result of the parts of the formula that incorporate the number of excess

unemployed (exceeding 4.5 percent of the total labor force) and the number
of long-term unemployed.

The number of excess unemployed displayed an extremely high degree of
volatility during the 1997 2001 time period. For example, in program year
1997, 36 states had unemployment rates above 4.5 percent and therefore
qualified for funding under this part of the formula. By program year 2001,
only 13 states continued to receive funding under this part of the formula.
Thus, as economic conditions improve, the number of states receiving funding
under this part of the formula decreases (see fig. 6).

Figure 6: Number of States That Received Dislocated Worker Allotments Based
on Excess Unemployment in Program Years 1997 through 2001

40 Number of States

20

0

1997 1998 1999 2000 2001

Program Year

The decline in the number of states that received funding under this part of
the formula, in combination with increased funding during this period,
resulted in more funding for states that received funds under this part of
the formula; states falling below the 4.5 percent threshold saw their
allotments reduced substantially. In program year 1997, $345 million was
allotted among 36 states, for an average of $9.5 million per state. By
program year 2001, $424 million was allotted to 13 states, resulting in an
average allotment of $32.6 million per state. The nearly 130 percent
increase in funding between program years 2000 and 2001, reported for
Mississippi in figure 5, was largely the result of a two-thirds reduction in
the number of states that received funding under this criterion.

This volatility in funding will likely persist as unemployment rates rise in
response to the current economic slowdown. Rising unemployment in the future
means that more states will again qualify for funding based on the excess
unemployment criterion and that even as their own unemployment increases,
the 13 states will likely experience substantial funding losses as more
states become eligible for funding based on this criterion.

In addition to the number of excess unemployed, the number of long-term
unemployed also contributed to the fluctuations in program funding for
individual states. For example, the allotments for long-term unemployed in
Minnesota declined by more than 20 percent in program year 2000 and
increased by more than 50 percent the following year. In New Hampshire, the
pattern was the opposite: an increase of more than 85 percent was followed
by a decline of nearly 45 percent (see fig. 7). The funding fluctuation
introduced by the number of long-term unemployed is particularly problematic
in that the number of long-term unemployed is not necessarily indicative of
the number of dislocated workers in a state, because individuals can be
unemployed for 15 weeks or more and not have been laid off. Furthermore, the
long-term unemployed are no longer included under the definition of a
dislocated worker and are therefore not automatically eligible for the
dislocated worker program.

Figure 7: Two States with the Largest Percentage Change in Long-Term
Unemployment Allotments for Program Years 2000 and 2001

Percentage 90

70

50

30

10

-10

-30

-50 Minnesota New Hampshire State

The high degree of volatility in formula allotments has resulted in
increasingly wide disparities in funding across states. In program year
1997, both Texas and Mississippi received the same funding per unemployed
resident. However, because Texas became ineligible for funding based on
excess unemployment in 2001, its funding per unemployed resident dropped
slightly, while Mississippi (one of the thirteen states still eligible) saw
its funding jump more than three-fold.16 As shown in figure 8, the program
year 2001 funding per unemployed individual in Mississippi was three times
higher than in Texas, even though in program year 1997, the funding per
unemployed individual was nearly identical. (See table 11 in app. V for a
complete listing of each state's funding per unemployed resident for program
years 1997 through 2001.)

16 Because the number of total unemployed includes many who are not eligible
for many of the services provided under the dislocated workers program, we
also compared, using Labor data, Texas's and Mississippi's funding per
unemployed worker. We found even larger funding disparities based on this
indicator of program need. For example, in 2001, Mississippi's funding was
more than 4 times that of Texas.

Figure 8: Five-Year Dislocated Worker Allotments per Unemployed Resident for
Three States with Similar Program Year 1997 Allotments

500 Dollars

400

300

200

100

0

1997 1998 1999 2000

Program Year

When the Congress passed WIA in 1998, it mandated that the secretary of
Labor undertake a study to improve the formula for the adult program. This
mandate includes the study of the formula used to allot adult program funds
to the states and of the formula used to allocate these funds within the
states. The study has been completed but has not yet been released. The
mandate did not address the formula for allocating dislocated worker program
funds.

WIA was passed with the intention of providing greater flexibility to states
and local workforce areas, but more detailed guidance could enable local
workforce areas to better use the act's flexibility. Clearly, WIA intends to
provide state and local areas with the flexibility to design programs that
meet the specific needs of dislocated workers in their areas. Given the
early stage of implementation, it is not surprising that some state and
local officials remain confused about how to put into practice some of the
act's new requirements, such as when to register individuals in the
dislocated worker program. Although Labor has provided broad guidance and
technical assistance to aid the transition from JTPA to WIA, some workforce
officials have stated that the guidance does not address specific

Conclusions

Recommendation for Executive Action

implementation concerns. Efforts to design flexible programs that meet local
needs could be enhanced if Labor addressed the concerns of workforce
officials with specific guidance regarding the act's implementation and
disseminated information on best practices in a timely manner.

Some states have trouble meeting the needs of their dislocated workers,
because the amount of dislocated worker funds they receive varies
dramatically from year to year and is not directly related to the states'
dislocated worker populations. The fluctuation in funding is caused by a
three-part funding formula that incorporates factors that are no longer
relevant to the dislocated worker program, that are highly volatile from
year to year, and that do not reflect the number of dislocated workers in a
state. A dislocated worker formula that incorporates factors more accurately
approximating a state's dislocated worker population would provide states
with a more relevant level of funding for services to their dislocated
workers.

