Department of Labor: Further Strategic Planning and Data Quality
Refinements Would Assist in Oversight (Testimony, 09/28/98,
GAO/T-HEHS-98-249).
Pursuant to a congressional request, GAO discussed the Department of
Labor's progress: in meeting its strategic planning responsibilities
under the Government Performance and Results Act of 1993; and (2)
addressing some of the problems with its performance data that GAO
identified in its audit work.
GAO noted that: (1) Labor has significantly improved the strategic plan
it originally submitted to Congress in September 1997; (2) its revised
strategic goals are more focused and better integrate the activities of
its component agencies; (3) for example, two of Labor's original six
goals have been consolidated to provide a single focus for Labor's
efforts in helping people find jobs and to encompass the job training
and assistance activities of several of its component agencies, such as
the Employment and Training Administration (ETA) and the Women's Bureau;
(4) moreover, in comparison with the original plan, Labor now provides
more information on how it plans to coordinate its activities with other
agencies, such as the Departments of Housing and Urban Development and
Health and Human Services, that are trying to achieve the same or
similar results; (5) yet further plan improvements are possible, even in
areas where Labor has made significant progress; (6) for example, Labor
could improve its strategic plan by providing explicit information on
how it will address known performance data problems, such as the
placement data Job Corps uses, which overstates the extent to which
program participants are employed; (7) Labor's record in correcting
problems with its performance information is mixed; (8) in some cases,
it has made significant progress in addressing data weaknesses; (9) for
example, GAO found in prior work that the Occupational Safety and Health
Administration's (OSHA) Integrated Management Information System did not
always appropriately characterize or fully capture information on
employer settlement agreements or reflect timely changes to inspection
data on these agreements; (10) such problems limited the extent to which
OSHA could effectively manage its inspections program; (11) since GAO's
report, Labor has corrected this problem; (12) however, other data
quality problems, such as those concerning ETA's Job Corps program,
remain largely unaddressed; (13) specifically, GAO found that reported
information on the extent to which Job Corps participants completed
vocational training and get jobs related to that training is misleading
and overstates program results; and (14) Labor still needs to address
data quality problems in this and other programs to effectively manage
its programs.
--------------------------- Indexing Terms -----------------------------
REPORTNUM: T-HEHS-98-249
TITLE: Department of Labor: Further Strategic Planning and Data
Quality Refinements Would Assist in Oversight
DATE: 09/28/98
SUBJECT: Program evaluation
Data integrity
Strategic planning
Management information systems
Employment or training programs
Congressional/executive relations
Interagency relations
Agency missions
IDENTIFIER: Y2K
GPRA
Government Performance and Results Act
DOL Job Corps Program
OSHA Integrated Management Information System
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Cover
================================================================ COVER
Before the Subcommittee on Oversight and Investigations, Committee on
Education and the Workforce, House of Representatives
For Release on Delivery
Expected at 1:30 p.m.
Monday, September 28, 1998
DEPARTMENT OF LABOR - FURTHER
STRATEGIC PLANNING AND DATA
QUALITY REFINEMENTS WOULD ASSIST
IN OVERSIGHT
Statement of Carlotta C. Joyner, Director
Education and Employment Issues
Health, Education, and Human Services Division
GAO/T-HEHS-98-249
GAO/HEHS-98-249T
(205386)
Abbreviations
=============================================================== ABBREV
ETA - test
HUD - test
HHS - test
OSHA - test
IMIS - test
OMB - test
MSHA - test
BEA - test
CFDA - test
HEHS - test
AIMD - test
DEPARTMENT OF LABOR: FURTHER
STRATEGIC PLANNING AND DATA
QUALITY REFINEMENTS WOULD ASSIST
IN OVERSIGHT
============================================================ Chapter 0
Mr. Chairman and Members of the Subcommittee:
We are pleased to be here today to assist you in your oversight of
the Department of Labor. With a budget of $34.6 billion and about
16,700 staff in fiscal year 1998, the Department of Labor administers
a variety of federal labor laws. Its stated mission includes helping
workers find jobs and helping employers find workers; protecting
workers' retirement and health care benefits and improving their
working conditions; strengthening free collective bargaining; and
tracking changes in employment, prices, and other national economic
measurements. With such a broad mandate, effective oversight of
Labor is as challenging as it is important. To help address such
challenges, the Congress passed the Government Performance and
Results Act of 1993, which is intended to shift the focus of federal
management and oversight from staffing and activity levels to the
results of federal programs. The Results Act requires federal
agencies to develop strategic plans that lay out their long-term
goals as well as their plans for achieving these goals.
