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Testimony: 

Before the Subcommittee on Higher Education, Lifelong Learning, and 
Competitiveness, Committee on Education and Labor, House of 
Representatives: 

United States Government Accountability Office: 
GAO: 

For Release on Delivery: 
Expected at 10:00 a.m. EST:
Thursday, February 26, 2009: 

Workforce Investment Act: 

Labor Has Made Progress in Addressing Areas of Concern, but More Focus 
Needed on Understanding What Works and What Doesn't: 

Statement of George A. Scott, Director: Education, Workforce, and 
Income Security: 

GAO-09-396T: 

GAO Highlights: 

Highlights of GAO-09-396T, a testimony before the Subcommittee on 
Higher Education, Lifelong Learning, and Competitiveness, Committee on 
Education and Labor, House of Representatives. 

Why GAO Did This Study: 

Since the Workforce Investment Actís (WIA) enactment in 1998, GAO has 
issued numerous reports that included recommendations regarding many 
aspects of WIA. These aspects include performance measures and 
accountability, funding formulas and spending, one-stop centers, and 
training, as well as services provided to specific populations, such as 
dislocated workers, youth, and employers. Collectively, GAO studies 
employed an array of data collection techniques, including surveys to 
state and local workforce officials and private sector employers; site 
visits; interviews with local, state, and Department of Labor (Labor) 
officials; and analyses of Labor data and documents. This testimony 
draws upon the results of these reports, issued between 2002 and 2008, 
and discusses issues raised and recommendations made. Specifically, 
this testimony addresses (1) progress made by Labor in addressing areas 
of concern, particularly related to GAO recommendations for action, and 
(2) what steps Labor has taken to ensure an understanding of what works 
and for whom in addressing the needs of workers and employers. 

What GAO Found: 

Labor has made some progress addressing earlier concerns regarding 
performance measurement and the accuracy of performance data, but 
issues with funding remain. The move to common measures helps provide a 
more complete picture of WIA services and may encourage services to 
challenging clients. With regard to such clients, Labor has chosen not 
to systematically adjust expected performance levels to account for 
different populations and local economic conditions, as recommended. 
Labor has made strides in improving the accuracy of performance data by 
requiring states to conduct data validation efforts. And, it has made 
progress in statesí ability to share data for tracking WIA performance, 
securing the participation of all but one state in the Wage Record 
Interchange System. Labor is also moving ahead with plans to implement 
an enhanced data reporting system that would, for the first time, allow 
Labor and states to track an individualís progress through the one-stop 
system. While progress has been made with regard to performance data, 
ensuring that funding is consistent with the demand for services and 
reflects funds states have available remains an issue. Statutory 
formulas have caused wide fluctuations in the funding states receive, 
particularly under the Dislocated Worker program. In addition, Labor 
has chosen not to consider statesí obligations when estimating their 
available funds, as recommended. 

To date, Labor has been slow to comply with the requirement to conduct 
impact evaluations of its programs and activities carried out under 
WIA. In 2004 and 2007, we recommended that Labor comply with the 
requirements of the law and conduct an impact evaluation of WIA 
services to better understand what services are most effective for 
improving outcomes. In its fiscal year 2008 budget, Labor identified a 
WIA assessment as an effort the agency would begin, and it has since 
initiated two studies. One, a nonexperimental study, is now complete, 
and officials expect to publish the results in March 2009. The other 
uses a random assignment experimental design, and will not be completed 
until June 2015. To address what Labor perceived as shortcomings in the 
one-stop service delivery system, Labor developed three separate 
discretionary grant initiatives to focus on the employment and training 
needs of high-growth, high-demand industries and awarded almost $900 
million for these initiatives. However, Labor will be challenged to 
assess their impact given methodological issues related to outcome 
data. Moreover, Labor does not plan to include them in the assessment 
of the impact of WIA services because the initiatives have their own 
evaluations. 

What GAO Recommends: 

GAO is making no new recommendations at this time. 

View [hyperlink, http://www.gao.gov/products/GAO-09-396T] or key 
components. For more information, contact George A. Scott at (202) 512-
7215 or scottg@gao.gov. 

[End of section] 

Mr. Chairman and Members of the Subcommittee: 

Thank you for inviting me here today to present the findings from our 
prior work on the workforce system under the Workforce Investment Act 
(WIA). As you know, WIA sought to transform the workforce system, 
unifying a fragmented employment and training system into a single, 
universal one--the one-stop system--that serves the needs of all job 
seekers and employers. Nearly 9 years after implementing these changes, 
the system continues to evolve. Now, in the current economic crisis, it 
faces incredible new challenges. As increasing numbers of workers 
become unemployed, the workforce investment system plays the central 
role in helping workers re-enter the workforce. One-stop centers serve 
as the key access point for services that are crucial in today's 
economy--Unemployment Insurance (UI) benefits, job training, and 
employment assistance--and they assist employers in finding workers. To 
help meet the increased demand, the American Recovery and Reinvestment 
Act of 2009 has provided nearly $5 billion in additional funds for 
workforce programs, many of which may be accessed through the one-stop 
system. 

