Senior Community Service Employment: Program Reauthorization Issues That
Affect Serving Disadvantaged Seniors (Testimony, 05/19/99,
GAO/T-HEHS-99-126).

Pursuant to a congressional request, GAO discussed the reauthorization
of the Senior Community Service Employment Program (SCSEP), focusing on
the: (1) effect of the hold harmless provision on allocating funds to
where needy elderly live; and (2) impact of the annual appropriations
statutes on the distribution of SCSEP positions within states.

GAO noted that: (1) existing legislative requirements governing the
allocations of SCSEP funds result in distributions of funds among and
within states that do not match the distribution of the needy
population; (2) the hold harmless provision, as interpreted by the
Department of Labor, limits Labor's ability to allocate funds among
states in a way that ensures that funds are provided to the states where
the most needy elderly reside; (3) a majority of SCSEP funds are not
responsive to population changes that have occurred since 1978 when the
hold harmless provision was put in place because national sponsors are
guaranteed the same level of activity in each state that they had in
1978; (4) in program year 1998, 63 percent of the total appropriation of
$440 million was subject to the hold harmless provision; (5) in
addition, because 78 percent of total appropriations go to national
sponsors, some areas within states can be over- or underserved; (6) this
annual appropriation provision has afforded the states a more limited
role in ensuring a more equitable distribution of funds than was
envisioned in the 1978 amendments, whereby states were to receive 55
percent of funds above the 1978 appropriation; (7) in GAO's 1995 SCSEP
report, GAO presented matters for consideration by Congress that would:
(a) amend or eliminate the hold harmless provision; and (b) increase the
amount of funds allocated to the states; and (8) GAO believes that these
options remain valid today.

--------------------------- Indexing Terms -----------------------------

 REPORTNUM:  T-HEHS-99-126
     TITLE:  Senior Community Service Employment: Program
	     Reauthorization Issues That Affect Serving Disadvantaged
	     Seniors
      DATE:  05/19/99
   SUBJECT:  Elderly persons
	     Employment or training programs
	     Grant administration
	     State-administered programs
	     Grant award procedures
	     Disadvantaged persons
	     Administrative costs
	     Authorization
IDENTIFIER:  ETA Senior Community Service Employment Program

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Cover
================================================================ COVER

Before the Subcommittee on Postsecondary Education, Training, and
Life-Long Learning, Committee on Education and the Workforce House of
Representatives

For Release on Delivery
Expected at 2:00 p.m.
Wednesday, May 19, 1999

SENIOR COMMUNITY SERVICE
EMPLOYMENT - PROGRAM
REAUTHORIZATION ISSUES THAT AFFECT
SERVING DISADVANTAGED SENIORS

Statement of Marnie S.  Shaul, Associate Director
Education, Workforce, and Income Security Issues
Health, Education, and Human Services Division

GAO/T-HEHS-99-126

GAO/HEHS-99-126T

(205396)

Abbreviations
=============================================================== ABBREV

  OAA - Older Americans Act
  OMB - Office of Management and Budget
  SCSEP - Senior Community Service Employment Program

SENIOR COMMUNITY SERVICE
EMPLOYMENT:  PROGRAM
REAUTHORIZATION ISSUES THAT AFFECT
SERVING DISADVANTAGED SENIORS
============================================================ Chapter 0

Mr.  Chairman and Members of the Subcommittee: 

We are pleased to be here today to assist you as you discuss the
reauthorization of the Older Americans Act (OAA), which provides for
the economic well-being of disadvantaged older Americans.  One
important program under the OAA is the Senior Community Service
Employment Program (SCSEP), which is a significant source of jobs for
needy elderly Americans.  SCSEP finances part-time, minimum-wage
community service jobs each year for about 100,000 economically
disadvantaged Americans aged 55 and older in schools, hospitals,
senior citizen centers, and other community service activities. 