We recommend that the secretary of Labor provide local workforce areas with
additional guidance on implementation issues and information on best
practices to facilitate implementation of the dislocated worker program
under WIA and to assist local workforce officials in using the greater
flexibility afforded by the act to design programs and services. Such
guidance would help the local areas further define their policies and
procedures to meet the needs of their dislocated workers. We also recommend
that the secretary identify strategies for disseminating this information in
a timely manner. In particular, Labor should

* proactively identify areas that emerge as requiring additional guidance to
help state and local areas implement the dislocated worker program;

* disseminate guidance that is more responsive to the concerns of workforce
officials responsible for implementing the act's requirements, including
when to register individuals into the dislocated worker program and how to
provide additional assistance to local areas using rapid response funds; and

* disseminate timely information on best practices being developed by local
areas to meet the needs of their dislocated workers.

Matter for Congressional Consideration

Agency Comments

We suggest that the Congress consider modifying the existing dislocated
worker funding formula to minimize funding volatility and to ensure that
dislocated worker funds are better distributed to states in relation to
their dislocated worker population. The Congress may wish to direct Labor to
undertake a study of the dislocated worker funding formula to identify
factors that would enable better distribution of program funds to states in
relation to their dislocated worker population.

We provided a draft of this report to Labor for review and comment. Labor
noted that the report provided an informative review of how states have
responded to the challenges presented by the implementation of WIA. Labor
generally agreed with our recommendations and identified steps that it is
taking to address them. Labor commented that the report provided the
agency's first opportunity to review many of the issues regarding the use of
state set-aside funds for rapid response and other statewide activities and
said that analysis of this data will be used to determine areas requiring
more technical assistance and guidance. Labor also provided technical
comments that we incorporated where appropriate. Labor's entire comments are
reproduced in appendix VI.

Regarding our recommendation that Labor proactively identify areas requiring
additional guidance, Labor generally agreed, pointing out that it had
organized four WIA readiness workgroups consisting of local, state, and
federal representatives that had identified several potential areas for
additional federal guidance. However, Labor said that it did not want to
interfere with the flexibility that WIA provides to states and localities.
We acknowledge Labor's efforts and encourage Labor to continue to monitor
emerging issues by facilitating discussions between local, state, and
federal officials on an ongoing basis.

Regarding our recommendation that Labor disseminate more guidance on issues
such as point of registration and use of rapid response funds for additional
assistance, Labor agreed, saying that it plans to issue additional guidance
on establishing the point of registration and believes that a common point
of registration is an integral component of a nationwide system of
performance accountability. Labor also recognizes that registration guidance
cannot be developed in isolation and must reflect the complexities of WIA's
performance accountability system. Regarding the issue of guidance on the
use of rapid response funds for additional assistance, Labor said that a
lack of guidance on this subject was not identified previously in its
implementation assessments or the workgroups'. Labor noted that the
information in our report would allow

further exploration of this issue and a determination of whether federal
guidance is necessary on this topic. We concur with Labor's assessment and
agree that such guidance should be developed with input from those officials
responsible for implementing WIA at the local level and should be consistent
with the accountability system established under WIA.

Regarding our recommendation that Labor disseminate timely information on
best practices, the agency stated that it has a contract with the state of
Illinois to develop a Web site to display promising practices. We applaud
Labor's efforts in this regard, agreeing that a Web site is an excellent
vehicle for providing information to a wide audience. We strongly encourage
Labor to monitor the site's implementation to ensure that the information
posted to the Web site is kept current.

Finally, regarding our suggestion that the Congress consider modifying the
dislocated worker funding formula, Labor replied that it has been aware of
the severe funding fluctuations and the difficulties such fluctuations
present to states. It believes that resource allocation practices should
ensure that funds are distributed in a manner that puts resources where they
are most needed, and it acknowledged that because worker dislocations take
place after formula funds are allocated, available resources do not always
match need. Labor noted that it has initiated a review of the WIA dislocated
worker funding formula. While we support Labor's efforts to review this
formula, we believe that it is imperative that such an initiative be
congressionally mandated.

We are sending copies of this report to the Honorable Elaine L. Chao,
secretary of Labor; relevant congressional committees; and others who are
interested. Copies will be made available to others upon request.

Please contact me on (202) 512-7215 if you or your staff have any questions
about this report. Other GAO contacts and staff acknowledgments are listed
in appendix VII.

Sigurd R. Nilsen Director, Education, Workforce, and Income Security

Appendix I: Objectives, Scope, and Methodology

We were asked to determine (1) how the implementation of WIA has affected
the services provided to dislocated workers at the local level, (2) how
funds set aside for rapid response and other statewide activities are used
to assist dislocated workers under WIA, and (3) whether the distribution of
dislocated worker funds is appropriately targeted to states in relation to
their dislocated worker population. To determine how services are provided
to dislocated workers, we visited 14 local workforce areas located in 6
states and distributed surveys to all 50 states, the District of Columbia,
and Puerto Rico concerning the use of state set-aside funds for rapid
response activities and for other statewide activities. We also interviewed
officials from the U.S. Department of Labor (Labor), the National Alliance
of Business, the National Governor's Association, and the National
Association of Workforce Boards.

Site Visits In selecting which states to visit, we categorized them
according to the size of each state's allotment for program year 2000, the
number of mass layoff events during the previous year, and the number of
workers affected by those events. We used three categories for the size of
the dislocated worker allotment: large-more than $50 million; medium-$15
million to $50 million; and small-less than $15 million. Similarly, we used
three categories for layoff activity: large- more than 200 mass layoff
events or more than 30,000 workers laid off; medium-75 to 200 mass layoff
events or 10,000 to 30,000 workers laid off; and small-fewer than 75 mass
layoff events or fewer than 10,000 workers laid off. We obtained the funding
information from Labor's Employment and Training Administration and the mass
layoff data from the U.S. Bureau of Labor Statistics. We then chose states
from the different groups to provide variety in terms of funding size,
dislocation activity, and location (see table 3).

