Office of Inspector General—Office of Audit

 

 

 

EMPLOYMENT AND 

TRAINING 

ADMINISTRATION 

Recovery Act: DOL Could Have Better 

Monitored the Use of Re-employment Services 

Funds to Adhere to Standards for 

Transparency and Accountability 

This audit was performed by Foxx & Company, under contract to the U.S. Department of 

Labor, Office of Inspector General, and by acceptance, it becomes a report of the Office of 

Inspector General. 

Assistant Inspector General for Audit 

U.S. Department of Labor 

March 31, 2011 Date: 

Report Number: 18-11-005-03-315 
 

	 

	 

	 

U.S. Department of Labor 

OFFICE OF INSPECTOR GENERAL 

Office of Audit 

BRIEFLY... 

Highlights of Report Number: 18-11-005-03-315, to the 

Assistant Secretary for Employment and Training. 

WHY READ THE REPORT 

Congress enacted the American Recovery and 

Reinvestment Act of 2009 (Recovery Act) to promote 

economic recovery and assist those most affected by the 

recession. The Department of Labor (DOL) received an 

additional $400 million in Wagner-Peyser grant funds for 

states. In appropriating these funds, Congress required 

that $250 million of the $400 million be spent for 

reemployment services (RES) for Unemployment 

Insurance (UI) claimants. Authority to obligate the 

additional RES funds provided by the Act expired on 

September 30, 2010. 

The Recovery Act required agencies to implement an 

unprecedented level of transparency and accountability 

to ensure the public could see where and how their tax 

dollars were being spent and what results the spending 

produced. The U.S. DOL Office of Inspector General 

(OIG) audited the Employment and Training 

Administration’s (ETA) implementation and oversight of 

the RES funding to determine if the Act’s requirements 

were achieved. 

WHY OIG CONDUCTED THE AUDIT 

Our audit objectives were to answer the following 

questions: 

1.	 Did the Department establish sufficient and 

timely planning and reporting procedures to 

assure adequate oversight of how 

reemployment services funds were used? 

2.	 Did states use reemployment services funds 

under the Recovery Act, as intended? 

3.	 What were the outcomes of the states’ use of 

the Recovery Act RES funds? 

READ THE FULL REPORT 

To view the report, including the scope, methodology, 

and full agency response, go to: 

http://www.oig.dol.gov/public/reports/oa/2011/18-11-

005-03-315.pdf.

March 2011 

RECOVERY ACT: DOLCOULD HAVE BETTER 

MONITORED THE USE OF RES FUNDS TO 

ADHERE TO STANDARDS FOR 

TRANSPARENCY AND ACCOUNTABILITY 

WHAT OIG FOUND 

DOL moved quickly after the Act’s passage to allocate 

funds to states and develop and issue general guidance 

on allowable spending categories and reporting formats. 

For the most part, the states visited said the guidance 

provided by DOL was timely. However, we found that 

DOL needed to provide additional guidance to direct 

spending more effectively and to report more meaningful 

results. For example, DOL could have directed the states 

to use the RES grants to correct claimant service-related 

weaknesses that had been identified by several 

organizations. Moreover, DOL guidance did not ensure 

the level of transparency and accountability the Recovery 

Act required. Thus DOL could not provide a breakout of 

how the 54 states and territories spent RES funding. 

The states we visited said that the RES funding had 

helped provide more and better quality services to UI 

claimants. However, DOL did not establish adequate 

standards for client service, or collect enough information 

on state activities to demonstrate whether the funds were 

effectively and efficiently spent. The standards of 

transparency and accountability established by the Act 

were not met because of the lack of results oriented 

goals, objectives, and measurable outcomes. 