My remarks today will focus on two main topics: (1) Labor's progress
in meeting its strategic planning responsibilities under the Results
Act and (2) its progress in addressing some of the problems with its
performance data that we identified in our audit work. Since
performance information increasingly may feed into funding
considerations, you also asked us to provide a brief general
description of the budget framework and some of the issues involved
in tracking and using different budget-related data. This
information is contained in the appendix. The information in this
testimony is based on the numerous studies we have conducted at Labor
over the past several years. (See Related GAO Products at the end of
this testimony.)
In summary, the Department of Labor has significantly improved the
strategic plan it originally submitted to the Congress in September
1997. Its revised strategic goals are more mission focused and
better integrate the activities of its component agencies. For
example, two of Labor's original six goals have been consolidated to
provide a single focus for Labor's efforts in helping people find
jobs and to encompass the job training and assistance activities of
several of its component agencies, such as the Employment and
Training Administration (ETA) and the Women's Bureau. Moreover, in
comparison with the original plan, Labor now provides more
information on how it plans to coordinate its activities with other
agencies, such as the Departments of Housing and Urban Development
(HUD) and Health and Human Services (HHS), that are trying to achieve
the same or similar results. Yet further plan improvements are
possible, even in areas where Labor has made significant progress.
For example, Labor could improve its strategic plan by providing
explicit information on how it will address known performance data
problems, such as the placement data Job Corps uses, which overstate
the extent to which program participants are employed.
Labor's record in correcting problems with its performance
information is mixed. In some cases, it has made significant
progress in addressing data weaknesses. For example, we found in
prior work that the Occupational Safety and Health Administration's
(OSHA) Integrated Management Information System (IMIS) did not always
appropriately characterize or fully capture information on employer
settlement agreements or reflect timely changes to inspection data on
these agreements. Such problems limited the extent to which OSHA
could effectively manage its inspections program. Since our report,
Labor has corrected this problem. However, other data quality
problems, such as those concerning ETA's Job Corps program, remain
largely unaddressed. Specifically, we found that reported
information on the extent to which Job Corps participants complete
vocational training and get jobs related to that training is
misleading and overstates program results. Labor still needs to
address data quality problems in this and other programs to
effectively manage its programs.
BACKGROUND
---------------------------------------------------------- Chapter 0:1
The Government Performance and Results Act of 1993 is the centerpiece
of a statutory framework that the Congress put in place to strengthen
federal decisionmaking and accountability and to improve federal
effectiveness and efficiency by promoting a new focus on results,
service quality, and customer satisfaction.\1 The Results Act seeks
to create this new focus by establishing a system of strategic and
annual planning to set goals for program performance and to measure
results.
Under the Results Act, agencies are required to develop strategic
plans that contain six key elements: (1) a comprehensive agency
mission statement, (2) agencywide long-term goals and objectives for
all major functions and operations, (3) approaches--or
strategies--and the various resources needed to achieve the goals and
objectives, (4) a description of the relationship between the
long-term goals and objectives and the annual performance goals, (5)
an identification of key factors external to the agency and beyond
its control that could significantly affect the achievement of the
strategic goals, and (6) a description of how program evaluations
were used to establish or revise strategic goals and a schedule for
future program evaluations.