               Appendix I: Objectives, Scope, and Methodology

  Table 3: Dislocated Worker Funding and Dislocation Activity for Selected
                                States State

DOL region

Program year 2000 allotment

                  Number of dislocation eventsa Number of affected workersa

Legend: DOL =
Department of
Labor.

aDislocation
events and
separations are
for the second
quarter of 1999 to the third quarter of 2000 or the equivalent time period
for program year 1999.

Within each state, we picked two local workforce areas, except in California
where we picked four areas. We judgmentally selected these workforce areas
to provide a range funding sizes and types of areas- specifically, urban
versus rural (see table 4 for a list of the selected local workforce areas).

             Table 4: Local Workforce Areas Selected for Visits

Program year 2000 dislocated worker allocation

   State                  Local workforce area                    City
California                  Los Angeles City                   Los Angeles  $24,985,890
             North Santa Clara Valley Job Training Consortium
                                                      (NOVA)    Sunnyvale     1,205,672
                            Riverside County                    Riverside     7,247,483
                  San Francisco City/County Consortium        San Francisco   2,369,840
 Illinois                 City of Chicago LWA#9                  Chicago      6,030,064
                        Rock Island County LWA#13              Rock Island      572,949
 Louisiana                Lafayette Parish #41                  Lafayette       473,855
                           Orleans Parish #12                  New Orleans    2,128,962
 Maryland                    Baltimore City                     Baltimore     2,227,582

                                         Western Maryland Hagerstown 731,484
                                    Massachusetts Bristol Fall River 689,772
                                                 Hampden Springfield 642,483
                         Minnesota Hennepin/Scott/Carver Minneapolis 598,205
                                                 Southeast Rochester 362,989

At each of these locations, we interviewed officials representing the local
workforce area and local workforce board and we toured one or more one-stop
centers. In some of the locations, we also attended orientation meetings and
met with one-stop center staff.

Appendix I: Objectives, Scope, and Methodology

Surveys

We distributed two surveys to the 50 states, the District of Columbia, and
Puerto Rico. One survey was designed to obtain information on how states
used their set-aside funds for other statewide activities, and the other was
designed to obtain information on how states used their set-aside funds for
rapid response. We sent the survey on other statewide activities to the 52
state agencies responsible for WIA implementation and sent the survey on
rapid response to the 52 state units responsible for rapid response
activities. As of September 27, 2001, we had received 50 responses (96
percent) for the survey on statewide activities and 50 responses (96
percent) to the survey on rapid response. Ohio and Pennsylvania did not
respond to the survey on other statewide activities, and Maine and New
Hampshire did not respond to the survey on rapid response.

Appendix II: Use of Dislocated Worker Funds for Rapid Response in 42 States

Fifty states responded to our survey on states' rapid response programs. Of
the 50 respondents, 42 provided program year 2000 financial data that do not
include program year 1999 carryover funds. Table 5 shows, for each of these
42 states, the total amount of dislocated worker funds set aside for rapid
response activities. Funds obligated for rapid response activities are
further broken down into two categories of obligations: rapid response
services and additional assistance to local areas.

Table 5: Program Year 2000 Dislocated Worker Allotment and Rapid Response
Set-Aside Funds in 42 States

                       Program year
                          2000        Total obligations Obligations for   Obligations for
                        dislocated        for rapid      rapid response         additional
                         worker           response                             assistance
       State               allotment        activities         services    to local areas
      Alabama            $12,337,794        $3,040,000         $300,000        $2,740,000
      Arkansas            12,375,366         1,317,187        1,317,187
     California          297,723,349        52,800,000       29,500,000        23,300,000
      Colorado             8,967,371           511,000          511,000
    Connecticut            8,480,789         1,816,948        1,816,948
      Delaware             1,664,457            20,000           20,000
     District of
      Columbia            10,174,200           149,664          149,664
      Florida             41,053,379         8,246,621        1,956,686         6,289,935
      Georgia             21,970,886         5,492,721        2,778,257         2,714,464
       Hawaii             12,921,697            96,913           96,913
      Illinois            38,725,943         8,670,303        2,424,796         6,245,507
      Indiana             10,502,473         2,549,700          796,100         1,753,600
        Iowa               4,984,236           198,995          173,820            25,175
       Kansas              5,772,856           614,286          345,746           268,540
      Kentucky            11,423,295         2,750,564          250,564         2,500,000
     Louisiana            24,339,414           983,791          949,711            34,080
      Maryland            16,806,330         1,350,000          580,000           770,000
   Massachusetts          13,588,888         2,400,000        1,200,000         1,200,000
      Michigan            22,130,803         1,821,710          520,000         1,301,710
    Mississippi           13,390,794         2,008,619        2,008,619                 0
      Nebraska             2,388,261           425,166           90,000           335,166
       Nevada              5,076,189           194,595          194,595                 0
     New Jersey           30,833,430         5,530,641        5,530,641                 0
     New Mexico           20,907,033           873,756          873,756                 0
      New York           142,360,726         5,775,996        5,775,996                 0
   North Carolina         16,906,622           730,000          360,000           370,000
    North Dakota           1,421,909           200,000          200,000                 0
        Ohio              30,844,022         4,721,000        1,645,000         3,076,000
       Oregon             30,420,464         1,489,544          589,544           900,000
    Pennsylvania          38,179,716         5,220,309        2,000,000         3,220,309
    Puerto Rico          108,278,443         1,856,854          856,854         1,000,000
    Rhode Island           2,924,830           731,208          731,208                 0