WHAT OIG RECOMMENDED 

We recommend to the Assistant Secretary for 

Employment and Training that DOL: 

- Establish priorities, outcome measures and 

effective data collection systems for future 

Wagner-Peyser funding to address program 

weaknesses and better measure the services 

states provide to UI claimants, 

- Develop monitoring and financial reporting 

requirements to enable DOL to report how 

effectively federal funds were spent by states 

employment and reemployment services, and 

- Determine from independent analysis what state 

experiences were and identify best practices, 

areas for improvement, and short and long term 

achievements. DOL can then use this 

information to set goals and measures for 

outcomes and achievements for future funding 

ETA disagreed with one recommendation and did not 

provide responses which adequately addressed the 

other two recommendations. As requested by ETA the 

OIG has added material that provides additional 

information about what ETA did to provide guidance to 

the states. 
Prepared by Foxx & Company 

For the U. S. Department of Labor – Office of Inspector General 

Table of Contents 

Independent Auditor’s Report...................................................................................... 3
 

Results in Brief.............................................................................................................. 4
 

Objective 1 — Did the Department establish sufficient and timely planning 

and reporting procedures to assure adequate oversight of 

how reemployment services funds were used? ............................... 7
 

DOL developed and provided timely general guidance, but missed an 

opportunity to direct states to spend Recovery Act funds more effectively 

and to report more meaningful results.. ................................................................ 7
 

Finding 1 -- DOL Did Provide Timely General Guidance But Missed an Opportunity to 

Direct the states to Address Identified Long-Term Deficiencies and 

Weaknesses in the Reemployment Services Program.......................... 8 

Objective 2 — Did states use reemployment services funds under the 

Recovery Act, as intended?............................................................... 11
 

DOL did not require states to report how they spent their RES allocations, 

the reports did not distinguish activities funded by Recovery Act funding 

from regular Wagner-Peyser funding and the reporting was inconsistent. 

However, for the states visited, it appears that the funds were spent in 

accordance with DOL guidance. ........................................................................ 11
 

Finding 2 -- DOL Did Not Monitor How RES Funds were Spent to Achieve Transparency 

Regarding the Uses of the Funds ......................................................... 12 

Finding 3 -- Recovery Act RES Funds Were Not Obligated Early in the Grant Period and 

DOL Did Not Provide Proper Oversight to Determine if the Funds were 

Obligated Concurrently with Other Grant Funds................................... 13
 

Objective 3 — What were the outcomes of the states’ use of the Recovery
 

Act RES funds? .................................................................................. 15

 DOL did not collect enough reliable data to measure the impact of the 

grants or to assess whether states spent the grant funds effectively and 

efficiently. . ........................................................................................................ 15
 

Finding 4 -- Unreliable DOL Reports on Grant Activities Prevented Assessments of 

Grant Outcomes ................................................................................... 17
 

Recommendations ...................................................................................................... 18
 

Recovery Act: Reemployment Services Grants for Unemployment Insurance Claimants 

 Report No. 18-11-005-03-315 
Prepared by Foxx & Company 

For the U. S. Department of Labor – Office of Inspector General 

Exhibits 

Exhibit 1 Recovery Act RES Funding for States............................................................ 21
 

Exhibit 2 Expenditure Categories by Four States of the Recovery Act RES Funding .. 23
 

Appendices 

Appendix A Background................................................................................................ 29
 

Appendix B Objectives, Scope, Methodology, and Criteria ........................................... 35
 

Appendix C Acronyms and Abbreviations ..................................................................... 37
 

Appendix D ETA Response to Draft Report .................................................................. 41
 

Appendix E Auditor Response to Agency Comments........................................... 61 

Recovery Act: Reemployment Services Grants for Unemployment Insurance Claimants 

 Report No. 18-11-005-03-315 
Independent Auditor’s Report 

 

Prepared by Foxx & Company 

For the U. S. Department of Labor – Office of Inspector General 

Independent Auditor’s Report 

March 31, 2011 

Ms. Jane Oates 

Assistant Secretary 

for Employment and Training 

U.S. Department of Labor 

200 Constitution Avenue, NW 

Washington, D.C. 20210 

The American Recovery and Reinvestment Act of 2009 (Recovery Act) was signed into 

law on February 17, 2009, to preserve and create jobs, promote the Nation’s economic 

recovery, and to assist those most impacted by the recession1

. The Recovery Act 

provided more than $65 billion for Unemployment Insurance funds. To better serve the 

sudden surge in Unemployment Insurance Claimants resulting from the 2008 recession, 