In the past, we have found that states and localities faced challenges 
in implementing the system envisioned under WIA. For example, funding 
issues have stymied the system due, in part, to flawed formulas that 
lead to wide fluctuations in funding from year to year. Moreover, 
policymakers and program implementers have lacked information on what 
the workforce system achieves. Since WIA was enacted in 1998, we have 
issued numerous reports that included recommendations regarding many 
aspects of WIA, including performance measures and accountability, 
funding formulas and spending, as well as services provided to specific 
populations, such as dislocated workers, youth, and employers. As the 
Congress considers reauthorizing WIA, you asked us to update our 
earlier testimony on WIA implementation[Footnote 1] and highlight any 
remaining issues for consideration. My testimony today will discuss (1) 
progress made by the Department of Labor (Labor) in addressing areas of 
concern, particularly related to GAO recommendations for action, and 
(2) what steps Labor has taken to ensure an understanding of what works 
and for whom in addressing the needs of workers and employers. To 
address these objectives, we drew upon reports we issued between 2002 
and 2008. In our prior work on WIA, we have employed an array of 
methodologies, including surveys of state and local workforce officials 
and private sector employers; site visits to state and local areas; 
interviews with local, state, and Labor officials; review of existing 
literature; and analyses of Labor's data and documents.[Footnote 2] We 
conducted our work in accordance with generally accepted government 
auditing standards. Those standards require that we plan and perform 
the audit to obtain sufficient, appropriate evidence to provide a 
reasonable basis for our findings and conclusions based on our audit 
objectives. We believe that the evidence we obtained provides a 
reasonable basis for our findings and conclusions. 

Background: 

WIA created a new, comprehensive workforce investment system designed 
to change the way employment and training services are delivered. When 
WIA was enacted in 1998, it replaced the Job Training Partnership Act 
(JTPA) with three new programs--Adult, Dislocated Worker, and Youth-- 
that allow for a broader range of services to the general public, no 
longer using income to determine eligibility for all program services. 
These new programs no longer focused exclusively on training, but 
provided for three tiers, or levels, of service for adults and 
dislocated workers: core, intensive, and training. Core services 
include basic services such as job searches and labor market 
information. These activities may be self-service or require some staff 
assistance. Intensive services include such activities as comprehensive 
assessment and case management, as well as classes in literacy, 
conflict resolution, work skills, and those leading to a high school 
diploma or equivalent--activities that require greater staff 
involvement. Training services include such activities as occupational 
skills or on-the-job training. These tiers of WIA-funded services are 
provided sequentially. That is, in order to receive intensive services, 
job seekers must first demonstrate that core services alone will not 
lead to getting a job that will provide self-sufficiency. Similarly, to 
receive training services, a job seeker must show that core and 
intensive services will not lead to such a job. Unlike prior systems, 
WIA requires that individuals eligible for training under the Adult and 
Dislocated Worker Programs receive vouchers--called Individual Training 
Accounts--which they can use for the training provider and course 
offering of their choice, within certain limitations. 

In addition to establishing the three new programs, WIA requires that 
services for these programs, along with those of a number of other 
employment and training programs, be provided through a single service 
delivery system--the one-stop system. States were required to implement 
these changes by July 1, 2000. Sixteen categories of programs from four 
separate federal agencies must provide services through the system. 
Each local area must have at least one comprehensive one-stop center 
where core services for all mandatory programs are accessible. WIA 
allows flexibility in the way these mandatory partners provide services 
through the one-stop system, allowing colocation of service providers, 
electronic linkages, or referrals to off-site partner programs. While 
WIA requires these mandatory partners to participate, it does not 
provide additional funds to operate one-stop systems and support one- 
stop partnerships. As a result, mandatory partners are expected to 
share the costs of developing and operating one-stop centers. In 
addition to mandatory partners, one-stop centers have the flexibility 
to include other partners in the one-stop system to better meet 
specific state and local workforce development needs. Services may also 
be provided at affiliated sites--designated locations that provide 
access to at least one employment and training program. 

About $3.2 billion was appropriated in fiscal year 2008 for the three 
WIA programs--Adult, Dislocated Worker, and Youth. The formulas for 
distributing these funds to the states were left largely unchanged from 
those used to distribute funds under the predecessor program, JTPA, and 
are based on such factors as unemployment rates and the relative number 
of low-income adults and youth in the population. Table 1 shows the 
mandatory programs and their fiscal year 2008 appropriation. 