Appendix II: Use of Dislocated Worker Funds for Rapid Response in 42 States

                Program year 2000 Total obligations  Obligations for      Obligations for

                dislocated worker for rapid response  rapid response            additional
                                                                               assistance
     State             allotment          activities        services       to local areas
South Carolina         9,726,336           1,163,845       1,113,845               50,000
 South Dakota          1,477,871              44,721          44,721
   Tennessee          14,194,628           3,459,711         738,046            2,721,665
     Texas            74,756,662          11,760,858       8,211,858            3,549,000
     Utah              4,343,544             828,513         340,515              487,998
    Vermont            1,220,468              84,398          84,398
   Virginia           12,359,788             853,186         453,186              400,000
  Washington          28,220,707           2,000,000       1,100,000              900,000
 West Virginia        23,364,426           4,200,000       1,200,000            3,000,000
    Wyoming            1,921,722               5,215           5,215

Appendix III: Combined Set-Aside Funds Available for Statewide Activities in
52 States

The Workforce Investment Act (WIA) permits states to set aside up to 15
percent of the allotments for their adult, dislocated worker, and youth
programs. In addition, the act allows the states to combine these funds to
support a variety of statewide activities. Table 6 lists, for all 50 states,
the District of Columbia, and Puerto Rico, the program year 2000 WIA adult,
dislocated worker, and youth allotments and the maximum allowable combined
set-aside for statewide activities.

Table 6:  Program Year 2000  WIA Allotments and Maximum  15 Percent Combined
Set-Aside for Statewide Activities for 52 States

Program Year 2000 WIA Allotments

                                                                                 Maximum
                                                                              15 percent
                                                                                combined
                                                                               set-aside
                                                                                     for
                                                                               statewide
   State         Adults               Dislocated workers       Youth          activities
          Alabama            $13,600,837      $12,337,794  $14,066,303        $6,000,740
          Alaska              3,089,722         6,719,943       3,215,719      1,953,808
          Arizona             15,648,932       11,542,782    16,578,123        6,565,476
         Arkansas             10,068,804       12,375,366    10,429,385        4,931,033
        California           160,743,770      297,723,349  171,424,027        94,483,672
         Colorado             6,409,369         8,967,371       6,550,692      3,289,115
        Connecticut           7,486,306         8,480,789       7,700,441      3,550,130
         Delaware             2,369,063         1,664,457       2,457,058        973,587
   District of Columbia       4,412,566        10,174,200       4,528,781      2,867,332
          Florida             39,256,368       41,053,379    39,070,163       17,906,987
          Georgia             19,518,990       21,970,886    20,496,219        9,297,914
          Hawaii              6,049,854        12,921,697       6,045,743      3,752,594
           Idaho              3,872,663         6,033,643       4,095,248      2,100,233
         Illinois             38,399,632       38,725,943    40,030,985       17,573,484
          Indiana             10,557,597       10,502,473    11,014,284        4,811,153
           Iowa               3,209,170         4,984,236       3,259,920      1,717,999
          Kansas              3,434,681         5,772,856       3,440,280      1,897,173
         Kentucky             15,516,224       11,423,295    15,511,193        6,367,607
         Louisiana            20,662,594       24,339,414    21,598,829        9,990,126
           Maine              3,667,080         3,854,255       3,720,413      1,686,262
         Maryland             13,552,128       16,806,330    13,787,590        6,621,907
       Massachusetts          12,483,536       13,588,888    12,957,434        5,854,479
         Michigan             27,277,938       22,130,803    28,969,657       11,756,760
         Minnesota            7,782,432         8,023,090       8,048,735      3,578,139
        Mississippi           11,341,654       13,390,794    12,562,595        5,594,256
         Missouri             13,732,983       15,326,715    14,008,527        6,460,234
          Montana             4,193,064         6,417,081       4,149,252      2,213,910

Appendix III: Combined Set-Aside Funds Available for Statewide Activities in
52 States

Program Year 2000 WIA Allotments

                        Maximum 15 percent combined

                                          set-aside for statewide activities

       State            Adults          Dislocated workers          Youth
     Nebraska         2,369,063                  2,388,261      2,457,058      1,082,157
      Nevada          3,550,960                  5,076,189      3,661,485      1,843,295
   New Hampshire      2,369,063                  2,247,442      2,457,058      1,061,034
    New Jersey        23,265,426                30,833,430  23,699,434        11,669,744
    New Mexico        9,968,030                 20,907,033  10,430,066         6,195,769
     New York         81,558,176               142,360,726  81,034,703        45,743,041
  North Carolina      14,198,520                16,906,622  14,391,704         6,824,527
   North Dakota       2,369,063                  1,421,909      2,457,058        937,205
       Ohio           40,353,010                30,844,022  41,633,629        16,924,599
     Oklahoma         10,261,832                 8,085,953  10,326,811         4,301,189
      Oregon          14,237,385                30,420,464  14,609,203         8,890,058
   Pennsylvania       34,243,052                38,179,716  34,298,461        16,008,184
    Puerto Rico       52,848,829               108,278,443  54,369,986        32,324,589
   Rhode Island       2,478,859                  2,924,830      2,490,640      1,184,149
  South Carolina      11,664,248                 9,726,336  12,091,526         5,022,317
   South Dakota       2,369,063                  1,477,871      2,457,058        945,599
     Tennessee        18,118,821                14,194,628  18,465,533         7,616,847
       Texas          82,451,236                74,756,662  88,620,250        36,874,222
       Utah           2,753,861                  4,343,544      3,301,394      1,559,820
      Vermont         2,369,063                  1,220,468      2,457,058        906,988
     Virginia         12,992,562                12,359,788  13,385,882         5,810,735
    Washington        20,455,166                28,220,707  21,370,932        10,507,021
   West Virginia      10,306,103                23,364,426  10,548,280         6,632,821
     Wisconsin        9,366,589                 11,506,979      9,633,249      4,576,023
      Wyoming         2,369,063                  1,921,722      2,457,058      1,012,176

Appendix IV: Percentage of Statewide Set-Aside Funds Used for Various
Activities

Forty-three of the 50 states responding to our survey on the use of
set-aside funds for statewide activities indicated that they combined
set-aside funds from their adult, youth, and dislocated worker allotments,
as allowed by the act. The following graphs identify the percentage of
statewide set-aside funds that these states spent on various activities. In
some instances, the upper limit (greater than 10 percent) included a wide
range. Accordingly, we have provided more information in the text on
expenditures by states for this category.

