Department of Energy Workforce Reduction:

Community Assistance Can Be Better Targeted

RCED-99-135: Published: May 7, 1999. Publicly Released: Jun 7, 1999.

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Pursuant to a legislative requirement, GAO reviewed the Department of Energy's (DOE) community assistance program for minimizing the impact of downsizing its contractor workforce, focusing on: (1) how much funding DOE had committed to spend and spent in support of its worker and community assistance program for fiscal years (FY) 1994 through 1998; (2) who received benefits during FY 1997 and FY 1998; (3) comparing DOE's separation benefits with the benefit packages of other federal and nonfederal organizations; and (4) what effect DOE's criteria had on determining which communities received assistance.

GAO noted that: (1) DOE's assistance to separated contractor workers is reasonably consistent with the types of benefits offered by other government and private sector employers; (2) however, its community development assistance funds did not necessarily go to those communities most affected by downsizing or with the highest unemployment; (3) for FY 1994 through FY 1998, DOE obligated and spent about $1.033 billion on benefits for the contractor workers and communities affected by its downsizing; (4) about $853 million was spent on worker assistance and the rest on community assistance; (5) about $460 million of the $1.033 billion was provided by DOE's Office of Worker and Community Transition and the remainder by other DOE programs; (6) at the end of FY 1998, DOE had a carryover balance of $72 million, including $10 million in unobligated funds and $62 million in funds that were obligated but not yet spent; (7) most of the contractor workers separated during FY 1997 and FY 1998 received benefits under DOE's workforce restructuring program; (8) while DOE generally offered its separated contractor employees a large range of benefits, the value of the benefits varied widely, primarily because of the differences in benefits packages among sites and in the employees' length of service and base pay; (9) these benefit packages are reasonably consistent with the types of benefits offered by public and private employers; (10) DOE's community assistance criteria, which focus on the merits of individual projects and not on relative economic need, do not necessarily result in the most assistance going to the communities most affected by its downsizing or with the highest unemployment; (11) for example, for FY 1995 through FY 1998, the communities surrounding DOE's Richland, Washington, facility had more than twice the unemployment rate and nearly twice the DOE job loss of those surrounding the Rocky Flats, Colorado, facility, but Richland received $18 million less than the $24 million that Rocky Flats received; (12) had the Department of Commerce's Economic Development Administration unemployment and jobs lost criteria been used to evaluate the request for community assistance, Rocky Flats would have been ineligible for funding, given the strength of its employment; (13) in addition, 5 of the 8 DOE sites that received community assistance would have been ineligible under these criteria; and (14) furthermore, because most DOE assistance went to communities with relatively strong economies, the extent to which DOE's assistance aided in creating or retaining jobs is not clear.

Recommendation for Executive Action

  1. Status: Closed - Implemented

    Comments: DOE's "60-day letter" indicated that it has revised its Policy and Planning Guidance to allocate funding based on the relative needs of communities affected by work force restructuring. This criteria now includes (1) economic distress measured by unemployment and loss of income, (2) job loss relative to the size of the affected community, (3) diversity of employment, and (4) overall size of the work force reduction.

    Recommendation: In order to target financial assistance to those communities that need it the most, the Secretary of Energy should revise the Department's criteria for administering community assistance so that aid is more focused on economic need. One way of doing this would be to develop community financial assistance criteria similar to those used by the Economic Development Administration in its existing guidance. These could include such factors as a community's unemployment rate and the impact of federal job loss on the local economy.

    Agency Affected: Department of Energy

 

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