Title VIII of the Recovery Act provided the Department of Labor an additional $400 

million in Wagner-Peyser funds for State Unemployment Insurance (UI) and 

Employment Service Operations for grants to states and jurisdictions (hereafter referred 

to as the states). In appropriating these funds, Congress required that $250 million of 

the $400 million be spent for reemployment services (RES) for UI claimants. States 

were authorized to spend their allocation on the “integrated Employment Service and UI 

information technology, required to identify and serve the needs of such claimants.” The 

actual amount available for allotment to the states was $247.5 million. The Recovery 

Act made one percent of the funds available to the Department of Labor (DOL) to 

administer and oversee the funds. The Recovery Act also required DOL to establish 

planning and reporting procedures "necessary to provide oversight of funds used for the 

services." DOL’s Employment and Training Administration (ETA) administers the 

regular annual Wagner-Peyser grants and the RES grant which supplemented the 

regular grants. 

The distribution of the RES funds to the states was announced in ETA Training and 

Employment Guidance Letter dated March 6, 2009. Guidance letters are a principal 

means used by ETA to communicate its policies and requirements. The funds were 

available to the states for obligation through September 30, 2010. The funds were to be 

spent no later than the end of Program Year 2010 (June 30, 2011). ETA’s guidance 

1

 The American Recovery and Reinvestment Act (Public Law 111-5), February 17, 2009 

Recovery Act: Reemployment Services Grant for UI Claimants 

3 Report No. 18-11-005-03-315 
 

Results in Brief 

 

  

Prepared by Foxx & Company 

For the U. S. Department of Labor – Office of Inspector General 

stated that both Congress and the Administration expected the majority of these funds 

to be spent within the first year of availability. 

Our audit objectives were to determine (1) if DOL established sufficient and timely 

planning and reporting procedures to assure adequate oversight of how reemployment 

services funds were used, (2) whether states used reemployment services funds under 

the Recovery Act, as intended, and (3) the outcomes of the states’ use of the Recovery 

Act RES funds. The audit included a review of guidance and data available from ETA; 

interviews with and data collected from DOL headquarters and Regions 1 (Boston), 2 

(Philadelphia), 3 (Atlanta), and 6 (San Francisco) officials; and interviews with and data 

obtained from officials in four states: California, Florida, New York, and Pennsylvania.2 

We conducted this performance audit in accordance with generally accepted 

government auditing standards. Those standards require that we plan and perform the 

audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our 

findings and conclusions based on our audit objectives. We believe that the evidence 

obtained provides a reasonable basis for our findings and conclusions based on our 

audit objectives. Our objectives, scope, methodology, and criteria are detailed in 

Appendix B. 

RESULTS IN BRIEF 

Within approximately one month of the Recovery Act’s enactment, DOL allocated the 

RES funds and issued guidance to the states on allowable spending categories and 

reporting requirements. State officials said that the guidance provided by DOL was 

timely and defined allowable uses of the grant. However, DOL’s guidance could have 

directed spending toward areas known to need improvement and required more specific 

reporting of what was accomplished with the RES funding. 

DOL’s spending guidance did not direct states to address long-term weaknesses and 

problems with the Wagner-Peyser program. Reports by GAO and DOL, dating back to 

the mid-1990s, have identified serious weaknesses which limited the amount and 

quality of services provided to UI claimants. DOL could have directed states to target at 

least some portion of the funding to address these key areas needing improvement. 

Even though DOL guidance stated that “we must implement the Recovery Act 

expeditiously and effectively with full transparency and accountability of our expenditure 

of funds,” the guidance did not require states to report information to DOL on what 

activities the grant funds were expended. As a result, while the states increased staffing 

to serve the influx of Unemployment Insurance claimants, DOL could not provide 

information on which of the allowable activities the 54 states and jurisdictions spent the 

$247.5 million in RES funding. State officials said that DOL focused on making sure that 

the funds were obligated quickly and by the statutory deadline of September 30, 2010. 

