    Trade Adjustment Assistance: Reforms Have Accelerated Training
    Enrollment, but Implementation Challenges Remain (22-SEP-04,
    GAO-04-1012).

    The Trade Adjustment Assistance (TAA) Reform Act of 2002
    consolidated two programs serving trade-affected workers and made
    changes to expand benefits and decrease the time it takes for
    workers to get services. GAO was asked to provide information on
    (1) how key reform provisions have affected program services, (2)
    what have been the challenges in implementing new provisions, (3)
    whether demand for TAA training has changed and how states are
    meeting this demand, and (4) what is known about what the TAA
    program is achieving.
    -------------------------Indexing Terms-------------------------
    REPORTNUM:   GAO-04-1012
        ACCNO:   A12511
      TITLE:     Trade Adjustment Assistance: Reforms Have Accelerated
    Training Enrollment, but Implementation Challenges Remain
         DATE:   09/22/2004
      SUBJECT:   Education or training
    	     Employment or training programs
    	     Occupational retraining
    	     Performance measures
    	     Program evaluation
    	     Program management
    	     State-administered programs
    	     Training utilization
    	     Workfare
    	     North American Free Trade Agreement
    	     Transitional Adjustment Assistance
    	     Program

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    GAO-04-1012

    United States Government Accountability Office

    GAO

    Report to the Committee on Finance, U.S. Senate

    September 2004

    TRADE ADJUSTMENT ASSISTANCE

      Reforms Have Accelerated Training Enrollment, but Implementation Challenges
                                         Remain

    GAO-04-1012

    Highlights of GAO-04-1012, a report to the Committee on Finance, U.S.
    Senate

    The Trade Adjustment Assistance (TAA) Reform Act of 2002 consolidated two
    programs serving trade-affected workers and made changes to expand
    benefits and decrease the time it takes for workers to get services. GAO
    was asked to provide information on (1) how key reform provisions have
    affected program services, (2) what have been the challenges in
    implementing new provisions, (3) whether demand for TAA training has
    changed and how states are meeting this demand, and (4) what is known
    about what the TAA program is achieving.

    GAO recommends that the Department of Labor monitor the implementation of
    certain provisions of the TAA Reform Act and propose legislative changes
    if:

    o  	the new training enrollment deadline is negatively affecting some
    workers, or

    o  	the eligibility criteria for the new wage insurance provision are
    resulting in denial of services to some older workers who could benefit
    from them.

    In its comments, Labor did not raise any issues with our findings,
    conclusions, or recommendations.

    www.gao.gov/cgi-bin/getrpt?GAO-04-1012.

    To view the full product, including the scope and methodology, click on
    the link above. For more information, contact Sigurd R. Nilsen at (202)
    512-7215 or nilsens@gao.gov.

    September 2004

    TRADE ADJUSTMENT ASSISTANCE

    Reforms Have Accelerated Training Enrollment, but Implementation Challenges
    Remain

    Most workers are enrolling in services more quickly than in prior years,
    partly because of a new 40-day time limit Labor must meet when processing
    a request, or petition, for TAA coverage. Labor reduced its average
    petitionprocessing time from 107 days in fiscal year 2002 to 38 days in
    fiscal year 2003 after the Reform Act took effect. Also, most states
    reported that workers are enrolling in training sooner because of a new
    deadline requiring workers to be enrolled in training by the later of 8
    weeks after petition certification or 16 weeks after a worker's layoff.
    However, this deadline may have negatively affected some
    workers-especially during large layoffs-as it does not always leave enough
    time to assess workers' training needs.

    States reported challenges implementing some new provisions of the TAA
    Reform Act. Officials in most of the states we visited reported an
    increased administrative workload from issuing training waivers to allow
    workers to qualify for the Health Coverage Tax Credit (HCTC)-over 40
    percent more waivers were issued in fiscal year 2003 than in 2002. While
    officials in all the states we visited said workers are or are likely to
    be interested in the wage insurance provision (Alternative TAA, or ATAA)
    that supplements the wages of certain workers aged 50 and over, it is
    still unclear how many workers will take advantage of this benefit.
    However, some found the provision's eligibility criteria problematic,
    partly because they require workers to lack easily transferable skills yet
    find reemployment within 26 weeks of layoff.

    Demand for TAA training increased substantially in fiscal year 2002, prior
    to the implementation of the reforms. States have struggled to meet this
    higher demand with available TAA training funds, even though TAA training
    funds available nationally doubled between fiscal years 2002 and 2003.
    Most states have responded by using other federal employment and training
    resources.

    Information on TAA program results has been limited, but Labor is making
    improvements by requiring states to use wage records to track TAA
    outcomes. Labor also initiated a new, 5-year evaluation study.

    Possible path for receiving TAA services

    Contents

    Letter

    Results in Brief
    Background
    Most Workers Are Enrolling in Services Sooner, but Some May Be

    Negatively Affected by the Enrollment Deadline

    New Health Care Provision Has Caused Increased Administrative
    Workload for Some Officials, While Other Provisions Have Been
    Difficult to Fully Implement

    Demand for TAA Training Has Increased, and States Have
    Responded by Supplementing Limited TAA Funds with Other
    Federal Resources

    Information on Program Results Has Been Limited, but Labor Is

    Taking Steps to Collect Better Data
    Conclusions
    Recommendation for Executive Action
    Agency Comments

                                           1

                                          3 6

    13

    19

    28

    40 46 47 48

    Appendix I Objectives, Scope, and Methodology

    Appendix II	Final Decisions Rendered by the U.S. Court of
    International Trade on Appealed TAA Cases,
    Fiscal Years 1999-2004

    Appendix III	Certified Workers, Benefit Recipients, and Expenditures

    Appendix IV State Training Allocations, Fiscal Years 2001-2004

    Appendix V	Detailed Listing of Steps States Report Taking in
    Response to Limited TAA Training Funds 57

             Appendix VI Demographic Characteristics of TAA Participants 61

    Appendix VII Comments from the Department of Labor

    Appendix VIII GAO Contacts and Staff Acknowledgments 63

    GAO Contacts 63 Staff Acknowledgments 63

    Related GAO Products

    Tables

    Table 1: Major Changes in the TAA Reform Act of 2002

    Table 2: TAA Eligibility Requirements

    Table 3: Labor's Fiscal Year 2003 TAA Performance and Goals

    Table 4: Site Selection Criteria

    Table 5: Local Workforce Areas Selected for Visits

    Table 6: Final Decisions Rendered by the U.S. Court of International Trade
    on Appealed TAA Determination Cases, Fiscal Years 1999-2004

    Table 7: TAA and NAFTA-TAA Certified Workers, Benefit Recipients, and
    Expenditures, Fiscal Years 1999-2003

    Table 8: State Training Allocations, Fiscal Years 2001-2003, and State
    Training Base Allocations, Fiscal Year 2004

    Table 9: Steps States Report They Have Taken in Response to Limited TAA
    Training Funds, Fiscal Years 2001-2003

    Table 10: Steps States Report They Have Taken or Anticipate Taking in
    Response to Limited TAA Training Funds, Fiscal Year 2004

    Table 11: Select Demographic Characteristics of Participants Exiting TAA
    Program, July 1, 2001-June 30, 2002

    8 12 44 50 52

    53 54 55 57

    59 61

    Figures

    Figure 1: Average TAA Petition Processing Time, Fiscal Years 19992003 15

    Figure 2: Example of How TAA Program Delays May Leave
    Workers Less Time to Enroll in Training 18
    Figure 3: Increase in Individuals Receiving Training Waivers, Fiscal
    Years 1999-2003 20
    Figure 4: Estimated Number of TAA-Certified Secondary Workers,
    Fiscal Years 1999-2003 23
    Figure 5: Estimated Proportion of TAA-Certified Workers Who Are
    Secondary Workers, Fiscal Years 1999-2003 24
    Figure 6: Most States Will Have Their Wage Insurance Programs
    Operational by Mid-2004 28
    Figure 7: Estimated Number of TAA-Certified Workers, Fiscal
    Years 1999-2003 29
    Figure 8: Number of Workers Entering TAA Training, Fiscal Years

    1999-2003 30
    Figure 9: Manufacturing Employment, Fiscal Years 1995-2003 31
    Figure 10: 37 States Place Limits on Training Costs per TAA

    Participant 34
    Figure 11: States Have Taken a Variety of Steps in Response to
    Limited TAA Training Funds 35
    Figure 12: States Use Various Funding Sources for TAA Case
    Management 38
    Figure 13: Number of States Using Supplemental Sources to Collect
    Data on Specific Employment Outcomes 43
    Figure 14: Percentage of Total TAA Participants in Selected States,
    Fiscal Years 2000-2002 51

    Abbreviations

    ATAA Alternative Trade Adjustment Assistance
    ES Employment Service
    GPRA Government Performance and Results Act
    HCTC Health Coverage Tax Credit
    IRS Internal Revenue Service
    NAFTA-TAA North American Free Trade Agreement Transitional

    Adjustment Assistance OMB Office of Management and Budget PART Program
    Assessment Rating Tool TAA Trade Adjustment Assistance TAPR Trade Act
    Participant Report UI Unemployment Insurance WIA Workforce Investment Act
    WRIS Wage Record Interchange System

    This is a work of the U.S. government and is not subject to copyright
    protection in the United States. It may be reproduced and distributed in
    its entirety without further permission from GAO. However, because this
    work may contain copyrighted images or other material, permission from the
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    separately.

    United States Government Accountability Office Washington, DC 20548

    September 22, 2004

    The Honorable Charles E. Grassley
    Chairman
    The Honorable Max Baucus
    Ranking Minority Member
    Committee on Finance
    United States Senate

    Economists generally agree that international trade has benefited
    Americans in a number of ways, for example, through making a broader
    range of goods and services available. However, international trade has
    also contributed to layoffs in a range of industries, including the
    manufacture of textiles, paper products, and electronic equipment. The
    share of all United States employment that is in manufacturing has
    declined fairly steadily over the last several decades. Recently, the
    number of manufacturing employees in the United States fell by almost
    2.1 million over a 2-year period between 2000 and 2002, representing
    12 percent of the manufacturing sector. The sharp decline in
    manufacturing employment in the United States has focused attention on
    the costs to workers of increased global competition, and on federal
    efforts to assist these workers-workers who, some evidence suggests,
    tend to be older with fewer transferable skills than other dislocated
    workers. These factors may complicate trade-affected workers' transition
    to reemployment, and make federal efforts to help them reintegrate into
    the workforce especially important.

    The federal government has a number of programs to assist workers who
    have been dislocated from their jobs. The primary program for workers
    dislocated from manufacturing because of international trade is the Trade
    Adjustment Assistance (TAA) program, established in 1962 and currently
    funded at about $1.3 billion annually. Under this program, workers may
    receive a variety of services, including training and income support while
    they are in training for up to 2 years after they exhaust their
    Unemployment Insurance (UI) benefits. In our previous reviews of the
    TAA program, we found weaknesses in the program's structure and
    operations. For example, the program allowed some workers to delay
    entering training for several years after being laid off, raising
    questions
    about the timeliness of the program's assistance. Partly in response to
    these concerns, Congress passed the Trade Adjustment Assistance (TAA)
    Reform Act of 2002. The act consolidated two former programs that served

    trade-affected workers-the TAA and the North American Free Trade Agreement
    Transitional Adjustment Assistance (NAFTA-TAA) programs- and made a number
    of key changes designed to expand benefits and decrease the time it takes
    to get workers into services. The law required that most of these changes
    take effect in November 2002, but it allowed some provisions to be
    implemented as late as August 2003. Among the changes, the act

    o  	shortened from 60 days to 40 days the time Labor is given to process
    petitions filed on behalf of groups of workers to determine their
    potential eligibility for services;

    o  	established a deadline for workers to enroll in training, after they
    have been laid off or their petition has been approved, in order to
    maintain eligibility for extended income support payments;

    o  	created a Health Coverage Tax Credit (HCTC) to help trade-affected
    workers who are enrolled in or have completed training, or have a waiver
    from this requirement, pay for health insurance;

    o  	created a wage insurance benefit for workers age 50 and older,
    subsidizing the difference between the prior and new wages of some
    trade-affected workers who find reemployment quickly; and

    o  	expanded the eligibility criteria for secondary workers-defined as
    those who are indirectly affected by international trade, because they
    supply component parts to or perform finishing work for directly affected
    firms.

    In light of recent changes to the program, you asked us to examine (1) how
    key provisions of the TAA Reform Act have affected program services, (2)
    what have been the challenges in implementing the TAA Reform Act's new
    provisions, (3) whether demand for TAA training has changed, and how
    states are meeting this demand, and (4) what is known about what the TAA
    program is achieving. To address these questions, we conducted a Web-based
    survey of the 50 states and Puerto Rico in March, 2004, and received
    responses from all 50 states. We collected administrative data from the
    Department of Labor (Labor) on TAA petitions, participants, services,
    performance, and expenditures from fiscal year 1999 through 2003. We
    assessed all data for reliability and found them to be sufficiently
    reliable for the purposes of our reporting objectives. We conducted site
    visits to 5 states-Maine, North Carolina, Pennsylvania, Texas, and
    Washington. We selected these states according to several criteria,
    including recent experience with large numbers of TAA

    Results in Brief

    participants; representation of a range of adversely affected industries
    and, according to Labor officials, a range of experiences implementing
    TAA; and geographic diversity. On our site visits, we interviewed state
    officials, local service delivery staff, employers, and TAA program
    participants. We conducted our work between August 2003 and August 2004 in
    accordance with generally accepted government auditing standards. (See
    app. I for more details on our objectives, scope, and methodology.)

