Trade Adjustment Assistance: States Have Fewer Training Funds	 
Available than Labor Estimates When Both Expenditures and	 
Obligations Are Considered (02-NOV-07, GAO-08-165).		 
                                                                 
Manufacturing workers face an uncertain future as manufacturing  
employment declines--more than 3 million manufacturing jobs have 
been lost in this country since 2000 because of international	 
trade as well as other factors. The Trade Adjustment Assistance  
(TAA) program, administered by the Department of Labor (Labor),  
is the nation's primary program providing income support, job	 
training, and other benefits for manufacturing workers who lose  
their jobs as a result of international trade. During the 3-year 
period from fiscal years 2004 through 2006, Labor certified	 
nearly 4,700 petitions for TAA covering an estimated 400,000	 
workers. For fiscal year 2006, Congress appropriated about $966  
million for TAA, of which about $220 million was for training	 
trade-affected workers. Each year, Labor initially allocates 75  
percent of the training funds, or $165 million, to states	 
according to a formula developed by Labor. Labor holds the	 
remaining 25 percent in reserve to distribute to states 	 
throughout the year as the need arises because of unexpected	 
layoffs. To minimize year-to-year fluctuations in state funding, 
Labor uses a "hold harmless" policy that ensures that each	 
state's initial allocation is at least 85 percent of the initial 
allocation received in the previous year. States have 3 years to 
spend TAA funds--fiscal year 2006 funds must be used by the end  
of fiscal year 2008. In addition, to cover administrative costs, 
Labor allocates to each state an additional 15 percent of its	 
training allocation. Labor can also provide states with 	 
supplemental funding to assist TAA participants through National 
Emergency Grants (NEG)--discretionary awards intended to	 
temporarily expand service capacity in response to major layoffs.
During hearings held in June 2007, Labor asserted that, based on 
reported expenditures, all states had sufficient funds to provide
training benefits to trade-affected workers. We reported in May  
2007 that, in fact, 13 states used virtually none of their fiscal
year 2006 training funds, even when considering both expenditures
and obligations--that is, funds that have been committed but not 
yet paid. On the other hand, we also reported that nine states	 
had used virtually all of their fiscal year 2006 training funds. 
Our prior work on another key employment and training		 
program--the Workforce Investment Act--found that expenditures by
themselves do not provide a complete picture of spending	 
activity. Obligations must be considered to accurately gauge how 
much is available to provide services--such as training--to	 
participants, and we recommended that Labor use obligations when 
estimating available funds. Recently, Labor's Office of Inspector
General has also concluded that obligations provide a more useful
measure for assessing states' funding status if the obligations  
accurately reflect legally committed funds and are consistently  
reported. Because TAA reauthorization is rapidly approaching,	 
Congress must have accurate information on whether current	 
funding levels are meeting TAA training needs. Congress asked	 
that we assess (1) the total amount of TAA training funds states 
actually had available in fiscal year 2007, (2) the process	 
states use to obligate training funds and how they manage these  
obligations, and (3) the amount of National Emergency Grants	 
(NEG) funds that have been awarded for TAA during the past 3	 
fiscal years.							 
-------------------------Indexing Terms------------------------- 
REPORTNUM:   GAO-08-165 					        
    ACCNO:   A77912						        
  TITLE:     Trade Adjustment Assistance: States Have Fewer Training  
Funds Available than Labor Estimates When Both Expenditures and  
Obligations Are Considered					 
     DATE:   11/02/2007 
  SUBJECT:   Appropriated funds 				 
	     Employee training					 
	     Employment 					 
	     Employment assistance programs			 
	     Federal aid to states				 
	     Federal funds					 
	     Federal/state relations				 
	     Government grants					 
	     Grants						 
	     Grants to states					 
	     International trade				 
	     Manufacturing industry				 
	     On-the-job training				 
	     Trade Adjustment Assistance Program		 

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GAO-08-165

   

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material separately. 

United States Government Accountability Office: 
GAO: 

Report to the Chairman, Subcommittee on Trade, Committee on Ways and 
Means, House of Representatives: 

November 2007: 

Trade Adjustment Assistance: 

States Have Fewer Training Funds Available than Labor Estimates When 
Both Expenditures and Obligations Are Considered: 

GAO-08-165: 

Contents: 

Letter: 

Appendix I: Briefing Slides: 

Appendix II: TAA Training Funds Available in Fiscal Year 2007, by 
State: 

Appendix III: National Emergency Grants Received by States, Fiscal 
Years 2005 through 2007 for TAA: 

Appendix IV: Comments from the Department of Labor: 

Related GAO Products: 

Abbreviations: 

NEG: National Emergency Grant: 

TAA: Trade Assistance Act: 

[End of section] 

United States Government Accountability Office: Washington, DC 20548: 

November 2, 2007: 

The Honorable Sander M. Levin: Chairman:
Subcommittee on Trade:
Committee on Ways and Means:
House of Representatives: 

Dear Mr. Chairman: 

Manufacturing workers face an uncertain future as manufacturing 
employment declines--more than 3 million manufacturing jobs have been 
lost in this country since 2000 because of international trade as well 
as other factors. The Trade Adjustment Assistance (TAA) program, 
administered by the Department of Labor (Labor), is the nation's 
primary program providing income support, job training, and other 
benefits for manufacturing workers who lose their jobs as a result of 
international trade. During the 3-year period from fiscal years 2004 
through 2006, Labor certified nearly 4,700 petitions for TAA covering 
an estimated 400,000 workers. For fiscal year 2006, Congress 
appropriated about $966 million for TAA, of which about $220 million 
was for training trade-affected workers. 

Each year, Labor initially allocates 75 percent of the training funds, 
or $165 million, to states according to a formula developed by Labor. 
Labor holds the remaining 25 percent in reserve to distribute to states 
throughout the year as the need arises because of unexpected layoffs. 
To minimize year-to-year fluctuations in state funding, Labor uses a 
"hold harmless" policy that ensures that each state's initial 
allocation is at least 85 percent of the initial allocation received in 
the previous year. States have 3 years to spend TAA funds--fiscal year 
2006 funds must be used by the end of fiscal year 2008. In addition, to 
cover administrative costs, Labor allocates to each state an additional 
15 percent of its training allocation. Labor can also provide states 
with supplemental funding to assist TAA participants through National 
Emergency Grants (NEG)--discretionary awards intended to temporarily 
expand service capacity in response to major layoffs. 