Figure  9: Percentage  of Statewide  Set-Aside Funds Spent  on Disseminating
State List of Training Providers

40 Number of States

30

20

10

0

0 <1-3 3.1-10 >10

Percentage of Set-Aside Funds Spent on This Activity

One  state  (North Dakota)  spent  30  percent of  its  set-aside  funds on
disseminating a state list of training providers.

Appendix IV: Percentage of Statewide Set-Aside Funds Used for Various
Activities

Figure 10: Percentage of Statewide Set-Aside Funds Spent on Conducting
Evaluations of Programs or Activities

40 Number of States

30

20

10

0

0 <1-3 3.1-10 >10

Percentage of Set-Aside Funds Spent on This Activity

Five states spent between 10 percent and 18 percent of their combined
set-aside funds on conducting evaluations of programs or activities. In
addition, South Dakota and Arizona spent about 25 percent on this activity.

Appendix IV: Percentage of Statewide Set-Aside Funds Used for Various
Activities

Figure 11: Percentage of Statewide Set-Aside Funds Spent on Providing
Incentive Grants to Local Areas

40 Number of States

30

20

10

0

0 <1-3 3.1-10 >10

Percentage of Set-Aside Funds Spent on This Activity

Seven states spent between 10 percent and 17 percent of their combined
set-aside funds on providing incentive grants to local areas. In addition,
Illinois spent over 21 percent, Wisconsin spent almost 29 percent, and
Nebraska spent about 38 percent on this activity.

Appendix IV: Percentage of Statewide Set-Aside Funds Used for Various
Activities

Figure 12: Percentage of Statewide Set-Aside Funds Spent on Providing
Technical Assistance to Local Areas

40 Number of States

30

20

10

0

0 <1-3 3.1-10 >10

Percentage of Set-Aside Funds Spent on This Activity

Four states spent between 10 percent and 15 percent of their combined
set-aside funds on providing technical assistance to local areas. In
addition, Mississippi and South Dakota spent 25 percent on this activity.

Appendix IV: Percentage of Statewide Set-Aside Funds Used for Various
Activities

Figure 13: Percentage of Statewide Set-Aside Funds Spent on Assisting in the
Establishment or Operation of One-Stop Delivery Systems

40 Number of States

30

20

10

0

0 <1-3 3.1-10 >10

Percentage of Set-Aside Funds Spent on This Activity

Seven states spent between 11 percent and 20 percent of their combined
set-aside funds on assisting in the establishment and operation of one-stop
center systems; another nine states spent between 22 percent and 37 percent
of their funds on this activity. In addition, Connecticut spent about 41
percent and Missouri spent about 52 percent.

Appendix IV: Percentage of Statewide Set-Aside Funds Used for Various
Activities

Figure 14: Percentage of Statewide Set-Aside Funds Spent on Additional
Assistance for Local Areas with a High Concentration of Eligible Youths

40 Number of States

30

20

10

0

0 <1-3 3.1-10 >10

Percentage of Set-Aside Funds Spent on This Activity

Four states spent between 12 percent and 15 percent of their set-aside funds
on additional assistance for local areas with a high concentration of
eligible youths.

Appendix IV: Percentage of Statewide Set-Aside Funds Used for Various
Activities

Figure 15: Percentage of Statewide Set-Aside Funds Spent on Operating Fiscal
and Management Accountability Information Systems

40 Number of States

30

20

10

0

0 <1-3 3.1-10 >10

Percentage of Set-Aside Funds Spent on This Activity

Four states spent between 10 percent and 20 percent of their set-aside funds
on operating fiscal and management accountability information systems;
another eight states spent from 20 percent to 30 percent on this activity.
In addition, Arkansas spent almost 39 percent, Idaho spent about 47 percent,
and Virginia spent about 51 percent on this activity.

Appendix IV: Percentage of Statewide Set-Aside Funds Used for Various
Activities

Figure 16: Percentage of Statewide Set-Aside Funds Spent on Carrying Out
General State-Level Administrative Activities

40 Number of States

30

20

10

0

0 <1-3 3.1-10 >10

Percentage of Set-Aside Funds Spent on This Activity

Nine states spent between 10 percent and 20 percent of their combined
set-aside funds on carrying out general state-level administrative
activities, six states spent between 20 percent and 30 percent on this
activity, and 18 states spent between 30 percent and 35 percent. In
addition, Texas spent about 38 percent, Nebraska spent about 45 percent, and
Iowa spent about 64 percent of their combined set-aside funds on this
activity.

Appendix IV: Percentage of Statewide Set-Aside Funds Used for Various
Activities

Figure 17: Percentage of Statewide Set-Aside Funds Spent on Providing
Capacity Building to Local Areas through Training of Staff and Development
of Exemplary Program Activities

40 Number of States

30

20

10

0

0 <1-3 3.1-10 >10

Percentage of Set-Aside Funds Spent on This Activity

Five states spent between 10 percent and 19 percent of their combined
set-aside funds on providing capacity building to local areas through
training of staff, development of exemplary program activities, or both.

Appendix IV: Percentage of Statewide Set-Aside Funds Used for Various
Activities

Figure 18: Percentage of Statewide Set-Aside Funds Spent on Conducting
Research and Demonstration Projects

40 Number of States

30

20

10

0

0 <1-3 3.1-10 >10

Percentage of Set-Aside Funds Spent on This Activity

Idaho spent 13 percent, Florida spent about 29 percent, and New Hampshire
spent about 35 percent of their combined set-aside funds on conducting
research and demonstration projects.