Table 1: WIA's Mandatory Programs, Related Federal Agencies, and Fiscal 
Year 2008 Appropriation (Dollars in millions): 

Federal Agency: Department of Labor; 
Mandatory programs: WIA Adult; 
Fiscal year 2008 appropriation: $849. 

Federal Agency: Department of Labor; 
Mandatory programs: WIA Dislocated Worker; 
Fiscal year 2008 appropriation: $1,446. 

Federal Agency: Department of Labor; 
Mandatory programs: WIA Youth; 
Fiscal year 2008 appropriation: $924. 

Federal Agency: Department of Labor; 
Mandatory programs: Employment Service (Wagner-Peyser); 
Fiscal year 2008 appropriation: $736. 

Federal Agency: Department of Labor; 
Mandatory programs: Trade adjustment assistance programs; 
Fiscal year 2008 appropriation: $889. 

Federal Agency: Department of Labor; 
Mandatory programs: Veterans' employment and training programs; 
Fiscal year 2008 appropriation: $228. 

Federal Agency: Department of Labor; 
Mandatory programs: Unemployment Insurance; 
Fiscal year 2008 appropriation: $2,464. 

Federal Agency: Department of Labor; 
Mandatory programs: Job Corps; 
Fiscal year 2008 appropriation: $1,598. 

Federal Agency: Department of Labor; 
Mandatory programs: Senior Community Service Employment Program; 
Fiscal year 2008 appropriation: $522. 

Federal Agency: Department of Labor; 
Mandatory programs: Employment and training for migrant and seasonal 
farm workers; 
Fiscal year 2008 appropriation: $80. 

Federal Agency: Department of Labor; 
Mandatory programs: Employment and training for Native Americans; 
Fiscal year 2008 appropriation: $53. 

Federal Agency: Department of Education; 
Mandatory programs: Vocational Rehabilitation Program; 
Fiscal year 2008 appropriation: $2,874. 

Federal Agency: Department of Education; 
Mandatory programs: Adult Education and Literacy; 
Fiscal year 2008 appropriation: $567. 

Federal Agency: Department of Education; 
Mandatory programs: Vocational Education (Perkins Act); 
Fiscal year 2008 appropriation: $1,272. 

Federal Agency: Department of Health and Human Services; 
Mandatory programs: Community Services Block Grant; 
Fiscal year 2008 appropriation: $654. 

Federal Agency: Department of Housing and Urban Development (HUD); 
Mandatory programs: HUD-administered employment and training; 
Fiscal year 2008 appropriation: $89. 

Total: 
Fiscal year 2008 appropriation: $15,245. 

Sources: Departments of Labor, Education, Health and Human Services, 
and Housing and Urban Development. 

Note: Although WIA required 17 mandatory programs to participate in the 
one-stop system, the Welfare-to-Work program has been discontinued, 
reducing the total to include 16 mandatory programs. 

[End of table] 

In order to receive their full funding allocations, states must report 
on the performance of their three WIA programs to Labor's Employment 
and Training Administration (ETA) that administers the programs. WIA 
requires that performance measures gauge program results in the areas 
of job placement, retention, earnings, skill attainment, and customer 
satisfaction, largely through the use of UI wage records.[Footnote 3] 
Labor's guidance requires that job seekers be tracked for outcomes when 
they begin receiving core services that require significant staff 
assistance. States are held accountable by Labor for their performance 
and may receive incentive funds or suffer financial sanctions based on 
whether they meet performance levels. WIA requires states and Labor to 
negotiate to establish expected performance levels for each measure. 

To address what Labor perceived as shortcomings in the one-stop service 
delivery system, Labor spent almost $900 million between 2001 and May 
2008 on three employment and training grant initiatives: the High 
Growth Job Training Initiative (High Growth) beginning in 2001, the 
Community Based Job Training Initiative (Community Based) beginning in 
2005, and the Workforce Innovation in Regional Economic Development 
(WIRED) initiative beginning in 2006. ETA oversees the grant 
initiatives. The vast majority of these grants are awarded under a 
provision of the American Competitiveness and Workforce Improvement Act 
(ACWIA), which provides authority for job training grants funded by the 
H-1B visa program,[Footnote 4] and a provision of WIA, which provides 
authority for demonstration, pilot, multiservice, research, and 
multistate projects. 