    Most trade-affected workers are enrolling in services sooner than in prior
    years because of certain key provisions of the TAA Reform Act, but states
    report that the new training enrollment deadline has had unintended
    consequences for some workers. With the new 40-day time limit for
    processing petitions, Labor has reduced the average processing time from
    107 days in fiscal year 2002, before the new time limit took effect, to 38
    days in fiscal year 2003. In addition, 41 of the 50 states reported that
    workers are now enrolling in training sooner as a result of the new
    training enrollment deadline which requires workers to be enrolled in
    training or have a training waiver by the later of 8 weeks after the
    petition is certified or 16 weeks after the worker is laid off. However,
    states report that some workers have been negatively affected by the
    deadline. State officials told us that, as a result of the training
    enrollment deadline, some workers may not be enrolling in the most
    appropriate training. Officials reported that in order to meet the
    deadline, they feel pressured to assess workers more quickly and lack the
    time to adequately assess workers' training needs. Another negative effect
    of the deadline, states report, is that some potentially eligible workers
    are missing the deadline and therefore losing their eligibility for any
    extended income support beyond what is available through their UI
    benefits. Officials also told us that the deadline may provide workers
    with too little time to process the trauma of losing their jobs and to
    accept the need for training or other services. These difficulties are
    heightened in the case of large layoffs, because the volume of workers who
    need services within a very short time period overwhelms the program's
    capacity to provide them with appropriate skill assessments.

    The implementation of the HCTC has increased the administrative workload
    for some local areas, while some other new provisions of the TAA Reform
    Act have been difficult for states to fully implement. States report that
    implementing the HCTC has required them to issue many more training
    waivers to TAA-eligible workers than in past years, and officials in most
    of the states we visited told us that issuing waivers has caused an
    increased administrative workload. States issued over 40 percent more

    training waivers in fiscal year 2003 than in 2002, according to Labor's
    data. State officials also told us that some new provisions of the Reform
    Act have been challenging to fully implement. For example, some states
    said it has been difficult to identify newly eligible secondary workers
    because, in some cases, trade-affected companies may be reluctant or find
    it difficult to provide lists of firms that supply them with component
    parts. The estimated percentage of workers covered by approved TAA
    petitions who are secondary workers increased from just over 1 percent in
    fiscal year 2002 to just over 2 percent in fiscal year 2003. In addition,
    while officials in all of the states we visited said workers are
    interested in or will likely be interested in the new wage insurance
    provision, most states did not implement the provision in calendar year
    2003-and of the 1,962 approved TAA petitions in fiscal year 2003, 60
    included approved requests for the wage insurance program. It is unclear
    how many workers will take advantage of the wage insurance benefit at this
    stage of implementation. Also, Labor, officials in one state, and
    employers found the wage insurance eligibility criteria problematic. The
    TAA statute clearly indicates that to be eligible for the wage insurance
    program, workers must lack easily transferable skills, yet find
    reemployment within 26 weeks of layoff. Officials in one state told us
    that these criteria exclude workers who can find reemployment quickly but
    at lower wages, and who therefore could be well served by a wage insurance
    benefit. In addition, after wage insurance coverage is requested,
    employers must confirm that their workers lack easily transferable skills,
    and an employer indicated that it is difficult to assess the skill levels
    of an entire group of affected workers, who may possess a diverse set of
    skills and skill levels.

    Demand for TAA training increased substantially in fiscal year 2002, and
    states are exhausting their TAA funds and using other federal employment
    and training resources to serve many TAA-eligible workers. According to
    Labor's data, the number of participants entering training annually
    increased by over 50 percent to about 45,000 participants between fiscal
    years 2001 and 2002, and remained roughly steady at that higher level in
    fiscal year 2003. This increase in demand coincided with a sharp decline
    in manufacturing employment in fiscal year 2002, but predated the
    implementation of the TAA Reform Act in fiscal year 2003. States have
    struggled to meet this higher demand with the TAA training funds available
    to them, even though TAA training funds available nationally doubled
    between fiscal years 2002 and 2003. According to our survey, 19 states
    temporarily discontinued enrolling TAA-eligible workers in training at
    some point between fiscal years 2001 and 2003 because they lacked adequate
    training funds, and six states have taken this step during fiscal year
    2004. Responding to the demand has been particularly difficult

    for states where officials have interpreted the TAA statutory provisions
    on training to mean that all TAA-eligible workers are entitled to
    training. However, Labor has issued guidance encouraging states to
    consider service options other than training for TAA-eligible workers, and
    many states are beginning to take additional steps to manage their TAA
    training funds. For example, several states we visited reported that they
    are more carefully screening workers to determine if training is the most
    appropriate strategy for them. Most states have responded to this
    heightened demand, consistent with guidance from Labor, by increasingly
    relying on other federal employment and training resources to support both
    case management and training for TAA-eligible workers. For example, since
    fiscal year 2001, 41 states have applied for federal grants designed to
    provide assistance to laid-off workers in order to supplement their TAA
    funds.

    Historically, information on TAA program results has been limited, but
    Labor has taken steps to gather more complete and accurate data on the
    program. In 1999, Labor introduced a new performance measurement system
    that was designed to collect information on TAA program participants and
    their outcomes in order to track performance against national goals.
    However, in a previous report we found that some states did not report
    complete information to this system. In order to improve the quality of
    performance data, Labor revamped the performance measurement system in
    fiscal year 2001 and began requiring states to use UI wage records for
    reporting outcomes for TAA program participants. While wage records
    generally provide objective and consistent information, they do not
    contain information on all categories of workers. Most states do little to
    supplement wage record data with other data sources that may capture this
    information; only 12 of the states we surveyed reported that they collect
    outcome data beyond what is required by Labor. Labor completed a study of
    program effectiveness in 1993, but the study's conclusions are of limited
    usefulness in assessing the current program. Labor recently began a new
    5-year study of the implementation and effectiveness of the TAA program,
    which it expects will provide more useful findings. Labor expects the
    first of several interim reports will be issued by mid-2005 and expects to
    issue the final report in 2009.

    We are recommending that Labor monitor the implementation of certain
    provisions of the TAA Reform Act that, according to officials, have
    presented implementation challenges and may have had unintended
    consequences for some workers, and if necessary, propose legislative
    changes to address these issues. Specifically, we are recommending that
    Labor assess (1) whether the new training enrollment deadline is having a

    negative impact on some workers affected by very large layoffs, and (2)
    whether the eligibility criteria for the wage insurance provision are
    resulting in denial of services to some older workers who could benefit
    from the program. In its comments on a draft of this report Labor did not
    raise any issues with our findings, conclusions or recommendations. Labor
    provided technical comments, which we incorporated as appropriate.

                                       Background

    To assist workers who are laid off as a result of international trade, the
    Trade Expansion Act of 1962 created the Trade Adjustment Assistance
    program. Historically, the main benefits available through the program
    have been extended income support and training. Participants are generally
    entitled to income support, but the amount of funds available for training
    is limited by statute. For fiscal year 2004, about $1.1 billion was
    appropriated for income support and about $269 million for training and
    other benefits.1 Labor certifies groups of laid-off workers as potentially
    eligible for TAA benefits and services by investigating petitions that are
    filed on the workers' behalf.2 Workers are eligible for TAA if they were
    laid off as a result of international trade and were involved in the
    production of an article; workers served by the TAA program have generally
    been laid off from the manufacturing sector.

    Congress has amended the TAA program a number of times since its
    inception. For example, in 1974 Congress eased program eligibility
    requirements, and in 1988 Congress added a requirement that workers be in
    training to receive income support. In 1993 Congress created a separate
    North American Free Trade Agreement Transitional Adjustment Assistance
    program specifically for workers laid off because of trade with

    3

    Canada or Mexico.

    1The TAA program operates on a federal fiscal year basis, that is, fiscal
    year 2004 runs from October 1, 2003 to September 30, 2004.

    2Not all workers covered by an approved TAA petition are individually
    eligible for TAA benefits and services. Individual eligibility also
    depends on factors including the timing and duration of a worker's layoff.
    In this report, when referring to workers eligible for the TAA program, we
    generally mean workers who have been certified as potentially eligible for
    the program.

    3For more information on the TAA program see GAO, Trade Adjustment
    Assistance: Trends, Outcomes, and Management Issues in Dislocated Worker
    Programs, GAO-01-59 (Washington, D.C.: Oct. 13, 2000), and GAO, Trade
    Adjustment Assistance: Experiences of Six Trade-Impacted Communities,
    GAO-01-838 (Washington, D.C.: Aug. 24, 2001).

    Changes Included in TAA Reform Act of 2002

    The most recent amendments to the TAA program were included in the TAA
    Reform Act of 2002 (Pub. L. No. 107-210), which was signed into law in
    August 2002. The Reform Act consolidated the former TAA and NAFTA-TAA
    programs into a single TAA program and doubled the amount of funds
    available for training annually. The act also

    o  	changed some administrative requirements in an effort to accelerate
    the process of enrolling workers in the program;

    o  	increased the maximum number of weeks of income support available, to
    match the maximum number of weeks of training available;

    o  	added two new benefits, a Health Coverage Tax Credit and a wage
    insurance provision; and

    o  	expanded program eligibility to include some secondary workers
    affected by trade with countries other than Canada and Mexico as well as
    more workers affected by a shift in production (see table 1).

    Table 1: Major Changes in the TAA Reform Act of 2002

              Former TAA Former NAFTA-TAA TAA under TAA Reform Act of 2002

    Petition processing

    60-day time limit for Labor to conduct an 40-day time limita 40-day time
    limit investigation and issue a decision

    Extended income support Training enrollment deadline Eligibility-shift of
                   production Authorization for training expenditures

    52 weeks of extended 52 weeks of extended 78 weeks of extended income
          income support    income support       support
         available after    available after      available after exhaustion of UI
         exhaustion of UI   exhaustion of UI     benefits
             benefits       benefits
                                                 (plus an additional 26 weeks for
                                                                     participants
                                                  completing remedial training)

    bNone      Participant must be enrolled in Participant must be enrolled in
                                      training by training or
                      the later of 16 weeks after         have a waiver from this
                                  separation or 6              requirement by the
             weeks after certification to qualify     later of 16 weeks after
                                              for         separation or 8
                   extended income support         weeks after certification to
                                                            qualify for
                                                      extended income support

    Eligibility-secondary workers
                                      Secondary workers who Secondary workers who
    Secondary workers not eligible      supply component supply component
                                        parts to or perform     parts to any firm
                                       finishing work for a  directly affected by
                                                       firm             trade, or
                                      directly affected by    perform finishing
                                      trade with Canada or     work for a firm
                                                                  directly
                                                            affected by trade
                                      Mexico are eligiblec  with Canada or Mexico
                                                            are
                                                                  eligible

         Workers affected by   Workers affected by     Workers affected by shift
    shift of production to  shift of production to  of production to
        foreign countries not   Canada or Mexico are     countries with which the
              eligible                eligible                United States has a
                                                       trade agreement are
                                                       eligible, and workers
                                                          affected by shift of
                                                          production to other
                                                        countries under certain
                                                               conditions

            $80 million annually $30 million annually $220 million annually

                               Health Coverage Tax Credit

    No provision No provision 	Covers 65 percent of participants' health
    insurance premiums for qualified health plans

                            Wage insurance (Alternative TAA)

    No provision No provision 	Subsidizes difference between prior and new
    wages for older workers who obtain reemployment without TAA training

    Source: GAO analysis.

    aThe 40-day time limit under the former NAFTA-TAA program included a
    10-day time limit for states to issue a preliminary eligibility ruling,
    followed by a 30-day time limit for Labor to make a final ruling.

    bPrior to the Reform Act, workers could receive up to 26 weeks of extended
    income support without meeting any training enrollment deadline. However,
    to receive more than 26 weeks of extended income support, workers were
    required to file a training application by the later of 210 days after
    layoff or 210 days after petition certification. This 210-day deadline
    still applies under the current law.

    cSecondary worker eligibility is not included in the statute that
    authorizes the NAFTA-TAA program. When the NAFTA-TAA program was created,
    however, the Clinton administration issued a Statement of Administrative
    Action making workers secondarily affected by trade with Canada or Mexico
    eligible for benefits and services through another federal program.

    Most of the changes included in the act-including the petition-processing
    time limit, the training enrollment deadline, and the expanded group
    eligibility criteria-took effect for petitions filed on or after November
    4, 2002. Congress allowed more time for the implementation of the new
    benefit programs created by the act, giving Labor until August 2003 to
    implement the wage insurance program and certain components of the Health
    Coverage Tax Credit.

    Under the current revised TAA program, eligible participants have access
    to a wider range of benefits and services than before, including

    Training. Participants may receive up to 130 weeks of training, including
    104 weeks of vocational training and 26 weeks of remedial training (e.g.,
    English as a second language or literacy).

    Extended income support. Participants may receive up to 104 weeks of
    extended income support benefits beyond the 26 weeks of UI benefits
    available in most states. This total includes 78 weeks while participants
    are completing vocational training and an additional 26 weeks, if
    necessary, while participants are completing remedial training. The amount
    of extended income support payments in a state is set by statute at

    4

    the state's UI benefit level.

    During their first 26 weeks of extended income support, participants must
    either be enrolled in training, have completed training, or have a waiver
    from this requirement; to qualify for more than 26 weeks of extended
    income support, participants must be enrolled in training. The TAA statute
    lists six reasons why a TAA participant may receive a waiver from the
    training requirement, including that the worker possesses marketable
    skills or that the approved training program is not immediately
    available.5 States must review participants' waivers at least every 30
    days, and if

    4Extended income support payments may be reduced based on other income and
    training allowances.

    5The four other reasons listed in the TAA statute are (1) worker will be
    recalled by former employer, (2) worker is within two years of retirement,
    (3) worker is unable to participate in training because of health
    problems, and (4) approved training is either not available or not
    available at a reasonable cost, or no training funds are available.

    necessary may continue to renew participants' waivers each month
    throughout the initial 26 weeks of extended income support.

    Job search and relocation benefits. Payments are available to help
    participants search for a job in a different geographical area and to
    relocate to a different area to take a job. Participants may receive up to
    a maximum of $1,250 to conduct a job search. The maximum relocation
    benefit includes 90 percent of the participant's relocation expenses plus
    a lump sum payment of up to $1,250.