Appendix IV: Percentage of Statewide Set-Aside Funds Used for Various
Activities

Figure 19: Percentage of Statewide Set-Aside Funds Spent on Implementing
Incumbent Worker Training

40 Number of States

30

20

10

0

0 <1-3 3.1-10 >10

Percentage of Set-Aside Funds Spent on This Activity

Four states spent between 10 percent and 20 percent of their combined
set-aside funds on implementing incumbent worker training. In addition,
Vermont spent 30 percent, Florida spent 34 percent, and Indiana spent 37
percent of their combined set-aside funds on this activity.

Appendix IV: Percentage of Statewide Set-Aside Funds Used for Various
Activities

Figure  20: Percentage of  Statewide Set-Aside  Funds Spent on  Implementing
Programs Targeted to Empowerment Zones and Enterprise Communities

Number of States 40

30

20

10

0

0 <1-3 3.1-10 >10

Percentage of Set-Aside Funds Spent on This Activity

Appendix IV: Percentage of Statewide Set-Aside Funds Used for Various
Activities

Figure  21:  Percentage  of Statewide  Set-Aside  Funds  Spent on  Providing
Support for the Identification of Eligible Training Providers

40 Number of States

30

20

10

0

0 <1-3 3.1-10 >10

Percentage of Set-Aside Funds Spent on This Activity

Appendix IV: Percentage of Statewide Set-Aside Funds Used for Various
Activities

Figure  22: Percentage of  Statewide Set-Aside  Funds Spent on  Implementing
Programs for Displaced Homemakers

40 Number of States

30

20

10

0

0 <1-3 3.1-10 >10

Percentage of Set-Aside Funds Spent on This Activity

Virginia spent  19 percent of  its set-aside funds on  implementing programs
for displaced homemakers.

Appendix IV: Percentage of Statewide Set-Aside Funds Used for Various
Activities

Figure  23: Percentage of  Statewide Set-Aside  Funds Spent on  Implementing
Training Programs for Nontraditional Employment Positions

40 Number of States

30

20

10

0

0 <1-3 3.1-10 >10

Percentage of Set-Aside Funds Spent on This Activity

Vermont  spent about  11  percent of  its  set-aside funds  on implementing
training programs for nontraditional employment positions.

Appendix IV: Percentage of Statewide Set-Aside Funds Used for Various
Activities

Figure 24: Percentage of Statewide Set-Aside Funds Spent on Other Activities

40 Number of States

30

20

10

0

0 <1-3 3.1-10 >10

Percentage of Set-Aside Funds Spent on This Activity

Seven states spent between 10 percent and 18 percent of their set-aside
funds on other activities, six states spent between 19 percent and 31
percent, and two states spent between 31 percent and 40 percent. In
addition, Alabama and West Virginia both spent about 47 percent of their
set-aside funds on these activities, while Nevada spent about 73 percent and
California spent about 76 percent.

Appendix V:  Detailed Listing of the Federal  Funding Formula for Dislocated
Workers

Appendix V presents detailed results of our analysis of the federal funding
formula for dislocated workers and its impact on 50 states, the District of
Columbia, and Puerto Rico (see tables 7 through 11). We obtained information
for the analysis of the funding formula and the state dislocated worker
allotments between program years 1997 and 2001 from the Department of Labor.

Table 7: Dislocated Worker Allotments for Program Years 1997 through 2001,
by State

                     Program year  Program year Program year  Program year Program year
       State                 1997          1998         1999          2000
      Alabama         $14,887,940   $10,405,271  $11,310,449  $12,337,794   $15,068,548
       Alaska           3,931,646     5,569,805   6,053,763      6,719,943   11,395,001
      Arizona         10,790,780     13,481,176   9,383,103    11,542,782    12,879,316
      Arkansas          5,898,001     9,331,256  10,872,546    12,375,366     7,103,656
     California       226,611,355   228,452,063  252,751,353  297,723,349   273,391,437
      Colorado          6,569,865     6,965,327   6,515,135      8,967,371    8,255,862
    Connecticut       12,269,326     13,972,394  10,137,244      8,480,789    7,406,982
      Delaware          1,966,568     1,962,967   1,730,577      1,664,457    2,184,617
District of Columbia    5,631,401     5,710,918   9,278,408    10,174,200     8,433,959
      Florida         47,487,185     43,088,420  37,376,186    41,053,379    39,311,417
      Georgia         15,447,527     16,437,304  17,327,420    21,970,886    20,930,127
       Hawaii           5,392,433     7,124,058   9,203,634    12,921,697     6,477,632
       Idaho            3,203,461     4,218,044   5,142,284      6,033,643    3,898,217
      Illinois        41,727,268     38,162,269  33,944,834    38,725,943    41,575,303
      Indiana         11,375,233     10,887,945   9,999,244    10,502,473    10,682,428
        Iowa            4,209,472     5,193,070   4,603,653      4,984,236    5,437,368
       Kansas           4,690,124     5,046,917   5,107,811      5,772,856    5,502,565
      Kentucky        11,913,534     16,465,202  10,071,794    11,423,295    11,735,435
     Louisiana        22,984,811     24,467,573  25,508,779    24,339,414    23,158,418
       Maine            4,643,804     3,812,342   4,094,611      3,854,255    3,214,945
      Maryland        16,322,396     14,535,456  19,792,477    16,806,330    17,559,765
   Massachusetts      18,455,865     14,048,429  13,467,578    13,588,888    15,134,353
      Michigan        24,798,043     20,753,875  21,366,758    22,130,803    21,932,071
     Minnesota          8,025,182     8,655,629   8,482,964      8,023,090   10,473,235
    Mississippi       10,812,972     11,851,804  14,148,987    13,390,794    30,701,477
      Missouri        10,875,026     12,288,831  13,857,280    15,326,715    12,374,521
      Montana           3,531,457     2,892,798   4,879,006      6,417,081    7,084,638
      Nebraska          1,594,122     1,965,472   1,997,095      2,388,261    2,997,707
       Nevada           4,632,379     4,648,561   3,910,433      5,076,189    5,334,057
   New Hampshire        2,260,095     2,272,311   1,583,448      2,247,442    1,877,882
     New Jersey       44,679,005     43,261,829  36,304,389    30,833,430    30,498,439
     New Mexico         8,607,771    12,173,813  14,447,813    20,907,033    21,923,521
      New York        91,917,963    113,707,688  141,469,827  142,360,726   105,559,534
   North Carolina     13,056,615     13,313,849  14,354,831    16,906,622    16,959,265

