Workforce Investment Act: Additional Actions Would Further
Improve the Workforce System (28-JUN-07, GAO-07-1051T).
Since the Workforce Investment Act's (WIA) enactment in 1998, GAO
has issued numerous reports that included recommendations
regarding many aspects of WIA, including performance measures and
accountability, funding formulas and spending, one-stop centers,
and training, as well as services provided to specific
populations, such as dislocated workers, youth, and employers.
Collectively, these studies employed an array of data collection
techniques, including surveys to state and local workforce
officials and private sector employers; site visits; interviews
with local, state, and Labor officials; and analysis of Labor
data and documents. This testimony draws upon the results of
these reports, issued between 2000 and 2007, as well as GAO's
ongoing work on one-stop infrastructure, and discusses issues
raised and recommendations made. Specifically, the testimony
addresses (1) progress made by federal, state, and local
officials in implementing key provisions of WIA; and (2)
challenges that remain in implementing an integrated employment
and training system.
-------------------------Indexing Terms-------------------------
REPORTNUM: GAO-07-1051T
ACCNO: A71612
TITLE: Workforce Investment Act: Additional Actions Would
Further Improve the Workforce System
DATE: 06/28/2007
SUBJECT: Education
Employee training
Employees
Employment
Employment assistance programs
Funds management
Performance measures
Program evaluation
Training utilization
Youth employment programs
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GAO-07-1051T
* [1]Background
* [2]System Infrastructure and Service Strategies Have Evolved To
* [3]WIA's Service Delivery Infrastructure Continues to Evolve
* [4]States and Local Areas Have Sought to Tailor Services to Mee
* [5]Additional Action Could Help System Development
* [6]Funding Allocation and Spending Information Do Not Reflect P
* [7]Little Is Known about What the System Is Achieving
* [8]Labor Should Consider Alternative Approaches to Implement Ne
* [9]Concluding Observations
* [10]GAO Contacts and Staff Acknowledgments
* [11]GAO's Mission
* [12]Obtaining Copies of GAO Reports and Testimony
* [13]Order by Mail or Phone
* [14]To Report Fraud, Waste, and Abuse in Federal Programs
* [15]Congressional Relations
* [16]Public Affairs
Testimony before the Subcommittee on Higher Education, Lifelong Learning,
and Competitiveness, Committee on Education and Labor, House of
Representatives
United States Government Accountability Office
GAO
For Release on Delivery
Expected at 1:30 p.m. EDT
Thursday, June 28, 2007
WORKFORCE INVESTMENT ACT
Additional Actions Would Further Improve the Workforce System
Statement of Sigurd R. Nilsen, Director
Education, Workforce, and Income Security Issues
GAO-07-1051T
Mr. Chairman and Members of the Subcommittee:
Thank you for inviting me here today to present the findings from our work
on the Workforce Investment Act (WIA). As you know, WIA represented a
significant departure from earlier job training programs. Passed in 1998
and implemented by most states in July 2000, it was designed to unify a
fragmented employment and training system and create a single, universal
system--a one-stop system that could serve the needs of all job seekers
and employers. WIA sought to streamline the delivery of federally funded
employment and training services, enabling job seekers to make informed
choices among training providers and course offerings, and enhancing the
private sector role in the workforce system. WIA gave states and
localities flexibility in deciding how to implement the one-stop system,
allowing local one-stops to tailor their systems to local needs. Four
separate federal agencies--the Departments of Labor (Labor), Health and
Human Services (HHS), Education, and Housing and Urban Development
(HUD)--fund 16 categories of programs that are required to provide
services through the one-stop system. In addition to programs that are
required to take part in the new system, Labor encourages states and
localities to include optional partners, such as Temporary Assistance for
Needy Families (TANF), in order to better meet the specific workforce
development needs of their local areas. Labor takes a lead role in this
system and is responsible for assessing the effectiveness of Labor-funded
programs and for providing guidance and technical assistance to states and
localities as programs deliver their services through the one-stop system.
Since WIA was enacted, we have issued numerous reports that included
recommendations regarding many aspects of WIA, including performance
measures and accountability, funding formulas and spending, one-stop
centers, and training, as well as services provided to specific
populations, such as dislocated workers, youth, and employers. As the
Congress considers reauthorizing WIA, you asked us to summarize our
findings and recommendations and provide our assessment of the current
status of the system envisioned under WIA. My testimony today will discuss
(1) progress made by federal, state, and local officials in implementing
key provisions of WIA and (2) challenges that remain in implementing an
integrated employment and training system. To address these objectives, we
drew upon reports we issued between 2000 and 2007, as well as our ongoing
work for you on one-stop center infrastructure.^1 In our prior work on
WIA, we have employed an array of methodologies, including surveys of
state and local workforce officials and private sector employers; site
visits to state and local areas; interviews with local, state, and Labor
officials; and analysis of Labor's data and documents. Our new work on
one-stop center infrastructure is based primarily on an electronic survey
of state workforce officials in 50 states conducted between April and May
2007. In addition to our survey, we conducted a literature review to
identify findings from other studies--including those sponsored by
Labor--that examined one-stop delivery systems. We conducted our work in
accordance with generally accepted government auditing standards.
In summary, the workforce system's infrastructure and service strategies
have evolved under WIA to meet the needs of employers and job seekers, but
congressional action could further the system's development. While the
number of comprehensive one-stop centers has decreased somewhat over the
past six years, states generally reported increased availability of
services for some of the mandatory programs at comprehensive one-stop
centers. Adults and dislocated workers receive a wide range of services
through the one-stop system, but states and local areas have generally
focused their youth services on in-school youth, finding it difficult to
recruit and retain out-of-school youth. Most medium and large employers
are aware of and use the system and are quite satisfied with its services,
but they generally use one-stop centers to fill their needs for
low-skilled workers. Despite the progress states and local areas have made
in developing the system, key aspects of the program could be improved.