    Health Coverage Tax Credit. Eligible participants may receive a tax credit
    covering 65 percent of their health insurance premiums for certain health
    insurance plans. To be eligible for the credit, trade-affected workers
    must either be receiving extended income support payments, or they must be
    eligible for extended income support but are still receiving UI payments,
    or they must be recipients of benefits under the new wage insurance
    program. As a result, trade-affected workers who are still receiving UI
    rather than extended income support may register for the HCTC only if they
    are in training, have completed training, or have a waiver from the
    training requirement.6 The Internal Revenue Service (IRS) along with other
    federal agencies administers the tax credit; states are required to
    regularly submit to the IRS lists of potentially eligible TAA
    participants.

    Wage insurance. The wage insurance program-known as the Alternative TAA
    (ATAA) program-is a demonstration project designed for older workers who
    forgo training, obtain reemployment within 26 weeks, but take a pay cut.
    Provided the participant's annual earnings at his or her new job are
    $50,000 or less, the benefit provides 50 percent of the difference between
    the participant's pre- and postlayoff earnings up to a maximum of $10,000
    over 2 years. In order for the workers covered by a petition for TAA
    assistance to qualify for the benefit, the petition must include a
    specific request for ATAA eligibility. The petition must stipulate that a

    6Before the TAA Reform Act took effect, the maximum TAA waiver duration
    was a worker's initial 26 weeks of extended income support. Now, to
    qualify for the HCTC, workers may need waivers while they are still
    receiving UI benefits and before they have even started to collect
    extended income support. Labor has issued guidance to states clarifying
    that the maximum waiver duration may now exceed 26 weeks if a worker needs
    a waiver during the UI eligibility period and continues to need a waiver
    throughout the initial 26 weeks of extended income support.

    significant proportion of the workers covered by the petition are age 50
    and older and that the workers lack easily transferable skills.

    Certification Process and Eligibility Requirements

    The process of enrolling trade-affected workers in the TAA program begins
    when a petition for TAA assistance is filed with Labor on behalf of a
    group of laid-off workers. Petitions may be filed by entities including
    the employer experiencing the layoff, a group of at least three affected
    workers, a union, or the state or local workforce agency. The law requires
    Labor to complete its investigation, and either certify or deny the
    petition, within 40 days after it has received the petition.

    Labor investigates whether a petition meets the requirements for TAA
    certification by taking steps such as contacting company officials,
    surveying a company's customers, and examining aggregate industry data.
    When Labor has certified a petition, it notifies the relevant state, which
    has responsibility for contacting the workers covered by the petition,
    informing them of the benefits available to them, and telling them when
    and where to apply for benefits.

    The TAA statute lays out certain basic requirements that all certified
    petitions must meet, including that a significant proportion of workers
    employed by a company be laid off or threatened with layoff. In addition
    to meeting these basic requirements, a petition must demonstrate that the
    layoff is related to international trade in one of several ways. Table 2
    summarizes these statutory eligibility requirements for the TAA program.

    Table 2: TAA Eligibility Requirements

    Basic requirements (both must be (1) Significant number or proportion of workers
                       in firm or subdivision have been separated

    satisfied)

    or are threatened with separation.

    (2) Affected workers must have been employed by a company that produced an
    article.a

    (1) Increased imports-Imports of articles like or directly competitive
    with articles produced by the firm have increased, the sales and/or
    production of the firm has decreased, and the increase in imports has
    contributed importantly to the decline in sales and/or production and the
    layoff of workers.

                          Additional requirements (one must be

    satisfied) (2) Shift of production-There has been a shift of production by
    the firm to another country, of an article like or directly competitive
    with the article produced by the firm, and either

    o  	the country to which production was shifted is party to a free trade
    agreement with the United States;

    o  	the country to which production was shifted is a beneficiary under the
    Andean Trade Preference Act, the African Growth and Opportunity Act, or
    the Caribbean Basin Economic Recovery Act; or

    o  	there has been or is likely to be an increase in imports of articles
    like or directly competitive with articles produced by the firm.

    (3) Affected secondarily by trade-Workers must meet one of two criteria:

    Supplier secondary workers-Affected firm produces and supplies component
    parts to another firm that has experienced TAA-certified layoffs; parts
    supplied to the certified firm constituted at least 20 percent of the
    affected firm's production, or a loss of business with the certified firm
    contributed importantly to the layoffs at the affected firm.

    Downstream secondary workers-Affected firm performs final assembly or
    finishing work for another firm that has experienced TAA-certified layoffs
    as a result of an increase in imports from or a shift in production to
    Canada or Mexico, and a loss of business with the certified firm
    contributed importantly to the layoffs at the affected firm.

    Source: GAO analysis.

    aLeased workers of companies under contract with a company that produced
    an article also meet this eligibility requirement.

    If Labor denies a petition for TAA assistance, the workers who would have
    been certified under the petition have two options for challenging this
    denial. They may request an administrative reconsideration of the decision
    by Labor. To take this step, workers must cite reasons why the denial is
    erroneous according to the facts, the interpretation of the facts, or the
    law itself, and must mail their request to Labor within 30 days of the
    announcement of the denial. Workers may also appeal to the United States
    Court of International Trade for judicial review of Labor's denial.
    Workers must appeal a denial to the U.S. Court of International Trade
    within 60 days of either the initial denial or a denial following
    administrative reconsideration by Labor. (See app. II for a summary of
    final decisions made by the U.S. Court of International Trade since fiscal
    year 1999 on TAA appeals.)

    Integration with One-Stop System and Workforce Investment Act Program

    Most Workers Are Enrolling in Services Sooner, but Some May Be Negatively
    Affected by the Enrollment Deadline

    The Workforce Investment Act (WIA) of 1998 encouraged greater coordination
    between the TAA program and other federal employment and training
    programs. WIA required the use of a consolidated service delivery
    structure-called the one-stop center system-and mandated that services for
    about 17 categories of federal employment and training programs, including
    TAA, be accessible through this system. These programs must ensure that
    certain services, such as eligibility determination and assessment, are
    available through at least one one-stop center in each local area.7

    The WIA dislocated worker program, also a mandated partner in the onestop
    delivery system, is the federal government's primary employment and
    training program designed for laid-off workers. Funded at almost $1.5
    billion in fiscal year 2004, the dislocated worker program includes two
    components: formula funds that Labor annually distributes to states (about
    $1.2 billion) and the national reserve (about $300 million). Labor uses
    part of the national reserve to award national emergency grants to states,
    based on their requests throughout the year, to help them respond to
    disasters and major layoffs. Labor also uses part of the national reserve
    to award national emergency grants specifically to serve trade-affected
    workers who are also eligible for the TAA program.8

    States report that most trade affected workers are enrolling in services
    sooner than in prior years because of some of the key provisions of the
    TAA Reform Act, but the new training enrollment deadline has had
    unintended consequences for some workers. The new 40-day time limit for
    Labor to process petitions has enabled workers to receive services more
    quickly after being laid off. In addition to setting the new petition
    processing time limit, the act also established a new training enrollment
    deadline for workers, and states reported to us that most workers are now
    enrolling in training sooner as a result of this deadline. However, states
    reported that some workers have been negatively affected by the deadline.

    7For more information on the one-stop center system, see GAO, Workforce
    Investment Act: One-Stop Centers Implemented Strategies to Strengthen
    Services and Partnerships, but More Research and Information Sharing Is
    Needed, GAO-03-725 (Washington, D.C.: June 18, 2003).

    8For more information on the national emergency grants program, see GAO,
    National Emergency Grants: Labor Is Instituting Changes to Improve Award
    Process, but Further Actions Are Required to Expedite Grant Awards and
    Improve Data, GAO-04-496 (Washington, D.C.: April 16, 2004).

    For example, some workers may not enroll in the most appropriate training
    or may miss the deadline and lose extended income support. These problems
    are heightened in the case of large layoffs, some states reported.

    Training Enrollment is Accelerated by Certain Provisions of the Reform Act

    Most workers are enrolling in TAA services sooner than in prior years
    because of two key provisions of the TAA Reform Act, the new
    petitionprocessing time limit and the new training enrollment deadline.
    The Reform Act reduces by one-third, from 60 days to 40 days, the time
    period in which Labor must review a petition. The purpose of the reduced
    time frame is to enable workers to receive benefits and services more
    quickly. In the past, Labor sometimes had difficulty meeting the 60-day
    time limit for petition processing. But it reduced the average processing
    time from 107 days in fiscal year 2002, before the new time limit took
    effect, to 38 days in fiscal year 2003 (see fig. 1). Also, Labor improved
    the percentage of petitions processed in 40 days or less from 17 percent
    in fiscal year 2002 to 62 percent in fiscal year 2003 after the act went
    into effect.9 According to a Labor official, management changes helped the
    agency reduce the average petition-processing time. For example, Labor
    developed a step-by-step timeline for staff, laying out when they must
    complete specific steps in the petition review process in order to meet
    the 40-day requirement. In addition, Labor increased the number of
    petition investigators by adding more contractors. Officials also have
    plans to reengineer the petition reviews in part to expedite the
    process.10

    9The percentage of petitions processed within 40 days in fiscal year 2003
    prior to implementation of the act was 20 percent.

    10The reengineering is still in a planning stage. Draft plans are
    currently under review at a number of levels at Labor. One of the goals of
    the changes is to standardize certain operating procedures to guide
    investigators' work and to ensure consistency among the investigators'
    decisions, at least in areas where this is possible. The new process would
    be computer-rather than paper-based, and would calculate a recommended
    determination decision for the investigator based on qualitative and
    quantitative data entered into a new computer system. However, there would
    still be room for discretion on the part of Labor officials, who could
    override the system's recommendations.

    Figure 1: Average TAA Petition Processing Time, Fiscal Years 1999-2003

    Days

    120

    100

    80

    60

    40

    20

    0

                             1999 2000 2001 2002 2003 2003

    (pre-(post

    reform act) reform act)

    Fiscal years

    Source: Department of Labor.

    Workers are also enrolling in services sooner because of the new training
    enrollment deadline.11 The deadline requires workers to be enrolled in
    training or have a training waiver by the later of two dates: either 16
    weeks after being laid off or 8 weeks after the petition is certified.
    Workers who fail to meet this deadline become ineligible to receive
    extended income support benefits. Forty-one of the 50 states surveyed
    reported that workers are now enrolling in training sooner as a result of
    this deadline. Most states also reported that the deadline accelerates the
    processes of determining eligibility and notifying and assessing workers.
    Prior to the TAA Reform Act, workers were required to be in training or
    have a training waiver in order to start collecting extended income
    support benefits after exhausting their UI eligibility-26 weeks in most
    states. Now, because of the new deadline, workers may be required to
    either be in

    11The new deadline is in addition to the 210-day deadline that predates
    the TAA Reform Act and is still in effect. The 210-day deadline is no
    longer an issue for participants who have enrolled in training within the
    new deadline, which they must meet before the 210-day deadline.

    training or possess a training waiver while still collecting regular UI
    benefits.

    Training Enrollment Deadline May Have Unintended Consequences for Some
    Workers

    Although the new training enrollment deadline gets most workers into
    training sooner, it has also had unintended consequences. For example,
    officials from the majority of states reported that as a result of the
    training enrollment deadline, some workers might not be enrolling in the
    most appropriate training because less time is available to assess
    workers' training needs. In order to meet the training enrollment
    deadline, officials may feel pressured to assess workers more quickly.
    State officials in some of the states we visited told us that some TAA
    program participants are not able to carefully select training programs
    because of rushed assessments.

    Another negative effect of the new time limit is that some workers miss
    the deadline and lose their eligibility for extended income support.
    Thirtysix states report that workers at least occasionally miss the
    deadline and consequently lose their eligibility for extended income
    support beyond what is available through UI benefits. A local official
    from North Carolina said that some certified workers in the local area who
    would like to enter the TAA program miss the deadline, either because they
    do not come in for TAA enrollment until after the deadline has passed or
    they come into the one-stop before the deadline but do not leave
    themselves enough time to enroll in training or obtain a training waiver.
    For example, this official told us that in the case of a recent layoff of
    120 workers, 20 workers did not come into the one-stop until after their
    deadline had passed. Other officials in North Carolina said that workers
    who lose their eligibility for extended income support generally are not
    allowed to enter training, because state and local officials are concerned
    that with no other source of income, workers will drop out of training.

    The ability of workers to meet the new training enrollment deadline may be
    negatively affected by delays in program operations. These delays, as well
    as delays by workers themselves in registering for TAA services, may
    contribute to some workers having insufficient time for an assessment of
    their training needs or missing the training enrollment deadline. One of
    the program operation delays occurs as a result of the time it takes Labor
    to notify states about certification decisions. After Labor has certified
    a petition, it waits several days before informing the state, to give
    relevant members of Congress advance notification. Twenty-one states
    reported that the time it takes Labor to notify states about
    certifications at least occasionally causes workers to miss the deadline.
    Another delay may

    occur as a result of the time it takes for states to receive lists of
    affected workers from companies. After a state receives notification from
    Labor of a certification, it obtains from the company a list of the
    workers affected by the certified layoff and sends a letter to these
    workers informing them of their potential eligibility for TAA. Sometimes
    companies are unable or unwilling to provide these lists in a timely
    manner. In these cases, some workers miss the deadline because they don't
    receive the notification soon enough or may have insufficient time for an
    assessment of their training needs. Twenty-seven states reported that the
    time it takes states to receive the list of affected workers at least
    occasionally causes workers to miss the deadline. In addition to these
    program delays, laid-off workers may have insufficient time for assessment
    or miss their enrollment deadline because of their own delays in seeking
    assistance. Some state and local officials in the sites we visited told us
    it often takes time for dislocated workers to process the emotional shock
    of being laid off and accept the need for assistance, which may cause them
    to miss the training enrollment deadline. Thirty-seven states reported on
    our survey that workers' delays in reporting to one-stop centers for
    counseling at least occasionally cause them to miss the deadline and lose
    their eligibility for extended income support.

    Figure 2 illustrates the program delays, using the timeline of an actual
    layoff that began in December 2002 in one of the states we visited. In
    this example, Labor notified the state 6 days after certifying the
    petition (step 5). Almost another month elapsed before the state received
    a complete list of affected workers from the company (step 6). As a
    result, by the time the state mailed notification letters, affected
    workers had, at most, 3 weeks to register for services and enroll in
    training or receive a training waiver.