During hearings held in June 2007, Labor asserted that, based on 
reported expenditures, all states had sufficient funds to provide 
training benefits to trade-affected workers. We reported in May 2007 
that, in fact, 13 states used virtually none of their fiscal year 2006 
training funds, even when considering both expenditures and 
obligations--that is, funds that have been committed but not yet 
paid.[Footnote 1] On the other hand, we also reported that nine states 
had used virtually all of their fiscal year 2006 training funds. Our 
prior work on another key employment and training program--the 
Workforce Investment Act--found that expenditures by themselves do not 
provide a complete picture of spending activity.[Footnote 2] 
Obligations must be considered to accurately gauge how much is 
available to provide services--such as training--to participants, and 
we recommended that Labor use obligations when estimating available 
funds. Recently, Labor's Office of Inspector General has also concluded 
that obligations provide a more useful measure for assessing states' 
funding status if the obligations accurately reflect legally committed 
funds and are consistently reported. 

Because TAA reauthorization is rapidly approaching, Congress must have 
accurate information on whether current funding levels are meeting TAA 
training needs. You asked that we assess (1) the total amount of TAA 
training funds states actually had available in fiscal year 2007, (2) 
the process states use to obligate training funds and how they manage 
these obligations, and (3) the amount of National Emergency Grants 
(NEG) funds that have been awarded for TAA during the past 3 fiscal 
years. To address the first question, we obtained financial data from 
Labor for TAA training funds allocated in fiscal years 2005 through 
2007. We analyzed states' reported information on expenditures and 
obligations through March 31, 2007. We verified the reliability of 
Labor's information by comparing it to other sources and assessing the 
accuracy of mathematical computations. We did not verify the accuracy 
of the expenditure and obligation data states reported to Labor. To 
address the second objective, we conducted a telephone survey of all 50 
states and received responses from 45. These 45 states represent 85 
percent of the TAA training funds allocated during fiscal years 2005 
through 2007. Finally, to address the third objective, we collected 
information on NEG funds for TAA provided to each state for fiscal 
years 2005 through 2007. We performed our work between July and October 
2007 in accordance with generally accepted government auditing 
standards. 

On September 26, 2007, we briefed your staff on the results of our 
efforts. This report formally conveys the information provided during 
that briefing. Appendix I contains the briefing slides. 

In summary, we found that as of March 31, 2007, states had about $173 
million of TAA training funds available compared with Labor's estimate 
of $447 million.[Footnote 3] The difference between our estimate and 
Labor's is due to several factors. First, Labor's estimate included 
about $92 million in administrative funds, not intended to be used for 
training, that was awarded to states during fiscal years 2005 through 
2007. Second, Labor included more than $12 million that was provided to 
states in fiscal year 2006 to upgrade their management information 
systems. Third, Labor's estimate did not consider any of the 
approximately $107 million of TAA training obligations states reported 
for funds allocated during fiscal years 2005 through 2007. Finally, 
Labor's estimate did not account for any of the TAA training 
expenditures states reported in fiscal year 2007, through March 31, 
2007. These factors contributed to our estimate of available training 
funds being lower than Labor's. We also found that total funding 
available in 2007 varied widely from state to state, consistent with 
our earlier findings of fiscal year 2006 spending alone. For example, 
seven states reported spending or obligating all of the funds they had 
received during fiscal years 2005 through 2007. On the other hand, 21 
states reported not spending or obligating any of their fiscal year 
2007 TAA training funds--and, 6 of the 21 states had not spent or 
obligated any of their fiscal year 2006 TAA training funds as well. See 
appendix II for a complete listing of the amounts of TAA training funds 
states had available as of March 31, 2007. 

Nearly all of the states responding to our telephone survey reported 
obligating TAA training funds when an actual commitment occurs, and 
most states reported actively managing their obligations, including de- 
obligating funds in a timely manner. Of the 45 states responding to our 
survey, 44 reported obligating funds when either a training contract is 
signed or when a participant is approved for, or enrolls in, training. 
For longer-term training, about one-third of the states reported 
obligating the entire amount of the training contract. Thus, if a 
participant enrolled in training that cost $20,000 and covered 2 years, 
these states would obligate the entire $20,000 at one time. On the 
other hand, about two-thirds of the states would only obligate a 
portion of the $20,000 needed for a specific period, such as the 
current fiscal year. Nearly 90 percent of the states responding to our 
survey also reported having procedures to de-obligate training funds in 
a timely manner, often as soon as the state is notified that the 
participant is no longer in training. Most of the states reported 
actively monitoring obligations to ensure that they are current and 
accurate, often through the use of training attendance records. 

During fiscal years 2005 through 2007, 18 states received a total of 
$32 million in NEGs for TAA participants. Approximately two-thirds of 
these funds were distributed in fiscal year 2005. In fiscal year 2006, 
only 5 states received NEG funds--about $6 million--for TAA 
participants and only 6 states in fiscal year 2007--about $4.5 million. 
See appendix III for the amount of NEG funds provided to states for TAA 
during fiscal years 2005 through 2007. 

We provided a draft of this report to Labor for comment. In its 
response, Labor took issue with several of our findings. Labor noted 
that its estimate of $453 million was intended to convey the total 
amount available for training expenditures over the entire fiscal year 
and not to represent funding availability as of March 31. In order to 
provide the most current and accurate information about the amount of 
training funds states had available, we deducted expenditures and 
obligations made by states through the first 6 months of fiscal year 
2007. Even without considering any expenditures and obligations during 
fiscal year 2007, Labor's estimate would have overstated the amount of 
funds states had available for training. For example, Labor's estimate 
of available training funds included over $104 million not intended for 
training, but rather for administrative expenses and for upgrading 
management information systems. 

Labor states that it does not believe it is appropriate to subtract 
obligations when estimating available funds, saying that, even though 
the funds are obligated, they are still available. We disagree. As 
noted in our report, obligations are not available for other uses 
because they represent a true commitment to participants to cover their 
training costs. Labor also notes that, because some participants fail 
to complete training, including obligations for the full cost of 
training in our calculations will inflate the overall need for training 
dollars. It should be noted that some costs may accrue, even for 
participants who don't complete training. We agree that obligating 
funds for the full cost of longer-term training could inflate the 
estimate if states did not actively monitor obligations. However, we 
found that only one-third of the states reported obligating the full 
cost of the training contract at one time. Furthermore, nearly all 
states told us they have procedures in place to de-obligate training 
funds in a timely manner, and most states report actively monitoring 
obligations to ensure that the data are current and accurate. 