Funding issues continue to hamper the system, in part because WIA's
Dislocated Worker funding formula causes wide fluctuations in funding
levels from year to year that do not reflect actual layoff activity. In
addition, Labor's focus on expenditures without including obligations
overestimates the amount of funds available to provide services at the
local level. Moreover, little is known about what the system is achieving
because only a small minority of participants are captured in the
performance measures and Labor has not conducted an impact study to assess
the effectiveness of the one-stop system, as required under WIA. Labor has
taken some steps to improve guidance and communication, but has not
involved key stakeholders in the development of some of its major
initiatives and provided too little time for states and local areas to
implement them.
^1In particular, see GAO, Veterans' Employment and Training Service: Labor
Could Improve Information on Reemployment Services, Outcomes, and Program
Impact, [17]GAO-07-594 (Washington, D.C.: May 24, 2007); Workforce
Investment Act: Employers Found One-Stop Centers Useful in Hiring
Low-Skilled Workers, [18]GAO-07-167 (Washington, D.C.: Dec. 22, 2006);
Workforce Investment Act: Labor and States Have Taken Actions to Improve
Data Quality, but Additional Steps Are Needed, [19]GAO-06-82 ,
(Washington, D.C.: Nov. 14, 2005); Youth Opportunity Grants: Lessons Can
Be Learned from Program, but Labor Needs to Make Data Available,
[20]GAO-06-53 , (Washington, D.C.: Dec. 9, 2005); Workforce Investment
Act: Substantial Funds Are Used for Training, but Little Is Known about
Training Outcomes, [21]GAO-05-650 , (Washington, D.C.: June 29, 2005);
Workforce Investment Act: Issues Related to Allocation Formulas for Youth,
Adults, and Dislocated Workers, [22]GAO-03-636 , (Washington, D.C.: Apr.
25, 2003); Workforce Investment Act: States' Spending Is on Track, but
Better Guidance Would Improve Financial Reporting, [23]GAO-03-239 ,
(Washington, D.C.: Nov. 22, 2002); and Workforce Investment Act:
Implementation Status and the Integration of TANF Services.
[24]GAO/T-HEHS-00-145 . Washington, D.C.: June 29, 2000.
Background
The Workforce Investment Act created a new, comprehensive workforce
investment system designed to change the way employment and training
services are delivered. When WIA was enacted in 1998, it replaced the Job
Training Partnership Act (JTPA) with three new programs--Adult, Dislocated
Worker, and Youth--that allow for a broader range of services to the
general public, no longer using income to determine eligibility for all
program services. These new programs no longer focused exclusively on
training, but provided for three tiers, or levels, of service for adults
and dislocated workers: core, intensive, and training. Core services
include basic services such as job searches and labor market information.
These activities may be self-service or require some staff assistance.
Intensive services include such activities as comprehensive assessment and
case management, as well as classes in literacy, conflict resolution, work
skills, and those leading to general equivalency diploma (GED)--activities
that require greater staff involvement. Training services include such
activities as occupational skills or on-the-job training. These tiers of
WIA-funded services are provided sequentially. That is, in order to
receive intensive services, job seekers must first demonstrate that core
services alone will not lead to getting a job that will provide
self-sufficiency. Similarly, to receive training services, a job seeker
must show that core and intensive services will not lead to such a job.
Unlike prior systems, WIA requires that individuals eligible for training
under the Adult and Dislocated Worker Programs receive vouchers--called
Individual Training Accounts--which they can use for the training provider
and course offering of their choice, within certain limitations.
In addition to establishing the three new programs, WIA requires that
services for these programs, along with those of a number of other
employment and training programs, be provided through a single service
delivery system--the one-stop system. States were required to implement
these changes by July 1, 2000. Sixteen categories of programs from four
separate federal agencies must provide services through the system. (See
table 1.)
Table 1: WIA's Mandatory Programs and Related Federal Agencies
Federal agency Mandatory program
Department of Labor WIA Adult
WIA Dislocated Worker
WIA Youth
Employment Service (Wagner-Peyser)
Trade adjustment assistance programs
Veterans' employment and training programs
Unemployment Insurance
Job Corps
Senior Community Service Employment Program
Employment and training for migrant and seasonal
farm workers
Employment and training for Native Americans
Department of Education Vocational Rehabilitation Program
Adult Education and Literacy
Vocational Education (Perkins Act)
Department of Health and Community Services Block Grant
Human Services
Department of Housing and HUD-administered employment and training
Urban Development
Source: GAO-03-589 and Labor.
Note: Although WIA required 17 mandatory programs to participate in the
one-stop system, the Welfare-to-Work program no longer exists, reducing
the total to 16 mandatory programs.
Each local area must have at least one comprehensive one-stop center where
core services for all mandatory programs are accessible. WIA allows
flexibility in the way these mandatory partners provide services through
the one-stop system, allowing colocation, electronic linkages, or
referrals to off-site partner programs. While WIA requires these mandatory
partners to participate, it does not provide additional funds to operate
one-stop systems and support one-stop partnerships. As a result, mandatory
partners are expected to share the costs of developing and operating
one-stop centers. In addition to mandatory partners, one-stop centers have
the flexibility to include other partners in the one-stop system to better
meet specific state and local workforce development needs. Services may
also be provided at affiliated sites, defined as designated locations that
provide access to at least one employment and training program.
About $3.3 billion was appropriated in fiscal year 2006 for the three WIA
programs--Adult, Dislocated Worker, and Youth. The formulas for
distributing these funds to the states were left largely unchanged from
those used to distribute funds under the predecessor program, JTPA, and
are based on such factors as unemployment rates and the relative number of
low-income adults and youth in the population. In order to receive their
full funding allocations, states must report on the performance of their
three WIA programs. WIA requires that performance measures gauge program
results in the areas of job placement, retention, earnings, skill
attainment and customer satisfaction, largely through the use of
Unemployment Insurance (UI) wage records.^2 Labor's guidance requires that
job seekers be tracked for outcomes when they begin receiving core
services that require significant staff assistance. States are held
accountable by Labor for their performance and may receive incentive funds
or suffer financial sanctions based on whether they meet performance
levels. WIA requires states to negotiate with Labor to establish expected
performance levels for each measure. While WIA established performance
measures for the three WIA-funded programs, it did not establish any
comprehensive measures to assess the overall performance of the one-stop
system.