    Figure 2: Example of How TAA Program Delays May Leave Workers Less Time to
                                   Enroll in Training

    Sources: GAO analysis; Copyright (c) Corel Corp. All rights reserved, Art
    Explosion.

    The delays described above are heightened in the case of large layoffs,
    because the volume of workers who need services within a very short time
    period overwhelms the program's capacity to provide workers with
    appropriate assessment. Processing a large number of affected workers
    quickly may be especially challenging for program administrators in rural
    areas, which do not have many staff to perform case management. Ten states
    reported that processing large layoffs often or very often causes workers
    to miss the training enrollment deadline, and an additional 9 states said
    processing large layoffs occasionally causes workers to miss the deadline.
    For example, Texas officials told us that when dealing with

    New Health Care Provision Has Caused Increased Administrative Workload for
    Some Officials, While Other Provisions Have Been Difficult to Fully
    Implement

    very large layoffs, states may need more time to assess and process
    workers than is allowed by the new training enrollment deadline. Officials
    in a rural area in Maine that experienced a large trade-related layoff
    said that it was challenging to get all affected workers to register for
    training within the deadline. This area hired additional workers to
    perform outreach to affected workers and encourage them to register for
    services.

    In an effort to prevent workers from missing the new deadline and losing
    eligibility for extended income support, some officials are issuing
    training waivers to workers who reach their deadlines without having
    enrolled in a training program.12 For example, officials in Maine reported
    that during a large layoff in a rural area, local staff granted mass
    waivers to workers so they would meet the deadline and preserve their
    extended income support benefits. According to a Maine official, staff in
    this rural area could not provide appropriate assessment within the
    training enrollment deadline to all affected workers, so waivers were
    necessary to prevent workers from losing eligibility for extended income
    support.

    Officials in some states and local areas reported an increased
    administrative workload associated with issuing more training waivers,
    primarily to accelerate Health Coverage Tax Credit enrollment, and noted
    that some other new provisions in the TAA Reform Act were difficult to
    fully implement. State officials are issuing more training waivers than in
    the past, in order to ensure that workers are able to access the HCTC
    after being laid off, and some officials told us that this increase in
    waivers has caused a significant administrative workload. States also
    reported that the provision that extends TAA eligibility to secondary
    workers and the one that provides a wage insurance benefit have been
    challenging to fully implement.

    12The previous NAFTA-TAA program had a training enrollment deadline and
    did not allow waivers. Officials from one state we visited always
    encouraged individuals to enroll in the regular TAA program rather than
    the NAFTA-TAA program if they could-because these state officials believed
    that the deadline was so problematic. The deadline was expanded to cover
    the consolidated TAA program in an effort to focus participants' attention
    on training.

    Most States Are Issuing More Waivers to Enable Workers to Receive HCTC

    Almost all states reported issuing an increased number of training waivers
    since the TAA Reform Act took effect. Three states reported in our survey
    that before the Reform Act took effect they issued training waivers to
    over 50 percent of TAA-eligible workers. Since the Reform Act took effect,
    29 states have issued waivers to over 50 percent of eligible workers, and
    15 of these issued waivers to over 75 percent of eligible workers. Labor's
    national data indicate that overall states issued over 40 percent more
    training waivers in fiscal year 2003 than in 2002 (see fig. 3).

    Figure 3: Increase in Individuals Receiving Training Waivers, Fiscal Years
    1999-2003

                                   Individuals 40,000

                                         35,000

                                         30,233

                                         30,000

                                         25,000

                                         20,000

                                         15,000

                                         10,000

                                        5,000 0

    1999 2000 2001 2002 2003 Fiscal years

                              Source: Department of Labor.

    Most states reported to us that the reason they have issued more training
    waivers is to ensure that workers are eligible for the HCTC.13
    Thirty-eight states reported on our survey that to a great or very great
    extent, they have issued more training waivers since the TAA Reform Act
    took effect in order to allow workers to qualify for the HCTC. To activate
    eligibility for the HCTC, even while they are still receiving UI benefits,
    workers must meet the eligibility criteria for extended income support,
    including the requirement that they must be in training, have completed
    training or have

    13In an upcoming report we will be providing a more in-depth analysis of
    the implementation of the HCTC provision of the TAA Reform Act.

    a training waiver. Officials in all the states we visited told us that
    many state and local officials are issuing waivers so that workers can
    quickly become eligible for the HCTC. Officials in two of these states
    noted that workers need waivers to enroll in the HCTC even before they
    reach their training enrollment deadline. Furthermore, officials in two
    other states told us that workers are receiving waivers to allow them to
    enroll in the HCTC even before these workers exhaust their UI benefits.

    According to officials in four of the five states we visited, issuing
    waivers to enable workers to qualify for the HCTC causes a significant
    administrative workload. The administrative workload associated with
    issuing training waivers is considerable, in part because training waivers
    have to be issued individually and must be reviewed monthly. Officials in
    one state noted that the workload associated with issuing waivers is
    especially burdensome during a very large layoff, when a large volume of
    workers must be processed. Furthermore, the increased administrative
    workload associated with issuing and reviewing training waivers may be
    compounded for states that choose to issue extensions to workers whose
    waivers expire before they exhaust their UI benefits.

    Despite officials' efforts to ensure that workers are eligible for the
    HCTC, the actual rate of HCTC participation is difficult to determine
    because reliable data on the total number of individuals actually eligible
    for HCTC are not available. For example, according to an October 2003
    survey for the IRS, some of those identified as potentially eligible for,
    but not enrolled in HCTC, were in fact ineligible because they had other
    coverage, such as Medicare or through a spouse's employer, that made them
    ineligible for the tax credit. Although there are no reliable national
    data on the HCTC participation rate, officials in states we visited told
    us that workers might not be taking advantage of the HCTC because eligible
    individuals lack affordable health care insurance options from which to
    choose. Furthermore, officials in one state also noted that some workers
    may not take advantage of the HCTC because they cannot afford to pay their
    entire health care insurance premium while they wait to enroll in the
    HCTC.

    States Reported States reported having difficulties with the
    implementation of two other Difficulties Implementing reform
    provisions-the provision that extends TAA eligibility to an Other New
    Provisions additional category of secondary workers and the new wage
    insurance

    provision.

    Secondary Workers Provision

    The TAA Reform Act extended eligibility to a new category of secondary
    workers-workers who supply parts to any company directly affected by
    trade, not just those affected by trade with Canada or Mexico, as was true
    under the previous NAFTA-TAA program-and the number of secondary workers
    covered by certified TAA petitions increased somewhat in fiscal year
    2003.14 However, it is unclear whether the number of secondary workers
    certified after the TAA Reform Act represents a small or large proportion
    of all secondary workers who are now potentially eligible for the TAA
    program, particularly because most states reported difficulties in
    identifying secondary workers and only some have increased their efforts
    to do so. According to Labor's data, the estimated number of secondarily
    affected workers covered by approved TAA petitions increased from about
    3,600 workers in fiscal year 2002, before the Reform Act took effect, to
    about 4,700 workers in fiscal year 2003 (see fig. 4).

    14The TAA Reform Act expanded eligibility specifically to secondary
    workers who supply component parts to any firm directly affected by trade.
    However, secondary workers who finish a product are only eligible for TAA
    services if they finished a product produced by a firm directly affected
    by trade with either Canada or Mexico.

    Figure 4: Estimated Number of TAA-Certified Secondary Workers, Fiscal
    Years 1999-2003

    Secondary workers 5,000

                                         4,671

    4,500

    4,000

    3,500

    3,000

    2,500

    2,000

    1,500

    1,000

    500

    0 1999 2000 2001 2002 2003 Fiscal years

    Source: Department of Labor.

    Note: The data used for this figure are estimates of secondary workers
    certified as eligible for TAA, based on estimates of the number of
    affected workers submitted by companies at the time TAA petitions are
    filed with the Department of Labor. At the time petitions are submitted,
    companies may not know exactly how many workers will be affected. We use
    these estimates because the Department of Labor does not collect data on
    the number of workers ultimately certified. Furthermore, because the TAA
    Reform Act took effect for workers certified under petitions filed on or
    after November 4, 2002, data for fiscal year 2003 may include some
    secondary workers who were certified from October 1, 2002 to November 3,
    2002 under the previous eligibility criteria.

    Secondary workers have also increased as a proportion of all TAAcertified
    workers, from about 1 percent in fiscal year 2002 to about 2 percent in
    fiscal year 2003 (see fig. 5). However, the total number of secondary
    workers who are potentially eligible for the TAA program under the new
    eligibility guidelines is not known. As a result, it is unclear what
    proportion of secondary workers potentially eligible for services have
    been certified under the Reform Act.

    Figure 5: Estimated Proportion of TAA-Certified Workers Who Are Secondary
    Workers, Fiscal Years 1999-2003

    Percentage of TAA-certified workers

    2.5

                                          2.3

    2.0

    1.5

    1.0

    0.5

    0 1999 2000 2001 2002 2003 Fiscal years

    Source: Department of Labor.

    Note: These percentages are percentages of all workers certified under
    both the TAA and NAFTA-TAA programs, although prior to the TAA Reform Act,
    secondary workers were eligible for services only under the NAFTA-TAA
    program. Also, the data used for this figure are estimates of secondary
    workers and total workers certified as eligible for TAA, based on
    estimates of the number of affected workers submitted by companies at the
    time TAA petitions are filed with the Department of Labor. At the time
    petitions are submitted, companies may not know exactly how many workers
    will be affected. We use these estimates because the Department of Labor
    does not collect data on the number of workers ultimately certified.

    States reported facing challenges in identifying secondary workers. More
    than half of all states reported having at least some difficulty
    identifying secondarily affected workers. States reported using a range of
    methods to identify secondary workers eligible for the TAA program. For
    example, according to our survey, states are most likely to identify
    secondary workers by asking trade-affected employers for lists of their
    suppliers or finishers or by asking employers if their layoff was as a
    result of losing business from other firms that may have been trade
    affected. However, officials in most of the states we visited told us that
    some trade-affected employers are reluctant or find it difficult to
    provide the names of suppliers that may also be affected by their shutdown
    or reduced production. For example, officials in North Carolina told us
    that employers are sometimes hesitant to share this information because
    they do not want their suppliers to know that they are having financial

                                Wage Insurance Provision

    difficulties. Also, officials in Maine told us that smaller employers may
    find it difficult to provide information on their suppliers or finishers
    because they do not have this information readily available. In addition,
    some trade-affected employers may no longer be in operation or may be
    difficult to contact. None of the state officials we talked with had
    developed procedures to identify workers in other states who are
    secondarily affected by layoffs in their own states-so workers in one
    state who are secondarily affected by a trade-related layoff in another
    state might never learn they may qualify for TAA services. Labor has also
    not developed a strategy to assist states in identifying workers who are
    secondarily affected by a layoff in a different state.

    More states are making significant efforts to identify secondary workers
    now than in the past, but this number remains relatively small. While only
    5 states reported on our survey that they sought to identify eligible
    secondary workers to a great extent prior to the TAA Reform Act, 13 states
    reported that since the Reform Act took effect, they have sought to
    identify secondary workers to a great extent.

    Officials in all of the states we visited told us either that workers have
    expressed an interest in or they expect workers to be interested in the
    new Alternative TAA program-a 5-year demonstration project providing a
    wage insurance subsidy to older workers who find reemployment quickly but
    at a lower wage. Most states also reported having difficulty implementing
    this new program. Thirty-eight states reported that they had at least some
    difficulty implementing the new wage insurance provision. One of the most
    commonly reported problems was the difficulty of developing new payment
    systems for issuing workers' monthly checks. For example, an official in
    one state we visited told us that the state's existing UI payment system,
    which is used to issue payments to wage insurance beneficiaries, could not
    be readily modified to issue payments to wage insurance beneficiaries.
    Furthermore, an official from another state told us the state's current UI
    payment system program prohibits it from issuing checks to individuals
    identified in the system as employed. As a result, the state uses an
    off-line payment system to issue wage insurance checks. States also
    reported that a lack of guidance from Labor on this new provision hampered
    their efforts to implement it. Labor did not provide states with formal
    guidance on how to implement the provision

    until August 6, 2003, the same day that workers were first able to apply
    for the wage insurance program.15

    In addition, some officials and employers found the wage insurance
    eligibility criteria problematic. The TAA statute clearly indicates that
    for a group of workers to be certified as eligible for the wage insurance
    program, the workers must lack easily transferable skills and a
    significant number of the workers must be age 50 or over. Petitioners must
    apply for wage insurance coverage when the petition is submitted to Labor,
    and as part of the investigation process, employers must confirm that
    their workers lack easily transferable job skills. The TAA statute also
    clearly states that to be individually eligible for wage insurance
    payments, workers must obtain reemployment within 26 weeks of layoff and
    may not receive TAA-funded training. According to Labor, it has been
    difficult to implement the wage insurance provision because of eligibility
    criteria that include the requirement that workers must lack easily
    transferable job skills. As a result of these eligibility requirements,
    according to Labor, the only workers who are likely to qualify for
    payments are those who take low-skill jobs at significant pay cuts, and
    for whom the $10,000 maximum subsidy falls far short of compensating them
    for their wage loss. On the other hand, some workers who have some
    transferable skills, can find jobs paying closer to their prelayoff wage,
    and need only temporary financial assistance may be denied access to the
    program. According to Labor, most denied wage insurance requests result
    from failure to meet this eligibility requirement. Officials in one state
    and employers in two other states also found the wage insurance
    eligibility criteria problematic. For example, officials in one state we
    visited told us that the eligibility criteria requiring workers to lack
    transferable job skills yet still find employment exclude workers who can
    find reemployment quickly but at lower wages, and who therefore could be
    well served by a wage insurance benefit. In another case, an employer told
    us that several administrative workers were laid off because of a plant
    closure and were able to find new jobs that required the same job skills,
    but at a much lower pay level because they no longer had job seniority.
    These workers could have benefited from the program, according to their
    employer, but were denied the subsidy because they had transferable
    skills. In addition, a state official we visited reported that an employer
    found that it was difficult to assess the skill levels of an entire

    15Labor was required to establish the wage insurance program by no later
    than August 6, 2003, one year after the enactment of the TAA Reform Act.

    group of affected workers who often possess a diverse set of skills and
    skill levels.