The Department of Labor administers this $440 million program through
grants to 10 national organizations--called sponsors--and states. 
Two legislative provisions affect how funds are allocated between the
national sponsors and the states.  The first is a ï¿½hold harmlessï¿½
provision that guarantees that national sponsors can carry out the
same level of activity in states as they did in 1978.  The second
provision is that national sponsors receive 78 percent of total
program funds under annual appropriations statutes.  Concerns have
been raised about how these provisions affect the distribution of
services to needy elderly people. 

My remarks today will focus on (1) the effect of the hold harmless
provision on allocating funds to where needy elderly live and (2) the
impact of the annual appropriations statutes on the distribution of
SCSEP positions within states.  My comments are based on the findings
from our 1995 report on the SCSEP program, a 1998 report updating
program information,\1 and additional work recently done for the
Subcommittee. 

In summary, we found that existing legislative requirements governing
the allocations of SCSEP funds result in distributions of funds among
and within states that do not match the distribution of the needy
population.  Specifically, the hold harmless provision, as
interpreted by Labor, limits Labor's ability to allocate funds among
states in a way that ensures that funds are provided to the states
where the most needy elderly reside.  A majority of SCSEP funds are
not responsive to population changes that have occurred since 1978
when the hold harmless provision was put in place because national
sponsors are guaranteed the same level of activity in each state that
they had in 1978.  In program year 1998, 63 percent of the total
appropriation of $440 million was subject to the hold harmless
provision.  In addition, because 78 percent of total appropriations
go to national sponsors, some areas within states can be over- or
underserved.  This annual appropriation provision has afforded the
states a more limited role in ensuring a more equitable distribution
of funds than was envisioned in the 1978 amendments, whereby states
were to receive 55 percent of funds above the 1978 appropriation.  In
our 1995 SCSEP report, we presented matters for consideration by the
Congress that would (1) amend or eliminate the hold harmless
provision and (2) increase the amount of funds allocated to the
states.  We believe that these options remain valid today. 

--------------------
\1 Department of Labor:  Senior Community Service Employment Program
Delivery Could Be Improved Through Legislative and Administrative
Actions (GAO/HEHS-96-4, Nov.  2, 1995) and Senior Community Service
Employment Program:  Status of National Sponsor Grants
(GAO/HEHS-98-115R, Apr.  17, 1998). 

   BACKGROUND
---------------------------------------------------------- Chapter 0:1

SCSEP evolved from Operation Mainstream, which trained and employed
chronically unemployed adults under the Economic Opportunity Act of
1964.  In 1965, Operation Mainstream provided funding to the Green
Thumb organization, at the time a nonprofit affiliate of the National
Farmers Union, to conduct a pilot training and employment program for
economically disadvantaged older workers in several rural areas. 
Green Thumb was thus the first of the 10 nonprofit national sponsors
that today administer most of the SCSEP funds. 

During the next 13 years (1965-78), legislative and administrative
actions instituted most of the basic aspects of today's SCSEP: 

  -- responsibility for the program was moved to the Department of
     Labor;

  -- the program was made part of the OAA and given the goal of
     providing subsidized employment in community service
     organizations to economically disadvantaged older Americans;

  -- all grantees were asked to attempt to place at least 10 percent
     of their program enrollees in unsubsidized jobs (the goal has
     been 20 percent since 1985);

  -- and 8 of the eventual 10 national sponsors, as well as most
     state governments, were made grantees for the program. 

Of the current 10 national sponsors, 5 were added because of OAA
amendments and other congressional guidance to Labor, which directed
that Labor add national sponsors whose services were directed
primarily toward minority constituencies or ethnic groups with high
concentrations of the elderly poor. 

      STATUTORY PROVISIONS ON
      ALLOCATING FUNDS
-------------------------------------------------------- Chapter 0:1.1

The OAA contains several provisions governing Labor's allocation of
SCSEP funds.  The hold harmless provision requires the Secretary of
Labor to reserve for the national sponsors a funding amount
sufficient to maintain the 1978 activity level.  Any balance of the
appropriation over the hold harmless amount is to be distributed to
the sponsors and state governments mainly on an ï¿½equitable
distributionï¿½ basis--that is, in accordance with the state-by-state
distribution of people 55 years old or older, adjusted for per capita
income. 