The act required agencies to submit the first of their strategic
plans to the Congress in September 1997. To meet this requirement,
Labor submitted individual plans for 15 of its component
agencies--including all 7 program agencies--which it supplemented
with a "strategic plan overview." In a prior review of the plan
overview, we noted that Labor needed to make several improvements to
make the plan more useful. In particular, we suggested that a
mission-focused rather than organizationally focused planning process
would improve Labor's ability to examine its operations to find a
less costly, more effective means of meeting its mission. In
addition, we suggested that Labor detail how information from
evaluations was used to develop the plan and specify how future
evaluations would help assess Labor's success in achieving its stated
goals. We also suggested that Labor elaborate on its discussion of
crosscutting issues, such as coordination with others within and
outside Labor who have similar roles for particular functions. We
also noted that Labor needed to provide additional information on the
strategies it would use to ensure that its information technology
would help achieve its goals. In this regard, Labor's plan did not
include a clear, integrated, measurable year 2000 strategy.
The Results Act also requires that agencies, building on the
decisions made as part of the strategic planning process, develop
annual performance plans covering each program activity set forth in
their budgets. With this requirement, the Results Act establishes
the first statutory link between agencies' budget requests and their
performance planning efforts; it also establishes the connections
between the long-term strategic goals outlined in the strategic plans
and the day-to-day activities of managers and staff. In developing
their performance plans, agencies must (1) establish performance
goals to define the level of performance to be achieved by a program
activity; (2) express such goals in an objective, quantifiable, and
measurable form, unless authorized to be in an alternative form; (3)
briefly describe the operational processes, skills, and technology
and the human, capital, or information resources required to meet the
performance goals; (4) establish indicators to be used in each
program activity; (5) provide a basis for comparing actual program
results with the established performance goals; and (6) describe the
means used to verify and validate measured values.
Labor submitted its fiscal year 1999 performance plan to the Congress
in February 1998. As we reported in June 1998, Labor's performance
plan partially met the criteria for these plans.\2 To make the plan
more useful, we noted that Labor needed to, among other things, (1)
improve the quality of some of its performance goals and indicators,
(2) more completely describe its strategies for achieving its goals
as well as its plans for coordinating with other agencies, (3) better
identify the human and technological resources it will require to
achieve its performance goals, and (4) provide sufficient information
to demonstrate the credibility of the data it will use to measure its
performance.
In addition to reviewing its strategic and performance plans, we have
conducted a number of program evaluations concerning Labor over
recent years. Although Labor administers several programs and
carries out a diverse array of activities through several different
offices, many of its functions fall into two major
categories--enhancing workers' skills through job training and
ensuring worker protection--which comprise a significant portion of
Labor's budget. Accordingly, much of our program evaluation work has
focused on these functions. In particular, we have conducted a
number of reviews of activities administered by ETA and OSHA.
--------------------
\1 Other parts of this framework include financial management
statutes, such as the Chief Financial Officers Act, and information
resources management statutes, such as the Clinger-Cohen Act. The
framework also includes the Federal Managers' Financial Integrity
Act, debt collection and credit reform legislation, and the Inspector
General Act. For a more detailed discussion of this statutory
framework see Managing for Results: The Statutory Framework for
Performance-Based Management and Accountability (GAO/GGD/AIMD-98-52,
Jan. 28, 1998).
\2 Results Act: Observations on Labor's Fiscal Year 1999 Performance
Plan (GAO/HEHS-98-175R, June 4, 1998).
LABOR'S REVISED STRATEGIC PLAN
COULD BE FURTHER IMPROVED
---------------------------------------------------------- Chapter 0:2
On its own initiative, the Department of Labor recently revised the
strategic plan it originally submitted to the Congress in September
1997. In preparing for this hearing, we reviewed a draft of Labor's
revised plan to determine whether it had made progress in addressing
some of the concerns we raised in the past.\3 Overall, Labor's
revised strategic plan is a significant improvement over its original
version; it addresses several of the concerns we raised in reviewing
its first such plan and some of the concerns we raised in reviewing
its fiscal year 1999 performance plan. However, Labor could further
improve its plan to make it more useful.