    At this stage of implementation, it is unclear how many workers will take
    advantage of the wage insurance benefit. Most states did not fully
    implement their wage insurance programs in calendar year 2003, and some do
    not expect to have their systems implemented until September 2004. Only 19
    states implemented their wage insurance programs during 2003; most of the
    remaining states have implemented or expect to implement their programs
    during 2004 (see fig. 6). In addition, it is unknown how many workers are
    currently utilizing wage insurance benefits. Of 1,962 TAA petitions
    approved during fiscal year 2003, 60 included approved requests for the
    wage insurance program16-but at the time we conducted our data collection,
    Labor's Division of Trade Adjustment Assistance had no data on the number
    of older workers enrolled in the wage insurance program. Labor is now
    collecting data on the number of workers enrolled in the wage insurance
    program and will assess the implementation issues associated with the wage
    insurance provision.

    16During August and September 2003, the only months of fiscal year 2003 in
    which petitioners had the option to apply for wage insurance benefits,
    there were 223 approved TAA petitions. Over 25 percent of the approved
    petitions during this time period, therefore, included approved requests
    for wage insurance benefits. There were 86 requests for wage insurance
    benefits submitted on TAA petitions during fiscal year 2003.

    Figure 6: Most States Will Have Their Wage Insurance Programs Operational
    by Mid-2004

    States

    50

                                           47

    45

    40

    35

    30

    25

    20

    15

    10

    5

    0 July-Oct.-Jan.-April-July-Sept. Dec. Mar. June Sept.

    2003 2004

    Source: GAO survey of state workforce agencies.

    Note: This figure is based on responses from 47 states. Three states were
    unable to provide this information.

    Demand for TAA services has increased in recent years, and states have
    responded by using other federal resources to supplement available TAA
    funds. States have struggled to meet the higher demand with the TAA
    resources available to them, and some states have temporarily discontinued
    enrolling TAA-eligible workers in training, partly because of funding
    shortfalls. A perception that all TAA-eligible workers are entitled to
    training has contributed to problems with managing TAA training funds.
    However, Labor has encouraged states to take various steps to manage their
    limited TAA resources more effectively and to avoid treating training as
    the best option for all participants, and many states have taken steps to
    control their TAA training expenditures through efforts such as a more
    careful screening of workers' training needs. Most states' primary
    response to the increased demand for training has been to supplement their
    TAA funds with other federal resources, although some barriers remain to
    the integration of TAA with other federal programs.

    Demand for TAA Training Has Increased, and States Have Responded by
    Supplementing Limited TAA Funds with Other Federal Resources

    Demand for TAA Services Increased during a Period of Manufacturing Job
    Loss, and States Have Struggled to Meet This Demand with Available TAA
    Funds

    Demand for TAA assistance increased substantially between fiscal years
    2001 and 2002, as measured by the estimated number of workers certified
    and the number of workers entering training.17 After increasing in fiscal
    year 2002, the number of workers certified and the number of workers
    entering training did not experience a further substantial increase in
    fiscal year 2003. According to Labor's data, an estimated 270,000 workers
    were certified as eligible for TAA services in fiscal year 2002, a roughly
    65 percent increase from 2001 and the largest number in any year since at
    least fiscal year 1995. The estimated number of certified workers then
    fell to about 200,000 in fiscal year 2003 (see fig. 7).

    Figure 7: Estimated Number of TAA-Certified Workers, Fiscal Years
    1999-2003

    Workers

    300,000

    250,000

    200,000

    150,000

    100,000

    50,000

    0

    1999 2000 2001 2002

    Fiscal year

    Source: Department of Labor.

    Note: The data used for this figure are estimates of the number of workers
    certified as eligible for TAA, based on estimates of the number of
    affected workers submitted by companies at the time TAA petitions are
    filed with the Department of Labor. At the time petitions are submitted,
    companies may not know exactly how many workers will be affected. We use
    these estimates because the Department of Labor does not collect data on
    the number of workers ultimately certified. These estimates include
    workers certified as eligible under either the TAA or the NAFTA-TAA
    program, but workers certified under both programs are counted only once
    in our analysis. This method differs from the one used in an earlier
    report.

    17The number of workers certified as potentially eligible and the numbers
    receiving specific benefits and services include workers served under the
    TAA and NAFTA-TAA programs.

    Similarly, the number of eligible workers entering training annually
    increased in fiscal year 2002 to about 45,000, a 51 percent increase over
    fiscal year 2001 (see fig. 8).18

    Figure 8: Number of Workers Entering TAA Training, Fiscal Years 1999-2003

    Workers

    60,000

    50,000

    40,000

    30,000

    20,000

    10,000

    0 1999 2000 2001 2002 2003 Fiscal year

    Source: Department of Labor.

    Note: These data are underestimates of the total numbers of workers
    entering training, because some states did not capture all workers
    entering training in the data they submitted to Labor.

    The increase in program demand in fiscal year 2002 coincided with a sharp
    decline in manufacturing employment that preceded the implementation of
    the TAA Reform Act of 2002. After having been relatively steady since
    1995, manufacturing employment began to decline in 1999, and the steepest
    decline occurred between fiscal years 2001 and 2002-from about 16.8
    million to about 15.5 million employees, almost an 8 percent drop (see
    fig. 9). According to the Congressional Budget Office, increased
    competition from imports is at least partially responsible for this
    decline in manufacturing employment, coupled with the recession in 2001
    and other factors such as productivity improvements and reduced demand for
    manufactured goods. The increase in demand for TAA services may be

    18Other measures of demand also rose in fiscal year 2002, including the
    number of workers who started collecting extended income support benefits
    and the number who received job search allowances (see app. III).

    more directly linked to the decline in manufacturing employment, insofar
    as it was related to international trade, than to the TAA Reform Act of
    2002. While demand for TAA services increased substantially during fiscal
    year 2002, most provisions of the TAA Reform Act of 2002 did not take
    effect until early in fiscal year 2003.

    Figure 9: Manufacturing Employment, Fiscal Years 1995-2003

    Employees 18,000,000

    17,000,000

    16,000,000

    15,000,000

    14,000,000

    0

    1995 1996 1997 1998 1999 2000 2001 2002 2003 Fiscal year

    Source: Bureau of Labor Statistics.

    Many states report that available TAA training funds are not sufficient to
    meet the increased demand for services. Most states anticipate that in
    fiscal year 2004 they will have difficulties meeting the demand for TAA
    training with TAA training funds alone-even though the amount of funds
    available nationally for TAA training was doubled from $110 million to
    $220 million between fiscal years 2002 and 2003. According to our survey,
    35 states expect that available TAA training funds for fiscal year 2004
    will not cover the amount they will obligate and spend for TAA-eligible
    workers during the fiscal year. Eighteen states estimate this gap at over
    $1 million.

    A factor that has contributed to the difficulty states face in meeting
    increased demand is the perception that training is an entitlement for
    TAAeligible workers. According to the TAA statute, a TAA-eligible worker
    is entitled to training if six training approval criteria are met,
    including the requirements that there is no suitable employment available
    for the worker

    and that the training is available at a reasonable cost.19 These criteria
    give states some discretion in determining which TAA-eligible workers
    should receive training. However, officials in four of the five states we
    visited said training has historically been viewed as an entitlement for
    the majority of TAA-eligible workers and that this perception persists
    among some case managers and unions. For example, an official in one state
    said some case managers responsible for the TAA program tend to approve
    training whenever a certified worker requests it, because they think these
    workers are entitled to training. This view may complicate efforts to
    manage limited TAA training funds. Two officials we talked with said
    training is seen as an entitlement because suitable employment has been
    defined through regulation as employment paying at least 80 percent of a
    worker's prelayoff wages. Most TAA-eligible workers, according to one of
    these officials, have high prelayoff wages but job skills that don't
    readily transfer to a new job, so they would need training to obtain
    employment paying 80 percent of their prelayoff wages.

    Partly in response to the limited TAA training funds available to meet the
    demand for training, some states have temporarily discontinued enrolling
    TAA-eligible workers in training for periods of time. Nineteen states
    reported that, at some point between fiscal years 2001 and 2003, they
    temporarily discontinued enrolling TAA-eligible workers in training
    because they lacked adequate TAA training funds.20 Six states reported
    that they have taken this step during fiscal year 2004. These periods of
    enrollment deferral may make it more difficult for workers to complete
    their training programs. Pennsylvania, for example, stopped enrolling
    newly eligible workers in training for a 3-month period during fiscal year
    2003 following more than a year of unusually high demand for TAA services.
    Workers seeking training during this period were given training waivers so
    they could continue to collect extended income support. When the state
    received additional TAA training funds from Labor, it encouraged these
    workers to register for training and many did so. However, those workers
    who enrolled in training had used up 3 months of extended

    19The other four criteria are (1) the worker would benefit from the
    training, (2) there is a reasonable expectation of employment following
    the training, (3) the training is reasonably available from a public or
    private provider, and (4) the worker is qualified to undertake and
    complete the training.

    20One Labor official and one state official we talked with also mentioned
    other factors that may have contributed to periods of training enrollment
    deferral, citing, for example, occasional delays prior to fiscal year 2004
    in Labor's response to states' requests for TAA training funds.

    income support payments while waiting for training funds to become
    available. As a result, they had fewer months of income support remaining
    to complete their training programs, and officials are concerned that they
    could be forced to drop out of their programs when they run out of
    extended income support payments.

    Since 2002, Labor has taken several steps intended to help states better
    manage their TAA training resources at a time of increased demand. Labor
    has encouraged states to put more emphasis on up-front assessment of
    workers' employment and training needs, so they can provide workers with
    job search assistance rather than long-term training when appropriate.
    Also, Labor has changed its approach to distributing TAA training funds
    among the states. In the past, states requested TAA training funds from
    Labor throughout the fiscal year as their needs arose. In fiscal year
    2004, for the first time, Labor allocated a portion of TAA training funds
    among the states according to a formula. It allocated 75 percent of
    available TAA training funds among the states at the beginning of the
    fiscal year, based on states' historical training allocations and
    historical number of participants,21 and held the remaining 25 percent in
    reserve to help states that experience large and unanticipated
    trade-related layoffs. Labor's goals in developing this new allocation
    approach were to give states a better idea of the training resources
    available to them, so they could more effectively plan for and budget
    their training expenditures, and to ensure that funds are distributed
    among states according to their needs. (App. IV contains information on
    the training funds received by each state in fiscal years 2001 through
    2003, and each state's fiscal year 2004 formula allocation.) Finally,
    Labor has encouraged states to obligate the TAA training funds they
    receive in a fiscal year only for training costs that will actually be
    incurred during that fiscal year, rather than for the full costs of
    training programs that span multiple fiscal years. One of the main goals
    of this effort, according to Labor officials, is to discourage states from
    tying up current year funds for future training costs that may not be
    incurred if workers drop out of training.

    Many states are now making efforts to more carefully manage their TAA
    training expenditures. More than half the states have developed new

    21For fiscal year 2004, Labor allocated 80 percent of available training
    funds based on the average amount of funds allocated to states for TAA
    training in the previous 3 fiscal years, and 20 percent based on the
    average number of program participants in each state for the previous 3
    years for which complete data are available. Labor plans in future years
    to include in the formula factors related to states' performance on
    program outcomes.

    guidelines for enrolling participants since fiscal year 2001, including 21
    that have taken this step during fiscal year 2004. Four of the five states
    we visited told us that they are making an effort to have case managers
    more carefully assess whether training is the most appropriate strategy
    for each TAA-eligible worker. Also, many states report that since 2001
    they have tried to control the amount of training funds expended per
    TAAeligible worker. Almost half the states have tried to control training
    costs by enrolling TAA-eligible workers in shorter-term training. States
    are also reducing the maximum amount that may be spent on training for
    each TAA-eligible worker. According to our survey, 37 states have
    established a cost limit on the amount that may be spent on training for
    each TAA participant, ranging from $3,500 to $25,000 (see fig. 10). Nine
    of these states reduced their cost limits between fiscal years 2001 and
    2003 as a way to manage their TAA training funds, and 6 states have taken
    this step during fiscal year 2004. For example, Pennsylvania reduced its
    cost limit per TAA participant from $20,000 to $16,000 during fiscal year
    2003, as part of its efforts to control costs.

    Figure 10: 37 States Place Limits on Training Costs per TAA Participant

    Number of states 20

    15

    15

    10

    5

    0

    Under $10,000 $15,000 $20,000 $10,000 to to or $14,999 $19,999 higher

    Limit

    Source: GAO survey of state workforce agencies.

    About half the states reported that since 2001 they have changed their
    approach to obligating TAA training funds and are now obligating current
    year funds only for current year training costs. Twenty-three states
    reported that they have taken this step in fiscal year 2004 alone. (See
    fig. 11 for the number of states that have taken the steps discussed
    above. See app. V for a detailed listing of steps taken by each state.)

    Figure 11: States Have Taken a Variety of Steps in Response to Limited TAA
    Training Funds

    States 50

    45

    40

    35

    30

    25

                                        23 22 21

    20

    15

    10 5

    0

    waiting list for traininglimit per participant forenrolling
    participantsonly for current year costsshorter-term training

    Placed participants on temporary

    Took step at some point in fiscal years 2001-2003

    Took step in fiscal year 2004

    Source: GAO survey of state workforce agencies.

    Note: States could have taken a particular step both at some point between
    fiscal years 2001 and 2003 and during fiscal year 2004.