System Infrastructure and Service Strategies Have Evolved To Meet the Needs of
Job Seekers and Employers
Seven years after the implementation of the workforce investment system
under WIA, the system's infrastructure continues to evolve. Nationwide,
the number of comprehensive one-stop centers has decreased somewhat, but
not uniformly across states. States generally reported increased
availability of services for some of the mandatory programs at
comprehensive one-stop centers. But despite WIA's requirement that all
mandatory partners provide services through the one-stop system, some
states have maintained a completely separate system for delivering
services for Wagner-Peyser-funded Employment Services (ES). Adults and
dislocated workers receive a wide range of services through the one-stop
system, but states and local areas have generally focused their youth
services on in-school youth, finding it difficult to recruit and retain
out-of-school youth. Most medium and large employers are aware of and use
the system and are quite satisfied with its services, but they generally
use one-stop centers to fill their needs for low-skilled workers.
^2In some cases, supplemental data sources may be used when UI data are
not available. Supplemental data may not be used for the earnings measure.
WIA's Service Delivery Infrastructure Continues to Evolve
WIA's service delivery infrastructure has continued to evolve since we
last reviewed it in 2001. Over the 6-year period, nationwide, the number
of one-stop centers--both comprehensive and satellite--has declined, a
fact that states most often attributed to a decrease in funding. The
number of comprehensive centers declined from a high of 1,756 in 2001 to
1,637 in 2007. However, this trend is not uniform across states. Ten
states reported an increase in comprehensive centers over the last 4
years. For example, Montana reported a 600 percent increase in centers as
part of a statewide restructuring of its one-stop delivery system that
involved converting former satellite and affiliated sites into
comprehensive one-stop centers. States that reported an increase in the
number of comprehensive one-stop centers often cited a rise in demand for
services as the reason for the increase.
Services for mandatory programs are increasingly available through the
one-stop system in 2007, though not always on-site. States continue to
have services for two key programs--WIA Adult and Dislocated
Workers--available on-site at the majority of the one-stop centers. In
addition, 30 states reported that TANF services were generally available
on-site at a typical comprehensive one-stop center, and 3 more states
reported they were typically on-site at satellites. The on-site
availability of some other programs--such as, Job Corps, Migrant and
Seasonal Farmworkers, Senior Community Service and Employment Program, and
Adult Education and Literacy--declined slightly between 2001 and 2007.
However, the overall availability of these programs' services increased,
largely because of substantial increases in access through electronic
linkages and referrals.
Despite the increased availability of some programs at one-stop centers,
some states have not fully integrated all of their Wagner-Peyser-funded
Employment Service into the system. Six states reported in our 2007 survey
that they operate stand-alone Employment Service offices, all completely
outside the one-stop system. Another four states reported having at least
some stand-alone offices outside the system (see fig. 1). At the same
time, states that operate stand-alone offices also report providing
services on-site at the majority of their one-stops. Labor has expressed
concern that stand-alone Employment Service offices cause confusion for
individuals and employers and promote duplication of effort and
inefficient use of resources. Given the concern over resources, we asked
states to provide estimates of their state's total Employment Service
allotment that was used to support the infrastructure of the stand-alone
offices. Only 6 states could provide them, and the overall average was
about 5 percent. However, the state with the most stand-alone ES offices
reported that it had not used any of its ES allotment to support the
infrastructure of these offices. Instead, this state financed the
infrastructure costs of its 30 stand-alone offices with state general
funds. Despite their concerns, Labor officials say that they lack the
authority to prohibit stand-alone ES offices.
Figure 1: In 2007, 18 States Have Stand-alone ES Offices, Six States
Operate Them Completely Outside the System
While most states used multiple program funds to finance the operation of
their one-stops, WIA and ES continue to be the two programs most often
cited as funding sources used to cover one-stop infrastructure--or
nonpersonnel--costs. In program year 2005, the most recent year for which
data are available, 23 states reported that WIA was the top funding source
used to support infrastructure, while 19 states identified the Employment
Service. Of the eight states remaining, three cited TANF as the top
funding source, two cited Unemployment Insurance, one cited WIA state
funds, and two states could not provide this information. States reported
less reliance on other programs to fund the one-stop infrastructure in
2005 than in the past (see table 2). For example, the number of states
that reported using TANF funds at all to cover infrastructure costs
declined from 36 to 27.
Table 2: Programs Funding One-Stop Center Infrastructure Costs
Number of states Number of states
using program to using program to Number of states
fund fund using program to fund
infrastructure, infrastructure, infrastructure,
Program Fiscal Year 2000 Fiscal Year 2001 Program Year 2005
Labor
WIA Title I/JTPA 50 50 50
ES (Wagner-Peyser) 49 50 50
Veterans' 43 43 41
Employment and
Training program
NAFTA and 39 41 30
Trade/Trade
Adjustment
Assistance
Unemployment 39 39 34
Insurance
Welfare-to-Work 39 38 N/A
grants
One-stop 37 N/A N/A
implementation
grants
Job Corps 20 24 11
Education
Vocational 37 37 24
rehabilitation
Adult education 29 29 15
and literacy
Vocational 24 19 N/A
education
Other
Temporary 33 36 27
Assistance for
Needy Families
Community colleges N/A N/A 11
State funds N/A 31 24
Source: Based on GAO surveys conducted in 2000, 2001, and 2007.
N/A = not applicable.
States and Local Areas Have Sought to Tailor Services to Meet the Needs of
Customers
WIA provides the flexibility to states and local areas to develop
approaches for serving job seekers and employers that best meet local
needs. In our work we have found some broad trends in services, but there
continues to be wide variation across the country in the mix of services
and how they are provided. Local areas use a substantial portion of their
WIA funds to provide training to adults and dislocated workers, but use
even more to provide the services that go beyond training, including case
management, assessment, and supportive services. However, serving youth,
particularly out-of-school youth, has proven challenging. WIA increased
the focus on the employer as customer, and we found that most medium and
large employers are aware of and use the one-stop. However, employers look
to the one-stop system mostly to help fill their needs for low-skilled
workers, in part because they assume that most workers available through
the system are low-skilled.
Services to adults and dislocated workers involve more than training.