--------------------
\3 We reviewed a draft plan dated July 31, 1998, which was submitted
to several congressional committees and others for comment. Labor
submitted its revised plan to the Office of Management and Budget
(OMB) for review on September 14, 1998. Labor is planning to make
its revised plan public after OMB's review.
REVISED PLAN ADDRESSES
SEVERAL OF THE ORIGINAL
PLAN'S WEAKNESSES
-------------------------------------------------------- Chapter 0:2.1
Among the improvements Labor made to its strategic plan were
revisions to a set of strategic goals developed for its first annual
performance plan. Labor's revised strategic goals are more mission
focused and better integrate the activities of Labor's component
agencies.\4 Labor's original goals appeared dependent, in part, on
the organization of its first strategic plan. For that plan, Labor
submitted individual plans for 15 of its component agencies and
supplemented these with a "strategic plan overview." Further, the
original plan, by packaging together the strategic goals of Labor's
component agencies, appeared to be driven by its organizational
structure rather than by its mission. In contrast, Labor's new
strategic goals appear to be driven by its mission. For example,
Labor's new strategic goal of "A Prepared Workforce," consolidates
two former goals that addressed activities aimed at helping people
find jobs. These activities are performed by several component
agencies, including ETA and the Women's Bureau. For each of its
strategic goals, Labor has also provided intermediate outcome goals,
which better focus similar activities performed by multiple component
agencies. For example, there was no single stated outcome goal of
reducing workplace fatalities, injuries, and illnesses in Labor's
original strategic plan. Such an outcome goal is, however, presented
in Labor's revised plan, which better integrates the workplace safety
activities of OSHA and the Mine Safety and Health Administration
(MSHA).
The revised plan also provides a more in-depth discussion of
crosscutting efforts, that is, how Labor is coordinating its
activities among programs that are trying to achieve the same or
similar results both within and outside the department. For example,
Labor describes in its plan that it will work with HUD and HHS to
increase employment. One of Labor's collaborative efforts will be to
give special consideration to entities that include "empowerment
zones" and "enterprise communities" in their Welfare-to-Work
competitive award applications and to provide additional funds to
grantees willing to participate in HHS' national evaluation of the
Welfare-to-Work program.\5
Labor has also improved its plan by providing additional information
concerning how it uses or plans to use program evaluations, including
assessments of the implementation and results of programs, operating
policies, and practices. The Results Act was intended, in part, to
improve congressional and agency decisionmaking by providing
comprehensive and reliable information on the extent to which federal
programs are fulfilling their statutory purpose. Labor's revised
plan includes more information than its original plan on how it used
the results of evaluations to develop some of its goals and
strategies as well as how it will use evaluations to measure
performance in achieving some of its goals. For example, MSHA
performs trend analyses of injury and illness data as part of its
program evaluation and planning process. Its analysis of such data
has shown an upward trend in accidents and fatalities in sand and
gravel and stone operations. Based on this finding, MSHA has
developed a strategy whereby it will direct additional enforcement
and compliance assistance efforts toward this particular industrial
sector. Labor's revised plan also describes the establishment of a
management council, composed of senior-level managers from each of
Labor's component agencies, to help guide Labor's evaluation efforts.
--------------------
\4 Labor's new goals are (1) "A Prepared Workforce: Enhance
Opportunities for America's Workforce"; (2) "A Secure Workforce:
Promote the Economic Security of Workers and Families"; and (3)
"Quality Workplaces: Foster Quality Workplaces That Are Safe,
Healthy, and Fair."
\5 The Empowerment Zone and Enterprise Community program, which is
designed to help revitalize urban and rural communities, targets
federal grants for social services and community redevelopment and
provides tax incentives to attract or retain businesses in distressed
areas.