Labor expressed concern that some findings were based on a telephone 
survey and suggested that a comprehensive audit should be performed. 
Given our limited time, we conducted a telephone survey of state 
officials to gather information on how states report managing the 
obligation of their training funds, and we obtained responses from 45 
states. Our questions asked them to provide specific information on the 
processes they used to manage the program. We agree that a 
comprehensive evaluation should occur and believe that such an effort 
should be part of Labor's oversight and monitoring of the program. 

Labor acknowledged that the report confirms the need to review the 
"hold harmless" provision used to allocate training funds, noting that 
the department has become concerned that several states carry a 
significant level of funds into the new year, while others have 
expended nearly all funds allocated. 

Finally, Labor pointed out that states did not apply for National 
Emergency Grants because they had insufficient training money 
available. Rather states requested NEGs to allow them to provide "wrap- 
around" services, such as assessment, case management, and job search 
assistance. Indeed, of the 6 states receiving NEG funds in fiscal year 
2007, 4 had more than $4 million available in TAA training funds. 
Labor's entire comments are reproduced in appendix IV. 

We are sending copies of this report to relevant congressional 
committees and other interested parties and will make copies available 
to others upon request. In addition, the report will be available at no 
charge on GAO's Web site at [hyperlink, http://www.gao.gov]. If you or 
your staff have any questions about this report, please contact me at 
(202) 512-7215. You may also reach me by e-mail at [email protected]. 
Contact points for our Offices of Congressional Relations and Public 
Affairs may be found on the last page of this report. Dianne Blank, 
Wayne Sylvia, Rebecca Woiwode, and Stuart Kaufman made key 
contributions to this report. 

Sincerely, 

George A. Scott: 

Director: 
Education, Workforce, and Income Security Issues: 

[End of section] 

Appendix I: Briefing Slides: 

Trade Adjustment Assistance (TAA) Training Fund Availability: 

Briefing for Congressional Staff: House Ways and Means Committee: Trade 
Subcommittee: 
September 26, 2007: 

Introduction: 

* During hearings held by this committee in June 2007, Department of 
Labor officials stated that all states had sufficient TAA training 
funds in fiscal year 2007. 

* Our May 2007 report found that some states had used their fiscal year 
2006 TAA training funds when considering both expenditures and 
obligations--funds that have been committed, but not yet paid--while 
other states had used virtually none. We recommended that Labor modify 
the process it uses to distribute the funds.[Footnote 4] 

* Because TAA is due to be reauthorized this year, the Subcommittee 
asked us to address the availability of TAA training funds. 

Objectives: 

Our objectives were to: 

* determine how much TAA training funds states had available in fiscal 
year 2007; 
* determine the process states use to obligate training funds and how 
they manage TAA training obligations, and; 
* determine the amount of National Emergency Grant (NEG) funds that 
have been awarded for TAA during last 3 fiscal years. 

Scope and Methodology: 

To address our objectives, we: 

* obtained Laborï¿½s TAA financial data and NEG awards for fiscal years 
2005, 2006 and 2007 (through March 31, 2007); 
* analyzed TAA allocations, expenditures, and obligations by state by 
fiscal year, and; 
* used a telephone survey of state TAA coordinators to obtain 
information on their process for managing TAA obligations. We obtained 
responses from 45 of the 50 states that received any TAA funds in 2006. 
[Footnote 5] These 45 states represent 85 percent of the TAA training 
funds awarded during fiscal years 2005-2007. 

Summary of Findings: 

* According to our analysis of Laborï¿½s data, states had about $173 
million in TAA training funds available as of March 31, 2007. Labor 
estimated $447 million was available. The differences between the 
estimates primarily result from Labor including allocations for 
administrative funding and excluding statesï¿½ training obligations. 

* Nearly all states report obligating funds when an actual commitment 
occurs, and most report actively managing obligations, including de-
obligating funds in a timely manner. 

* During the last 3 fiscal years, Labor awarded more than $32 million 
in NEGs to 18 states to be used for TAA participants. 

Background: 

* Approximately $220 million of TAA training funds are distributed to 
states annually by Labor. 
- 75 percent is distributed at beginning of fiscal year based on 
laborï¿½s formula, but each state is guaranteed to receive no less than 
85 percent of the previous yearï¿½s allocation. 
- Remaining 25 percent distributed on as-needed basis during fiscal 
year. 
- At the end of the fiscal year, Labor distributes any remaining 
reserve funds to all states that received funds during the year. 
- With each allocation of training funds, states are given an 
additional 15 percent to cover administrative costs. 

* Labor must distribute current yearï¿½s appropriation by the end of the 
fiscal year or the funds expire and are not available for any other 
use. 

* States have 3 years to spend TAA training funds. Labor may recapture 
any funds that states are unable to utilize within a reasonable period 
of time, but only after consultation with and appropriate notification 
to the state. 

* States report quarterly, on a cumulative basis, how much of TAA 
training funds have been expended and obligated. 

* NEGs may also be used to fund services, including training, for TAA 
participants. The grants may be funded in whole or in increments over a 
period of time. 

Objective 1: TAA Training Funds: 

States Have Fewer Available TAA Training Funds Than Estimated by Labor: 

* In June 2007, Labor submitted to the House Ways and Means Committee 
data showing that states had about $447 million in TAA training funds 
available as of March 31, 2007 [Footnote 6]. 

* We estimate that as of March 31, 2007, states had approximately $173 
million available. 

* States vary widely in the amount of available training funds. 

Available TAA Training Funds in Fiscal Year 2007 by Year Awarded: 

[See PDF for image] 

This figure is a vertical bar graph depicting Available TAA Training 
Funds in Fiscal Year 2007 by Year Awarded. The vertical axis of the 
graph represents dollars in millions from 0 to 250. The horizontal axis 
of the graph represents fiscal years 2005-2007. The following data is 
depicted: 

Fiscal year 2005:
Labor's estimate of training funds: $69.4; 
GAO analysis of Labor data: $19.7. 

Fiscal year 2006:
Labor's estimate of training funds: $172.9; 
GAO analysis of Labor data: $56.3. 