Labor Has Addressed Some Areas of Concern, but Others Need Attention: 

Labor has made some progress addressing earlier concerns regarding 
performance measurement and the accuracy of performance data, but more 
could be done. In 2005, in response to an Office of Management and 
Budget (OMB) initiative, Labor began requiring states to implement a 
common set of performance measures for its employment and training 
programs, including WIA. These measures include an entered employment 
rate, an employment retention rate, and an average earnings rate. The 
move to common measures helps provide a more complete picture of WIA 
services and may encourage providing services to challenging clients. 
In addition to changing some performance measures, Labor, in 
implementing common measures, required states to collect and report a 
count on all WIA participants who used the one-stop system. Prior to 
implementation of the common measures, information on participants did 
not always include an accurate count of clients using self-services or 
informational services, even though the latter group was estimated to 
be the largest portion of WIA clients.[Footnote 5] In addition, 
replacing a previous performance measure that focused on earning gains 
with the common measure--average earnings--may help reduce the 
disincentive to serve some job seekers. However, it remains unclear 
whether those with lower overall earning potential, such as those who 
work part-time, will benefit from this change. Further action may be 
needed to help reduce the incentive to serve only those who help meet 
performance levels. One approach that would help would be to 
systematically adjust expected performance levels to account for 
different populations and local economic conditions when negotiating 
performance. We previously recommended that Labor use this approach, 
but Labor has declined to implement this change because it feels the 
current process is adequate.[Footnote 6] Labor has also taken steps to 
increase the information it has on employers who use the system. 
Currently, Labor only measures employer satisfaction, but it has 
secured approval from OMB to collect more extensive information. Labor 
still cannot provide an unduplicated count of all people served at a 
one-stop center in a given year. It expects to be able to do so when 
the Workforce Investment Streamlined Performance Reporting System 
(WISPR) is implemented; however, no implementation date has been set. 

Labor has also made strides in improving the accuracy of performance 
data and states' ability to share UI wage records--the primary data 
source for tracking WIA performance. In October 2004, to improve the 
accuracy of the performance data, Labor began requiring states to 
conduct two types of validation: (1) data element validation--reviewing 
samples of WIA participant files, and (2) report validation--assessing 
whether states' software accurately calculated performance outcomes. 
For our 2005 report, almost all state officials we surveyed reported 
that Labor's data validation requirements have helped increase 
awareness of data accuracy and reliability.[Footnote 7] Regarding 
sharing UI wage records, in 2006, Labor assumed responsibility for 
administering the Wage Record Interchange System (WRIS), which allowed 
states to share UI wage records and account for job seekers who 
participate in one state's employment programs but get jobs in another. 
When Labor took the system over from a nonprofit organization, many 
states withdrew because of a perceived conflict of interest between 
Labor's federal enforcement role and states' role in protecting data 
confidentiality.[Footnote 8] When we last reported on this issue in 
2007, only 30 states were participating, and it was unclear if and when 
the other states would enter a data sharing agreement with Labor. Labor 
has developed a data sharing agreement to address confidentiality, and 
currently, all but one state is participating in WRIS. 

Even though Labor missed its July 1, 2007, implementation date, the 
agency continues to work toward the implementation of an enhanced data 
reporting system, WISPR. If implemented, the system would integrate 
data reporting by using standardized reporting requirements across the 
Employment Service, WIA, veterans' state grant, and Trade Adjustment 
Assistance programs, and ultimately replace their existing reporting 
systems with a single reporting structure. Its integrated design would, 
for the first time, allow Labor and states to track an individual's 
progress through the one-stop system. In addition, the system would 
expand data collection and reporting in two key areas: (1) the services 
provided to employers and (2) estimates of the number of people who 
access the one-stop system but ultimately receive limited or no 
services from one-stop staff. The Information Collection Request for 
WISPR was approved by OMB in October 2008. ETA is now finalizing its 
implementation strategy, but timing and resources will influence the 
actual implementation date. States continue to prepare for the 
implementation of this system by making adjustments to their management 
information systems. 

While progress has been made with regard to performance data, ensuring 
that funding is consistent with the demand for services and reflects 
funds states have available remains an issue. As a result of WIA's 
statutory funding formulas, states' funding levels may not always be 
consistent with the actual demand for services. This occurs because 
formula factors are not aligned with the target populations for these 
programs. In addition, the allocation may not reflect current labor 
market conditions because there are time lags between when the data are 
collected and when the allocation becomes available to states. The 
formula for the Dislocated Worker program is especially problematic 
because it causes funding volatility unrelated to a state's actual 
layoff activity. Several aspects of the Dislocated Worker formula 
contribute to funding volatility and to the seeming lack of consistency 
between dislocation and funding. For example, the excess unemployment 
factor has a threshold effect--states may or may not qualify for the 
one-third of funds allocated under this factor in a given year, based 
on whether or not they meet the threshold condition of having statewide 
unemployment of at least 4.5 percent. In a 2003 study, we found one 
state where funding decreased in the same year that dislocation 
activity increased over 40 percent.[Footnote 9] This volatility could 
be mitigated by "hold harmless" and "stop gain" provisions that limit 
changes in funding to within a particular range of each state's prior 
year allocation, as the formula for the WIA Adult formula does. 
[Footnote 10] In addition to issues related to funding allocation, 
Labor's process for determining states' available funds considers only 
expenditures and does not consider the role of obligations in the 
current program structure. We have recommended that Labor consider 
states' obligations when estimating available funds, but Labor 
disagreed with this recommendation and has no plans to implement it. As 
a result, Labor's estimate of expenditure rates suggests that states 
are not spending their funds as quickly as they actually are. Labor's 
Office of the Inspector General has also noted that obligations provide 
a more useful measure for assessing states' WIA funding status if 
obligations accurately reflect legally committed funds and are 
consistently reported.[Footnote 11] ETA's position has been that 
expenditures, which indicate funds that have actually been used, 
provide a more complete and reliable picture of the use and 
availability of funds by each state. We continue to disagree with 
Labor's position and stress the need for Labor to obtain and use 
obligation data. 