2

 These states are geographically dispersed, characterize different economic and employment conditions 

and challenges, and represent a significant portion of the nation’s population. The RES funding for these 

four states represents 27 percent of the total $247.5 million in RES funding. In addition, four of the six 

DOL ETA regional offices oversee these states. 

Recovery Act: Reemployment Services Grant for UI Claimants 

4 Report No. 18-11-005-03-315 
Prepared by Foxx & Company 

For the U. S. Department of Labor – Office of Inspector General 

Furthermore, although DOL guidance stated that “It is the intent of Congress that 

Recovery Act funds for employment and training be spent concurrently with regular 

formula funds to greatly increase the capacity of the workforce system to serve workers 

in need,” DOL did not establish reporting or monitoring systems to determine if this 

Congressional mandate was followed. 

The four states we visited provided schedules which identified how the RES funding 

was expended. Most funds were used to hire additional employees to assist UI 

claimants and provide higher quality reemployment services. However, in many states 

there were delays in hiring staff to provide these services for UI claimants. DOL 

Regional and State officials said this was because there were hiring freezes which 

required exemptions. In addition, because of the flat funding for the Wagner-Peyser 

program over the years, many states were operating at a ‘bare bones’ level as 

characterized by DOL and the states. Therefore, many states were not in a position to 

quickly hire and train new staff. 

Nationally, with the emphasis being on obligating the RES funds by September 30, 

2010, all but a small portion of the funds were obligated by the deadline. However, 

obligations were concentrated in the latter part of the grant period. Although DOL’s 

guidance stated that the majority of the funds should be spent within the first year of 

availability, almost half of the funds were obligated in the last 6 months of the 18 month 

obligation period leading up to September 30, 2010. As of July 2010, with only 3 months 

remaining, 20 states had not obligated 40 percent or more of the funding. DOL Regional 

Office monitoring reports indicated a concern by DOL leadership that Recovery Act 

funds were being obligated and spent too slowly. 

State officials told us that RES funding was beneficial and increased the quality and 

quantity of services to UI claimants. However, despite the emphasis on transparency 

and accountability, DOL could not demonstrate that there were direct and specific 

outcomes that resulted from the RES funds. DOL guidance stated that it was difficult to 

determine the impact of the RES funding because these funds were spent at the same 

time and on the same type of clients as the regular Wagner-Peyser grant funding. We 

agree that it would be extremely difficult for the states to determine which UI claimants 

received services funded through the Recovery Act and which received services with 

regular funding. Given this, DOL reporting requirements used all UI claimants receiving 

staff assisted services as an indicator of the effect of the Recovery Act funds. However, 

this method is not exact as it overstated the RES funded activities because both funding 

sources were used to provide services to UI claimants. As a result, DOL could not 

demonstrate compliance with the Recovery Act requirement to report on the UI 

claimants serviced only by the RES funding. 

In addition, states were not reporting the services provided to UI claimants consistently 

or correctly. When we showed these inconsistencies and errors to DOL officials, they 

said that this condition was due to the states various interpretations of the reporting 

guidelines DOL provided. DOL officials said there has been difficulty obtaining 

Recovery Act: Reemployment Services Grant for UI Claimants 

5 Report No. 18-11-005-03-315 
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For the U. S. Department of Labor – Office of Inspector General 

consistency in the reporting. We found that DOL was not adequately reviewing the 

accuracy of the information as we determined that the reporting data had errors and 

inconsistencies. 

Although DOL said that the Recovery Act provided “an unprecedented level of funding,” 

DOL did not provide adequate guidance to the states on how to best spend the RES 

funds, did not change its management or oversight of the program, and could not show 

specific outcomes of the Recovery Act funding. Although several organizations have 

identified serious program weaknesses and deficiencies since the mid 1990s, DOL did 

not require any additional measurements, goals or objectives for the use of the 

Recovery Act funds. With the use of the $247.5 million, DOL could have directed the 

states to use at least a portion of the RES funding to address these long standing 

shortcomings in the reemployment services program, which may have effected long 

lasting changes in the states programs; and establish better measurements of 

outcomes. 