Another provision requires that the portion of any appropriation that
exceeds the 1978 funding level in subsequent years will be split--55
percent for states and 45 percent for the national sponsors. 
However, the ï¿½55/45ï¿½ provision--designed to provide state governments
more parity with the national sponsors--has never been implemented. 
Every year since 1978, appropriations acts have overridden the 55/45
provision.  These statutes have required that no more than 22 percent
of the SCSEP appropriation be allocated to the state governments.  At
least 78 percent must be allocated to the national sponsors. 

A third provision that also still applies is the requirement for an
equitable distribution of funds among areas within each state. 

      SCSEP IN PROGRAM YEAR 1998
-------------------------------------------------------- Chapter 0:1.2

The SCSEP appropriation for the 1998 program year\2 ($440 million)
accounted for about 30 percent of all OAA funds.  To receive a SCSEP
grant, a national sponsor or state government must agree to provide a
match, in cash or in kind, equal to at least 10 percent of the grant
award.  Many state governments make their match in the form of cash
contributions.  The national sponsors, on the other hand, normally
provide in-kind matches in the form of donated office space, staff
time, equipment, and the like.  The in-kind matches for most national
sponsors come not from the sponsors' own resources but from those of
the community service host agencies, where the SCSEP enrollees
actually work.  These host agencies typically are hospitals, local
libraries, nutrition centers, parks, and similar public service
entities. 

National sponsors and state governments use the SCSEP grants to
finance SCSEP part-time jobs in host agencies.  The cost of such a
job, or enrollee position--which generally must include at least 20
hours of work a week--is the amount determined sufficient to fund (1)
an enrollee's minimum wages, benefits, training, and incidental
expenses for up to 1,300 hours a year in the program and (2) the
associated administrative expenses.  Labor periodically adjusts this
cost amount, termed the ï¿½unit cost,ï¿½ in consultation with the Office
of Management and Budget (OMB).  The unit cost has risen from $6,061
in 1994 to $7,153 in 1998.  Labor divides each year's SCSEP
appropriation by the unit cost amount to determine how many positions
are available.  Program enrollees, who must be 55 years of age or
older and earn no more than 125 percent of the federal poverty level
prior to enrolling in this program, are paid the federal or local
minimum wage--whichever is higher.\3 For the 1997 program year,
funding permitted the establishment of about 61,300 positions
nationwide.  An enrollee may leave a program position for such
reasons as illness or acceptance of an unsubsidized job, opening the
position for another participant.  Thus, during the 1997 program
year, about 100,000 enrollees occupied the 61,300 positions; about 73
percent of the enrollees were women.  National sponsors administered
about 47,000 positions nationwide and the states and territories
administered about 14,300. 

--------------------
\2 The SCSEP program year runs from July 1 to June 30.  For example,
the period from July 1998 through June 1999 is the 1998 program year. 
Funds for the 1998 program year came from the Department of Labor
Appropriations Act, 1998. 

\3 The current federal minimum wage is $5.15 per hour. 

      THE 10 NATIONAL SPONSORS
-------------------------------------------------------- Chapter 0:1.3

Labor distributes 78 percent of SCSEP funds through noncompetitive
grants to 10 national organizations, called national sponsors.  Labor
provides annual grant applications only to national organizations
that currently sponsor SCSEP.  Labor's action is consistent with the
statute and with expressions of intent by the Senate Appropriations
Committee.  Labor officials rely on annual Appropriations Committee
report language such as the following from a recent Senate
Appropriations report that seems to indicate support for the current
sponsors:  ï¿½It is the intent of the Committee that the current
sponsors continue to build upon their past accomplishments.ï¿½ In
addition, although it permits awards to other entities, the OAA
creates a specific preference for awards to ï¿½national organizations
and agencies of proven ability in providing employment services .  . 
..ï¿½\4

As shown in table 1, during program year 1998, the national sponsors
received more than $352 million to fund 47,738 enrollee positions. 
National sponsors administered the program in from 8 to 45 states. 