Appendix V:  Detailed Listing of the Federal  Funding Formula for Dislocated
Workers

                 Program year   Program year  Program year  Program year   Program year
     State                1997          1998          1999          2000           2001
  North Dakota         911,735       812,799    791,223        1,421,909      1,279,725
      Ohio          30,158,145    30,143,462   28,150,483    30,844,022      34,309,127
    Oklahoma         6,134,591     5,531,341   6,881,200       8,085,953      6,561,865
     Oregon          8,292,745    15,100,295   17,668,368    30,420,464      28,811,913
  Pennsylvania      47,736,539    45,002,996   36,555,932    38,179,716      38,706,830
  Puerto Rico       39,306,758    49,534,488   82,314,462   108,278,443     166,101,676
  Rhode Island       4,450,933     3,588,822   3,851,636       2,924,830      2,885,714
 South Carolina     13,502,936    16,723,308   8,163,435       9,726,336     11,936,257
  South Dakota         815,418       890,691    986,630        1,477,871      1,283,809
   Tennessee        15,412,716    18,581,291   14,120,459    14,194,628      12,771,543
     Texas          81,382,699    81,009,852   74,819,227    74,756,662      63,747,179
      Utah           2,503,785     2,446,846   3,229,390       4,343,544      4,430,131
    Vermont          1,060,691     1,298,100   1,391,491       1,220,468      1,240,882
    Virginia        13,354,807    14,527,059   13,872,204    12,359,788      12,424,713
   Washington       26,317,878    24,728,657   13,905,356    28,220,707      27,119,437
 West Virginia      12,065,944    13,035,793   16,082,147    23,364,426      25,423,973
   Wisconsin         8,791,150     9,028,070   9,944,587     11,506,979      12,880,353

Wyoming 999,905 1,299,464 1,204,056 1,921,722 1,663,175

Total 1,034,400,000 1,080,408,000 1,124,408,000 1,271,220,000 1,272,032,000

Table 8: Percentage Change in Total Dislocated Worker Allotments for Program
Years 1998 through 2001, by State

Program year  Program year Program year  Program year States  1998 1999 2000
2001 
Alabama -30% 9% 9% 22% Alaska 42 9 11 70 Arizona 25 -30 23 12 Arkansas 58 17
14 -43 California  1 11 18 -8 Colorado 6 -6 38 -8 Connecticut 14 -27 -16 -13
Delaware 0 -12 -4  31 District of Columbia 1 62 10  -17 Florida -9 -13 10 -4
Georgia 6 5 27  -5 Hawaii 32 29 40 -50 Idaho 32 22 17 -35 Illinois -9 -11 14
7 Indiana -4 -8 5 2 Iowa 23-11 8 9 Kansas 8 1 13 -5

Appendix V: Detailed Listing of the Federal Funding Formula for Dislocated
Workers

States

Program year 1998

Program year 1999

Program year 2000

Program year 2001

Appendix V:
Detailed  Listing
of  the  Federal
Funding   Formula
for    Dislocated
Workers

Table 9: States
with Excess
Unemployment for
Program Years
1997 through 2001

Program year
Program year
Program year
Program year
Program year
States  1997 1998
1999   2000  2001

Alabama X X

AlaskaX XX X X

Arizona X X

Arkansas X X X X

California X X X
X X

Colorado

Connecticut X X

Delaware X X

District of
Columbia X X X X
X

Florida X X X

Georgia X X

HawaiiX XX X X

IdahoX XX X

Illinois X X X

Indiana Iowa

Kansas
Kentucky X X
LouisianaX X X X X
MaineX XX
Maryland X X X
Massachusetts X
Michigan X
Minnesota
Mississippi X X X X X
Missouri
MontanaX X X X X
Nebraska
Nevada X X
New Hampshire
New Jersey X X X X
New MexicoX X X X X
New YorkX X X X X
North Carolina
North Dakota
OhioX X
Oklahoma
OregonX XX X X
Pennsylvania X X X
Puerto Rico X X X X X
Rhode Island X X X

Appendix V:  Detailed Listing of the Federal  Funding Formula for Dislocated
Workers

Program year Program year Program year Program year Program year States 1997
1998 1999 2000 2001

                             South Carolina X X

South Dakota

                         Tennessee X X TexasX XX X

Utah Vermont

Virginia

                            Washington X X X X X

                          West Virginia X X X X X

Wisconsin

Wyoming X X X

                         State Count 36 34 23 18 13

Table 10: Percentage Change in Long-Term Unemployment Allotments from Prior
Year, by State