Despite early concerns about the extent of training, we found that
substantial WIA funds were being used to fund training. Local boards used
about 40 percent of the approximately $2.4 billion in WIA funds they had
available in program year 2003 to provide training services to an
estimated 416,000 WIA participants, primarily in occupational skills.^3
However, the vast majority of job seekers receive self-assisted core
services, not training. Not everyone needs or wants additional training.
And even when they do, they need help deciding what type of training would
best match their skill level while at the same time meet local labor
market needs--help that includes information on job openings,
comprehensive assessments, individual counseling, and supportive services,
such as transportation and child care. Of the funds available in program
year 2003, 60 percent was used to pay for these other program costs, as
well as to cover the cost of administering the program.^4
Providing services to youth has been challenging for local areas. Local
areas often focus their WIA youth resources on serving in-school youth,
often using a range of approaches to prevent academic failure and school
dropouts. Out-of-school youth are viewed as difficult to serve, in part
because they are difficult to locate in the community and they face
particularly difficult barriers to employment and education, including low
levels of academic attainment, limited work experience, and a scarcity of
jobs in the community. The 5-year Youth Opportunity Grants program,
authorized under WIA was designed, in part, to enhance the local
infrastructure of youth services, particularly in high-poverty areas.
Grantees offered participants a range of youth services--education,
occupational skills training, leadership development, and support
services. They set up centers that varied widely. To reach the
hard-to-serve target population, grantees used a variety of recruiting
techniques, ranging from the conventional to the innovative. For example,
some grantees conducted community walking campaigns using staff to
saturate shopping malls and other areas where youth congregate. Conditions
in the communities such as violence and lack of jobs presented a challenge
to most grantees, but they took advantage of the local discretion built
into the program to develop strategies to address them. Grantees and
others reported that the participants and their communities made progress
toward the education and employment goals of the program. However, a
formal assessment of the program's impact, while under way, has not yet
been released by Labor. Although Labor originally planned to continue to
add grantees, funding for the program was eliminated in the budget for
fiscal year 2004.^5
3Our estimate may include some participants more than once, because some
individuals may have received more than one type of training.
^4For more information, see [25]GAO-05-650 .
Employers mostly use one-stop centers to fill their needs for low-skilled
workers. Most medium and large employers are aware of and use the system
and are satisfied with its services (see fig 2). Regardless of size, just
over 70 percent of employers responding to our 2006 survey reported that
they hired a small percentage of their employees--about 9 percent--through
one-stops. Two-thirds of those they hired were low-skilled workers, in
part because they thought the labor available from the one-stops was
mostly low-skilled. Employers told us they would hire more job seekers
from the one-stop labor pools if the job seekers had the skills for which
they were looking. Most employers used the centers' job posting service,
fewer made use of the one-stops' physical space or job applicant screening
services. Still, when employers did take advantage of services, they
generally reported that they were satisfied with the services and found
them useful because they produced positive results and saved them time and
money. When employers did not use a particular one-stop service, in most
cases they said that they either were not aware that the one-stop provided
the service, or said they obtained it elsewhere, or said that they carried
through on their own.^6
^5For more information see GAO, Youth Opportunity Grants: Lessons Can Be
Learned from Program, but Labor Needs to Make Data Available,
[26]GAO-06-53 , (Washington, D.C.: December 9, 2005), and Workforce
Investment Act: Labor Actions Can Help States Improve Quality of
Performance Outcome Data and Delivery of Youth Services, [27]GAO-04-308 ,
(Washington, D.C.: February 23, 2004).
Figure 2: Percentage of Business Establishments Aware of, Using, and
Satisfied with One-Stops
Additional Action Could Help System Development
Despite the successes state and local officials have had since WIA's
implementation, some aspects of the law and other factors have hampered
their efforts. First, funding issues continue to stymie the system. For
example, the formulas in WIA that are used to allocate funds to states do
not reflect current program design and have caused wide fluctuations in
funding levels from year to year. In addition, Labor's focus on
expenditures without including obligations overestimates the amount of
funds available to provide services at the local level. Second, the
performance measurement system is flawed and little is known about what
WIA has achieved. Labor has taken some steps to improve guidance and
communication, but does not involve key stakeholders in the development of
some major initiatives and provides too little time for states and local
areas to implement them.
^6For more information, see [28]GAO-07-167 and GAO, [29]Workforce
Investment Act: Employers Are Aware of, Using, and Satisfied with One-Stop
Services, but More Data Could Help Labor Better Address Employers' Needs,
GAO-05-259 [30], (Washington, D.C.: February 18, 2005 ).
Funding Allocation and Spending Information Do Not Reflect Program Structure
As states and localities have implemented WIA, they have been hampered by
funding issues, including statutory funding formulas that are flawed. As a
result, states' funding levels may not always be consistent with the
actual demand for services. In previous work, we identified several issues
associated with the current funding formulas.^7 First, formula factors
used to allocate funds are not aligned with the target populations for
these programs.^8 Second, allocations may not reflect current labor market
conditions because there are time lags between when the data are collected
and when the allocations become available to states. Third, the formula
for the Dislocated Worker program is especially problematic, because it
causes funding levels to suffer from excessive and unwarranted volatility
unrelated to a state's actual layoff activity. Several aspects of the
Dislocated Worker formula contribute to funding volatility and to the
seeming lack of consistency between dislocation and funding. The excess
unemployment factor has a threshold effect--states may or may not qualify
for the one-third of funds allocated under this factor in a given year,
based on whether or not they meet the threshold condition of having at
least 4.5 percent unemployment statewide. In a study we conducted in 2003,
we compared dislocation activity and funding levels for several states. In
one example, funding decreased in one year while dislocation activity
increased by over 40 percent (see fig. 3). This volatility could be
mitigated by provisions such as "hold harmless" and "stop gain"
constraints that limit changes in funding to within a particular range of
each state's prior year allocation. The Adult formula includes such
constraints, setting the hold harmless at 90 percent and the stop gain at
130 percent.^9
7See [31]GAO-03-636 and GAO, Workforce Investment Act: Potential Effects
of Alternative Formulas on State Allocations, [32]GAO-03-1043 ,
(Washington, D.C.: August 28, 2003).