                          Table 1
          
          Grant Awards, Employment Positions, and
          Number of States in Which SCSEP National
            Sponsors Operate, Program Year 1998

                                          Number
                                 Grant        of    Number
                          amount\a (in  position        of
National sponsor              dollars)         s    states
------------------------  ------------  --------  --------
American Association of    $52,781,434     7,071        34
 Retired Persons
 Foundation (AARPF)
Associacion Nacional Pro    13,330,666     1,838        11
 Personas Mayores
 (ANPPM)
Green Thumb, Inc. (GT)\b   109,137,519    14,896        45
National Asian Pacific       6,018,169       835         8
 Center on Aging
 (NAPCA)\b
National Center and         13,040,594     1,810        11
 Caucus on Black Aged,
 Inc. (NCCBA)
National Indian Council      6,001,653       839        14
 on Aging, Inc. (NICOA)
National Council on the     40,091,501     5,320        19
 Aging (NCOA)\b
National Senior Citizens    66,963,276     9,003        28
 Education and Research
 Center, Inc. (NSCERC)\b
National Urban League,      15,622,159     2,142        16
 Inc. (NUL)\b
U. S. Department of         28,469,959     3,984        42
 Agricultureï¿½Forest
 Service (USDA)
==========================================================
Total                     $352,256,930    47,738
----------------------------------------------------------
\a The total for national sponsors' grant amounts includes state
funds when states request that a portion of their funding be provided
directly by Labor to a national sponsor for program activities for
their particular state. 

\b Labor also provided additional competitive grant awards to several
national sponsors.  The amounts of the national sponsor awards were,
for NUL, $300,000; GT, $800,000; NSCERC, $215,200; NAPCA, $45,000;
and NCOA, $204,999. 

With the exception of Alaska, Delaware, and Hawaii--which operate
their own SCSEP programs and have no national sponsors--at least two
national sponsors operate in each state.  In one state, nine national
sponsors operate SCSEP programs in addition to the state agency. 
Thirty-six states have four or more national sponsors receiving
federal funds to provide SCSEP services within their borders.  So,
most states have several entities making decisions about where to
provide services. 

Whenever the SCSEP program has a new appropriation level, Labor
conducts with the national sponsors a meeting known as the ï¿½melon
cutting.ï¿½ At these meetings, Labor makes known its allocations to
each of the national sponsors and presides over discussions in which
national sponsors often trade enrollee positions in various areas. 
Sometimes, a representative from the National Association of State
Units on Aging is invited to express states' concerns, but the states
have no formal control over the distribution of positions. 

--------------------
\4 Senate Report 103-143, p.16 (1993). 

   HOLD HARMLESS PROVISION
   PREVENTS ALLOCATING THE
   MAJORITY OF PROGRAM FUNDS TO
   STATES WITH THE GREATEST NEED
---------------------------------------------------------- Chapter 0:2

The hold harmless provision of OAA's title V limits Labor's ability
to allocate funds among states in a way that ensures equitable
distribution--in accordance with the state-by-state distribution of
people 55 years old and older, adjusted to give greater weight to
economically disadvantaged areas and persons.  The result is a
pattern of too many SCSEP positions in some states and too few in
other states relative to their eligible populations.  Legislative
action could correct this problem. 

      EQUITABLE DISTRIBUTION AMONG
      STATES NOT FULLY ACHIEVED
-------------------------------------------------------- Chapter 0:2.1

In applying OAA's hold harmless provision, Labor officials establish
a reserve amount from each year's SCSEP appropriation to finance the
1978 level of national sponsor positions in each state.  Therefore,
if the national sponsors together administered 100 positions in a
certain state in 1978, they would receive thereafter, from a Labor
set-aside of appropriated funds, enough funds to finance at least 100
positions in that state, assuming that the appropriation level is
high enough to finance the 1978 total number of positions. 