    States Are Using Other Federal Funds to Supplement Case Management and
    Training for TAA-Eligible Workers

    Use of Other Federal Resources to Supplement TAA Case Management Funds

    In addition to making changes in how they manage their TAA funds, states
    have also been turning to other federal resources to help provide case
    management and training to TAA-eligible workers. Labor has encouraged
    states to combine TAA with other federal programs to serve TAA-eligible
    workers, through written guidance and a series of regional forums for
    state officials.22 In response to limited TAA funds, almost all states-46-
    reported on our survey that they have been co-enrolling TAA participants
    in the WIA program for job search or training since 2001. States are also
    increasingly using WIA national emergency grant funds to provide services,
    including training and case management, to trade-affected workers.23 The
    amount of national emergency grant funds awarded annually to states
    specifically to serve TAA-eligible workers more than doubled from about
    $50 million per year in fiscal years 2001 and 2002 to about $120 million
    in fiscal year 2003.24

    States use several federal funding sources to support case management for
    TAA-eligible workers, and increasingly are relying on WIA resources for
    this purpose. States may use their TAA administrative funds-15 percent of
    their TAA training formula allocations-for case management, but most
    states we visited said TAA administrative funds were not their main
    funding source for TAA case management. Only 12 states reported that they
    distribute TAA administrative funds to local areas to support case
    managers working directly with TAA participants. In most of the states we
    visited, officials told us that state Employment Service (ES) staff
    members have historically been the primary providers of direct case
    management services to trade-affected workers, and most states also told
    us that Wagner-Peyser grant funds have been the main funding source for
    these services.25 Several states told us that in recent years, they have
    increased

    22For example, one model of coordination included in Labor's guidance is
    to use WIA funds for case management and TAA funds for training and income
    support.

    23Labor awards national emergency grant funds to states to help them
    respond to major layoffs.

    24According to Labor, the amount of national emergency grant funds awarded
    specifically to serve trade-affected workers was about $80 million in
    program year 2001, about $150 million in program year 2002, and about $90
    million in program year 2003. Program years run from July to June; for
    example, while fiscal year 2003 ran from October 1, 2002 to September 30,
    2003, program year 2003 ran from July 1, 2003 to June 30, 2004.

    25The ES is a nationwide system of public employment offices established
    by the Wagner-Peyser Act. ES staff provide services to job seekers and
    employers, including job search assistance, job referral, and job
    placement assistance. Federal Wagner-Peyser funds are allocated to each
    state to help support its ES staff.

    their reliance on WIA to provide case management to TAA-eligible workers,
    and in the majority of states nationwide WIA and ES staff are now the
    primary providers of case management services including assessment of
    workers' interests and skills, recommendation of training programs, and
    follow-up with workers during training. Officials in two states said they
    are relying on WIA to support case management for TAAeligible workers
    partly in order to serve the increased number of workers eligible for the
    program. Officials in two other states said they are using WIA case
    managers to help meet their goal of more carefully assessing TAA-eligible
    workers' training needs, because these case managers have experience with
    this type of assessment.

    Most states are combining Wagner-Peyser funds, TAA administrative funds,
    and different categories of WIA funds to support TAA case management (see
    fig. 12).26 Most states-38-reported using three or more different funding
    sources for TAA case management. Just four states reported that they
    relied exclusively on a single funding source; two said they used only
    Wagner-Peyser funds, and two said they used only TAA administrative funds.

    26In addition to WIA local formula funds and WIA national emergency grant
    funds, states also reported using WIA rapid response and statewide
    activities funds to support case management for TAA-eligible workers.
    States may reserve up to 25 percent of their WIA dislocated worker
    allocations to provide rapid response services intended to help laid-off
    workers transition quickly to new employment. States may also reserve up
    to 15 percent of their WIA allocations to provide a variety of other
    statewide activities for workers.

    Figure 12: States Use Various Funding Sources for TAA Case Management

    States

    40

    Wagner-Peyser TAA

    administrative WIA localformula

                    emergency grant responseWIA statewideactivities

    Funding sources

    Source: GAO survey of state workforce agencies.

    Officials from several local areas we visited said that within their local
    areas, they are increasingly taking the same approach to serving all
    dislocated workers, regardless of the programs in which they are
    participating. In a local area in Maine, for example, all case managers at
    the one-stop center-whether state ES or local WIA staff-have been
    cross-trained on the TAA and WIA programs. Any case manager can serve any
    dislocated worker, and dislocated workers receive the same case management
    services regardless of whether they are enrolled in the TAA program or the
    WIA dislocated worker program. A one-stop center in North Carolina that we
    visited supports its TAA specialist, an ES staff member, through several
    funding sources, including Wagner-Peyser grant funds, local WIA funds,
    national emergency grant funds, and TAA administrative funds. This staff
    member serves the TAA-eligible workers who come to the one-stop center, as
    well as some dislocated workers who are enrolled in WIA, and provides each
    one with similar case management services. In another local area in
    Pennsylvania, trade-affected workers initially meet with an ES staff
    member who determines their TAA eligibility and provides an orientation to
    the benefits available through the

    Use of WIA to Supplement TAA Training Funds

    TAA program. They complete a set of case management activities, including
    assessment and development of a training plan, which is provided by a
    combination of ES and local WIA staff members and is required of all
    dislocated workers.

    Two local areas we visited that had recently experienced large
    traderelated layoffs relied on WIA's national emergency grant funds to
    support case management services for TAA-eligible workers. A local area in
    North Carolina, for example, established a temporary one-stop center in a
    plant that was shut down as a result of trade, and used a portion of its
    national emergency grant funds to hire temporary ES staff members to help
    operate this center. A local area in Maine used some of its national
    emergency grant funds to temporarily hire peer support workers from among
    the workers affected by the trade-related layoff. These peer support
    workers provided a range of services, including outreach to affected
    workers, counseling, and skill assessment. An official told us that
    affected workers are more likely to trust peer support workers than other
    case managers because they feel comfortable talking with a colleague who
    has been through the same layoff experience.

    In addition to providing case management for TAA-eligible workers, some
    states also use WIA funds to supplement TAA training funds, and often use
    the same lists of training providers for TAA as for WIA participants. For
    example, North Carolina has encouraged its local areas to use their WIA
    funds whenever possible to support the costs of TAA-eligible workers'
    training. State officials feel their TAA training allocation is inadequate
    to serve the large number of trade-affected workers in the state. A local
    area in Texas reported that it sometimes combines TAA and WIA funds to pay
    for a TAA-eligible worker's training, for example, when the worker's
    training program costs more than the state's cost limit for TAA training.
    Three states we visited also use national emergency grant funds to support
    training for TAA participants. According to our survey, 41 states have
    applied for national emergency grant funds to supplement their TAA
    training funds since 2001. In most states, workers are generally choosing
    from the same list of training providers whether they are TAA or WIA
    participants. Fourteen states reported that training programs approved for
    TAA participants must be on the state's WIA Eligible Training Provider

    Effect of WIA Performance Measures

    List,27 and an additional 23 states reported that most training programs
    approved for TAA participants are on the state's list.

    While some states report making use of these other funding sources, some
    officials also told us that WIA's performance measures create an obstacle
    to improved coordination between the programs. States and local areas are
    held accountable for the employment outcomes of workers who receive
    services through their WIA dislocated worker funds, including the
    proportion of participants who obtain employment and the difference
    between participants' wages in their old and new jobs. States and local
    areas receive financial incentives and sanctions based on their ability to
    meet their goals on these performance measures. Officials in three states
    we visited reported that WIA performance measures create a disincentive to
    co-enroll TAA-eligible workers in WIA services. For example, an official
    in one state said local WIA administrators often perceive trade-affected
    workers as having high prelayoff wages but skills that are not readily
    transferable, and therefore as having little chance of replacing their
    prelayoff wages in a new job-one of several WIA performance measures.
    Local officials are reluctant to enroll TAA-eligible workers in WIA, out
    of concern that these workers will negatively affect their ability to meet
    their WIA performance goals.28

    Information on Program Results Has Been Limited, but Labor Is Taking Steps
    to Collect Better Data

    Information on TAA program results has historically been limited, but
    Labor is making efforts to gather more complete outcome data and to more
    accurately assess the program's effectiveness. In 1999, Labor introduced a
    new participant outcomes reporting system that was designed to collect
    national information on TAA program outcomes and uses these outcomes to
    track program performance against national goals. However, in an earlier
    study we found that information captured by this reporting system was
    often incomplete and many states did not validate

    27A state's Eligible Training Provider List contains all training course
    offerings that are available to WIA-funded individuals eligible for
    training. To remain on the list, training providers must meet certain
    performance criteria established by the state.

    28In previous reports we have described how performance measures create a
    disincentive to enrolling various populations in WIA-funded case
    management and training, including older workers and dislocated workers
    with high prior wages. See for example GAO, Older Workers: Employment
    Assistance Focuses on Subsidized Jobs and Job Search, but Revised
    Performance Measures Could Improve Access to Other Services, GAO-03-350
    (Washington, D.C.: Jan. 24, 2003) and GAO, Workforce Investment Act:
    Improvements Needed in Performance Measures to Provide a More Accurate
    Picture of WIA's Effectiveness, GAO-02-275 (Washington, D.C.: Feb. 1,
    2002).

    information reported to Labor.29 Labor has taken steps to improve the
    accuracy of this information by requiring states to use UI wage records to
    track outcomes. Some categories of workers, however, are not included in
    these wage records and most states do little to supplement wage record
    data with other data sources. As a result, program outcomes may be
    understated. To evaluate the effects of the TAA program, Labor completed a
    study of the program in 1993.30 However, because of methodological issues
    and recent reforms to the program, the study's conclusions are of limited
    usefulness in assessing the current program. Labor recently initiated a
    new 5-year study and expects the first of several interim reports by
    mid-2005.

    Labor Has Attempted to Improve Accuracy of TAA Data, But Information Gaps
    Remain

    Labor has taken steps to improve the accuracy of TAA program information
    captured by its participant outcomes reporting system, but weaknesses
    persist. In an effort to improve information on the TAA program, in fiscal
    year 1999 Labor introduced a new participant outcomes reporting system,
    the Trade Act Participant Report (TAPR), that was designed to collect
    national information on TAA program participants, services, and outcomes,
    such as employment, employment retention, and wages. States are required
    to submit quarterly summary reports on participants who are no longer
    receiving any TAA program services. In an earlier study, however, we found
    that some states reported incomplete data on program outcomes and failed
    to validate participant information reported to Labor. As a result,
    program information may have been inaccurate. States reported that they
    relied heavily on participant surveys to collect information on program
    outcomes such as employment and earnings and that participants often did
    not return these surveys. Furthermore, some states reported that they were
    unable to report more complete information because they lacked the
    resources to expand their data collection efforts to better capture
    program outcomes. Similarly, Labor's Inspector General also found that
    information on participants and

    29See GAO-01-59.

    30Mathematica Policy Research, Inc., International Trade and Worker
    Dislocation: Evaluation of the Trade Adjustment Assistance Program,
    submitted to the U.S. Department of Labor (April 1993).

    program outcomes collected in TAPR was inadequate for evaluating the
    program's performance against national goals.31

    In response to concerns about the reliability of data reported on TAA
    participants, Labor has taken steps to improve the information captured in
    its participant outcomes reporting system by incorporating wage records
    data, but some states may not be accessing all available wage data. In
    fiscal year 2001, Labor began requiring states to use UI wage records to
    report outcomes for TAA program participants. While wage records generally
    provide objective and accurate information to track workers' employment
    and earnings, the data have limitations that may contribute to
    understating of program outcomes. For example, state wage records only
    capture information on workers who get jobs in that state and states
    cannot easily access wage record information from other states. As a
    result, states may not be able to provide outcome information for TAA
    program participants who gained employment in another state.

    To help track employment of TAA participants across state lines, some
    states are using the Wage Record Interchange System (WRIS), a data
    clearinghouse used under WIA that allows states to share their wage record
    data.32 Since June 2002, states could use WRIS for reporting TAA outcomes,
    but it is unknown how many states are using or plan to use this system.
    While Labor officials told us that states are encouraged to use WRIS to
    obtain more complete employment and earnings information on TAA program
    participants, Labor could not provide information on how many states are
    actually using this data clearinghouse to track former TAA program
    participants because it does not have a mechanism in place to identify
    these states. Officials in four of the five states we visited reported
    that they are using WRIS to track program participants' employment and
    earnings outcomes.

    Some individuals may not be captured by wage record data. Wage records,
    which cover about 94 percent of workers, do not include some categories of
    workers such as the self-employed, most independent contractors,

    31Office of the Inspector General, U.S. Department of Labor, Improving the
    Trade Act Programs (DOL Office of Audit Report Number 04-01-009-03-330,
    Sep. 26, 2001).

    32Not all states use WRIS to report WIA performance. In a recent study, we
    found that 38 states currently participate in WRIS. GAO, Workforce
    Investment Act: States and Local Areas Have Developed Strategies to Assess
    Performance, but Labor Could Do More to Help, GAO-04-657 (Washington, D.C:
    June 1, 2004).

    military personnel, federal government employees, and postal service
    employees. Most states do little to supplement wage record data with other
    data sources despite the fact that such information can be reported to
    TAPR, and, as a result, program outcomes may be understated. Only 12
    states reported that they collect data on outcomes such as employment,
    earnings, or employment retention beyond what is required for TAPR. Nine
    of these states reported collecting information on whether participants
    find jobs after they leave the program (see fig. 13). This information is
    generally collected through telephone interviews or mail surveys of
    workers. Officials from two of these states reported that this information
    is generally used as a local program management tool to gauge the
    effectiveness of training programs or providers rather than to collect
    more complete and accurate data for TAPR. In contrast, in a recent study
    of WIA outcomes, we found that 39 states collect additional data to more
    completely track the outcomes of WIA participants and to help them manage
    their programs locally.33

    Figure 13: Number of States Using Supplemental Sources to Collect Data on
    Specific Employment Outcomes

                                   Entered employment

                                  Wages at employment

    Whether recalled by employer

                                  Employment retention

                                           9

    0123 4 5 678 9

    States

                    Source: GAO survey of state workforce agencies.