                          Program year    Program year    Program year     Program year
         States                    1997            1998       1999                 2000
         Alabama                   -20%             32%       -4%                   35%
         Alaska                      49              33       -29
         Arizona                     48             -20        16
        Arkansas                     60              17        41                   -32
       California                     3              -6        18                    -8
        Colorado                     18             -24        74                   -10
       Connecticut                   -4              10       -21                   -12
        Delaware                      7              -3       -15                    48
  District of Columbia               -2               7        29                   -22
         Florida                     -1               1        21                    -9
         Georgia                      9              12        38                   -10
         Hawaii                      15              25        32                    -5
          Idaho                      42               2        21                    11
        Illinois                      1               6        16                     7
         Indiana                     10             -22        0                    -22
          Iowa                       42             -12        -6                    39
         Kansas                      -1               0        6                    -14
        Kentucky                     17              -7        11                     6
        Louisiana                     4              -5        -1                    15
          Maine                      -2              17        3                    -31
        Maryland                     -6              36        5                     14
      Massachusetts                 -16              -8        -3                    24
        Michigan                     -8               2       -12                     2
        Minnesota                    11               8       -23                    54
       Mississippi                   46              17        9                    -11

Appendix V:  Detailed Listing of the Federal  Funding Formula for Dislocated
Workers

                       Program year     Program year    Program year       Program year
       States                    1997            1998       1999                   2000
      Missouri                      9              14        27                     -25
       Montana                     -7              17         1
      Nebraska                     78              17        -15
       Nevada                      16             -12        57
    New Hampshire                   7             -56        89
     New Jersey                     5             -14        10
     New Mexico                    56             -14        52
      New York                      5              34         7
   North Carolina                   7              11        34
    North Dakota                  -29              17        112
        Ohio                        7               9         2
      Oklahoma                    -15              31        10
       Oregon                      97               7        61
    Pennsylvania                    2              -4        18
     Puerto Rico                    7              22        47
    Rhode Island                  -34              31        -6
   South Carolina                  47             -36         0
    South Dakota                    7              17        112                    -26
      Tennessee                    -2              30        -3                     -23
        Texas                      -3              12         7                      13
        Utah                      -24              63        41                      11
       Vermont                     42              17        -29                     11
      Virginia                      9               4        -26                      0
     Washington                     9             -26        63                      -4
    West Virginia                  -2               1        56                     -14
      Wisconsin                    -5              22         7                      17
       Wyoming                      7              17        41                      11
  US + Puerto Rico                  4               4        13                       0

Appendix V:  Detailed Listing of the Federal  Funding Formula for Dislocated
Workers

Table 11: Total Dislocated Worker Allotment per Unemployed Worker for
Program Years 1997 through 2001, by State

                     Program year Program year  Program year Program year  Program year
       States                1997         1998          1999     2000
       Alabama                $135         $107          $127     $133             $156
       Alaska                  170          230           298         354
       Arizona                 100          121           101         116
      Arkansas                  96          142           173         206
     California                195          220           262         325
      Colorado                  77           92            91         128
     Connecticut               139          156           148         162
      Delaware                 107          110           122         129
District of Columbia           237          280           416         537
       Florida                 127          124           113         135
       Georgia                  90           94           108         139
       Hawaii                  156          197           266         375
        Idaho                  102          130           158         188
      Illinois                 129          129           122         143
       Indiana                  84          105           103         119
        Iowa                    79           98           110         118
       Kansas                   87           90           101          116          116
      Kentucky                 125          159           117          137          150
      Louisiana                176          200           225          235          241
        Maine                  132          121           136          148          132
      Maryland                 120          113           151          158          191
    Massachusetts              120          109           119          136          162
      Michigan                 107           98           111          117          126
      Minnesota                 85           96           119          119          144
     Mississippi               142          169           210          216          437
      Missouri                  94          101           116          160          156
       Montana                 140          129           198          257          301
      Nebraska                  64           85           107          103          119
       Nevada                  110          111           100          140          142
    New Hampshire               95          113            89          127          106
     New Jersey                173          186           176          160          182
     New Mexico                158          218           271          401          476
      New York                 172          207           276          305          252
   North Carolina               80           92           107          143          131
    North Dakota                89           83           107          150          133
        Ohio                   108          112           112          126          142
      Oklahoma                  88           93           111          125          130
       Oregon                   95          156           188          310          319
    Pennsylvania               145          148           133          147          159
     Puerto Rico               222          291           463          692        1,193
    Rhode Island               162          140           160          146          145

Appendix V:  Detailed Listing of the Federal  Funding Formula for Dislocated
Workers

                  Program year  Program year  Program year  Program year   Program year
     States               1997          1998           1999     2000               2001
  South Carolina            133           168            124           126          148
   South Dakota              72            79             92          144
    Tennessee               111           130            113          131
      Texas                 142           150            152          156
       Utah                  78            75             96          118
     Vermont                 79            98            121          120
     Virginia                89            99            122          123
    Washington              150           156            102          191
  West Virginia             200           232            305          452
    Wisconsin                84            87            107          120
     Wyoming                 86           107            106          159
 US + Puerto Rico           140           155            176          209

Appendix VI: Comments From the U.S. Department of Labor

          Appendix VI: Comments From the U.S. Department of Labor

          Appendix VI: Comments From the U.S. Department of Labor

Appendix VI: Comments From the U.S. Department of Labor

Appendix VII: GAO Contacts and Staff Acknowledgments

GAO Contacts

Staff Acknowledgments

Joan Mahagan, Assistant Director (617) 565-7532 Wayne Sylvia,
Analyst-in-Charge (617) 565-7492

Arthur Merriam, Joseph Evans, and Lorin Obler made significant contributions
to this report, in all aspects of the work throughout the review. In
addition, Jerry Fastrup and Richard Horte led the analysis of the dislocated
worker funding formula, James Wright and John Smale assisted in the design
of the two national surveys, Jessica Botsford and Richard Burkard provided
legal support, and Corinna Nicolaou assisted in the message and report
development.

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