REVISED PLAN NEEDS TO
PROVIDE EXPLICIT INFORMATION
ON HOW IT WILL ADDRESS KNOWN
PERFORMANCE DATA PROBLEMS
-------------------------------------------------------- Chapter 0:2.2
Labor could further improve its revised strategic plan by providing
explicit information on how it intends to correct problems with its
performance measurement data. Doing so would provide plan readers
more assurance that these data will in fact be credible and provide a
reasonable basis for measuring Labor's progress toward achieving its
goals. The revised plan includes a section on data capacity, which
provides a description of selected performance measurement systems,
and an appendix that identifies limitations associated with some of
Labor's performance data. While Labor acknowledges it needs to
address certain problems, including a lack of valid data to measure
progress toward some goals, it should provide additional information
to explain the known significant limitations of performance data and
information on what it plans to do to fix such data. For example,
Labor plans to measure progress in meeting its strategic goal of "A
Prepared Workforce" in part by the percent of Job Corps participants
placed in employment. However, as I will discuss later, we found
that Labor's system for tracking employment information does not
provide an accurate picture of program results. Labor should provide
an explicit discussion in its plan about how it will address this
issue and the impact the issue has in terms of measuring performance.
LABOR NEEDS TO CLEARLY
EXPLAIN HOW IT WILL ACHIEVE
ITS GOALS
-------------------------------------------------------- Chapter 0:2.3
The revised strategic plan could also be improved with additional
information on how Labor will achieve its goals. In comparison to
its original strategic and performance plans, Labor has made progress
in this regard. However, Labor needs to ensure that, throughout its
strategic plan, stated strategies are sufficiently and clearly
explained, allowing readers to understand how each strategy will help
Labor achieve a goal and gauge how effective a stated strategy will
be. For example, one of Labor's stated strategies for meeting or
exceeding timeliness standards for paying unemployment insurance
claims is to collaborate with states to develop and implement
performance management system improvements and to "enhance
performance planning, facilitate performance achievement, and assess
the effectiveness of program improvement efforts." Without any
additional information about this strategy, it is unclear how and to
what extent this strategy will help Labor meet its goals.
LABOR NEEDS TO BETTER
ADDRESS ITS YEAR 2000 RISKS
-------------------------------------------------------- Chapter 0:2.4
Labor's revised strategic plan could also be improved by providing
additional information on its strategies for addressing the year 2000
computing issue. While Labor made progress in addressing the issue
in comparison with its original strategic plan, the significant risks
facing the department regarding this potential crisis warrant an even
more substantive discussion of its efforts in the strategic plan.
In a recent testimony, we noted that while Labor has made progress,
it is still at risk in several areas, including making benefits
payments to laid-off workers, collecting labor statistics, and
ensuring accurate accounting for pension benefits.\6
Several of Labor's systems supporting these business areas are at
risk; some could fail as early as January 1999 because they involve
calculations a year into the future. Accordingly, we noted that it
is critical that appropriate contingency plans be developed to ensure
business continuity in the event of system failure.
According to Labor officials, the department is committed to
developing business continuity and contingency plans for each
mission-critical business process and supporting system. Labor has
drafted such plans for key processes and systems. Plans for other
business areas and supporting systems are expected to be developed
later this year, according to Labor officials.
--------------------
\6 Year 2000 Computing Crisis: Progress Made at Department of Labor,
but Key Systems at Risk (GAO/T-AIMD-98-303, Sept. 17, 1998).
LABOR'S DATA QUALITY PROBLEMS
NOT TOTALLY RESOLVED
---------------------------------------------------------- Chapter 0:3
Our past reviews of individual programs throughout Labor have found
critical data quality problems with several of its performance
information systems. Labor's ability to effectively manage its
programs is highly dependent on the quality of such data. Quality
data are critical not only for accurately measuring progress in
achieving goals but also for setting goals and developing strategies
to achieve those goals. While Labor has taken steps to address some
of the problems we identified, such as those at OSHA, data quality
problems remain.
