Background

The Workforce Investment Act 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 general equivalency diploma (GED)—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.   (See table 1.)
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, 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, defined as designated locations that provide  access to at least one employment and training program.
About $3.3 billion was appropriated in fiscal year 2006 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. In order to receive their  full funding allocations, states must report on the performance of their  three WIA 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  Unemployment Insurance (UI) wage records. 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 to negotiate with Labor to  establish expected performance levels for each measure. While WIA  established performance measures for the three WIA-funded programs, it  did not establish any comprehensive measures to assess the overall  performance of the one-stop system.

	System Infrastructure and Service Strategies Have Evolved To Meet the Needs of Job Seekers and Employers

Seven years after the implementation of the workforce investment system  under WIA, the system’s infrastructure continues to evolve. Nationwide,  the number of comprehensive one-stop centers has decreased somewhat,  but not uniformly across states. States generally reported increased  availability of services for some of the mandatory programs at  comprehensive one-stop centers. But despite WIA’s requirement that all  mandatory partners provide services through the one-stop system, some  states have maintained a completely separate system for delivering  services for Wagner-Peyser-funded Employment Services (ES). Adults and  dislocated workers receive a wide range of services through the one-stop  system, but states and local areas have generally focused their youth  services on in-school youth, finding it difficult to recruit and retain out-of- school youth. Most medium and large employers are aware of and use the  system and are quite satisfied with its services, but they generally use one- stop centers to fill their needs for low-skilled workers.

		WIA’s Service Delivery Infrastructure Continues to Evolve

WIA’s service delivery infrastructure has continued to evolve since we last  reviewed it in 2001. Over the 6-year period, nationwide, the number of one- stop centers—both comprehensive and satellite—has declined, a fact that  states most often attributed to a decrease in funding. The number of  comprehensive centers declined from a high of 1,756 in 2001 to 1,637 in  2007. However, this trend is not uniform across states. Ten states reported  an increase in comprehensive centers over the last 4 years. For example,  Montana reported a 600 percent increase in centers as part of a statewide  restructuring of its one-stop delivery system that involved converting  former satellite and affiliated sites into comprehensive one-stop centers.  States that reported an increase in the number of comprehensive one-stop  centers often cited a rise in demand for services as the reason for the  increase.
Services for mandatory programs are increasingly available through the  one-stop system in 2007, though not always on-site. States continue to  have services for two key programs—WIA Adult and Dislocated  Workers—available on-site at the majority of the one-stop centers. In  addition, 30 states reported that TANF services were generally available  on-site at a typical comprehensive one-stop center, and 3 more states  reported they were typically on-site at satellites. The on-site availability of  some other programs—such as, Job Corps, Migrant and Seasonal  Farmworkers, Senior Community Service and Employment Program, and  Adult Education and Literacy—declined slightly between 2001 and 2007.  However, the overall availability of these programs’ services increased,  largely because of substantial increases in access through electronic  linkages and referrals.
Despite the increased availability of some programs at one-stop centers,  some states have not fully integrated all of their Wagner-Peyser-funded  Employment Service into the system. Six states reported in our 2007  survey that they operate stand-alone Employment Service offices, all  completely outside the one-stop system. Another four states reported  having at least some stand-alone offices outside the system (see fig. 1).   At the same time, states that operate stand-alone offices also report  providing services on-site at the majority of their one-stops. Labor has  expressed concern that stand-alone Employment Service offices cause  confusion for individuals and employers and promote duplication of effort  and inefficient use of resources. Given the concern over resources, we  asked states to provide estimates of their state’s total Employment Service  allotment that was used to support the infrastructure of the stand-alone  offices. Only 6 states could provide them, and the overall average was  about 5 percent. However, the state with the most stand-alone ES offices  reported that it had not used any of its ES allotment to support the  infrastructure of these offices. Instead, this state financed the  infrastructure costs of its 30 stand-alone offices with state general funds.  Despite their concerns, Labor officials say that they lack the authority to  prohibit stand-alone ES offices.
While most states used multiple program funds to finance the operation of  their one-stops, WIA and ES continue to be the two programs most often  cited as funding sources used to cover one-stop infrastructure—or  nonpersonnel—costs. In program year 2005, the most recent year for  which data are available, 23 states reported that WIA was the top funding  source used to support infrastructure, while 19 states identified the  Employment Service. Of the eight states remaining, three cited TANF as  the top funding source, two cited Unemployment Insurance, one cited WIA  state funds, and two states could not provide this information.  States  reported less reliance on other programs to fund the one-stop  infrastructure in 2005 than in the past (see table 2). For example, the  number of states that reported using TANF funds at all to cover  infrastructure costs declined from 36 to 27.