^8The formulas for distributing these funds to the states were left
largely unchanged from those used to distribute funds under JTPA.
^9For more information, see [33]GAO-03-636 .
Figure 3: An Example of the Mismatch between Dislocated Worker Funding
Allocation and Dislocation Activity--Massachusetts
In addition to issues related to funding allocation, the process used to
determine states' available funds considers only expenditures and does not
take into account the role of obligations in the current program
structure. Our analysis of Labor's data from program year 2003 and beyond
indicates that states are spending their WIA funds within the authorized
3-year period. Nationwide, states spent over 66 percent of their program
year 2003 WIA funds in the first year--an increase from the 55 percent
since our 2002 report. In fact, almost all program funds allocated in
program year 2003 were spent by states within 2 years. By contrast,
Labor's estimate of expenditure rates suggests that states are not
spending their funds as quickly because the estimate is based on all funds
states currently have available--from older funds carried in from prior
program years to those only recently distributed. Moreover, many of the
remaining funds carried over may have already been obligated--or committed
through contracts for goods and services for which a payment has not yet
been made. When we examined recent national data on the amount of WIA
funds states are carrying in from previous program years, we found that,
overall, the amount of carryover funds is decreasing--from $1.4 billion
into program year 2003 to $1.1 billion into program year 2005. One
explanation for the decline may be that obligations are being converted to
expenditures.
In our 2002 report, we also noted that Labor's data lacked consistent
information on obligations because states were not all using the same
definition for obligations in what they reported to Labor. Labor's
guidance was unclear and did not specify whether obligations made at the
local level--the point at which services are delivered--should be
included. We recommended that Labor clarify the guidance to standardize
the reporting of obligations and use this guidance when estimating states'
available funds. Labor issued revised guidance in 2002, but continues to
rely on expenditure data in establishing its estimates. In so doing, it
overestimates the funds states have available to spend and ignores the
role of obligations in the current workforce investment system. Labor's
Office of the Inspector General (OIG) recently concurred, noting that
obligations provide a more useful measure for assessing states' WIA
funding status if obligations accurately reflect legally committed funds
and are consistently reported.^10
Little Is Known about What the System Is Achieving
We have little information at a national level about what the workforce
investment system under WIA achieves. Outcome data do not provide a
complete picture of WIA services. The data reflect only a small portion of
those who receive WIA services and contain no information on services to
employers. Furthermore, WIA performance data are not comparable across
states and localities, in part because of inconsistent policies in
tracking participants for outcomes. In addition, the use of wage records
to calculate outcomes is no longer consistent across states. Labor and
states have made progress in measuring WIA performance in a number of
areas, including Labor's data validation initiative and the move to common
measures. Labor's proposed integrated data system holds promise in
improving data reporting, but it is unclear whether it will be implemented
as currently proposed. Furthermore, Labor has not yet conducted an impact
evaluation, as required by WIA.
^10For more information, see U.S. Department of Labor, Office of Inspector
General, Semi-Annual Report to Congress, Volume 57 (October 1, 2006-March
31, 2007), and [34]GAO-03-239 .
WIA performance data do not include information on all customers receiving
services. Currently Labor has only limited information on certain job
seekers--those who use only self-services--and on employers. WIA excludes
job seekers who receive core services that are self-service or
informational in nature from being included in the performance
information. Thus, only a small proportion of the job seeker population
who receive services at one-stops are actually reflected in WIA outcome
data, making it difficult to know what the overall program is achieving.
Customers who use self-services are estimated to be the largest portion of
those served under WIA. In a 2004 study, we reported that some estimates
show only about 5.5 percent of the individuals who walked into a one-stop
were actually registered for WIA and tracked for outcomes. Furthermore,
Labor has limited information about employer involvement in the one-stop
system. Although Labor measures employers' satisfaction, this measure does
not provide information on how employers use the system. Labor officials
told us that they do not rely on this information for any purpose, and the
information is too general for states and local areas to use.
WIA performance data are not comparable across states and localities.
Because not all job seekers are included in WIA's outcome measures, states
and local areas must decide when to begin tracking participants for
outcomes--a decision that has led to outcome data that are not comparable
across states and local areas. The guidance available to states at the
time WIA was first implemented was open to interpretation in some key
areas. For example, the guidance told states to register and track for
outcomes all adults and dislocated workers who receive core services that
require significant staff assistance, but states could decide what
constituted significant staff assistance. As a result, states and local
areas have differed on whom they track and for how long--sometimes
beginning the process when participants receive core services, and at
other times not until they receive more intensive services. We have
recommended that Labor determine a standard point of registration and
monitor states to ensure they comply. Labor has taken some actions, but
registration remains an issue.^11
Furthermore, data are not comparable because the availability of wage
records to calculate outcomes is no longer consistent across states. UI
wage records--the primary data source for tracking WIA
performance--provide a fairly consistent national view of WIA performance.
At the same time, UI wage records cannot be readily used to track job
seekers who get jobs in other states unless states share data. The Wage
Record Interchange System (WRIS) was developed to allow states to share UI
wage records and account for job seekers who participate in one state's
employment programs but get jobs in another state. In recent years, all
states but one participated in WRIS while it was operated by the nonprofit
National Association of State Workforce Agencies. However, in July 2006,
Labor assumed responsibility for administering WRIS, and many states have
withdrawn, in part because of a perceived conflict of interest between
Labor's role in enforcing federal law and the states' role in protecting
the confidentiality of their data. As of March 2007, only 30 states were
participating in the program, and it is unknown if and when the other
states will enter the data-sharing agreement. As a result, performance
information in almost half the states may not include employment outcomes
for job seekers who found jobs outside the states in which they received
services.^12
^11See [35]GAO-06-82 .