CERTAIN DATA QUALITY
PROBLEMS HAVE BEEN ADDRESSED
-------------------------------------------------------- Chapter 0:3.1
OSHA provides an example of data problems Labor has recently acted to
correct. In December 1996, we reported that IMIS--OSHA's management
information system--did not always appropriately characterize or
fully capture information on settlement agreements OSHA had reached
with employers, nor did it always change inspection data in a timely
manner to reflect the terms of a settlement agreement.\7 As a result,
information regarding the number or type of violations and penalty
amounts associated with any particular inspection may have been
distorted or inaccurate because it may not have included reductions
in penalties that occurred as part of the settlement process. In
addition, the depiction within the database of a relationship between
a fatality or injury and the violations detected may have been
misleading. Effective management of OSHA's programs was limited by
such data quality problems.
Since our report, OSHA has corrected these problems through several
actions. First, it directed field staff to review the accuracy of,
and correct identified problems with, the records concerning over
1,000 of the most significant settlement agreements closed during
fiscal years 1996, 1997, and 1998. Second, it instructed field staff
on the importance of maintaining accurate records. Third, OSHA has
included in its citation letters to employers with inspected
workplaces language informing them that they can review their IMIS
records and should inform OSHA of any inaccuracies. To facilitate
such review, OSHA now makes IMIS records available on the Internet
along with a notice to employers and employees that they should
contact OSHA if they believe a particular IMIS entry is inaccurate,
incomplete, or out-of-date.
--------------------
\7 OSHA's Inspection Database (GAO/HEHS-97-43R, Dec. 30, 1996).
LABOR IS ACTING TO ADDRESS
OTHER DATA QUALITY PROBLEMS
-------------------------------------------------------- Chapter 0:3.2
In December 1997, we reported that ETA lacked information that would
allow it to monitor its performance in processing agricultural
employers' applications for the certification of temporary and
seasonal agricultural guestworkers under the H-2A program.\8 Our
analysis of the program showed that in fiscal year 1996, ETA issued
Department of Labor certifications after the statutory deadlines for
at least one-third of all applications. However, ETA does not
collect key program management information that would allow it to
monitor its performance in meeting the program's statutory and
regulatory deadlines. Without such information, ETA has not been
able to ensure that agricultural employers have workers when they are
needed. In response to our recommendation, ETA is seeking funds to
design and implement an automated reporting, management, and
application processing system.
In our work on Job Corps, also administered by ETA, we found that
reported information did not provide an accurate picture of program
activities and results, which limits ETA's ability to evaluate the
results of its efforts. Our survey of employers who were reported as
hiring Job Corps participants showed that about 15 percent of the job
placements in our sample were potentially invalid: A number of
employers reported that they had not hired students who Labor had
reported as placed with their businesses, and other employers of Job
Corps participants identified by Labor could not be found.\9 Labor
has taken some action to address this issue. In April 1997, the
Office of Job Corps issued a directive requiring that contracts for
Job Corps placement services include provisions requiring contractors
to reimburse the government for costs associated with job placements
that are later determined to be invalid. We have not evaluated the
impact of Labor's efforts in this regard.
In addition, our previous work has shown that some data that Labor
collects on other programs lack the consistency needed to evaluate
performance when multiple programs address similar missions and
goals. For example, as we reported in September 1996, we found a
lack of consistent data with regard to Labor's and other agencies'
employment-focused programs for the disabled.\10 Those that collected
data on program outcomes--such as data on whether participants got
jobs and kept them; what wages they received; and whether they
received employee benefits, such as health insurance--used different
definitions for key data. They also had different eligibility
criteria, paperwork requirements, software, and confidentiality
rules, which limited comparisons of program performance. To help
address these and other issues, Labor has established a workforce
development performance measurement group, which includes members
representing Labor and other federal agencies as well as state and
local agencies. The group serves as a forum for discussing and
addressing such performance measurement issues common to the group.
--------------------
\8 H-2A Agricultural Guestworker Program: Changes Could Improve
Services to Employers and Better Protect Workers (GAO/HEHS-98-20,
Dec. 31, 1997).
\9 Job Corps: High Costs and Mixed Results Raise Questions About
Program's Effectiveness (GAO/HEHS-95-180, June 30, 1995).