		States and Local Areas Have Sought to Tailor Services to Meet the Needs of Customers

WIA provides the flexibility to states and local areas to develop  approaches for serving job seekers and employers that best meet local  needs. In our work we have found some broad trends in services, but there  continues to be wide variation across the country in the mix of services  and how they are provided. Local areas use a substantial portion of their  WIA funds to provide training to adults and dislocated workers, but use  even more to provide the services that go beyond training, including case  management, assessment, and supportive services. However, serving  youth, particularly out-of-school youth, has proven challenging. WIA  increased the focus on the employer as customer, and we found that most  medium and large employers are aware of and use the one-stop. However,  employers look to the one-stop system mostly to help fill their needs for  low-skilled workers, in part because they assume that most workers  available through the system are low-skilled.
Services to adults and dislocated workers involve more than training.  Despite early concerns about the extent of training, we found that  substantial WIA funds were being used to fund training. Local boards used  about 40 percent of the approximately $2.4 billion in WIA funds they had  available in program year 2003 to provide training services to an estimated  416,000 WIA participants, primarily in occupational skills. However, the  vast majority of job seekers receive self-assisted core services, not  training. Not everyone needs or wants additional training. And even when  they do, they need help deciding what type of training would best match  their skill level while at the same time meet local labor market needs— help that includes information on job openings, comprehensive  assessments, individual counseling, and supportive services, such as  transportation and child care. Of the funds available in program year 2003,  60 percent was used to pay for these other program costs, as well as to  cover the cost of administering the program.
Providing services to youth has been challenging for local areas. Local  areas often focus their WIA youth resources on serving in-school youth,  often using a range of approaches to prevent academic failure and school  dropouts. Out-of-school youth are viewed as difficult to serve, in part  because they are difficult to locate in the community and they face  particularly difficult barriers to employment and education, including low  levels of academic attainment, limited work experience, and a scarcity of  jobs in the community. The 5-year Youth Opportunity Grants program,  authorized under WIA was designed, in part, to enhance the local  infrastructure of youth services, particularly in high-poverty areas.  Grantees offered participants a range of youth services—education,  occupational skills training, leadership development, and support services.  They set up centers that varied widely. To reach the hard-to-serve target  population, grantees used a variety of recruiting techniques, ranging from  the conventional to the innovative. For example, some grantees conducted  community walking campaigns using staff to saturate shopping malls and  other areas where youth congregate. Conditions in the communities such  as violence and lack of jobs presented a challenge to most grantees, but  they took advantage of the local discretion built into the program to  develop strategies to address them. Grantees and others reported that the  participants and their communities made progress toward the education  and employment goals of the program. However, a formal assessment of  the program’s impact, while under way, has not yet been released by  Labor. Although Labor originally planned to continue to add grantees,  funding for the program was eliminated in the budget for fiscal year 2004.
Employers mostly use one-stop centers to fill their needs for low-skilled  workers. Most medium and large employers are aware of and use the  system and are satisfied with its services (see fig 2). Regardless of size,  just over 70 percent of employers responding to our 2006 survey reported  that they hired a small percentage of their employees—about 9 percent— through one-stops. Two-thirds of those they hired were low-skilled  workers, in part because they thought the labor available from the one- stops was mostly low-skilled. Employers told us they would hire more job  seekers from the one-stop labor pools if the job seekers had the skills for  which they were looking. Most employers used the centers’ job posting  service, fewer made use of the one-stops’ physical space or job applicant  screening services. Still, when employers did take advantage of services,  they generally reported that they were satisfied with the services and  found them useful because they produced positive results and saved them  time and money. When employers did not use a particular one-stop  service, in most cases they said that they either were not aware that the  one-stop provided the service, or said they obtained it elsewhere, or said  that they carried through on their own.