    Labor tracks TAA program outcomes against national goals, but the TAA
    program has not met all of its goals in any given year. Since fiscal year
    2000, Labor has used outcomes that states report to TAPR to track program
    performance against national goals related to employment,

    33 See GAO-04-657.

    wages, and job retention.34 For example, performance goals set for fiscal
    year 2003 included having 78 percent of all participants find employment.
    While Labor has exceeded some of its goals in previous years, it has never
    met all of its goals in any given year. Furthermore, according to Labor's
    outcome data, none of the TAA performance goals set for fiscal year 2003
    were met (see table 3). 35

    Table 3: Labor's Fiscal Year 2003 TAA Performance and Goals

    In percent Job retention-retention in employment in the third quarter
    after program exit of those who were employed in the first quarter after
    program exit 86

                                                     Fiscal year 2003 Fiscal year
                                           Indicator   performance      2003 goal
               Employment-employed the first quarter
                                  after program exit               63

    Wages-earnings replacement rate for those
    employed in the first quarter after program
    exit and still employed in the third quarter
    after program exit 74

    Source: Department of Labor.

    In fiscal year 2004, Labor announced its new initiative to implement a
    reporting system that would collect and report program performance for all
    workforce programs administered by Labor, including TAA. This single
    system is intended to reduce barriers to greater service integration
    across federal workforce programs, and Labor also expects it will increase
    the reliability of its performance data by standardizing measurements such
    as employment, job retention, and earnings across all programs. The
    majority of outcomes data will still be collected from wage records.
    However, Labor officials also reported that states would be able to submit
    supplemental information on program participants whose employment

    34TAA performance measures provide information to support Labor's
    performance goals under the Government Performance and Results Act (GPRA).
    GPRA is intended to focus government decision making, management, and
    accountability on the results and outcomes achieved by federal programs.

    35Labor's reported data are compiled from TAPR data. Outcome data for 2003
    are based on participants who exited either the TAA or NAFTA-TAA program
    from July 1, 2001 to June 30, 2002. As a result, these data do not reflect
    program outcomes for participants served under the provisions of the TAA
    Reform Act, who would have been certified as TAAeligible on or after
    November 4, 2002.

    status and wages are not captured in wage records. These supplemental
    data, however, will not be included in annual performance outcomes
    calculations.

    No Recent Data Exist on Program Effectiveness, but Labor Is Initiating a
    New Impact Study

    No information is currently available to accurately measure program
    effectiveness. However, Labor has recently taken steps to better evaluate
    the effect of TAA services on participants. While outcomes measures are an
    important component of program management in that they assess whether a
    participant is achieving an intended outcome-such as obtaining
    employment-they cannot, by themselves, measure whether the outcome is a
    direct result of program participation. Other influences, such as the
    condition of the local economy, may affect an individual's ability to find
    a job as much or more than participation in an employment and training
    program. In order to determine whether participant outcomes are the
    effects of a program, rather than of other factors, it is necessary to
    conduct an impact evaluation.

    Labor last completed an evaluation of the TAA program in 1993 when it
    analyzed the impact of TAA services, particularly training, on
    participants' employment, job retention and earnings outcomes. The study
    compared TAA participants with a sample of dislocated worker
    non-participants with similar prelayoff characteristics. According to the
    study's findings, TAA program participants tended to have longer periods
    of joblessness than other dislocated workers. Furthermore the study found
    that among TAA program participants, certain participants-including women
    or those with limited education-experienced especially long periods of
    unemployment (see app. VI for an overview of demographic characteristics
    of recent TAA participants).36 However, methodological issues resulted in
    inconclusive findings regarding the impact of training on TAA program
    participants' employment and earnings. In addition, Labor officials told
    us that because program benefits and services were

    36A more recent study found that generally trade-affected workers as
    compared with other dislocated workers are more likely to be women and
    older. As a result of these characteristics, these types of workers are
    more likely to face barriers to reemployment (Lori Kletzer, Job Loss from
    Imports: Measuring the Cost, Washington, DC: Institute for International
    Economics, 2001).

    significantly changed in 2002, the study's conclusions are of limited use
    in assessing the current program.37

    Labor initiated a new 5-year study of the TAA program in 2004, and while
    details of this study are still being determined, the study is expected to
    consist of three phases. The first phase will be a study of the initial
    implementation of the TAA Reform Act. The longer-term phases of the study
    include a quasi-experimental impact study and an in-depth study of program
    administration that will identify promising practices and data collection
    issues. The second phase of the study will measure the effects of program
    services such as training on participants' employment, earnings, and
    employment retention. The current plans include collecting data from
    interviews and administrative records for both TAA program participants
    and a comparison group of UI claimants, which will be matched to
    participants using a technique that allows researchers to more readily
    identify appropriate comparison groups.38 According to Labor officials,
    the methodology expected to be used in this study to identify comparison
    groups is an improvement over the methodology used in the previous study
    and should provide them with more conclusive findings about the impact of
    TAA services on participants. Although this is a long-term study, several
    interim reports are expected. The first of several interim reports is
    anticipated in mid-2005, and Labor expects to issue the final report in
    2009.

    Conclusions 	International trade is at least partially responsible for the
    decline in manufacturing over the last several years in the United States.
    Workers affected by trade may face greater barriers to reemployment than
    workers laid off for other reasons, for example because trade-affected
    workers are often older than other dislocated workers. By providing
    training and

    37In 2004 the Office of Management and Budget (OMB) reviewed the TAA
    program through its Program Assessment Rating Tool (PART). OMB rated the
    program as ineffective based in part on the fact that the existing
    studies, including those of Labor, questioned whether the program was
    effective in helping program participants get back into suitable jobs.

    38According to Labor officials, because random assignment is not possible
    in the TAA program, the impact study will use quasi-experimental methods
    that compare outcomes of different groups of TAA participants to those of
    comparison groups. The study will use propensity scoring, a technique that
    allows researchers to find comparison group members who are most closely
    matched to participants on a number of characteristics simultaneously.

    extended income support, the TAA program is intended to help workers laid
    off because of international trade obtain reemployment.

    The TAA Reform Act of 2002 changed the program in several ways that were
    intended to improve and expand services for trade-affected workers. At
    this early stage in implementation, several changes appear to be helping
    trade-affected workers. The clearest positive effect so far is that
    tradeaffected workers are enrolling in services sooner, because of the new
    time limit on Labor's processing of TAA petitions and the new deadline for
    workers to enroll in training. It is too early to tell what will be the
    results of some changes, for example, how many workers will take advantage
    of the new wage insurance benefit.

    Meanwhile, states report that certain provisions of the Reform Act have
    presented implementation challenges. The new training enrollment deadline
    may be causing some workers to lose their eligibility for extended income
    support, making it more difficult for them to complete the training they
    may need to obtain reemployment at wages comparable to their prelayoff
    wages. The new enrollment deadline may also be preventing some workers
    from receiving thorough assessments of their training needs and enrolling
    in the most appropriate training. Furthermore, these difficulties may be
    heightened in the cases of very large layoffs. Some officials report that
    eligibility requirements for the new HCTC have increased their
    administrative workload by causing them to spend more of their resources
    issuing training waivers just to facilitate workers' eligibility for the
    tax credit. Resources spent on issuing training waivers may be detracting
    from time invested in providing workers with needed job placement and
    training assistance. Furthermore, some find the eligibility criteria for
    the wage insurance program problematic, for example because the criteria
    require workers to lack easily transferable skills yet find reemployment
    without TAA-funded training. These eligibility criteria could be resulting
    in the denial of wage insurance payments to some workers who could benefit
    from the program.

    We recommend that Labor monitor issues related to the implementation of
    certain provisions of the TAA Reform Act that may have had unintended
    consequences for some workers, and propose legislative changes as deemed
    necessary. In particular, Labor should track over time the following:

    Recommendation for Executive Action

    o  	the ability of workers to meet the new training enrollment deadline
    and of states and local areas to provide appropriate assessments to all
    trade-

    affected workers within the deadline, especially when responding to very
    large layoffs, and

    o  whether the eligibility criteria for the new wage insurance program are

    Agency Comments

    resulting in the denial of services to some older workers who could
    benefit from the program.

    We provided a draft of this report to officials at Labor for their review
    and comment. In its comments, Labor did not raise any issues with our
    findings, conclusions or recommendations. Labor provided technical
    comments, which we include as appropriate. Labor's comments are reproduced
    in appendix VII.

    We are sending copies of this report to the Secretary of Labor, relevant
    congressional committees, and others who are interested. Copies will also
    be made available to others upon request. The report is also available at
    no charge on GAO's Web site at http://www.gao.gov.

    Please contact me on (202) 512-7215 if you or your staff have any
    questions about this report. Other major contributors to this report are
    listed in app. VIII.

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

    Appendix I: Objectives, Scope, and Methodology

    We were asked to provide information on (1) how key provisions of the
    Trade Adjustment Assistance (TAA) Reform Act have affected program
    services, (2) what have been the challenges in implementing the TAA Reform
    Act's new provisions, (3) whether demand for TAA training has changed, and
    how states are meeting this demand, and (4) what is known about what the
    TAA program is achieving. To address these questions, we conducted a
    Web-based survey of all 50 state workforce agencies that administer the
    TAA program and Puerto Rico. We conducted site visits to 5 states-Maine,
    North Carolina, Pennsylvania, Texas, and Washington- and interviewed state
    and local officials in each state. We reviewed data and documents from the
    U.S. Department of Labor (Labor) and other sources. We also interviewed
    officials from Labor, the AFL-CIO, the National Association of State
    Workforce Agencies, and the Congressional Research Service.

                                    Web-Based Survey

    To collect broad information on TAA Reform Act implementation and states'
    management of their training funds, we surveyed state officials from the
    50 states and Puerto Rico in March, 2004. Washington, D.C. was not
    surveyed because it did not have a TAA program. This structured survey was
    administered via e-mail and the Internet and had a 98 percent response
    rate, including responses from all 50 states. The survey was designed to
    obtain information on the following: Labor and state efforts to reach out
    to new categories of eligible workers such as secondary workers, the
    effect of new training enrollment deadlines on services to participants,
    and obstacles that states faced in implementing new provisions in the TAA
    Reform Act, including the Health Coverage Tax Credit and the wage
    insurance provision. The survey also included questions on other sources
    of funds used to support services for TAA participants and the extent to
    which states collect outcome data that is more up to date and accurate
    than the data required by Labor.

    Because this was not a sample survey, there are no sampling errors.
    However, the practical difficulties of conducting any survey may introduce
    other errors, commonly referred to as nonsampling errors. For example,
    difficulties in how a particular question is interpreted, in the sources
    of information that are available to respondents, or in how the data are
    entered into a database or were analyzed can introduce unwanted
    variability into the survey results. We took steps in the development of
    the questionnaire, the data collection, and the data analysis to minimize
    these nonsampling errors. For example, GAO survey specialists designed the
    questionnaire in collaboration with GAO staff with subject matter
    expertise. Then, the draft questionnaire was pretested with three state

    Appendix I: Objectives, Scope, and Methodology

    officials to ensure that the questions were relevant, clearly stated, and
    easy to comprehend. When the data were analyzed, a second, independent
    analyst checked all computer programs. Since this was a Web-based survey,
    respondents entered their answers directly into the electronic
    questionnaire. This eliminates the need to have the data keyed into a
    database, thus removing an additional source of error.

    Site Visits 	We selected 5 states for site visits according to several
    criteria, including experience with large numbers of TAA participants in
    recent years, representation of a range of adversely affected industries,
    states recommended by Labor either as models in implementing TAA or as
    states facing implementation challenges, and geographic diversity (see
    table 4). In each state we interviewed state officials on topics including
    TAA Reform Act implementation, management of TAA training funds, and
    coordination between TAA and other federal programs.

                            Table 4: Site Selection Criteria

                                 Average Average TAA         Recent adversely
                       participantsa per training allocation affected
                                   year, per
           State               FY00-FY02 year, FY01-FY03          industries
                      (national ranking) (national ranking)
           Maine                                             Paper, computer
                              1,286 (14)     $4,073,574 (17) equipment,
                                                                   apparel
    North Carolina           6,850(1)      $6,596,453 (7)       Textiles
                                                             Steel, airlines,
        Pennsylvania           2,401 (7)     $14,846,753 (1) chemical dye,
                                                                 electronics
           Texas                                               High-tech,b oil,
                               4,368 (2)      $9,893,323 (3)     electronics,
                                                               garment/apparel
                                                                        Aluminum,
         Washington            3,749 (3)     $11,070,045 (2)  lumber/paper/forest
                                                             products, aerospace

    Source: Department of Labor and GAO analysis.

    aParticipants are workers in training during the fiscal year. bHigh-tech
    job categories include computer-related occupations and technical and
    quality assurance.

    Combined, the 5 states constituted about 36 percent of the national total
    of TAA participants from fiscal years 2000 through 2002 (see fig. 14).

    Appendix I: Objectives, Scope, and Methodology

    Figure 14: Percentage of Total TAA Participants in Selected States, Fiscal
    Years 2000-2002

    Source: Department of Labor and GAO anaylsis.

    Note: Because of rounding, the total does not add up to 36 percent.

    We judgmentally selected two local areas in each state and visited a mix
    of urban and rural areas (see table 5). We met with local officials,
    program participants, employers, and workforce investment board members.
    We collected information on how local areas are implementing provisions of
    the TAA Reform Act and how they are coordinating Workforce Investment Act
    and TAA funds.

                     Appendix I: Objectives, Scope, and Methodology

                   Table 5: Local Workforce Areas Selected for Visits

                        State              Local workforce area              City
                        Maine                           Augusta      Augusta
                                               East Millinocket  East Millinocket
               North Carolina                      Vance County     Henderson
                                                     Kannapolis    Kannapolis
                 Pennsylvania                      Berks County      Reading
                                                  Lehigh Valley   Lehigh Valley
                        Texas               Greater Austin Area            Austin
                                                  Dallas County    Richardson
                   Washington            Cowlitz/Wahkiakum East             Kelso
                                           Tacoma-Pierce County      Tacoma
                              Employment & Training Consortium

                                 Source: GAO analysis.

    Review of Data from Labor and Other Sources

    We reviewed data from Labor on petitions, participants, services,
    performance, and expenditures from fiscal year 1999 to fiscal year 2003.
    For fiscal year 2003, we broke out data on petition-processing times
    between workers served prior to the TAA Reform Act and those served after
    implementation of the Reform Act in an attempt to isolate the effects of
    program changes. We assessed the reliability of key data by interviewing
    Labor officials, reviewing Labor documentation, and performing edit checks
    of computer-based data. We found some limitations in these data but judged
    the data to be sufficiently reliable for the purposes of our reporting
    objectives. In particular, some data on certified workers and on the
    number of workers entering training annually may have inaccuracies, but we
    believe these data to be sufficiently reliable for the purpose of
    demonstrating trends over time, the main focus of our reporting objective.
    Data that were used for background purposes and provided in app. VI were
    not independently verified.