Because the 1978 distribution of SCSEP positions did not, and still
does not, correspond to the size of each state's economically
disadvantaged elderly population, the hold harmless provision in
effect prevents a fully equitable distribution.  For the 1998 program
year, for example, about $277 million (63 percent) of the total
appropriation of $440 million was subject to the hold harmless
provision.\5 These funds are allocated to the national sponsors on a
state-by-state basis to protect the positions of 1978 enrollees and
allow the national sponsors to maintain some long-standing
relationships with host agencies.  Had the $277 million been
distributed in accordance with current age and per capita income
data, shifts in the number of positions would have occurred in many
states. 

In the analysis of the hold harmless issue in our 1995 report (based
on program year 1994 data), 25 states would have gained or lost at
least $500,000 each, and 13 states would have gained or lost more
than $1 million each if the hold harmless provision had been
discontinued.  While in a majority of states the change would have
amounted to less than 10 percent of total SCSEP funding, a few states
would have had a change of more than 20 percent.\6

Furthermore, in the future, the effect of the hold harmless provision
could increase.  As the unit cost of each position increases
(primarily through increases in the federal minimum wage rate),
without SCSEP appropriations increases, the share of the total SCSEP
funds needed to support the 1978 hold harmless positions increases. 
This would result in more funds being allocated on the basis of 1978
state positions and less allocated to states on the basis of
up-to-date population and income data that more accurately reflect
the needs of low-income elderly populations. 

--------------------
\5 This is the amount that Labor determined was needed from the
appropriation to fund 38,672 positions nationwide--the 1978 number of
positions.  Labor derived the $277 million by multiplying the 38,672
positions by the unit cost of each position for 1998--$7,153. 

\6 These results are based on an update of our simulation using
Labor's program year 1994 data that also incorporated the OAA
provision guaranteeing a .5-percent SCSEP appropriation minimum to
the states and a .25-percent minimum to certain other areas, such as
Guam and the Virgin Islands. 

      OPTIONS FOR OVERCOMING THE
      PROBLEM
-------------------------------------------------------- Chapter 0:2.2

The hold harmless provision could be modified in two ways.  The
relevant provision states that the Secretary of Labor will reserve
for the sponsors' grants or contracts sums necessary to maintain at
least their 1978 level of activities ï¿½under such grants or
contracts.ï¿½ Labor interprets this provision to require a
state-by-state distribution of positions based on the sponsors' 1978
activities.  One option is to amend the hold harmless provision to
specifically authorize Labor to base the distribution on the national
sponsors' 1978 total positions nationwide, rather than on the levels
in each state.  If the hold harmless provision was amended this way,
Labor would still be required to provide sufficient grants to the
national sponsors to finance their 1978 number of total positions,
but it would not distribute positions according to the number of
sponsor positions in each state in 1978.  With the amendment, Labor
could distribute all of the SCSEP dollars in accordance with the
pattern of need, as measured by each state's 55 and older population
size and per capita income. 

Another approach would be to repeal the entire hold harmless
provision.  This would remove the authorizing legislation's
protection of the national sponsors' historic base of positions. 
Such a change could significantly shift funding from the national
sponsors to the states, unless the annual appropriation acts continue
to stipulate that 78 percent of funds shall go to national sponsors. 

   THE ï¿½78/22ï¿½ APPROPRIATIONS
   PROVISION AFFECTS THE EQUITABLE
   DISTRIBUTION OF SCSEP POSITIONS
   WITHIN STATES
---------------------------------------------------------- Chapter 0:3

The annual appropriations acts essentially prescribe that 78 percent
of funds go to national sponsors and 22 percent to states, and this
provision can result in areas of states over- or underserving the
needy elderly.  A more equitable distribution of funds might occur if
states received a larger share of the program funds. 

      EQUITABLE DISTRIBUTION
      WITHIN STATES NOT FULLY
      ACHIEVED
-------------------------------------------------------- Chapter 0:3.1

Once funds are allocated to all entities operating within a state, a
provision of the OAA requires an equitable distribution of funds
among areas of each state, and state agencies are charged with
responsibility for accomplishing this.  The 1978 amendments to the
act provided that states would receive 55 percent of funds greater
than the 1978 appropriation.  Under this provision, if appropriations
increased, the states' share of SCSEP resources would gradually
increase, and the states would eventually achieve parity with the
national sponsors.  However, this provision--the 55/45 provision--has
never taken effect.  Instead, every year since 1978, appropriations
acts have overridden the 55/45 provision and required that at least
78 percent of the annual appropriation be allocated to the national
sponsors. 