	Additional Action Could Help System Development

Despite the successes state and local officials have had since WIA’s  implementation, some aspects of the law and other factors have hampered  their efforts. First, funding issues continue to stymie the system. For  example, the formulas in WIA that are used to allocate funds to states do  not reflect current program design and have caused wide fluctuations in  funding levels from year to year. In addition, Labor’s focus on  expenditures without including obligations overestimates the amount of  funds available to provide services at the local level. Second, the  performance measurement system is flawed and little is known about  what WIA has achieved. Labor has taken some steps to improve guidance  and communication, but does not involve key stakeholders in the  development of some major initiatives and provides too little time for  states and local areas to implement them.

		Funding Allocation and Spending Information Do Not Reflect Program Structure

As states and localities have implemented WIA, they have been hampered  by funding issues, including statutory funding formulas that are flawed. As  a result, states’ funding levels may not always be consistent with the actual  demand for services. In previous work, we identified several issues  associated with the current funding formulas. First, formula factors used  to allocate funds are not aligned with the target populations for these  programs. Second, allocations may not reflect current labor market  conditions because there are time lags between when the data are  collected and when the allocations become available to states. Third, the  formula for the Dislocated Worker program is especially problematic,  because it causes funding levels to suffer from excessive and unwarranted  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. 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  at least 4.5 percent unemployment statewide. In a study we conducted in  2003, we compared dislocation activity and funding levels for several  states. In one example, funding decreased in one year while dislocation  activity increased by over 40 percent (see fig. 3). This volatility could be  mitigated by provisions such as “hold harmless” and “stop gain”  constraints that limit changes in funding to within a particular range of  each state’s prior year allocation. The Adult formula includes such  constraints, setting the hold harmless at 90 percent and the stop gain at  130 percent.
In addition to issues related to funding allocation, the process used to  determine states’ available funds considers only expenditures and does  not take into account the role of obligations in the current program  structure. Our analysis of Labor’s data from program year 2003 and beyond  indicates that states are spending their WIA funds within the authorized   3-year period. Nationwide, states spent over 66 percent of their program  year 2003 WIA funds in the first year—an increase from the 55 percent  since our 2002 report. In fact, almost all program funds allocated in  program year 2003 were spent by states within 2 years. By contrast,  Labor’s estimate of expenditure rates suggests that states are not spending  their funds as quickly because the estimate is based on all funds states  currently have available—from older funds carried in from prior program  years to those only recently distributed. Moreover, many of the remaining  funds carried over may have already been obligated—or committed  through contracts for goods and services for which a payment has not yet  been made. When we examined recent national data on the amount of WIA  funds states are carrying in from previous program years, we found that,  overall, the amount of carryover funds is decreasing—from $1.4 billion  into program year 2003 to $1.1 billion into program year 2005. One  explanation for the decline may be that obligations are being converted to  expenditures.
In our 2002 report, we also noted that Labor’s data lacked consistent  information on obligations because states were not all using the same  definition for obligations in what they reported to Labor. Labor’s guidance  was unclear and did not specify whether obligations made at the local  level—the point at which services are delivered—should be included. We  recommended that Labor clarify the guidance to standardize the reporting  of obligations and use this guidance when estimating states’ available  funds. Labor issued revised guidance in 2002, but continues to rely on  expenditure data in establishing its estimates. In so doing, it overestimates  the funds states have available to spend and ignores the role of obligations  in the current workforce investment system. Labor’s Office of the  Inspector General (OIG) recently concurred, noting that obligations  provide a more useful measure for assessing states’ WIA funding status if  obligations accurately reflect legally committed funds and are consistently  reported.