Fiscal year 2007:
Labor's estimate of training funds: $204.8; 
GAO analysis of Labor data: $96.5. 

Source: Department of Labor and GAO analysis of Labor data as of March 
31, 2007. 

[End of graph] 

Available Training Funds for Five States with Larger Allocations: 

[See PDF for image] 

This figure is a vertical bar graph depicting Available Training Funds 
for Five States with Larger Allocations. The vertical axis of the graph 
represents dollars in millions from 0 to 50. The horizontal axis of the 
graph represents states receiving more than $35 million of TAA training 
funds during fiscal years 2005-2007. The following data is depicted: 

Michigan:
Labor's estimate of training funds: $25.4; 
GAO analysis of Labor data: $0. 

North Carolina:
Labor's estimate of training funds: $23; 
GAO analysis of Labor data: $0.9. 

Pennsylvania: 
Labor's estimate of training funds: $47.8; 
GAO analysis of Labor data: $23.5. 

Texas:
Labor's estimate of training funds: $31.3; 
GAO analysis of Labor data: $6. 

Washington:
Labor's estimate of training funds: $41.9; 
GAO analysis of Labor data: $36. 

Source: Department of Labor and GAO analysis of Labor information as of 
March 31, 2007. 

[End of graph] 

Reasons for Difference between Labor and GAO Estimates of Available 
Training Funds: 

* Laborï¿½s estimate included funds not intended for training:
- approximately $92 million of administrative funds allocated to states 
during fiscal years 2005 to 2007 and; 
- more than $12 million awarded to states in fiscal year 2006 to 
upgrade their management information systems. 

* Laborï¿½s estimate did not consider:
- any of the approximately $107 million states reported in unliquidated 
obligations during fiscal years 2005 to 2007, and; 
- any expenditures reported by states in fiscal year 2007. 

Objective 2: Obligation Process: 

States Vary Widely in the Amount of Available Training Funds: 

As of March 31, 2007: 

* 7 states had exhausted their TAA training fundsï¿½reporting that they 
had expended or obligated all of the funds they received in fiscal 
years 2005-2007. 

* 21 states reported not expending or obligating any of their fiscal 
year 2007 TAA training fund allocation; 
- 6 of these states also had not expended or obligated any of their 
fiscal year 2006 allocation; 
- These 6 states had more than $50 million of unused fiscal year 2006 
and 2007 training funds. 

Statesï¿½ TAA Training Fund Obligations Reflect Actual Commitment: 

* 44 of the 45 states responding to our survey reported obligating 
funds when an actual commitment occurs:
- 28 when a training contract is signed; 
- 10 when a participant is approved for training, and; 
- 6 when a participants enrolls in or begins training. 

* 1 state obligates when funds are released to the local area. 

* For training that crosses over fiscal years:
- one-third of states reported obligating the entire amount of the 
training upfront;
- two-thirds of the states reported obligating only the portion of the 
total training cost needed for a specific period, such as the current 
fiscal year. 

States Report Actively Managing Obligations: 

* Nearly 90 percent of states reported having procedures in place to de-
obligate funds in a timely manner, often as soon as the state is 
notified that the participant is no longer in training. 

* Most states reported actively monitoring obligations to ensure that 
they are current and accurate, often through the use of participantsï¿½ 
training attendance records. 

* Over three-fourths of states reported having no difficulty in 
tracking or reporting obligations. 

State Processes for Managing Obligations, by Percentage of States: 

[See PDF for image] 

This figure is a horizontal bar graph with the following data depicted: 

Obligate only a portion of funds upfront: 67%; Use attendance records 
to track obligations: 82%; Have no difficulty tracking and reporting 
obligations: 76%. 

Source: GAO analysis of survey responses. 

[End of figure] 

Objective 3: National Emergency Grants: 

NEG Funds Provided to States for TAA during Fiscal Years 2005 to 2007: 

* More than $32 million of NEG funds were given to 18 states for TAA 
during fiscal years 2005 through 2007. 

* The majority of the funds (about $22 million) was distributed to 15 
states in fiscal year 2005. 

* Only 5 states received NEG funds for TAA in 2006 and 6 states in 
2007. 

Amount of NEG Funds Provided for TAA from Fiscal Years 2005 through 
2007: 

[See PDF for image] 

This figure is a vertical bar graph with the vertical axis representing 
dollars in millions from 0 to 25, and the horizontal axis representing 
fiscal years 2005-2007. The following data is depicted: 

Fiscal year 2005:
Incremental payments for prior awards: $17.993 million; 
New awards: $3.69 million; 
Total: $21.683 million. 

Fiscal year 2006:
Incremental payments for prior awards: $0; 
New awards: $6.124 million; 
Total: $6.124 million. 

Fiscal year 2007:
Incremental payments for prior awards: $0.201 million; 
New awards: $4.382 million; 
Total: $4.583 million. 

Source: Department of Labor and GAO analysis of Labor information. 

[End of figure] 

Concluding Observations: 

* States have far fewer funds available to provide TAA-funded training 
than Labor has suggested. 

* Laborï¿½s approach to distributing TAA training funds to states 
continues to be a concern. As in our 2007 TAA report, we found that 
several states have exhausted their funding, while others have spent 
little or none of their 2006 or 2007 funds. 

* Most states have developed processes to help them better manage 
expenditures and obligations. Nearly all states told us they actively 
manage obligations and routinely de-obligate funds when appropriate. 
This suggests that the information on obligations reported by states to 
Labor likely reflects a true commitment of funds. 

[End of section] 

Appendix II: TAA Training Funds Available in Fiscal Year 2007, by 
State: 

State: Alabama; 
Total training funds awarded fiscal years 2005-2007: $8,195,181; 
Cumulative expenditures as of March 31, 2007: $2,004,196; 
Cumulative obligations as of March 31, 2007: $3,452,814; 
Available balance as of March 31, 2007: $2,738,171. 

State: Alaska; 
Total training funds awarded fiscal years 2005-2007: $1,433,731; 
Cumulative expenditures as of March 31, 2007: $760,634; 
Cumulative obligations as of March 31, 2007: $79,679; 
Available balance as of March 31, 2007: $593,418. 

State: Arizona; 
Total training funds awarded fiscal years 2005-2007: $7,828,584; 
Cumulative expenditures as of March 31, 2007: $2,360,839; 
Cumulative obligations as of March 31, 2007: $526,463; 
Available balance as of March 31, 2007: $4,941,282. 