Because 78 percent of the funds go to national sponsors, factors that
inhibit national sponsors from moving positions to where needy
elderly people reside could result in an inequitable distribution of
enrollee positions.  For example, the predominant role of the
national sponsors and the relationships they have established with
particular host agencies in determining where positions will be
located are one barrier to efficient movement of positions within a
state.  In addition, national sponsors with an ethnic focus have been
reluctant to serve areas that do not have significant numbers of
their ethnic constituents.  Furthermore, national sponsors may not
want to enter new or rural areas because that could increase
administrative costs.  Finally, in any particular state,
relationships between the state staff and the national sponsors or
among the national sponsors can affect where the SCSEP services are
provided. 

In our 1995 SCSEP report, we reviewed each state's county-by-county
report of equitable distribution for SCSEP positions and found
deficiencies in many cases.  In three states we cited as examples, we
found that most counties had either too many positions or too few
positions compared with the number that the distribution of eligible
people would indicate. 

States can use their 22 percent of SCSEP funds to fill in where
national sponsors are not meeting the needs of the elderly, but they
can only encourage national sponsors to move their positions.  So, it
is not possible for some states to fully address the needs of the
elderly in underserved areas.  Also, as funds become available to
national sponsors for new positions, the ï¿½melon cuttingï¿½ process that
Labor holds with national sponsors may not fully incorporate the
views of state agencies about where positions are needed.  Our 1995
report acknowledged that other factors such as some states not
participating actively in the program affect the equitable
distribution of positions within states.  However, the 78/22
provision is an important factor in determining the distribution of
positions within states. 

      OPTION FOR OVERCOMING THE
      PROBLEM
-------------------------------------------------------- Chapter 0:3.2

One option for more equitably distributing SCSEP positions within the
states is to increase the percentage of funds dedicated to state
governments from each year's appropriation from the 22 percent to a
higher percentage.  If the Congress stopped enacting the 22-percent
limit on state funding, the OAA provision requiring that state
governments receive 55 percent of all funding above the $201 million
1978 appropriation level would take effect.  If the 55/45 provision
had been in effect for program year 1998, the funds allocated to
national sponsors would have decreased from $343 million to about
$268 million and the states' share would have increased from $97
million to approximately $172 million.  With their statewide
administrative structures and additional funds, state governments
might have more flexibility in serving their eligible populations and
greater ability to meet their statutory responsibility. 

   CONCLUSIONS
---------------------------------------------------------- Chapter 0:4

For almost 30 years, the SCSEP program has been an important source
of jobs for needy elderly Americans.  Currently, approximately
100,000 enrollees annually work in subsidized community service jobs
and are given an opportunity to acquire skills sufficient to leave
the program for an unsubsidized position.  Because the program
continues to operate in the same manner as it has since 1978 and
because the states where concentrations of elderly Americans reside
have changed over that time, there is a mismatch between where needy
elderly live and where the subsidized positions are provided.  In
1995, we offered several matters for consideration by the Congress
that we believe could help alleviate this problem.  These matters
included

  -- amending or eliminating the hold harmless provision and

  -- increasing the portion of SCSEP grant funds allocated to state
     governments from the current 22 percent. 

We believe that these options are still valid ways to ensure a more
equitable distribution of positions and funds.  While these represent
major changes in SCSEP, we believe that if they are properly phased
in over a period of time, states, national sponsors, and program
participants will benefit by ensuring that funds are awarded to serve
locations with the highest concentrations of needy older Americans. 

-------------------------------------------------------- Chapter 0:4.1

Mr.  Chairman, this concludes my testimony.  I will be happy to
answer any questions that you or other Members of the Subcommittee
may have. 

*** End of document. ***