		Little Is Known about What the System Is Achieving

We have little information at a national level about what the workforce  investment system under WIA achieves. Outcome data do not provide a  complete picture of WIA services. The data reflect only a small portion of  those who receive WIA services and contain no information on services to  employers. Furthermore, WIA performance data are not comparable  across states and localities, in part because of inconsistent policies in  tracking participants for outcomes. In addition, the use of wage records to  calculate outcomes is no longer consistent across states. Labor and states  have made progress in measuring WIA performance in a number of areas,  including Labor’s data validation initiative and the move to common  measures. Labor’s proposed integrated data system holds promise in  improving data reporting, but it is unclear whether it will be implemented  as currently proposed. Furthermore, Labor has not yet conducted an  impact evaluation, as required by WIA.
WIA performance data do not include information on all customers  receiving services. Currently Labor has only limited information on  certain job seekers—those who use only self-services—and on employers.  WIA excludes job seekers who receive core services that are self-service  or informational in nature from being included in the performance  information. Thus, only a small proportion of the job seeker population  who receive services at one-stops are actually reflected in WIA outcome  data, making it difficult to know what the overall program is achieving.  Customers who use self-services are estimated to be the largest portion of  those served under WIA. In a 2004 study, we reported that some estimates  show only about 5.5 percent of the individuals who walked into a one-stop  were actually registered for WIA and tracked for outcomes. Furthermore,  Labor has limited information about employer involvement in the one-stop  system. Although Labor measures employers’ satisfaction, this measure  does not provide information on how employers use the system. Labor  officials told us that they do not rely on this information for any purpose,  and the information is too general for states and local areas to use.
WIA performance data are not comparable across states and localities.  Because not all job seekers are included in WIA’s outcome measures,  states and local areas must decide when to begin tracking participants for  outcomes—a decision that has led to outcome data that are not  comparable across states and local areas. The guidance available to states  at the time WIA was first implemented was open to interpretation in some  key areas. For example, the guidance told states to register and track for  outcomes all adults and dislocated workers who receive core services that  require significant staff assistance, but states could decide what  constituted significant staff assistance. As a result, states and local areas  have differed on whom they track and for how long—sometimes beginning  the process when participants receive core services, and at other times not  until they receive more intensive services. We have recommended that  Labor determine a standard point of registration and monitor states to  ensure they comply. Labor has taken some actions, but registration  remains an issue.
Furthermore, data are not comparable because the availability of wage  records to calculate outcomes is no longer consistent across states. UI  wage records—the primary data source for tracking WIA performance— provide a fairly consistent national view of WIA performance. At the same  time, UI wage records cannot be readily used to track job seekers who get  jobs in other states unless states share data. The Wage Record Interchange  System (WRIS) was developed to allow states to share UI wage records  and account for job seekers who participate in one state’s employment  programs but get jobs in another state. In recent years, all states but one  participated in WRIS while it was operated by the nonprofit National  Association of State Workforce Agencies. However, in July 2006, Labor  assumed responsibility for administering WRIS, and many states have  withdrawn, in part because of a perceived conflict of interest between  Labor’s role in enforcing federal law and the states’ role in protecting the  confidentiality of their data. As of March 2007, only 30 states were  participating in the program, and it is unknown if and when the other  states will enter the data-sharing agreement. As a result, performance  information in almost half the states may not include employment  outcomes for job seekers who found jobs outside the states in which they  received services.
Labor has taken steps to address issues related to the quality of WIA  performance data, but further action is needed. Both Labor’s OIG and our  early studies of WIA raised issues on the quality of the performance data,  and Labor has taken steps aimed at addressing these issues. In October  2004, Labor began requiring states to implement new data validation  procedures for WIA performance data. This process requires 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.  While it is too soon to fully assess whether Labor’s efforts have improved  data quality, officials in most states have reported that Labor’s new  requirements have helped increase awareness of data accuracy and  reliability at both the state and local levels.
In addition, 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 measure. Moving to  the common measures has increased the comparability of outcome  information across programs and made it easier for states and local areas  to collect and report performance information across the full range of  programs that provide services in the one-stop system. In addition, as part  of the implementation of the common measures, states are for the first  time required to collect and report a count of all WIA participants who use  one-stop centers. This may help provide a more complete picture of the  one-stop system.
The shift to common measures could also affect services to some groups  of job seekers. Historically, certain WIA performance measures—primarily  the earnings measure—have driven localities to serve only those  customers who will help meet performance levels. For example, program  providers have reported that the earnings measure provides a disincentive  to enroll older workers in the program because of employment  characteristics that may negatively affect program performance. In several  local areas we visited for our study of older worker services, officials said  they considered performance measures a barrier to enrolling older  workers seeking part-time jobs because they would have lower earnings  and therefore reduce measured program performance. Labor’s shift from  earnings gain to average earnings under the common measures may help  reduce the extent to which the measures are a disincentive to serve certain  populations. It remains unclear, however, how the new measure will affect  the delivery of services to some groups, such as older workers, who are  more likely to work part-time and have lower overall wages. Further  action may be needed to help reduce the incentive to serve only those who  will help meet performance levels. One approach that could help would be  to systematically adjust expected performance levels to account for  different populations and local economic conditions when negotiating  performance. We have made such a recommendation to Labor, but little  action has been taken.
The Workforce Investment Streamlined Performance Reporting System  (WISPR). Since 2004, Labor has been planning to implement an integrated  data-reporting system that could greatly enhance the understanding of job  seeker services and outcomes. WISPR represents a promising step forward  in integrating and expanding program reporting, but it is unclear whether  implementation will occur as proposed. 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: the services  provided to employers and estimates of the number of people who access  the one-stop system but ultimately receive limited or no services from one- stop staff. On the basis of our preliminary review, WISPR appears to  address many of the issues we’ve raised regarding the system’s current  performance data. However, concerns have been raised about challenges  in implementing the new system, and at present, the timeline for WISPR’s  implementation remains unclear. Given the rapidly approaching July 1,  2007, implementation date, it appears likely that implementation will be  delayed.
No information exists on what works and for whom. Although Labor has  improved its outcome data on job seekers who participate in its programs,  these 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  led 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, 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. In response,  Labor cited the need for program stability and proposed delaying an  impact evaluation of WIA until after reauthorization. In its 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. As of May 2007, according to Labor officials, the agency had  not yet begun to design the study.