State: Arkansas; 
Total training funds awarded fiscal years 2005-2007: $6,456,865; 
Cumulative expenditures as of March 31, 2007: $4,093,208; 
Cumulative obligations as of March 31, 2007: $2,363,657; 
Available balance as of March 31, 2007: $0. 

State: California; 
Total training funds awarded fiscal years 2005-2007: $25,047,061; 
Cumulative expenditures as of March 31, 2007: $19,671,745; 
Cumulative obligations as of March 31, 2007: $2,788,899; 
Available balance as of March 31, 2007: $2,586,417. 

State: Colorado; 
Total training funds awarded fiscal years 2005-2007: $4,953,707; 
Cumulative expenditures as of March 31, 2007: $1,954,143; 
Cumulative obligations as of March 31, 2007: $1,879,097; 
Available balance as of March 31, 2007: $1,120,467. 

State: Connecticut; 
Total training funds awarded fiscal years 2005-2007: $5,501,021; 
Cumulative expenditures as of March 31, 2007: $3,900,933; 
Cumulative obligations as of March 31, 2007: $1,105,571; 
Available balance as of March 31, 2007: $494,517. 

State: Delaware; 
Total training funds awarded fiscal years 2005-2007: $74,221; 
Cumulative expenditures as of March 31, 2007: $15,672; 
Cumulative obligations as of March 31, 2007: $44,782; 
Available balance as of March 31, 2007: $13,767. 

State: District of Columbia; Total training funds awarded fiscal years 
2005-2007: $0; 
Cumulative expenditures as of March 31, 2007: $0; 
Cumulative obligations as of March 31, 2007: $0; 
Available balance as of March 31, 2007: $0. 

State: Florida; 
Total training funds awarded fiscal years 2005-2007: $8,006,934; 
Cumulative expenditures as of March 31, 2007: $368,967; 
Cumulative obligations as of March 31, 2007: $0; 
Available balance as of March 31, 2007: $7,637,967. 

State: Georgia; 
Total training funds awarded fiscal years 2005-2007: $5,030,561; 
Cumulative expenditures as of March 31, 2007: $2,508,596; 
Cumulative obligations as of March 31, 2007: $3,501,456; 
Available balance as of March 31, 2007: ($979,491). 

State: Hawaii; 
Total training funds awarded fiscal years 2005-2007: $813,884; 
Cumulative expenditures as of March 31, 2007: $10,831; 
Cumulative obligations as of March 31, 2007: $1,077; 
Available balance as of March 31, 2007: $801,976. 

State: Idaho; 
Total training funds awarded fiscal years 2005-2007: $7,695,483; 
Cumulative expenditures as of March 31, 2007: $2,796,569; 
Cumulative obligations as of March 31, 2007: $31,668; 
Available balance as of March 31, 2007: $4,867,246. 

State: Illinois; 
Total training funds awarded fiscal years 2005-2007: $26,770,849; 
Cumulative expenditures as of March 31, 2007: $18,351,370; 
Cumulative obligations as of March 31, 2007: $2,889,007; 
Available balance as of March 31, 2007: $5,530,472. 

State: Indiana; 
Total training funds awarded fiscal years 2005-2007: $20,784,317; 
Cumulative expenditures as of March 31, 2007: $18,144,273; 
Cumulative obligations as of March 31, 2007: $2,640,044; 
Available balance as of March 31, 2007: $0. 

State: Iowa; 
Total training funds awarded fiscal years 2005-2007: $13,248,340; 
Cumulative expenditures as of March 31, 2007: $13,046,677; 
Cumulative obligations as of March 31, 2007: $201,663; 
Available balance as of March 31, 2007: $0. 

State: Kansas; 
Total training funds awarded fiscal years 2005-2007: $5,428,878; 
Cumulative expenditures as of March 31, 2007: $1,120,875; 
Cumulative obligations as of March 31, 2007: $0; 
Available balance as of March 31, 2007: $4,308,003. 

State: Kentucky; 
Total training funds awarded fiscal years 2005-2007: $14,083,818; 
Cumulative expenditures as of March 31, 2007: $11,608,500; 
Cumulative obligations as of March 31, 2007: $534,754; 
Available balance as of March 31, 2007: $1,940,564. 

State: Louisiana; 
Total training funds awarded fiscal years 2005-2007: $1,968,150; 
Cumulative expenditures as of March 31, 2007: $56,943; 
Cumulative obligations as of March 31, 2007: $108,884; 
Available balance as of March 31, 2007: $1,802,323. 

State: Maine; 
Total training funds awarded fiscal years 2005-2007: $13,996,493; 
Cumulative expenditures as of March 31, 2007: $5,972,080; 
Cumulative obligations as of March 31, 2007: $335,840; 
Available balance as of March 31, 2007: $7,688,573. 

State: Maryland; 
Total training funds awarded fiscal years 2005-2007: $1,837,639; 
Cumulative expenditures as of March 31, 2007: $939,963; 
Cumulative obligations as of March 31, 2007: $0; 
Available balance as of March 31, 2007: $897,676. 

State: Massachusetts; 
Total training funds awarded fiscal years 2005-2007: $18,040,564; 
Cumulative expenditures as of March 31, 2007: $12,181,017; 
Cumulative obligations as of March 31, 2007: $1,437,510; 
Available balance as of March 31, 2007: $4,422,037. 

State: Michigan; 
Total training funds awarded fiscal years 2005-2007: $40,549,718; 
Cumulative expenditures as of March 31, 2007: $26,388,103; 
Cumulative obligations as of March 31, 2007: $14,264,491; 
Available balance as of March 31, 2007: ($102,876). 

State: Minnesota; 
Total training funds awarded fiscal years 2005-2007: $12,789,533; 
Cumulative expenditures as of March 31, 2007: $2,112,664; 
Cumulative obligations as of March 31, 2007: $461,582; 
Available balance as of March 31, 2007: $10,215,287. 

State: Mississippi; 
Total training funds awarded fiscal years 2005-2007: $5,174,783; 
Cumulative expenditures as of March 31, 2007: $1,269,317; 
Cumulative obligations as of March 31, 2007: $2,140,853; 
Available balance as of March 31, 2007: $1,764,613. 