Labor Has Failed to Take Adequate Action to Understand Program Impact: 

Labor has been slow to complete the required impact evaluation of WIA. 
In addition, although Labor has attempted to refocus the workforce 
system through discretionary grants, it will be challenged to evaluate 
their impact. 

Labor Has Been Slow to Complete a Required Impact Evaluation of WIA: 

Although Labor has taken steps to improve its outcome data on job 
seekers who participate in its programs, it has only recently embarked 
on an analysis of WIA's impact. Outcome data alone cannot measure 
whether outcomes are a direct result of program participation, rather 
than external factors. For example, local labor market conditions may 
affect an individual's ability to find a job as much as or more than 
participation in an employment and training program. To measure the 
effects of a program, it is necessary to conduct an impact evaluation 
that would seek to assess whether the program itself affected to 
participant outcomes. Since the full implementation of WIA in 2000--in 
which the one-stop system became the required means to provide most 
employment and training services--Labor has not made evaluating the 
impact of those services a research priority. While WIA required such 
an evaluation by 2005, Labor has declined to fund one in prior budgets. 
In 2004[Footnote 12] and 2007,[Footnote 13] we recommended that Labor 
comply with the requirements of WIA and conduct an impact evaluation of 
WIA services to better understand what services are most effective for 
improving outcomes. Responding to the 2004 recommendation, Labor cited 
the need for program stability and proposed delaying an impact 
evaluation of WIA until after reauthorization. In its fiscal year 2008 
budget proposal, Labor identified an assessment of WIA's impact on 
employment, retention, and earnings outcomes for participants as an 
effort the agency would begin. 

In an effort to fulfill the requirement of the law, Labor has conducted 
one evaluation of WIA and has another under way. The first is a 
nonexperimental study of the Adult and Dislocated Worker programs. It 
uses administrative data on participants who entered WIA programs 
between July 2003 and June 2005, and examines the difference in average 
earnings or employment attributable to WIA program participation. These 
estimates of WIA program impact are based on data from 12 states, 
covering approximately 160,000 WIA participants and nearly 3 million 
comparison group members.[Footnote 14] According to Labor officials, 
the study considers the impact for all participants in the program, the 
impact for those receiving only core or intensive services, and the 
incremental impact of training services. The study is now complete and 
the agency expects the report to be published in March 2009. 

The second study--termed the "WIA Gold Standard Evaluation" by Labor-- 
uses a random assignment experimental design to also assess the impact 
of core and intensive services, and the incremental impact of WIA 
training on participant outcomes. But in this case, the goals of the 
evaluation are to determine the programs' impacts on participants' post-
program employment and earnings and their cost effectiveness. The 
evaluation expects to examine impact by funding stream (Adult, 
Dislocated Worker, and Youth programs). Within each funding stream, the 
evaluation will assess impact by demographic subgroups, such as age, 
race/ethnicity, gender, and veteran status. The study is in the design 
phase and officials expect to begin implementation in June 2009. The 
evaluation will not be completed until June 2015. 

Labor Has Attempted to Refocus the Workforce System through 
Discretionary Grants, but Is Challenged to Evaluate their Impact: 

To address what it perceived as shortcomings in the one-stop service 
delivery system, Labor developed three separate discretionary grant 
initiatives to focus on the employment and training needs of high- 
growth, high-demand industries. According to Labor officials, the High 
Growth, Community Based, and WIRED initiatives were designed to 
collectively change the focus of the workforce investment system to 
give greater emphasis in these areas. The grants were intended to bring 
about this change by identifying the workforce and training needs of 
growing, high-demand industries; engaging workforce, industry, and 
educational partners to develop innovative solutions to workforce 
challenges, such as worker shortages; leveraging a wide array of 
resources to fund the solutions; and integrating workforce and economic 
development to transform regional economies by creating good jobs. 