		Labor Should Consider Alternative Approaches to Implement New Initiatives

Labor has implemented some initiatives, such as national performance and  reporting summits, to better communicate with states on changes in  processes and procedures. However, guidance on policy changes has often  come too late for states to be able to implement them. For example, in  implementing common measures, states had very little time to make the  necessary changes before they had to begin data collection and reporting  using the new requirements. While Labor publicized its plans to adopt the  common measures, states were notified only in late February 2005 that  Labor planned to implement changes on July 1, 2005, and final guidance  was not issued until April 15, 2005. This gave states 3 months or less to  interpret federal guidance, coordinate with partners, modify information  technology systems, issue new guidance, and train local area staff. In our  2005 report, we commented that rushed implementation could negatively  affect data quality and compromise the potential benefits of the proposed  changes.
In addition to underestimating the cost, time, and effort required of states  to make such changes, Labor has failed to solicit adequate stakeholder  input when introducing some major new initiatives. For example, Labor’s  efforts to implement an integrated reporting system have been hampered  by a lack of stakeholder input. In 2004, Labor first proposed a single,  streamlined reporting system, known as the ETA Management Information  and Longitudinal Evaluation system (EMILE) that would have replaced  reporting systems for several Labor programs. While many states  supported streamlined reporting, 36 states indicated that implementing the  EMILE system, as proposed, would be very burdensome. Labor developed  the system with only limited consultation with key stakeholders, including  state officials, and as a result underestimated the magnitude and type of  changes EMILE would require and the resources states would need in  order to implement it. In response, Labor substantially modified this  system’s design. The modified system, now called WISPR, was set to be  implemented on July 1, 2007. As with EMILE, however, concerns have  been raised about challenges in implementing the new system, particularly  the early implementation date. Some comments to OMB expressed the  view that Labor had again underestimated the time states would need to  revise policy, reprogram systems, and retrain staff. Given the rapidly  approaching deadline and states’ readiness to implement this system, it  seems that this important initiative will likely be delayed again. In 2005, we  recommended that Labor consider alternative approaches that involve  ongoing consultation with key stakeholders as the agency seeks to  implement its new initiatives.