State: Missouri; 
Total training funds awarded fiscal years 2005-2007: $14,736,635; 
Cumulative expenditures as of March 31, 2007: $8,241,790; 
Cumulative obligations as of March 31, 2007: $3,088,139; 
Available balance as of March 31, 2007: $3,406,706. 

State: Montana; 
Total training funds awarded fiscal years 2005-2007: $3,652,112; 
Cumulative expenditures as of March 31, 2007: $1,789,375; 
Cumulative obligations as of March 31, 2007: $0; 
Available balance as of March 31, 2007: $1,862,737. 

State: Nebraska; 
Total training funds awarded fiscal years 2005-2007: $1,687,832; 
Cumulative expenditures as of March 31, 2007: $570,758; 
Cumulative obligations as of March 31, 2007: $378,945; 
Available balance as of March 31, 2007: $738,129. 

State: Nevada; 
Total training funds awarded fiscal years 2005-2007: $513,227; 
Cumulative expenditures as of March 31, 2007: $10,619; 
Cumulative obligations as of March 31, 2007: $30,729; 
Available balance as of March 31, 2007: $471,880. 

State: New Hampshire; 
Total training funds awarded fiscal years 2005-2007: $1,771,447; 
Cumulative expenditures as of March 31, 2007: $1,137,377; 
Cumulative obligations as of March 31, 2007: $155,893; 
Available balance as of March 31, 2007: $478,177. 

State: New Jersey; 
Total training funds awarded fiscal years 2005-2007: $5,787,388; 
Cumulative expenditures as of March 31, 2007: $3,965,843; 
Cumulative obligations as of March 31, 2007: $0; 
Available balance as of March 31, 2007: $1,821,545. 

State: New Mexico; 
Total training funds awarded fiscal years 2005-2007: $1,929,494; 
Cumulative expenditures as of March 31, 2007: $976,519; 
Cumulative obligations as of March 31, 2007: $32,576; 
Available balance as of March 31, 2007: $920,400. 

State: New York; 
Total training funds awarded fiscal years 2005-2007: $9,008,359; 
Cumulative expenditures as of March 31, 2007: $3,103,447; 
Cumulative obligations as of March 31, 2007: $1,428,342; 
Available balance as of March 31, 2007: $4,476,570. 

State: North Carolina; 
Total training funds awarded fiscal years 2005-2007: $39,096,982; 
Cumulative expenditures as of March 31, 2007: $29,177,101; 
Cumulative obligations as of March 31, 2007: $9,019,173; 
Available balance as of March 31, 2007: $900,709. 

State: North Dakota; 
Total training funds awarded fiscal years 2005-2007: $448,443; 
Cumulative expenditures as of March 31, 2007: $269,145; 
Cumulative obligations as of March 31, 2007: $28,514; 
Available balance as of March 31, 2007: $150,784. 

State: Ohio; 
Total training funds awarded fiscal years 2005-2007: $21,648,217; 
Cumulative expenditures as of March 31, 2007: $17,069,186; 
Cumulative obligations as of March 31, 2007: $4,579,031; 
Available balance as of March 31, 2007: $0. 

State: Oklahoma; 
Total training funds awarded fiscal years 2005-2007: $5,129,382; 
Cumulative expenditures as of March 31, 2007: $1,211,207; 
Cumulative obligations as of March 31, 2007: $3,918,175; 
Available balance as of March 31, 2007: $0. 

State: Oregon; 
Total training funds awarded fiscal years 2005-2007: $17,846,771; 
Cumulative expenditures as of March 31, 2007: $12,033,344; 
Cumulative obligations as of March 31, 2007: $1,089,528; 
Available balance as of March 31, 2007: $4,723,899. 

State: Pennsylvania; 
Total training funds awarded fiscal years 2005-2007: $56,535,245; 
Cumulative expenditures as of March 31, 2007: $19,646,291; 
Cumulative obligations as of March 31, 2007: $13,349,337; 
Available balance as of March 31, 2007: $23,539,618. 

State: Puerto Rico; 
Total training funds awarded fiscal years 2005-2007: $114,186; 
Cumulative expenditures as of March 31, 2007: $0; 
Cumulative obligations as of March 31, 2007: $6,808; 
Available balance as of March 31, 2007: $107,378. 

State: Rhode Island; 
Total training funds awarded fiscal years 2005-2007: $4,687,047; 
Cumulative expenditures as of March 31, 2007: $3,602,430; 
Cumulative obligations as of March 31, 2007: $831,605; 
Available balance as of March 31, 2007: $253,012. 

State: South Carolina; 
Total training funds awarded fiscal years 2005-2007: $11,122,441; 
Cumulative expenditures as of March 31, 2007: $6,088,589; 
Cumulative obligations as of March 31, 2007: $0; 
Available balance as of March 31, 2007: $5,033,852. 

State: South Dakota; 
Total training funds awarded fiscal years 2005-2007: $2,697,874; 
Cumulative expenditures as of March 31, 2007: $2,049,796; 
Cumulative obligations as of March 31, 2007: $208,913; 
Available balance as of March 31, 2007: $439,164. 

State: Tennessee; 
Total training funds awarded fiscal years 2005-2007: $8,339,961; 
Cumulative expenditures as of March 31, 2007: $2,451,807; 
Cumulative obligations as of March 31, 2007: $4,584,862; 
Available balance as of March 31, 2007: $1,303,293. 

State: Texas; 
Total training funds awarded fiscal years 2005-2007: $37,573,203; 
Cumulative expenditures as of March 31, 2007: $21,284,020; 
Cumulative obligations as of March 31, 2007: $10,267,342; 
Available balance as of March 31, 2007: $6,021,841. 

State: Utah; 
Total training funds awarded fiscal years 2005-2007: $4,878,949; 
Cumulative expenditures as of March 31, 2007: $211,352; 
Cumulative obligations as of March 31, 2007: $462,791; 
Available balance as of March 31, 2007: $4,204,806. 

State: Vermont; 
Total training funds awarded fiscal years 2005-2007: $1,552,740; 
Cumulative expenditures as of March 31, 2007: $1,001,541; 
Cumulative obligations as of March 31, 2007: $0; 
Available balance as of March 31, 2007: $551,199. 

State: Virginia; 
Total training funds awarded fiscal years 2005-2007: $22,025,129; 
Cumulative expenditures as of March 31, 2007: $14,432,967; 
Cumulative obligations as of March 31, 2007: $4,513,630; 
Available balance as of March 31, 2007: $3,078,532. 