Labor officials characterize the High Growth initiative as a systematic 
change initiative designed to make the workforce system more demand- 
driven (i.e., focused on the needs of growing and high-demand 
industries) and to make the system's approach to workforce development 
more strategic by engaging business, industry, and education partners 
to identify workforce challenges and solutions. As a related effort, 
the Community Based grants were designed to build the training capacity 
of community colleges for high-growth, high-demand occupations. The 
goal of the third grant initiative, WIRED, was to "catalyze" the 
creation of high-skill and high-wage opportunities for workers within 
the context of regional economies--that is, to develop regional 
strategies--and to test models for integrating workforce and economic 
development, and to demonstrate that workforce development is a key 
driver in transforming regional economies. From 2001 through 2007, 
Labor awarded 349 grants totaling almost $900 million for these 
initiatives (see table 2). 

Table 2: Total Number and Amount of Grants Awarded by Labor, 2001 
through 2007: 

Grant initiative: High Growth; 
Number of grants: 166; 
Amount: $295,522,793. 

Grant initiative: Community Based; 
Number of grants: 142; 
Amount: $250,000,000. 

Grant initiative: WIRED; 
Number of grants: 41; 
Amount: $323,999,944. 

Grant initiative: Total; 
Number of grants: 349; 
Amount: $869,522,737. 

Source: GAO analysis of U.S. Department of Labor grants data. 

[End of table] 

Despite the money invested and emphasis placed on these initiatives, 
Labor did not fully integrate them into its strategic plan or ETA's 
research plan from the start. The strategic plan includes performance 
goals only for the Community Based initiative. High Growth and WIRED-- 
the two initiatives where Labor spent the most money--are mentioned in 
the strategic plan, but not specifically linked to a performance goal; 
therefore, it is unclear what criteria Labor will use to evaluate their 
effectiveness. Labor officials said the strategic plan did not address 
the initiatives because the plan focuses on budget issues. Just as the 
initiatives are not fully integrated into the strategic plan, neither 
are they fully integrated into ETA's research plan, which cites plans 
for future evaluations, but does not specify an assessment of their 
impact. In responding to recommendations made in our May 2008 report, 
Labor said only that it would consider inclusion of the initiatives in 
its next 5-year research agenda due for revision in 2009. We continue 
to believe that Labor should take steps to assess the initiatives' 
impact. 

Not fully incorporating the initiatives into its strategic or research 
plans may have limited Labor's ability to collect consistent outcome 
data. Labor said that, prior to 2005, it consistently collected data 
from grantees on the number of participants enrolled in and completing 
training funded under High Growth--the only one of the three grant 
initiatives operating at that time. However, it did not collect data on 
common measures--as it does for other training and employment services-
-and will face challenges in gathering performance outcomes on all 
participants funded by the grants. At the time the grants began, Labor 
could not require High Growth and Community Based grantees to provide 
data on the common measures because it did not have OMB approval. 
[Footnote 15] It now does, and Labor notes that currently reports are 
being submitted on the common measures on a quarterly basis and that 
grantees' performance outcomes are being calculated by the state of 
Kansas under a Memorandum of Understanding with ETA. However, in 
Labor's update on the collection of common measures, officials did not 
speak to the issue of whether they were able to collect common measures 
from funded grant activities that had already been completed. According 
to Labor, it can collect common measures for WIRED grantees and expects 
to have grant outcomes in November 2009. 

Labor has some plans underway to evaluate each of the three 
initiatives, but may face challenges drawing strong conclusions from 
them. Labor has conducted an evaluation of the implementation and 
sustainability of 20 early High Growth grantees. It is now evaluating 
the impact of the training provided by High Growth grantees. Labor 
anticipates the final report in spring 2009. Labor experienced a number 
of challenges in evaluating the initiatives. These include having to 
limit its evaluation to only 6 of 166 grantees, because only 6 had 
sufficient participants to ensure a statistically significant 
evaluation. Challenges also include problems gaining access to workers' 
earnings data and inconsistent outcome data from grantees. 

Labor officials said they plan to conduct a comprehensive evaluation of 
the Community Based initiative. According to Labor, the first phase of 
the evaluation was to examine the extent to which the Community Based 
grants addressed the stated workforce objectives and the challenges 
that projects were intended to address, as well as document the role of 
business and the workforce investment system in the overall success of 
the grants. This phase was also to include an examination of the 
feasibility of performing an impact evaluation. Labor has received the 
draft report from the contractor and provided comments, and the report 
is currently under revision. At this time, we do not know whether an 
impact evaluation was deemed feasible or when the report will be 
released. 

For its evaluation of the WIRED initiatives, Labor says it is examining 
the implementation and cumulative effects of WIRED strategies, 
including changes in the number and size of companies in targeted high- 
growth industries and whether new training led to job placement in the 
targeted industries. It contracted with the Berkeley Policy Associates 
to conduct the evaluation for the first 13 grantees, and a final report 
is expected by June 2010. It also contracted with Public Policy 
Associates to similarly evaluate the 28 remaining WIRED grantees. 
Currently, Labor reports that two interim reports are expected to be 
delivered in March 2009. 

