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 [email protected].

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

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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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February 11, 2002.

Workforce Investment Act: Improvements Needed in Performance Measures to
Provide a More Accurate Picture of WIA's Effectiveness. GAO-02-275.
Washington, D.C.: February 1, 2002.

Trade Adjustment Assistance: Experiences of Six Trade-Impacted
Communities. GAO-01-838. Washington, D.C.: August 24, 2001.

Trade Adjustment Assistance: Trends, Outcomes, and Management Issues in
Dislocated Worker Programs. GAO-01-59. Washington, D.C.: October 13, 2000.

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