Labor has taken steps to address issues related to the quality of WIA
performance data, but further action is needed. Both Labor's OIG and our
early studies of WIA raised issues on the quality of the performance data,
and Labor has taken steps aimed at addressing these issues. In October
2004, Labor began requiring states to implement new data validation
procedures for WIA performance data. This process requires states to
conduct two types of validation: (1) data element validation--reviewing
samples of WIA participant files, and (2) report validation--assessing
whether states' software accurately calculated performance outcomes. While
it is too soon to fully assess whether Labor's efforts have improved data
quality, officials in most states have reported that Labor's new
requirements have helped increase awareness of data accuracy and
reliability at both the state and local levels.^13
In addition, in 2005, in response to an Office of Management and Budget
(OMB) initiative, Labor began requiring states to implement a common set
of performance measures for its employment and training programs,
including WIA.^14 These measures include an entered employment rate, an
employment retention rate, and an average earnings measure. Moving to the
common measures has increased the comparability of outcome information
across programs and made it easier for states and local areas to collect
and report performance information across the full range of programs that
provide services in the one-stop system. In addition, as part of the
implementation of the common measures, states are for the first time
required to collect and report a count of all WIA participants who use
one-stop centers. This may help provide a more complete picture of the
one-stop system.^15
^12For more information, see [36]GAO-07-594 .
^13See [37]GAO-06-82 .
^14OMB established a set of common measures to be applied to most
federally funded job training programs that share similar goals.
The shift to common measures could also affect services to some groups of
job seekers. Historically, certain WIA performance measures--primarily the
earnings measure--have driven localities to serve only those customers who
will help meet performance levels. For example, program providers have
reported that the earnings measure provides a disincentive to enroll older
workers in the program because of employment characteristics that may
negatively affect program performance. In several local areas we visited
for our study of older worker services, officials said they considered
performance measures a barrier to enrolling older workers seeking
part-time jobs because they would have lower earnings and therefore reduce
measured program performance. Labor's shift from earnings gain to average
earnings under the common measures may help reduce the extent to which the
measures are a disincentive to serve certain populations. It remains
unclear, however, how the new measure will affect the delivery of services
to some groups, such as older workers, who are more likely to work
part-time and have lower overall wages. Further action may be needed to
help reduce the incentive to serve only those who will help meet
performance levels. One approach that could help would be to
systematically adjust expected performance levels to account for different
populations and local economic conditions when negotiating performance. We
have made such a recommendation to Labor, but little action has been
taken.^16
The Workforce Investment Streamlined Performance Reporting System (WISPR).
Since 2004, Labor has been planning to implement an integrated
data-reporting system that could greatly enhance the understanding of job
seeker services and outcomes. WISPR represents a promising step forward in
integrating and expanding program reporting, but it is unclear whether
implementation will occur as proposed. If implemented, the system would
integrate data reporting by using standardized reporting requirements
across the Employment Service, WIA, veterans' state grant, and Trade
Adjustment Assistance programs, and ultimately replace their existing
reporting systems with a single reporting structure. Its integrated design
would, for the first time, allow Labor and states to track an individual's
progress through the one-stop system. In addition, the system would expand
data collection and reporting in two key areas: the services provided to
employers and estimates of the number of people who access the one-stop
system but ultimately receive limited or no services from one-stop staff.
On the basis of our preliminary review, WISPR appears to address many of
the issues we've raised regarding the system's current performance data.
However, concerns have been raised about challenges in implementing the
new system, and at present, the timeline for WISPR's implementation
remains unclear. Given the rapidly approaching July 1, 2007,
implementation date, it appears likely that implementation will be
delayed.^17
^15See [38]GAO-06-82 .
^16For more information, see GAO, Workforce Investment Act: States and
Local Areas Have Developed Strategies to Assess Performance, but Labor
Could Do More to Help, [39]GAO-04-657 , (Washington, D.C.: June 1, 2004).
No information exists on what works and for whom. Although Labor has
improved its outcome data on job seekers who participate in its programs,
these data alone cannot measure whether outcomes are a direct result of
program participation, rather than external factors. For example, local
labor market conditions may affect an individual's ability to find a job
as much as or more than participation in an employment and training
program. To measure the effects of a program, it is necessary to conduct
an impact evaluation that would seek to assess whether the program itself
led to participant outcomes. Since the full implementation of WIA in
2000--in which the one-stop system became the required means to provide
most employment and training services--Labor has not made evaluating the
impact of those services a research priority. While WIA required such an
evaluation by 2005, Labor has declined to fund one in prior budgets. In
2004, we recommended that Labor comply with the requirements of WIA and
conduct an impact evaluation of WIA services to better understand what
services are most effective for improving outcomes.^18 In response, Labor
cited the need for program stability and proposed delaying an impact
evaluation of WIA until after reauthorization. In its 2008 budget
proposal, Labor identified an assessment of WIA's impact on employment,
retention, and earnings outcomes for participants as an effort the agency
would begin. As of May 2007, according to Labor officials, the agency had
not yet begun to design the study.^19
^17For more information, see [40]GAO-07-594 .
^18See [41]GAO-04-657 .
Labor Should Consider Alternative Approaches to Implement New Initiatives
Labor has implemented some initiatives, such as national performance and
reporting summits, to better communicate with states on changes in
processes and procedures. However, guidance on policy changes has often
come too late for states to be able to implement them. For example, in
implementing common measures, states had very little time to make the
necessary changes before they had to begin data collection and reporting
using the new requirements. While Labor publicized its plans to adopt the
common measures, states were notified only in late February 2005 that
Labor planned to implement changes on July 1, 2005, and final guidance was
not issued until April 15, 2005. This gave states 3 months or less to
interpret federal guidance, coordinate with partners, modify information
technology systems, issue new guidance, and train local area staff. In our
2005 report, we commented that rushed implementation could negatively
affect data quality and compromise the potential benefits of the proposed
changes.^20
In addition to underestimating the cost, time, and effort required of
states to make such changes, Labor has failed to solicit adequate
stakeholder input when introducing some major new initiatives. For
example, Labor's efforts to implement an integrated reporting system have
been hampered by a lack of stakeholder input. In 2004, Labor first
proposed a single, streamlined reporting system, known as the ETA
Management Information and Longitudinal Evaluation system (EMILE) that
would have replaced reporting systems for several Labor programs. While
many states supported streamlined reporting, 36 states indicated that
implementing the EMILE system, as proposed, would be very burdensome.