State: Washington; 
Total training funds awarded fiscal years 2005-2007: $46,107,973; 
Cumulative expenditures as of March 31, 2007: $10,153,382; 
Cumulative obligations as of March 31, 2007: $0; 
Available balance as of March 31, 2007: $35,954,591. 

State: West Virginia; 
Total training funds awarded fiscal years 2005-2007: $16,327,707; 
Cumulative expenditures as of March 31, 2007: $7,479,597; 
Cumulative obligations as of March 31, 2007: $8,073,984; 
Available balance as of March 31, 2007: $774,126. 

State: Wisconsin; 
Total training funds awarded fiscal years 2005-2007: $26,912,615; 
Cumulative expenditures as of March 31, 2007: $18,791,272; 
Cumulative obligations as of March 31, 2007: $112,249; 
Available balance as of March 31, 2007: $8,009,094. 

State: Wyoming; 
Total training funds awarded fiscal years 2005-2007: $89,533; 
Cumulative expenditures as of March 31, 2007: $79,611; 
Cumulative obligations as of March 31, 2007: $1,553; 
Available balance as of March 31, 2007: $8,369. 

State: Grand Total; 
Total training funds awarded fiscal years 2005-2007: $617,931,207; 
Cumulative expenditures as of March 31, 2007: $338,466,479; 
Cumulative obligations as of March 31, 2007: $106,951,908; 
Available balance as of March 31, 2007: $172,512,819. 

Source: Department of Labor and GAO analysis. 

[End of table] 

[End of section] 

Appendix III: National Emergency Grants Received by States, Fiscal 
Years 2005 through 2007 for TAA: 

State: Alaska; 
FY05: [Empty]; 
FY06: $2,000,000; 
FY07: [Empty]; 
Total: $2,000,000. 

State: Idaho; 
FY05: $24,000; 
FY06: [Empty]; 
FY07: [Empty]; 
Total: $24,000. 

State: Iowa; 
FY05: $657,773; 
FY06: [Empty]; 
FY07: $263,367; 
Total: $921,140. 

State: Maine; 
FY05: $2,423,904; 
FY06: [Empty]; 
FY07: $395,678; 
Total: $2,819,582. 

State: Maryland; 
FY05: $265,500; 
FY06: [Empty]; 
FY07: [Empty]; 
Total: $265,500. 

State: Massachusetts; 
FY05: $233,000; 
FY06: $307,000; 
FY07: $1,395,714; 
Total: $1,935,714. 

State: Missouri; 
FY05: $1,088,249; 
FY06: $1,030,535; 
FY07: [Empty]; 
Total: $2,118,784. 

State: Montana; 
FY05: [Empty]; 
FY06: [Empty]; 
FY07: $300,000; 
Total: $300,000. 

State: New Hampshire; 
FY05: $206,500; 
FY06: [Empty]; 
FY07: [Empty]; 
Total: $206,500. 

State: New York; 
FY05: $615,750; 
FY06: [Empty]; 
FY07: [Empty]; 
Total: $615,750. 

State: North Carolina; 
FY05: $6,611,688; 
FY06: [Empty]; 
FY07: [Empty]; 
Total: $6,611,688. 

State: Ohio; 
FY05: [Empty]; 
FY06: $1,613,026; 
FY07: [Empty]; 
Total: $1,613,026. 

State: Oklahoma; 
FY05: $484,700; 
FY06: [Empty]; 
FY07: [Empty]; 
Total: $484,700. 

State: Oregon; 
FY05: $1,971,544; 
FY06: $1,173,502; 
FY07: $1,552,004; 
Total: $4,697,050. 

State: South Carolina; 
FY05: $1,984,638; 
FY06: [Empty]; 
FY07: [Empty]; 
Total: $1,984,638. 

State: Tennessee; 
FY05: $670,000; 
FY06: [Empty]; 
FY07: [Empty]; 
Total: $670,000. 

State: West Virginia; 
FY05: $1,699,604; 
FY06: [Empty]; 
FY07: [Empty]; 
Total: $1,699,604. 

State: Wisconsin; 
FY05: $2,685,970; 
FY06: [Empty]; 
FY07: $676,452; 
Total: $3,362,422. 

State: Total; 
FY05: $21,622,820; 
FY06: $6,124,063; 
FY07: $4,583,215; 
Total: $32,330,098. 

Source: Department of Labor and GAO analysis. 

[End of table] 

[End of section] 

Appendix IV: Comments from the Department of Labor: 

U.S. Department of Labor: 
Assistant Secretary for Employment and Training: Washington, D.C. 
20210: 

October 29, 2007: 

Mr. George A. Scott: 
Director: 
Education, Workforce and Income Security Issues: U.S. Government 
Accountability Office: 441 G Street, NW: 
Washington, DC 20548: 

Dear Mr. Scott: 

Enclosed is the Department of Labor's response to the Government 
Accountability Office (GAO) Draft Report No. 08-165 entitled, "States 
Have Fewer Funds Available than Labor Estimates When Both Expenditures 
and Obligations are Considered." We appreciate the opportunity to 
comment on the draft. 

The GAO report seems to imply that the $453 million in Trade Adjustment 
Assistance (TAA) funds that the Department reported as available for 
expenditure at the beginning of FY 2007 were not actually available for 
states to spend. Two factors contribute to the difference between the 
GAO estimate of $173 million and the Department's report, and these are 
explained below. 

First, the GAO report subtracted expenditures through March 31, 
including funds hidden as obligations, from the total funds available. 
The Department's statement that there was $453 million available for 
expenditure in FY 2007 was intended to convey the total amount 
available for expenditure over the entire fiscal year. In this report, 
GAO subtracted expenditures in the first half of FY 2007 from the 
reported amount of available funds; however, the Department did not 
characterize its report as fund availability as of March 31. The 
Department's point was that states carried a significant amount of 
unspent money into the fiscal year, providing a total of $453 million 
that was actually available to be spent during FY 2007. 

Second, the Department does not believe it is appropriate to subtract 
obligations when reporting on the amount of funds available for 
expenditure. Even though money is obligated, it is still available for 
expenditure. Presumably, the state obligations the GAO subtracted from 
the available funds will become expenditures in FY 2007. Subtracting 
the obligations, or planned expenditures, from what is reported as 
available for expenditure, has the effect of double counting the 
obligations. 