	Concluding Observations

In the 7 years since most states fully implemented WIA, much progress has  been made in developing and implementing a universal system. With  notable exceptions, services for partner programs are becoming  increasingly available through the one-stop system. States and local areas  have used the flexibility under WIA to tailor services for where they are  and for whom they serve. As the Congress moves toward reauthorizing  WIA, consideration should be given to maintaining that state and local  flexibility, whereby innovation and system ownership can be fostered.  However, some aspects of WIA could be improved through legislative  action. Our findings highlight two key areas:  Improving the data on people who use the system: Requiring all job  seekers who receive WIA funded services to be included in the  performance management system would improve understanding of  who gets served and eliminate the ambiguity about who should be  tracked and for how long.  Improving funding stability: If Congress chooses not to make broader  funding formula changes, reducing the volatility in the Dislocated  Worker allocation by requiring the use of hold harmless and stop gain  provisions in the formula would help stabilize funding and better foster  sound financial practices.
Furthermore, we have made a number of recommendations to Labor to  improve aspects of the current program. While Labor has implemented  many of them, several key concerns remain unaddressed. Labor has not  taken steps to    more accurately estimate states’ available fund by considering  obligations as well as expenditures,    establish suitable performance levels for states to achieve by  developing and implementing a systematic approach for adjusting  expected performance to account for different populations and local  economic conditions,    maximize the likelihood that new initiatives will be adopted in an  achievable time frame by using a collaborative approach that engages  all key stakeholders, and  improve policymakers’ understanding of what employment and training  programs achieve by conducting important program evaluations,  including an impact study on WIA, and releasing those findings in a  timely way.
In absence of actions by Labor on these issues, the Congress may wish to  address them legislatively.
Mr. Chairman, this completes my prepared statement. I would be happy to  respond to any questions you or other members of the committee may  have at this time.

	GAO Contacts and Staff Acknowledgments

For information regarding this testimony, please contact Sigurd R. Nilsen,  Director, Education, Workforce, and Income Security Issues, at (202)   512-7215. Individuals who made key contributions to this testimony  include Dianne Blank, Rebecca Woiwode, and Thomas McCabe.

Related GAO Products

Veterans’ Employment and Training Service: Labor Could Improve  Information on Reemployment Services, Outcomes, and Program  Impact. 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. 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.  GAO-06-870. Washington, D.C.: September 5, 2006.
Trade Adjustment Assistance: Most Workers in Five Layoffs Received  Services, but Better Outreach Needed on New Benefits. GAO-06-43.  Washington, D.C.: January 31, 2006.
Youth Opportunity Grants: Lessons Can Be Learned from Program, but  Labor Needs to Make Data Available. GAO-06-53. Washington, D.C.:  December 9, 2005.
Workforce Investment Act: Labor and States Have Taken Actions to  Improve Data Quality, but Additional Steps Are Needed. GAO-06-82.  Washington, D.C.: November 14, 2005.
Workforce Investment Act: Substantial Funds Are Used for Training, but  Little Is Known about Training Outcomes. GAO-05-650. Washington,  D.C.: June 29, 2005.
Unemployment Insurance: Better Data Needed to Assess Reemployment  Services to Claimants. GAO-05-413. Washington, D.C.: June 24, 2005.
Workforce Investment Act: Labor Should Consider Alternative  Approaches to Implement New Performance and Reporting  Requirements. 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. GAO-05-259. Washington, D.C.: February 18, 2005.
Workforce Investment Act: Labor Has Taken Several Actions to Facilitate  Access to One-Stops for Persons with Disabilities, but These Efforts May  Not Be Sufficient. GAO-05-54. Washington, D.C.: December 14, 2004.
Workforce Investment Act: States and Local Areas Have Developed  Strategies to Assess Performance, but Labor Could Do More to Help.  GAO-04-657. Washington, D.C.: June 1, 2004.
National Emergency Grants: Labor Is Instituting Changes to Improve  Award Process, but Further Actions Are Required to Expedite Grant  Awards and Improve Data. GAO-04-496. Washington, D.C.: April 16, 2004.
Workforce Investment Act: Labor Actions Can Help States Improve  Quality of Performance Outcome Data and Delivery of Youth Services.  GAO-04-308. Washington, D.C.: February 23, 2004.
Workforce Training: Almost Half of States Fund Worker Training and  Employment through Employer Taxes and Most Coordinate with  Federally Funded Programs. GAO-04-282. Washington, D.C.: February 13,  2004.
Workforce Investment Act: Potential Effects of Alternative Formulas on  State Allocations. GAO-03-1043. Washington, D.C.: August 28, 2003.
Workforce Investment Act: Exemplary One-Stops Devised Strategies to  Strengthen Services, but Challenges Remain for Reauthorization.   GAO-03-884T. Washington, D.C.: June 18, 2003.
Workforce Investment Act: One-Stop Centers Implemented Strategies to  Strengthen Services and Partnerships, but More Research and  Information Sharing Is Needed. GAO-03-725. Washington, D.C.: June   18, 2003.
Workforce Investment Act: Issues Related to Allocation Formulas for  Youth, Adults, and Dislocated Workers. GAO-03-636. Washington, D.C.:  April 25, 2003.
Workforce Training: Employed Worker Programs Focus on Business  Needs, but Revised Performance Measures Could Improve Access for  Some Workers. GAO-03-353. Washington, D.C.: February 14, 2003.
Older Workers: Employment Assistance Focuses on Subsidized Jobs and  Job Search, but Revised Performance Measures Could Improve Access to  Other Services. GAO-03-350. Washington, D.C.: January 24, 2003.
Workforce Investment Act: States’ Spending Is on Track, but Better  Guidance Would Improve Financial Reporting. GAO-03-239. Washington,  D.C.: November 22, 2002.
Workforce Investment Act: States and Localities Increasingly Coordinate  Services for TANF Clients, but Better Information Needed on Effective  Approaches. GAO-02-696. Washington, D.C.: July 3, 2002.
Workforce Investment Act: Youth Provisions Promote New Service  Strategies, but Additional Guidance Would Enhance Program  Development. GAO-02-413. Washington, D.C.: April 5, 2002.
Workforce Investment Act: Better Guidance and Revised Funding  Formula Would Enhance Dislocated Worker Program. GAO-02-274.  Washington, D.C.: February 11, 2002.
Workforce Investment Act: Improvements Needed in Performance  Measures to Provide a More Accurate Picture of WIA’s Effectiveness.  GAO-02-275. Washington, D.C.: February 1, 2002.
Workforce Investment Act: Better Guidance Needed to Address Concerns  over New Requirements. GAO-02-72. Washington, D.C.: Oct. 4, 2001. Also  testimony GAO-02-94T.
Workforce Investment Act: Implementation Status and the Integration of  TANF Services. GAO/T-HEHS-00-145. Washington, D.C.: June 29, 2000.
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Summary:
Why GAO Did This Study

