Trade Adjustment Assistance:

Changes to Funding Allocation and Eligibility Requirements Could Enhance States' Ability to Provide Benefits and Services

GAO-07-701: Published: May 31, 2007. Publicly Released: May 31, 2007.

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The Trade Adjustment Assistance (TAA) program, administered by the Department of Labor (Labor), is the nation's primary program providing income support, job training, and other benefits for manufacturing workers who lose their jobs as a result of international trade. In preparation for TAA reauthorization in 2007, GAO was asked to assess several aspects of the TAA program. Specifically, we examine (1) recent trends in Labor's certification of petitions and workers' participation in training; (2) the challenges, if any, that states face in managing TAA training funds; and (3) the extent to which workers use the TAA wage insurance and health coverage benefits and the factors, if any, that limit participation.

During the past 3 fiscal years, the number of petitions certified has declined from about 1,700 in fiscal year 2004 to about 1,400 in 2006, covering an estimated 400,000 workers. The proportion of petitions certified has remained at about two-thirds. About 40 percent of the petitions were denied because workers were not involved in producing an article. While many certified workers receive training, nearly three-quarters of the states reported that enrolling workers by the training deadline was a challenge. Labor's process for allocating training funds presents significant challenges to states. Training funds allocated to states at the beginning of the fiscal year do not accurately reflect states' spending the year before or the demand for training services, in part because Labor's policy guarantees that each state will receive at least 85 percent of what it received the previous year. For example, 13 states spent virtually none of their fiscal year 2006 training funds. Not only did these 13 states receive about $41 million in fiscal year 2007, 5 of them even received larger allocations than the previous year. States also cited as a challenge the lack of flexibility to use training funds to provide trade-affected workers with case management services. Few TAA participants take advantage of the wage insurance and health coverage benefits, and several factors limit participation. While the number of new workers receiving the wage insurance benefit has increased since 2004, it remains relatively low. The major factor preventing more workers from participating is the requirement that workers find a job within 26 weeks. The number of workers receiving the health benefit is also relatively low, with about 6,900 workers enrolling for the first time in the advance health coverage benefit in 2006.

Matters for Congressional Consideration

  1. Status: Closed - Implemented

    Comments: Under Public Law 111-5, enacted February 17, 2009, Congress amended the Trade Adjustment Assistance program by changing the deadline by which workers need to enroll in training to qualify for extended income support benefits. Previously participants must have been enrolled in training by the later of two dates: either 16 weeks after being laid off or 8 weeks after Labor certified their petition. Congress amended the deadline to one single time period: 26 weeks after certification or separation, whichever is later.

    Matter: In order to make it easier for workers to comply with the training enrollment deadline, Congress may wish to consider simplifying the deadline by specifying a single time period that commences when workers are laid off or petitions are certified, whichever is later.

  2. Status: Closed - Implemented

    Comments: Under Public Law 111-5, enacted on February 17, 2009, Congress amended the Trade Adjustment Assistance program to require states to spend no less than one-third of the funds provided for administration, employment, and case management services to be spent on employment and case management services. Moreover, Congress required that, in addition, to any training funds provided, the Secretary of Labor is to provide each state with an additional $350,000 each fiscal year to be used for employment and case management services.

    Matter: To to allow states greater flexibility in how they may use their TAA funds to provide services to workers, Congress may wish to consider allowing a portion of TAA training funds to be used for case management services.

  3. Status: Closed - Implemented

    Comments: Under Public Law 111-5, enacted February 17, 2009, Congress amended the Trade Adjustment Assistance program and removed the reemployment deadline for Alternative Trade Adjustment Assistance wage insurance benefit eligibility and no longer requires a separate certification of group eligibility.

    Matter: If Congress decides to extend the wage insurance benefit demonstration program, Congress may wish to consider easing some of the constraints on accessing this benefit to enable more workers to take advantage of it, including increasing the length of time workers are allowed to become reemployed, eliminating the requirement that a firm's affected workers must lack transferable skills in order for a group of workers to be certified as eligible for wage insurance, and eliminating the requirement that a significant number of a firm's workers be age 50 or over in order for a group of workers to be certified as eligible for wage insurance.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: Amendments to the Trade Adjustment Assistance program enacted in 2009 (P.L. 111-5) require Labor to distribute 90 percent of the training funds by July 15 of the fiscal year. This new requirement will allow training funds to be distributed more evenly earlier in the fiscal year thereby preventing significant amount of funds being distributed on the last day of the fiscal year.

    Recommendation: In order to better ensure that TAA training funds are allocated to states that have demonstrated a need for training funds and have used a significant portion of the funds they have already been allocated, the Secretary of Labor should develop procedures to better allocate the reserve funds throughout the fiscal year to enable states to carefully manage their training resources, ensuring that these reserve funds are distributed only to those who have spent or obligated a significant portion of the current fiscal year allocation.

    Agency Affected: Department of Labor

  2. Status: Closed - Implemented

    Comments: Amendments to the Trade Adjustment Assistance program (P.L. 111-5, enacted in 2009) require Labor to reduce the initial allocation percentage to 35 percent and to take into account such factors as the recent trends regarding the number of workers covered by certifications and the number of workers participating in training as well as the amount of funding estimated to be necessary to provide training approved to workers during the fiscal year. The Act also reduces the hold harmless percentage from 85 percent to 25 percent.

    Recommendation: In order to better ensure that TAA training funds are allocated to states that have demonstrated a need for training funds and have used a significant portion of the funds they have already been allocated, the Secretary of Labor should change the process for initially distributing training funds, including the initial allocation percentage and the hold harmless policy.

    Agency Affected: Department of Labor

 

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