Labor officials said these initiatives are not included in the agency's 
broader WIA impact study, even though we noted that doing so would be 
one means for meeting our recommendation regarding the initiatives' 
impact. According to Labor, none of the three initiatives is considered 
to be a research project that was designed to compare participant 
outcomes with the participant outcomes achieved under WIA. Labor said 
it does not plan to include them in the assessment of the impact of WIA 
services because the initiatives have their own independent 
evaluations. 

Concluding Observations: 

Since WIA's implementation, Labor has made significant strides in its 
efforts to ensure that the workforce system provides policymakers and 
service providers with accurate and complete performance data. Its 
enhanced new reporting system is a step in the right direction in 
understanding the system's reach, but continued delays in 
implementation remain a concern. However, even with the gains Labor has 
made in performance data, more could be done to ensure that performance 
measures do not provide disincentives to serve certain populations. 
Specifically, one approach that could help address this issue would be 
for Labor to systematically adjust expected performance levels to 
account for different populations and local economic conditions when 
negotiating performance. 

Funding issues continue to challenge the workforce system. The 
statutory funding formulas cause volatility, and if Congress chooses 
not to make broader formula changes, relatively minor changes--such as 
hold harmless provisions--could improve funding stability in the 
Dislocated Worker program. In addition, Labor could more accurately 
estimate states' available funds by considering obligations as well as 
expenditures. 

Despite the progress that has been made in improving the system's 
performance data, little is known about what the workforce system is 
achieving. Labor has not made such research a priority and, 
consequently, is not well positioned to help workers or policymakers 
understand which employment and training approaches work best. Knowing 
what works and for whom is key to making the system work effectively 
and efficiently. Moreover, in failing to adequately evaluate its 
discretionary grant programs, Labor missed an opportunity to understand 
how the current structure of the workforce system could be modified to 
enhance services for growing sectors, to encourage strategic 
partnerships, and to encourage regional strategies. As Labor moves 
forward, it should ensure that it maximizes the opportunities its 
evaluations afford for understanding what works and for whom. 

Mr. Chairman, this completes my prepared statement. I would be happy to 
respond to any questions you or other members of the subcommittee may 
have at this time. 

GAO Contact and Staff Acknowledgments: 

For further information regarding this testimony, please contact me at 
(202) 512-7215 or scottg@gao.gov. Individuals making key contributions 
to this testimony include Dianne Blank, Patrick diBattista, Wayne 
Sylvia, and Matthew Saradjian. 

[End of section] 

Related Products: 

Employment and Training Program Grants: Labor Has Outlined Steps for 
Additional Documentation and Monitoring but Assessing Impact Still 
Remains an Issue. [hyperlink, 
http://www.gao.gov/products/GAO-08-1140T]. Washington, D.C.: September 
23, 2008. 

Employment and Training Program Grants: Evaluating Impact and Enhancing 
Monitoring Would Improve Accountability. [hyperlink, 
http://www.gao.gov/products/GAO-08-486]. Washington, D.C.: May 7, 2008. 

Workforce Investment Act: One-Stop System Infrastructure Continues to 
Evolve, but Labor Should Take Action to Require That All Employment 
Service Offices Are Part of the System. [hyperlink, 
http://www.gao.gov/products/GAO-07-1096]. Washington, D.C.: September 
4, 2007. 

Workforce Investment Act: Additional Actions Would Improve the 
Workforce System. [hyperlink, 
http://www.gao.gov/products/GAO-07-1051T]. Washington, D.C.: June 28, 
2007. 

Veterans' Employment and Training Service: Labor Could Improve 
Information on Reemployment Services, Outcomes, and Program Impact. 
[hyperlink, http://www.gao.gov/products/GAO-07-594]. Washington, D.C.: 
May 24, 2007. 

Workforce Investment Act: Employers Found One-Stop Centers Useful in 
Hiring Low-Skilled Workers; Performance Information Could Help Gauge 
Employer Involvement. [hyperlink, 
http://www.gao.gov/products/GAO-07-167]. Washington, D.C.: December 22, 
2006. 

National Emergency Grants: Labor Has Improved Its Grant Award 
Timeliness and Data Collection, but Further Steps Can Improve Process. 
[hyperlink, http://www.gao.gov/products/GAO-06-870]. Washington, D.C.: 
September 5, 2006. 

Workforce Investment Act: Labor and States Have Taken Actions to 
Improve Data Quality, but Additional Steps Are Needed. [hyperlink, 
http://www.gao.gov/products/GAO-06-82]. Washington, D.C.: November 14, 
2005: 

Workforce Investment Act: Substantial Funds Are Used for Training, but 
Little Is Known Nationally about Training Outcomes. [hyperlink, 
http://www.gao.gov/products/GAO-05-650]. Washington, D.C.: June 29, 
2005. 