We recommend to the Assistant Secretary for Employment and Training Administration 

that DOL: 

•	 Establish priorities and outcome measures and reliable data collection systems 

for future Wagner-Peyser funding to address program weaknesses and better 

measure the services states are providing to UI claimants, 

•	 Develop adequate monitoring and financial reporting requirements to enable 

DOL to report to Congress and the public how federal funds are spent by states 

to provide employment and reemployment services, and 

•	 Determine from its own independent analysis what states’ experiences were with 

the Recovery Act RES funding to identify best practices, areas for improvement, 

and short and long-term achievements. DOL can then use this information to set 

goals and measures for outcomes and achievements for all future funding 

Congress provides for reemployment and employment services. 

ETA provided comments on our report and disagreed with several statements, 

conclusions, and one of the recommendations; ETA did not provide responses which 

would adequately resolve the other two recommendations. As requested by ETA in their 

comments, the OIG has added material that provides additional information about what 

ETA did to provide guidance to the states and to respond to the Recovery Act’s 

requirements. ETA’s comments are included in their entirety as Appendix D. 

ETA’s comments contain a number of factual errors and misinterpretations of what the 

draft report stated or concluded. Rather than address each of these comments 

individually, we have prepared summary responses to their comments that are included 

in their entirety as Appendix E. 

Based on our analysis of ETA’s comments and changes made in response to their 

comments, the fundamental message of the report remains unchanged. We believe our 

recommendations are valid and adequately supported by the report’s findings and 

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For the U. S. Department of Labor – Office of Inspector General 

conclusions. The Recovery Act called for an unprecedented level of transparency and 

accountability for how Federal dollars were to be spent and for reporting the outcomes 

of that spending. ETA’s management and implementation of the RES grant authorized 

by the Recovery Act did not adhere to these transparency and accountability standards. 

Especially at this time of increased budget scrutiny, DOL needs to provide better 

information on the effectiveness and outcomes for the Wagner Peyser program in the 

future. 

RESULTS AND FINDINGS 

Objective 1 — Did the Department establish sufficient and timely planning and 

reporting procedures to assure adequate oversight of how reemployment 

services funds were used? 

DOL developed and provided timely general guidance but missed an opportunity to 

direct states to spend Recovery Act funds more effectively and report more meaningful 

results. 

Timely General Guidance Provided 

Given the short lead time and need to quickly implement the Recovery Act RES funding, 

DOL headquarters and its six regions did a good job communicating expenditure 

guidelines to the states. With the difficult economic times and high rate of unemployed 

who needed to be served, providing timely guidance was especially important so the 

states could use the funding to assist those most impacted by the recession as intended 

by the Recovery Act. DOL headquarters used Training and Employment Guidance 

Letters (TEGLs) to outline general categories of allowable activities for RES fund use 

and establish reporting requirements. In addition, as mandated by the Recovery Act, 

DOL emphasized that all funds were to be obligated by September 30, 2010. However, 

DOL needed to provide additional guidance to direct spending more effectively and to 

report meaningful results. The Wagner-Peyser Act gave DOL authority to approve state 

plans for implementing the grants. 

DOL allocated the RES funding to the states on March 6, 2009.3

 The agency issued 

TEGL 14-08 on March 18, 2009, that, among other things, provided policy guidance and 

direction regarding the Recovery Act funding for activities authorized under the WagnerPeyser Act.4

 It also instructed states to move quickly to use the Recovery Act funding, 

in conjunction with other available funds, to provide career assessments; remedial and 

3

 TEGL 13-08 issued March 6, 2009 on “Allotments for training and employment services as specified in 

the American Recovery and Reinvestment Act of 2009 (Recovery Act) for activities under the Workforce 

Investment Act of 1998 (WIA)”.

4

 TEGL 14-08 issued March 18, 2009 on “Guidance for Implementation of the Workforce Investment Act 

and Wagner-Peyser Act funding in the Recovery Act of 2009 and State Planning Requirements for 

Program Year 2009.” 

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For the U. S. Department of Labor – Office of Inspector General 

occupational training; job search assistance to unemployed workers; and to undertake 

other activities that could aid in the recovery of local, regional, and state economies. 