Labor developed the system with only limited consultation with key
stakeholders, including state officials, and as a result underestimated
the magnitude and type of changes EMILE would require and the resources
states would need in order to implement it. In response, Labor
substantially modified this system's design. The modified system, now
called WISPR, was set to be implemented on July 1, 2007. As with EMILE,
however, concerns have been raised about challenges in implementing the
new system, particularly the early implementation date. Some comments to
OMB expressed the view that Labor had again underestimated the time states
would need to revise policy, reprogram systems, and retrain staff. Given
the rapidly approaching deadline and states' readiness to implement this
system, it seems that this important initiative will likely be delayed
again. In 2005, we recommended that Labor consider alternative approaches
that involve ongoing consultation with key stakeholders as the agency
seeks to implement its new initiatives.
^19See [42]GAO-07-594 .
^20For more information, see GAO, Workforce Investment Act: Labor Should
Consider Alternative Approaches to Implement New Performance and Reporting
Requirements, [43]GAO-05-539 , (Washington, D.C.: May 27, 2005).
Concluding Observations
In the 7 years since most states fully implemented WIA, much progress has
been made in developing and implementing a universal system. With notable
exceptions, services for partner programs are becoming increasingly
available through the one-stop system. States and local areas have used
the flexibility under WIA to tailor services for where they are and for
whom they serve. As the Congress moves toward reauthorizing WIA,
consideration should be given to maintaining that state and local
flexibility, whereby innovation and system ownership can be fostered.
However, some aspects of WIA could be improved through legislative action.
Our findings highlight two key areas:
o Improving the data on people who use the system: Requiring all
job seekers who receive WIA funded services to be included in the
performance management system would improve understanding of who
gets served and eliminate the ambiguity about who should be
tracked and for how long.
o Improving funding stability: If Congress chooses not to make
broader funding formula changes, reducing the volatility in the
Dislocated Worker allocation by requiring the use of hold harmless
and stop gain provisions in the formula would help stabilize
funding and better foster sound financial practices.
Furthermore, we have made a number of recommendations to Labor to improve
aspects of the current program. While Labor has implemented many of them,
several key concerns remain unaddressed. Labor has not taken steps to
o more accurately estimate states' available fund by considering
obligations as well as expenditures,
o establish suitable performance levels for states to achieve by
developing and implementing a systematic approach for adjusting
expected performance to account for different populations and
local economic conditions,
o maximize the likelihood that new initiatives will be adopted in
an achievable time frame by using a collaborative approach that
engages all key stakeholders, and
o improve policymakers' understanding of what employment and
training programs achieve by conducting important program
evaluations, including an impact study on WIA, and releasing those
findings in a timely way.
In absence of actions by Labor on these issues, the Congress may wish to
address them legislatively.
Mr. Chairman, this completes my prepared statement. I would be happy to
respond to any questions you or other members of the committee may have at
this time.
GAO Contacts and Staff Acknowledgments
For information regarding this testimony, please contact Sigurd R. Nilsen,
Director, Education, Workforce, and Income Security Issues, at (202)
512-7215. Individuals who made key contributions to this testimony include
Dianne Blank, Rebecca Woiwode, and Thomas McCabe.
Related GAO Products
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on Reemployment Services, Outcomes, and Program Impact. [44]GAO-07-594 .
Washington, D.C.: May 24, 2007.
Workforce Investment Act: Employers Found One-Stop Centers Useful in
Hiring Low-Skilled Workers; Performance Information Could Help Gauge
Employer Involvement. [45]GAO-07-167 . Washington, D.C.: December 22,
2006.
National Emergency Grants: Labor Has Improved Its Grant Award Timeliness
and Data Collection, but Further Steps Can Improve Process. [46]GAO-06-870
. Washington, D.C.: September 5, 2006.
Trade Adjustment Assistance: Most Workers in Five Layoffs Received
Services, but Better Outreach Needed on New Benefits. [47]GAO-06-43 .
Washington, D.C.: January 31, 2006.
Youth Opportunity Grants: Lessons Can Be Learned from Program, but Labor
Needs to Make Data Available. [48]GAO-06-53 . Washington, D.C.: December
9, 2005.
Workforce Investment Act: Labor and States Have Taken Actions to Improve
Data Quality, but Additional Steps Are Needed. [49]GAO-06-82 . Washington,
D.C.: November 14, 2005.
Workforce Investment Act: Substantial Funds Are Used for Training, but
Little Is Known about Training Outcomes. [50]GAO-05-650 . Washington,
D.C.: June 29, 2005.
Unemployment Insurance: Better Data Needed to Assess Reemployment Services
to Claimants. [51]GAO-05-413 . Washington, D.C.: June 24, 2005.
Workforce Investment Act: Labor Should Consider Alternative Approaches to
Implement New Performance and Reporting Requirements. [52]GAO-05-539 .
Washington, D.C.: May 27, 2005.
Workforce Investment Act: Employers Are Aware of, Using, and Satisfied
with One-Stop Services, but More Data Could Help Labor Better Address
Employers' Needs. [53]GAO-05-259 . Washington, D.C.: February 18, 2005.
Workforce Investment Act: Labor Has Taken Several Actions to Facilitate
Access to One-Stops for Persons with Disabilities, but These Efforts May
Not Be Sufficient. [54]GAO-05-54 . Washington, D.C.: December 14, 2004.
Workforce Investment Act: States and Local Areas Have Developed Strategies
to Assess Performance, but Labor Could Do More to Help. [55]GAO-04-657 .
Washington, D.C.: June 1, 2004.
National Emergency Grants: Labor Is Instituting Changes to Improve Award
Process, but Further Actions Are Required to Expedite Grant Awards and
Improve Data. [56]GAO-04-496 . Washington, D.C.: April 16, 2004.
Workforce Investment Act: Labor Actions Can Help States Improve Quality of
Performance Outcome Data and Delivery of Youth Services. [57]GAO-04-308 .
Washington, D.C.: February 23, 2004.
Workforce Training: Almost Half of States Fund Worker Training and
Employment through Employer Taxes and Most Coordinate with Federally
Funded Programs. [58]GAO-04-282 . Washington, D.C.: February 13, 2004.