In the past, states have used obligations as a main reason for needing 
training funds based on a belief that training services would be needed 
in the future. For instance, as reported by GAO, one third of the 
states consider the full costs of a training program to be obligated 
when a training contract is signed, whether or not services have been 
provided. Actual data provided by the states show that approximately 72 
percent of training participants complete their training programs; 
therefore, obligations for the full costs of training for those who do 
not complete (28% of participants) will never materialize. Adding these 
obligations to expenditures results in an inflated estimate of the 
overall need for training dollars. 

This report also failed to note that, over the past several fiscal 
years, total annual state expenditures have been less than the $220 
million available for training. For example, in FY 2006, the most 
recent fiscal year for which complete data are available, a total of 
$159 million was actually expended on training. We believe this amount 
more accurately reflects the level of training activity in the states 
than adding expenditures to obligations. 

We also have some concern with other findings included in this report. 
We believe that the methodology for determining whether states 
correctly manage their obligations should require more than a telephone 
survey. Based on this self-reporting, most states told the GAO that 
they were effectively managing their funds, including de-obligating 
funds in a timely manner. However, we would welcome a comprehensive 
audit of states' funding practices upon which funding decisions could 
reliably be based. This process would allow auditors to verify that 
states are managing obligations and de-obligations correctly. 

We are pleased to see that this review addresses issues surrounding the 
TAA allocation formula adopted by the Department in fiscal year 2004 to 

more equitably fund state TAA needs. We are currently reviewing this 
formula to ensure that current year funds are allocated effectively to 
meet current year TAA training needs. Overall, we believe the adoption 
of a formula-based methodology for distributing TAA training funds has 
been a success. We know that, since adopting this formula approach, no 
state has ended the year without access to TAA training funds when they 
have been able to show that they have expended at least 50 percent of 
their current year allocation or have otherwise demonstrated need. Our 
policy of maintaining a 25 percent reserve for unanticipated need has 
made it possible to meet state needs for additional training funds 
through the end of the fiscal year. 

The Department has, however, become concerned that several states carry 
a significant level of funds into the new fiscal year, while other 
states have expended nearly all funds allocated. The "hold harmless" 
formula provision, which guarantees a state 85 percent of its prior 
year base allocation, may be causing this imbalance, and this report 
seems to confirm the need to review that provision. In implementing the 
formula, the Department believed that the "hold harmless" provision was 
important to ensure funding stability while states were becoming 
accustomed to the new methodology. Now that states have experience with 
the formula and the reserve process, the Department believes it is 
appropriate to consider changes to this provision. However, we also 
believe that it would be prudent to delay any changes until we know the 
outcome of TAA reauthorization. 

Finally, we would point out that since adopting the formula funding 
approach, the use of National Emergency Grants (NEGs) by states has not 
been because any state has had insufficient training money available. 
Rather, NEGs provide for "wrap-around" services to trade-affected 
workers, which include assessment, case management, job search 
assistance, and other services provided under the Workforce Investment 
Act that help workers transition into new employment, but are not 
payable using TAA funds. The need to use two funding sources to provide 
comprehensive, needed services to trade-impacted workers illustrates 
one of the program flaws in the currently authorized TAA program. The 
Administration has proposed addressing this program flaw in its 
principles for reform of TAA during reauthorization. 

If you would like additional information, please do not hesitate to 
call me at (202) 693-2700. You may also contact Erica Cantor, 
Administrator, Office of National Response, at (202) 693-3500. 

Sincerely, 

Signed by: 

Emily Stover DeRocco: 

[End of section] 

Related GAO Products: 

Trade Adjustment Assistance: Program Provides an Array of Benefits and 
Services to Trade-Affected Workers. GAO-07-994T. (Washington, D.C.: 
June 14, 2007). 

Trade Adjustment Assistance: Changes Needed to Improve States' Ability 
to Provide Benefits and Services to Trade-Affected Workers. GAO-07- 
995T. (Washington, D.C.: June 14, 2007). 

Trade Adjustment Assistance: Changes to Funding Allocation and 
Eligibility Requirements Could Enhance States' Ability to Provide 
Benefits and Services. GAO-07-701, GAO-07-702. (Washington, D.C.: May 
31, 2007). 

Trade Adjustment Assistance: New Program for Farmers Provides Some 
Assistance, but Has Had Limited Participation and Low Program 
Expenditures. GAO-07-201. (Washington, D.C.: December 18, 2006). 

National Emergency Grants: Labor Has Improved Its Grant Award 
Timeliness and Data Collection, but Further Steps Can Improve Process. 
GAO-06-870. (Washington, D.C.: September 5, 2006). 

Trade Adjustment Assistance: Labor Should Take Action to Ensure 
Performance Data Are Complete, Accurate, and Accessible. GAO-06-496. 
(Washington, D.C.: April, 25, 2006). 

Trade Adjustment Assistance: Most Workers in Five Layoffs Received 
Services, but Better Outreach Needed on New Benefits. GAO-06-43. 
Washington, D.C.: January 31, 2006. 

Trade Adjustment Assistance: Reforms Have Accelerated Training 
Enrollment, but Implementation Challenges Remain. GAO-04-1012. 
Washington, D.C.: September 22, 2004. 

[End of section] 

Footnotes: 

[1] GAO, Trade Adjustment Assistance: Changes to Funding Allocation and 
Eligibility Requirements Could Enhance States' Ability to Provide 
Benefits and Services, GAO-07-701, GAO-07-702 (Washington, D.C.: May 
31, 2007). 

[2] GAO, Workforce Investment Act: States' Spending is on Track, but 
Better Guidance Would Improve Financial Reporting, GAO-03-239 
(Washington, D.C.: Nov. 22, 2002). 

[3] Labor actually submitted data showing that about $453 million was 
available in fiscal year 2007, but this data included about $6 million 
that was awarded after March 31, 2007. 

[4] GAO. Trade Adjustment Assistance: Changes to Funding Allocation and 
Eligibility Requirements Could Enhance Statesï¿½ Ability To Provide 
Benefits and Services. GAO-07-702 (Washington, D.C.: May 31, 2007). 

[5] The District of Columbia receives no TAA training funds. 

[6] Labor submitted data showing that $453 million was available in 
fiscal year 2007, but included about $6 million awarded after March 31, 
2007. 

[End of section] 

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