\10 People With Disabilities: Federal Programs Could Work Together
More Efficiently to Promote Employment (GAO/HEHS-96-126, Sept. 3,
1996).
RECENTLY IDENTIFIED DATA
QUALITY PROBLEMS REMAIN A
CHALLENGE
-------------------------------------------------------- Chapter 0:3.3
We recently testified before the Congress on other problems
concerning Job Corps' program performance data, which Labor has not
begun to address.\11
Specifically, we found that information reported by Labor on the
percentage of Job Corps participants who completed their vocational
training and obtained jobs related to that training was misleading
and overstated program results. For example, Job Corps reported that
in program year 1996,\12 48 percent of program participants
nationwide completed vocational training, while our review concluded
that only 14 percent had completed all vocational training
requirements and the remaining 34 percent had completed only some of
the tasks of a specific vocational training program. Labor also
reported that 62 percent of the participants nationwide who obtained
employment found jobs that matched the vocational training received
in Job Corps. At the five centers we visited, however, the validity
of about 41 percent of the job placements reported as
training-related by Labor was questionable.
In addition, we found that Labor has not adequately supported its
claimed need to use noncompetitive procedures to award contracts to
national labor and business organizations to provide vocational
training services for Job Corps participants.\13
Labor officials have stated that its justification for using
sole-source awards is the extensive nationwide placement network
maintained by the contractors. However, Labor's national data system
has no information to indicate the extent to which national training
contractors are directly responsible for placing Job Corps
participants in jobs. Without performance data indicating whether
these contractors are successfully placing Job Corps participants in
jobs, Labor cannot be assured that it is pursuing an optimal
strategy.
--------------------
\11 Job Corps: Vocational Training Performance Data Overstate
Program Success (GAO/T-HEHS-98-218, July 29, 1998).
\12 A program year begins on July 1 and ends on June 30 of the
following year. A program year is designated by the year in which it
begins. Thus, program year 1996 began on July 1, 1996, and ended on
June 30, 1997.
\13 Labor also has failed to demonstrate that no other entities are
available to bid on such vocational training contracts.
-------------------------------------------------------- Chapter 0:3.4
Mr. Chairman, this concludes my prepared statement. I will be happy
to answer any questions that you or Members of the Subcommittee may
have.
OVERVIEW OF BUDGET FRAMEWORK AND
BUDGET-RELATED DATA
==================================================== Appendix Appendix
In the Budget Enforcement Act (BEA), federal spending is divided into
two categories: (1) discretionary spending, which is defined as
spending arising from appropriations laws, and (2) mandatory--or
direct--spending, which generally is spending arising from laws other
than appropriations acts.\14 For example, Labor's total fiscal year
1998 budget was $34.6 billion; of this amount, $10.7 billion was for
discretionary spending, and $23.9 billion was for mandatory spending.
These two types of spending are controlled differently.
Discretionary spending is controlled by appropriations and, under
BEA, is subject to overall caps or limits. Mandatory spending is
generally for benefit programs. The amount of funds spent in a given
year is determined by the eligibility criteria and the benefit
formula specified in the law--that is, the number of people who
qualify and the benefits for which they qualify. It cannot be
changed by simply appropriating less; it can be changed only by
legislation changing the design of a program. For most mandatory
programs, only the benefit payments are mandatory; the associated
administrative expenses are classified as discretionary. Examples of
mandatory programs in the Department of Labor are black lung
disability, unemployment compensation, and pension insurance.
As noted above, discretionary spending is that spending controlled by
the appropriations process. An appropriation provides budget
authority, which is the legal authority to enter into obligations.\15
It is only when a check is issued or cash is disbursed that an
obligation becomes an outlay. Although outlays are what one
generally thinks of when the term "spending" is used because it is
when money actually flows out of the U.S. Treasury, it is important
to keep in mind that what is directly controlled in appropriations
acts is budget authority. Similarly, it is important to recognize
that budget authority, obligations, and outlays are related but not
identical. Although they should track over time, they might not
match in a single fiscal year. Some budget authority is "outlayed"
fairly rapidly--such as salaries--and others take much longer--such
as construction. In general, appropriations acts specify a purpose
for which funds are provided, an amount, and a period of availability
for obligation. Some budget authority must be obligated by the end
of a given fiscal year or the authority expires; in other cases, the
authority may be available for obligation for more than 1 fiscal
year, and in still other cases may be available until expended.
