Trade Adjustment Assistance:

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

GAO-07-702: 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.

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