Since the Workforce Investment Act's (WIA) enactment in 1998, GAO has issued numerous reports that included recommendations regarding many aspects of WIA, including 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, these 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 Labor officials; and analysis of Labor data and documents. This testimony draws upon the results of these reports, issued between 2000 and 2007, as well as GAO's ongoing work on one-stop infrastructure, and discusses issues raised and recommendations made. Specifically, the testimony addresses (1) progress made by federal, state, and local officials in implementing key provisions of WIA; and (2) challenges that remain in implementing an integrated employment and training system.

What GAO Found

Seven years after implementing the workforce investment system under WIA, the system's infrastructure continues to evolve. Nationwide, the number of comprehensive one-stop centers has decreased somewhat, but not uniformly across states. States generally reported increased availability of services for some of the mandatory programs at comprehensive one-stop centers. However, despite WIA's requirement that all mandatory partners provide services through the one-stop system, some states have maintained a completely separate system for delivering services for Wagner-Peyser-funded Employment Services. Adults and dislocated workers receive a wide range of services through the one-stop system. Local areas used about 40 percent of their WIA funds in 2003 to provide training services to an estimated 416,000 participants, but the vast majority of job seekers receive services other than training. States and local areas have generally focused their youth services on in-school youth and have found it difficult to recruit and retain out-of-school youth. Most medium and large employers are aware of and use the system and are quite satisfied with its services, but they generally use one-stop centers to fill their needs for low-skilled workers. Despite the successes state and local officials have had since WIA's implementation, some aspects of the law and other factors have hampered their efforts. Funding issues continue to hamper the system. WIA's formulas that are used to allocate funds to states do not reflect current program design and have caused wide fluctuations in funding levels from year to year that do not reflect actual layoff activity. In addition, Labor's focus on expenditures without including obligations overestimates the amount of funds available to provide services at the local level. Moreover, little is known about what the system is achieving because only a small minority of participants are captured in the performance measures, and Labor has not conducted an impact study to assess the effectiveness of the one-stop system, as required under WIA. Labor has taken some steps to improve guidance and communication, but does not involve key stakeholders in the development of some major initiatives and provides too little time for states and local areas to implement them. We are suggesting that Congress consider taking steps to improve the stability of the funding and enhance the data available on people who use the system. In addition, in our past work, we have recommended that Labor use obligations when estimating states' available funds, that it comply with the requirements of WIA and conduct an impact evaluation, and that it consider alternative approaches in implementing new initiatives that involve ongoing consultation with key stakeholders. Labor has taken little action on these recommendations.