Trade Adjustment Assistance:

Opportunities to Improve the Community Adjustment and Investment Program

NSIAD-00-229: Published: Sep 29, 2000. Publicly Released: Sep 29, 2000.

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Pursuant to a congressional request, GAO provided information on the Community Adjustment and Investment Program (CAIP), focusing on: (1) how the program has been structured; (2) how program eligibility criteria and outreach efforts have been implemented; and (3) the results of efforts to provide assistance to eligible counties.

GAO noted that: (1) the Community Adjustment and Investment Program's management structure hinders efficient program management; (2) the program is managed in Washington, D.C., by a high-level interagency group chaired by the Department of the Treasury, called the Finance Committee; (3) Committee membership includes the Departments of Agriculture, Commerce, Housing and Urban Development, and Labor, and the Small Business Administration; (4) it took the Finance Committee over 3 years to set up program guidelines and to start disbursing program financing to distressed counties; (5) the Finance Committee's retention of certain day-to-day managerial functions is inefficient and has added more time to the decision-making process, particularly for direct loans and grants; (6) Treasury officials recognize that some delays have resulted from the program's centralized management structure and told GAO that they plan to hire additional full-time staff to expedite future decision-making; (7) however, it is not clear that new staff will improve program management unless the Finance Committee is prepared to delegate decision-making authority; (8) program eligibility procedures are complex and rely on a database that is not designed to be used as a measure of the impact of the North American Free Trade Agreement on communities; (9) GAO found that Treasury's current procedures result in the underestimation of dislocated workers, including approximately 3,700 secondary workers in firms that are suppliers to or assemblers for manufacturing firms adversely impacted by trade with Mexico and Canada; (10) although this undercounting has not had an impact on counties from qualifying for the program; (11) for the 228 counties in 30 states and Puerto Rico designated eligible for the program, notification and outreach have been limited, as Treasury does not directly notify eligible counties about the program, according to program officials; and (12) since 1997, about $257 million in loan guarantees, loans, and grants have been provided to 83 eligible counties.

Status Legend:

More Info
  • Review Pending-GAO has not yet assessed implementation status.
  • Open-Actions to satisfy the intent of the recommendation have not been taken or are being planned, or actions that partially satisfy the intent of the recommendation have been taken.
  • Closed-implemented-Actions that satisfy the intent of the recommendation have been taken.
  • Closed-not implemented-While the intent of the recommendation has not been satisfied, time or circumstances have rendered the recommendation invalid.
    • Review Pending
    • Open
    • Closed - implemented
    • Closed - not implemented

    Recommendations for Executive Action

    Recommendation: In order to improve the management and administration of the Community Adjustment and Investment Program, the Secretary of the Treasury should direct the Chair of CAIP's Finance Committee to consider delegating additional decision-making authority from the Finance Committee to program staff for loans and grants.

    Agency Affected: Department of the Treasury

    Status: Closed - Implemented

    Comments: In September 2000, GAO recommended that the Secretary of the Treasury direct the Chair of CAIP's Finance Committee to consider delegating additional decision-making authority from the Finance Committee to program staff for loans and grants. In response, the Treasury has taken steps, that taken together, comprise a substantial additional delegation of decision-making authority to program staff. Treasury has hired a national program director who is responsible for the day-to-day management of the program, as well as an attorney who spends 40 percent of his time on CAIP issues. They have created two additional functional subcommittees, the Eligible Area Subcommittee and the Funding Subcommittee for the CAIP credit component, comprised of program staff from the participating agencies. They have increased the procedural authority of two existing subcommittees, the Loan Subcommittee and the Funding Subcommittee for the CAIP grant component. These subcommittees together cover the spectrum of CAIP activities.

    Recommendation: In order to improve the management and administration of the Community Adjustment and Investment Program, the Secretary of the Treasury should direct the Chair of CAIP's Finance Committee to establish procedures to ensure that the data used in determining eligibility for program assistance are complete and accurate.

    Agency Affected: Department of the Treasury

    Status: Closed - Implemented

    Comments: In September 2000, GAO recommended that the Secretary of the Treasury direct the Chair of CAIP's Finance Committee to establish procedures to ensure that the data used in determining eligibility for program assistance are complete and accurate. In response, Treasury has taken steps to add data on workers in secondary firms affected by NAFTA to the eligibility database. They have also created an Eligible Area Subcommittee to oversee the eligibility process and to consider requests for eligibility from counties that feel they may be undercounted in the NAFTA-TAA database.

    Recommendation: In order to improve the management and administration of the Community Adjustment and Investment Program, the Secretary of the Treasury should direct the Chair of CAIP's Finance Committee to improve notification of eligible counties by directly informing them when they are found to be eligible for the program.

    Agency Affected: Department of the Treasury

    Status: Closed - Implemented

    Comments: In September 2000, we recommended that the Secretary of the Treasury direct the Chair of CAIP's Finance Committee to improve notification of eligible counties by directly informing them when they are found to be eligible for the program. In response, Treasury has taken steps to require that a Notice of Eligibility be sent directly to local officials in each newly-designated county. In addition, a Notice of Renewal is also sent directly to local officials when the county's eligibility has been extended. This action supplements its existing notification of the Members of Congress representing the county, and SBA and USDA's internal notification of their state offices about the eligibility of counties in the state.

    Recommendation: In order to improve the management and administration of the Community Adjustment and Investment Program, the Secretary of the Treasury should direct the Chair of CAIP's Finance Committee to establish outcome measures and a monitoring system to track the degree to which the program has actually assisted distressed counties.

    Agency Affected: Department of the Treasury

    Status: Closed - Implemented

    Comments: In September 2000, GAO recommended that the Secretary of the Treasury direct the Chair of CAIP's Finance Committee to establish outcome measures and a monitoring system to track the degree to which the program has actually assisted distressed communities. In response, Treasury has taken steps to set up a system to monitor the number of jobs created and/or preserved by the borrowers of its loans and loan guarantees. Borrowers are surveyed approximately two years after their loan or loan guarantee is approved, which is the time period indicated in the CAIP Guidelines for creating/preserving jobs. CAIP had its first survey findings in September 2002, and is continuing to try to improve the system. For grant recipients, CAIP grant agreements have specific annual goals for the number of jobs to be created or preserved by the project. Grantees report quarterly and in a final report on progress in meeting the annual goals.

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