Thus, actual obligations in a given fiscal year may stem not only
from that year's enacted appropriations (budget authority) but also
from budget authority provided in any number of prior
years--depending on the availability of those funds.
In addition, data series to describe this flow of federal funds have
grown up over time for different purposes, and they are not
interchangeable. For example, the Catalog of Federal Domestic
Assistance (CFDA), jointly published by OMB and the General Services
Administration, is a handbook or guide to federal grants, which
includes summary financial and nonfinancial data for each reported
assistance program, including grants, loans, and fellowships. CFDA
is primarily intended to help governments, private groups, and
individuals identify federal domestic assistance programs that are
available to meet these needs. If used with caution, CFDA can also
help in analyzing certain questions. For example, CFDA can help
categorize the types of assistance available, the number of programs,
and the extent of financial commitment. However, CFDA is not an
accounting system, and the funding reported may differ from that in
other systems or sources.
Budget data provided for one purpose may well not be appropriate for
another. For example, as we reported in July 1998, data organized by
what is called "object class" show obligations (not budget authority
or outlays) by the type of good or service procured (such as
personnel compensation, supplies and materials, and equipment)
without regard to the purpose of the programs for which they are
used.\16
As such, it can be used to get a rough idea of the methods used to
conduct an activity--for example, through direct provision of
services or through contracts. But its limitations are great and
must be recognized. For example, the services of a consultant might
be hired through "consulting and other services," through a term
appointment (personnel compensation), or even through a grant if the
grantee hired a consultant. Nor can object class data be used to
distinguish between administrative expenses and program expenses.
RELATED GAO PRODUCTS
Year 2000 Computing Crisis: Progress Made at Department of Labor,
but Key Systems at Risk (GAO/T-AIMD-98-303, Sept. 17, 1998).
Job Corps: Vocational Training Performance Data Overstate Program
Success (GAO/T-HEHS-98-218, July 29, 1998).
Department of Labor: Obligations by Object Class
(GAO/AIMD/HEHS-98-216R, July 10, 1998).
Results Act: Observations on Labor's Fiscal Year 1999 Performance
Plan (GAO/HEHS-98-175R, June 4, 1998).
Department of Labor: Strategic Planning and Information Management
Challenges Facing the Department (GAO/T-HEHS-98-88, Feb. 5, 1998).
Managing for Results: Agencies' Annual Performance Plans Can Help
Address Strategic Planning Challenges (GAO/GGD-98-44, Jan. 30,
1998).
Managing for Results: The Statutory Framework for Performance-Based
Management and Accountability (GAO/GGD/AIMD-98-52, Jan. 28, 1998).
H-2A Agricultural Guestworker Program: Changes Could Improve
Services to Employers and Better Protect Workers (GAO/HEHS-98-20,
Dec. 31, 1997).
The Results Act: Observations on Department of Labor's June 1997
Draft Strategic Plan (GAO/HEHS-97-172R, July 11, 1997).
OSHA's Inspection Database (GAO/HEHS-97-43R, Dec. 30, 1996).
People With Disabilities: Federal Programs Could Work Together More
Efficiently to Promote Employment (GAO/HEHS-96-126, Sept. 3, 1996).
Job Corps: High Costs and Mixed Results Raise Questions About
Program's Effectiveness (GAO/HEHS-95-180, June 30, 1995).
--------------------
\14 Appropriations acts may in some cases include "appropriated
entitlements," even though these funds are classified as "mandatory."
\15 Obligations are the amounts of orders placed, grants or contracts
awarded, or services received.
\16 Department of Labor: Obligations by Object Class
(GAO/AIMD/HEHS-98-216R, July 10, 1998).
*** End of document. ***