Workforce Investment Act: Labor Should Consider Alternative Approaches 
to Implement New Performance and Reporting Requirements. [hyperlink, 
http://www.gao.gov/products/GAO-05-539]. Washington, D.C.: May 27, 
2005. 

Workforce Investment Act: Employers Are Aware of, Using, and Satisfied 
with One-Stop Services, but More Data Could Help Labor Better Address 
Employers' Needs. [hyperlink, http://www.gao.gov/products/GAO-05-259]. 
Washington, D.C.: February 18, 2005. 

Public Community Colleges and Technical Schools: Most Schools Use Both 
Credit and Noncredit Programs for Workforce Development. [hyperlink, 
http://www.gao.gov/products/GAO-05-4]. Washington, D.C.: October 18, 
2004. 

Workforce Investment Act: States and Local Areas Have Developed 
Strategies to Assess Performance, but Labor Could Do More to Help. 
[hyperlink, http://www.gao.gov/products/GAO-04-657]. Washington, D.C.: 
June 1, 2004. 

Workforce Investment Act: Issues Related to Allocation Formulas for 
Youth, Adults, and Dislocated Workers. [hyperlink, 
http://www.gao.gov/products/GAO-03-636]. Washington, D.C.: April 25, 
2003. 

Workforce Investment Act: States' Spending Is on Track, but Better 
Guidance Would Improve Financial Reporting. [hyperlink, 
http://www.gao.gov/products/GAO-03-239]. Washington, D.C.: November 22, 
2002. 

[End of section] 

Footnotes: 

[1] GAO, Workforce Investment Act: Additional Actions Would Further 
Improve the Workforce System, [hyperlink, 
http://www.gao.gov/products/GAO-07-1051T] (Washington, D.C.: June 28, 
2007). 

[2] For a listing of reports, please see the related GAO products at 
the end of the testimony. 

[3] In some cases, supplemental data sources may be used when UI data 
are not available. Supplemental data may not be used for the earnings 
measure. 

[4] This program imposes a fee on employers that hire foreign workers 
to fill positions in specialized professions such as computer 
technology. 

[5] WIA provides that the outcomes of participants who use only self- 
service or informational services are not to be included in performance 
measurement. 

[6] See GAO, Workforce Investment Act: States and Local Areas Have 
Developed Strategies to Assess Performance, but Labor Could Do More to 
Help, [hyperlink, http://www.gao.gov/products/GAO-04-657] (Washington, 
D.C.: June 1, 2004). 

[7] See GAO, Workforce Investment Act: Labor and States Have Taken 
Actions to Improve Data Quality, but Additional Steps Are Needed, 
[hyperlink, http://www.gao.gov/products/GAO-06-82] (Washington, D.C.: 
Nov. 14, 2005). 

[8] For more information, see GAO, Veterans' Employment and Training 
Service: Labor Could Improve Information on Reemployment Services, 
Outcomes, and Program Impact, [hyperlink, 
http://www.gao.gov/products/GAO-07-594] (Washington, D.C.: May 24, 
2007). 

[9] GAO, Workforce Investment Act: Issues Related to Allocation 
Formulas for Youth, Adults, and Dislocated Workers, [hyperlink, 
http://www.gao.gov/products/GAO-03-636] (Washington, D.C: Apr. 25, 
2003). 

[10] Generally, for the Adult program, no state is to receive an 
allotment that is less than 90 percent (hold harmless) or more than 130 
percent (stop gain) of the amount the state received in the preceding 
fiscal year. 

[11] For more information, see U.S. Department of Labor, Office of 
Inspector General, Semi-Annual Report to Congress, Volume 57 (October 
1, 2006-March 31, 2007); and GAO, Workforce Investment Act: States' 
Spending Is on Track, but Better Guidance Would Improve Financial 
Reporting, [hyperlink, http://www.gao.gov/products/GAO-03-239] 
(Washington, D.C.: Nov. 22, 2002). 

[12] See [hyperlink, http://www.gao.gov/products/GAO-04-657]. 

[13] See [hyperlink, http://www.gao.gov/products/GAO-07-594]. 

[14] For the Adult and Dislocated Worker programs overall and core/ 
intensive only, the source of the comparison group was UI claimants in 
12 states and Employment Service registrants in 3 states. For WIA 
Training, the comparison group was WIA core/intensive services 
recipients. 

[15] In anticipation of OMB approval, starting in 2006, Labor included 
information on the common measures in all new solicitations for High 
Growth and Community Based grants, notified grantees of its goal for 
standardizing performance reporting, and provided technical assistance 
to help grantees prepare for it. 

[End of section] 

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