Workforce Investment Act: Potential Effects of Alternative Formulas on
State Allocations. [59]GAO-03-1043 . Washington, D.C.: August 28, 2003.
Workforce Investment Act: Exemplary One-Stops Devised Strategies to
Strengthen Services, but Challenges Remain for Reauthorization.
[60]GAO-03-884T . Washington, D.C.: June 18, 2003.
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Sharing Is Needed. [61]GAO-03-725 . Washington, D.C.: June 18, 2003.
Workforce Investment Act: Issues Related to Allocation Formulas for Youth,
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[63]GAO-03-353 . Washington, D.C.: February 14, 2003.
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Services. [64]GAO-03-350 . Washington, D.C.: January 24, 2003.
Workforce Investment Act: States' Spending Is on Track, but Better
Guidance Would Improve Financial Reporting. [65]GAO-03-239 . Washington,
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Services for TANF Clients, but Better Information Needed on Effective
Approaches. [66]GAO-02-696 . Washington, D.C.: July 3, 2002.
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but Additional Guidance Would Enhance Program Development. [67]GAO-02-413
. Washington, D.C.: April 5, 2002.
Workforce Investment Act: Better Guidance and Revised Funding Formula
Would Enhance Dislocated Worker Program. [68]GAO-02-274 . Washington,
D.C.: February 11, 2002.
Workforce Investment Act: Improvements Needed in Performance Measures to
Provide a More Accurate Picture of WIA's Effectiveness. [69]GAO-02-275 .
Washington, D.C.: February 1, 2002.
Workforce Investment Act: Better Guidance Needed to Address Concerns over
New Requirements. [70]GAO-02-72 . Washington, D.C.: Oct. 4, 2001. Also
testimony [71]GAO-02-94T .
Workforce Investment Act: Implementation Status and the Integration of
TANF Services. [72]GAO/T-HEHS-00-145 . Washington, D.C.: June 29, 2000.
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Highlights of [80]GAO-07-1051T , a testimony before the Subcommittee on
Higher Education, Lifelong Learning, and Competitiveness, Committee on
Education and Labor, House of Representatives
June 28, 2007
WORKFORCE INVESTMENT ACT
Additional Actions Would Further Improve the Workforce System
Since the Workforce Investment Act's (WIA) enactment in 1998, GAO has
issued numerous reports that included recommendations regarding many
aspects of WIA, including performance measures and accountability, funding
formulas and spending, one-stop centers, and training, as well as services
provided to specific populations, such as dislocated workers, youth, and
employers. Collectively, these studies employed an array of data
collection techniques, including surveys to state and local workforce
officials and private sector employers; site visits; interviews with
local, state, and Labor officials; and analysis of Labor data and
documents. This testimony draws upon the results of these reports, issued
between 2000 and 2007, as well as GAO's ongoing work on one-stop
infrastructure, and discusses issues raised and recommendations made.
Specifically, the testimony addresses (1) progress made by federal, state,
and local officials in implementing key provisions of WIA; and (2)
challenges that remain in implementing an integrated employment and
training system.
GAO is making no new recommendations at this time.
Seven years after implementing the workforce investment system under WIA,
the system's infrastructure continues to evolve. Nationwide, the number of
comprehensive one-stop centers has decreased somewhat, but not uniformly
across states. States generally reported increased availability of
services for some of the mandatory programs at comprehensive one-stop
centers. However, despite WIA's requirement that all mandatory partners
provide services through the one-stop system, some states have maintained
a completely separate system for delivering services for
Wagner-Peyser-funded Employment Services. Adults and dislocated workers
receive a wide range of services through the one-stop system. Local areas
used about 40 percent of their WIA funds in 2003 to provide training
services to an estimated 416,000 participants, but the vast majority of
job seekers receive services other than training. States and local areas
have generally focused their youth services on in-school youth and have
found it difficult to recruit and retain out-of-school youth. Most medium
and large employers are aware of and use the system and are quite
satisfied with its services, but they generally use one-stop centers to
fill their needs for low-skilled workers.
Despite the successes state and local officials have had since WIA's
implementation, some aspects of the law and other factors have hampered
their efforts. Funding issues continue to stymie the system. WIA's
formulas that are used to allocate funds to states do not reflect current
program design and have caused wide fluctuations in funding levels from
year to year that do not reflect actual layoff activity. In addition,
Labor's focus on expenditures without including obligations overestimates
the amount of funds available to provide services at the local level.
Moreover, little is known about what the system is achieving because only
a small minority of participants are captured in the performance measures,
and Labor has not conducted an impact study to assess the effectiveness of
the one-stop system, as required under WIA. Labor has taken some steps to
improve guidance and communication, but does not involve key stakeholders
in the development of some major initiatives and provides too little time
for states and local areas to implement them. We are suggesting that
Congress consider taking steps to improve the stability of the funding and
enhance the data available on people who use the system. In addition, in
our past work, we have recommended that Labor use obligations when
estimating states' available funds, that it comply with the requirements
of WIA and conduct an impact evaluation, and that it consider alternative
approaches in implementing new initiatives that involve ongoing
consultation with key stakeholders. Labor has taken little action on these
recommendations.
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66. http://www.gao.gov/cgi-bin/getrpt?GAO-02-696
67. http://www.gao.gov/cgi-bin/getrpt?GAO-02-413
68. http://www.gao.gov/cgi-bin/getrpt?GAO-02-274
69. http://www.gao.gov/cgi-bin/getrpt?GAO-02-275
70. http://www.gao.gov/cgi-bin/getrpt?GAO-02-72
71. http://www.gao.gov/cgi-bin/getrpt?GAO-02-94T
72. http://www.gao.gov/cgi-bin/getrpt?GAO/T-HEHS-00-145
73. http://www.gao.gov/
74. http://www.gao.gov/
75. http://www.gao.gov/fraudnet/fraudnet.htm
76. mailto:[email protected]
77. mailto:[email protected]
78. mailto:[email protected]
79. http://www.gao.gov/cgi-bin/getrpt?GAO-07-1051T
80. http://www.gao.gov/cgi-bin/getrpt?GAO-07-1051T
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