    Appendix II: Final Decisions Rendered by the U.S. Court of International Trade
    on Appealed TAA Cases, Fiscal Years 1999-2004

    Workers whose petitions for certification of TAA eligibility are denied by
    the U.S. Department of Labor may seek judicial review of Labor's decision
    by filing an appeal with the U.S. Court of International Trade. Workers
    may file such an appeal either after Labor's negative determination on the
    initial petition or after Labor's negative determination on a
    reconsideration of its determination. The U.S. Court of International
    Trade may affirm the action of the Department of Labor, set it aside in
    whole or in part, or return-termed remand-the case to Labor to take
    further evidence.

    Table 6: Final Decisions Rendered by the U.S. Court of International Trade
    on Appealed TAA Determination Cases, Fiscal Years 1999-2004

                    Fiscal year 1999 2000 2001 2002 2003 2004 Totals

    Number of decisions 2 4 3 4 8 5

    Outcomesa

          Reversed Labor's decision after remand                     1    2
        Affirmed Labor's original decision without    1         1    1
                          remand
           Affirmed Labor's reversal of original           1              3    4
                   decision after remand
         Affirmed Labor's negative decision after     1    1    2         1
                          remand
                         Dismissed                         2         2    2    1

    Source: GAO analysis.

    aFour other cases were remanded to the U.S. Department of Labor for
    reconsideration. However, the results of these remands were not available
    to us at the time of this report.

    Appendix III: Certified Workers, Benefit Recipients, and Expenditures

         Table 7: TAA and NAFTA-TAA Certified Workers, Benefit Recipients, and
                    Expenditures, Fiscal Years 1999-2003 Fiscal year

    1999 2000 2001 2002 2003

    a

    Certified workers 175,898 116,720 164,701 274,081 204,233

     Extended income support Job search allowance Payments $0.1 $0.1 $0.1 $0.1 $0.2

                 Payments             $213.1   $257.6   $260.4   $228.6    $326.9
              New recipients          37,540   34,965   34,690   42,362    47,992
        bWorkers entering training    32,587   25,258   30,340   45,771    47,239
          cTraining-related costs     $97.3    $106.7   $99.0    $145.0    $191.4

    Recipients 314 371 261 2,126

                 Relocation allowance Payments $1.0 $1.2 $0.9 $1.0 $1.7

    Recipients 772 757 407 453

    Source: Department of Labor.

    Note: All dollars are in millions.

    aThe data used for this table are estimates of the number of workers
    certified as eligible for TAA, based on estimates of the number of
    affected workers submitted by companies at the time TAA petitions are
    filed with the Department of Labor. At the time petitions are submitted,
    companies may not know exactly how many workers will be affected. We use
    these estimates because the Department of Labor does not collect data on
    the number of workers ultimately certified.

    bThis figure is an underestimate of the total number of workers entering
    training, because some states do not capture all workers entering training
    in the data they submit to Labor.

    cIncludes costs of tuition, transportation, subsistence, and related
    expenses for all workers who received training during the year. States may
    pay some of these costs through funding sources other than TAA, such as
    WIA funds.

    Appendix IV: State Training Allocations, Fiscal Years 2001-2004

    Prior to fiscal year 2004, Labor awarded TAA training funds to states
    based on their requests throughout the fiscal year. In fiscal year 2004,
    Labor allocated 75 percent of available training funds among the states at
    the beginning of the fiscal year according to a formula. The amounts
    allocated to states at the beginning of fiscal year 2004 are their base
    allocations. Labor held the remaining 25 percent of available training
    funds in reserve to help states respond to large and unanticipated layoffs
    throughout the year. States are eligible to submit requests for 25 percent
    reserve funds only after they have expended 50 percent of their base
    allocations.

    Table 8: State Training Allocations, Fiscal Years 2001-2003, and State
    Training Base Allocations, Fiscal Year 2004

           State       Fiscal year    Fiscal year    Fiscal year      Fiscal year
                          2001            2002           2003                2004
          Alabama         $6,762,498       $690,000     $2,639,932     $2,352,825
          Alaska                   0              0      1,425,664        539,240
          Arizona          4,520,650        925,865      4,286,604      3,190,283
         Arkansas          2,645,000      1,451,875      2,919,461      2,226,153
        California         6,787,415      7,831,443      9,437,155      6,826,917
         Colorado          1,093,500      1,177,232      2,590,199      1,859,483
        Connecticut        2,642,528      2,300,000      3,205,582      2,388,390
         Delaware                  0              0         41,466
          Florida          5,168,100      3,747,465      5,594,035      4,332,785
          Georgia                  0      1,891,750              0
          Hawaii              11,541              0              0
           Idaho           1,920,421      3,137,200      4,304,245      3,155,550
         Illinois          5,663,750      4,427,500      7,923,660      5,809,033
          Indiana          2,415,000      3,323,500      6,597,124      4,836,517
           Iowa              405,150      1,035,000      6,376,729      4,513,308
          Kansas             347,814      2,019,208      6,025,569      4,417,495
         Kentucky          2,388,901      3,200,757      2,688,600      2,405,596
         Louisiana         1,124,701        940,010        728,928        612,285
           Maine           3,174,980      4,381,291      4,664,450      3,607,190
         Maryland             34,500        690,000        706,808        518,179
    Massachusetts       1,667,500      2,702,500      8,133,369      5,962,776
         Michigan          2,866,156      6,141,000      8,191,855      6,050,100
         Minnesota           632,500      3,967,500      7,621,904      5,173,069
        Mississippi          379,562        915,573      2,635,960      1,932,488
         Missouri          2,169,475      5,687,589      8,631,673      5,519,517
          Montana          1,148,850      1,322,500      2,373,933      1,118,812

    Appendix IV: State Training Allocations, Fiscal Years 2001-2004

           State        Fiscal year    Fiscal year   Fiscal year      Fiscal year
                           2001           2002           2003                2004
          Nebraska          2,098,750     2,012,500        344,401        441,442
           Nevada                   0       281,750      1,066,034        332,032
    New Hampshire          195,500     1,153,450        885,500        662,720
         New Jersey         3,450,000     4,018,157      1,454,572      1,397,110
         New Mexico                 0       542,800        820,282        601,369
          New York          4,545,317     2,024,920      3,471,173      2,755,667
    North Carolina       4,231,540     6,619,170      9,159,118      7,246,224
        North Dakota           29,900        33,350         11,270
            Ohio            4,678,912     2,913,171      8,144,190      5,717,602
          Oklahoma          1,220,190     1,269,752      2,658,052      1,948,684
           Oregon           9,805,360     8,780,480      6,335,181      5,244,609
        Pennsylvania       10,867,500     8,245,500     32,707,004     23,725,215
        Rhode Island        1,957,593         4,934        959,973        764,425
    South Carolina         730,250     2,070,000     12,506,305      9,168,685
        South Dakota          270,250       347,300        629,480        461,488
         Tennessee          2,806,000     2,219,500      2,852,109      2,349,510
           Texas            8,232,418     6,389,309     15,058,242     11,211,282

             Utah          214,508       2,804,350      3,684,565       2,286,508
           Vermont         460,000        920,000        317,139          280,819
           Virginia       4,600,000      3,484,500      7,302,968       5,353,742
          Washington      7,736,280      4,450,500     21,243,827      15,412,748
        West Virginia     2,300,000       805,000        743,636          662,652
          Wisconsin       3,323,854      5,692,500     16,883,175      12,377,478
           Wyoming         140,000         16,985        64,898
        Reserve Funds                -              -             -    55,000,000
        National Total   $129,864,614   $131,006,636  $259,047,999   $244,750,000

    Source: Department of Labor.

    Note: State allocations in all fiscal years include funds reserved for
    administration in addition to funds reserved for training. Allocations for
    fiscal years 2001-2003, but not for fiscal year 2004, also include amounts
    awarded for job search and relocation benefits.

    Appendix V: Detailed Listing of Steps States Report Taking in Response to
    Limited TAA Training Funds

    Table 9: Steps States Report They Have Taken in Response to Limited TAA
    Training Funds, Fiscal Years 2001-2003

    Developed new Enrolled Placed participants guidelines for Obligated
    current participants in on temporary Reduced training enrolling year funds
    only for shorter-term waiting list for cost limit per State participants
    current year costs training training participant

    Alabama X X

    Alaska X

    Arizona X

    Arkansas

    California X

    Colorado X X X

    Connecticut X X X X

    Delaware X X X X

    Florida X X X

    Georgia X X

    Hawaii

    Idaho X X X

    Illinois X

    Indiana X X

    Iowa X X X X

    Kansas X X X

    Kentucky X X X
    Louisiana X
    Maine
    Maryland X
    Massachusetts
    Michigan X X X
    Minnesota X
    Mississippi X
    Missouri X X
    Montana X
    Nebraska X X X X
    Nevada X X
    New Hampshire
    New JerseyX X X X X
    New Mexico X X
    New York X X
    North Carolina X

    Appendix V: Detailed Listing of Steps States Report Taking in Response to
    Limited TAA Training Funds

    Developed new Enrolled Placed participants guidelines for Obligated
    current participants in on temporary Reduced training enrolling year funds
    only for shorter-term waiting list for cost limit per State participants
    current year costs training training participant

    North Dakota

    Ohio X X

    Oklahoma

    Oregon X

    Pennsylvania X X X X

    Rhode Island X X

    South Carolina X X X

    South Dakota X X

    Tennessee X

    Texas X X X X

    Utah X

    Vermont

    Virginia X

    Washington

    West Virginia X

    Wisconsin X

    Wyoming

    Total 18 18 22 19 9

                    Source: GAO survey of state workforce agencies.

    Note: (X) indicates state has taken step at some point between fiscal year
    2001 and fiscal year 2003.

    Appendix V: Detailed Listing of Steps States Report Taking in Response to
                               Limited TAA Training Funds

    Table 10: Steps States Report They Have Taken or Anticipate Taking in
    Response to Limited TAA Training Funds, Fiscal Year
    2004

    Developed new Obligated current Enrolled Placed guidelines for year funds
    only participants in participants on Reduced training enrolling for
    current year shorter-term temporary waiting cost limit per State
    participants costs training list for training participant

    Alabama X X X

    Alaska X X

    Arizona X X

                            Arkansas a California X X X X a

    Colorado X X X

    Connecticut aa a

    Delaware a X X

                                    Florida X a X aa

    Georgia a X

    Hawaii

    Idaho X X X

                                     Illinois X X a

    Indiana a X

    Iowa X X a X

    Kansas X X

    Kentucky aa X a
    Louisiana X a
    Maine a
    Maryland a
    Massachusetts X X X a
    Michigan X X X
    Minnesota aaa X
    Mississippi X
    Missouri X a X
    Montana a X
    Nebraska X X aa
    Nevada X X
    New Hampshire X aa
    New Jersey X X X X X
    New Mexico X aaa X
    New York X X X a

    Appendix V: Detailed Listing of Steps States Report Taking in Response to
    Limited TAA Training Funds

                Developed new Obligated       Enrolled      Placed
                              current
                   guidelines  year funds   participants participants     Reduced
                          for     only      in                on         training
                  enrolling    for current  shorter-term temporary    cost limit
                                  year                   waiting          per
        State    participants     costs       training     list for   participant
                                                           training
        North
    Carolina                                  X

    North Dakota

                                       Ohio aaaaa

    Oklahoma

                      Oregon X a Pennsylvania X X Rhode Island X a

    South Carolina Vermont

            South Dakota            a            X            a
              Tennessee             a                                           a
                Texas               X            X            X
                Utah                             X

                                    Virginia a X aa

    Washington

                           West Virginia X X X a Wisconsin X

    Wyoming aa
    Totals taken 21 23 17 6 6
    Totals anticipate taking 8 13 10 12 7

                    Source: GAO survey of state workforce agencies.

           Notes: (X) indicates state has taken step during fiscal year 2004.

    (a) indicates state anticipates taking step during fiscal year 2004.

    The survey was fielded in March 2004, therefore these results reflect
    steps states have taken during the first six months of fiscal year 2004
    and steps states anticipate taking during the last six months of fiscal
    year 2004.

    Appendix VI: Demographic Characteristics of TAA Participants

    Through the Trade Act Participant Report (TAPR), states regularly submit
    data to Labor on the demographic characteristics of TAA participants. The
    data provided below are for participants who completed program services or
    stopped receiving services between July 1, 2001, and June 30, 2002. These
    data include workers who received services under either or both the TAA
    program and the NAFTA-TAA program.

    Table 11: Select Demographic Characteristics of Participants Exiting TAA
    Program, July 1, 2001-June 30, 2002

                                    Percentagea Sex

    Female

    Male

                                          Age

    Under 30 years

    30-45 years

    45 years and older

                                       Education

    Less than high school

    High school graduate

    Some education beyond high school

    Average tenure on prelayoff job (in years)

    Source: Department of Labor.

    Note: Because these data are provided primarily for background purposes,
    they were not independently verified.

    aAll percentages are based only on participants for whom data were
    available.

    Appendix VII: Comments from the Department of Labor

                               A ndix VIII: GAO C d Staff

    Appendix VIII: GAO Contacts and Staff Acknowledgments

    GAO Contacts

    Staff Acknowledgments

    Dianne Blank (202) 512-5654 Lorin Obler (617) 788-0511

    Irene J. Barnett and Eric Clemons made significant contributions to this
    report in all aspects of the work throughout the assignment. In addition,
    Stuart Kaufman assisted in the design of the state survey, George Quinn
    Jr. assisted in the analysis of survey data, Ray Wessmiller assisted in
    the analysis of data collected from the Department of Labor, and Shana
    Wallace contributed to the development of the report's overall
    methodology. Jessica Botsford and Richard Burkard provided legal support,
    and Corinna Nicolaou assisted in the message and report development.

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