In April and May 2009, DOL issued TEGLs 17-08 and 24-08 to outline requirements for 

reporting on the expenditure of Recovery Act funds and for reporting performance 

accountability information.5 TEGL 24-08 stated that it is the intent of Congress that the 

Recovery Act funds were to supplement and be spent concurrently with annual WagnerPeyser appropriations. The guidance stated that it expected states and local areas to 

fully utilize the additional workforce funding to substantially increase the number of 

customers served. 

DOL supplemented these formal, written instructions with additional guidance in 

webinars, conferences, forums, consultations with the ETA regional offices and 

information on the ETA website. The DOL officials told us that the regional ETA officials 

responded to questions from the states. Also, DOL provided technical assistance on 

how the Recovery Act RES funds could be spent and on how monthly and quarterly 

reports were to be prepared. DOL also completed a Recovery Act Assessment and 

Technical Assistance Consultation to determine the level of state and local workforce 

readiness to properly use Recovery Act funds and to help ETA plan for any needed 

technical assistance. 6 

Reaction of States to DOL Guidance 

The state officials we met said the guidance provided by DOL was generally timely and 

defined the purpose and allowable spending categories for the grant funds. These 

officials stated that the TEGLs and webinars provided good information on the activities 

for which the Recovery Act RES funds could be used. There was a general consensus 

that the webinars were informative and useful in providing the states the same 

information simultaneously. The state officials we met with provided constructive 

feedback on how DOL could have improved the guidance. For example, officials from 

one state said that the guidance on reporting monthly statistics changed often. In 

another state, officials we met with stated there was some confusion on how monthly 

and cumulative reporting was to be completed. 

Finding 1 — DOL Did Provide Timely General Guidance but missed an 

Opportunity to Direct the States to Address Identified Long Term Deficiencies and 

Weaknesses in the Reemployment Services Program. 

Although DOL allocated the RES funds quickly and provided general guidance in a 

timely manner to the states, DOL needed to provide additional guidance to direct 

5

 TEGL 17-08 issued April 23, 2009 entitled “American Recovery and Reinvestment Act (Recovery Act) 

Funds Financial Reporting Requirements”. TEGL 24-08 issued May 21, 2009 entitled “Workforce 

Investment Act and Wagner-Peyser Act Performance Accountability Reporting for the American Recovery 

and Reinvestment Act of 2009.”
 6

 A report on this review, “The Readiness Report” was issued on July 10, 2009, and assessed to what 

extent the states were ready to use the Recovery Act funds and their technical assistance needs. 

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For the U. S. Department of Labor – Office of Inspector General 

spending more effectively and to report meaningful results. Reports by GAO and DOL, 

dating from the mid 1990s, identified serious weaknesses which limited the amount and 

quality of services provided to UI claimants. While some of these reports were issued 

early in the RES grant funding period, they generally continued to address long standing 

shortcomings in the reemployment services program. DOL missed an opportunity to 

direct states to spend a portion of RES to address program shortcomings thus creating 

long-lasting program improvements. 

Following are some examples of reported weaknesses and deficiencies cited over the 

years: 

•	 GAO reported in June 2007 that many states had not regularly maintained their 

profiling models -- statistical models that forecast which UI claimants were most 

likely to exhaust their UI benefits before finding a job. As a result, the models in 

some states may not have been accurately identifying claimants who were likely 

to exhaust benefits. Although Labor provided technical assistance to states 

requesting it, the Department did not regularly monitor state efforts to adjust their 

models. GAO recommended that the Secretary of Labor ensure that ETA takes a 

more active role in ensuring the accuracy of state profiling models. 

•	 In July 2009, DOL issued a “National Workforce System Readiness Level and 

Technical Assistance Needs for Implementation of the American Recovery and 

Reinvestment Act Report” that identified numerous examples where states 

needed to address serious weakness and deficiencies.7

 The results provided 

DOL with an indicator of state and local readiness and identified areas needing 

improvement. Even though a state was deemed “overall ready”, it could have had 

problems needing attention. This was true for the majority of the 53 states and 

jurisdictions DOL reviewed.8 Some examples of areas that required specific 

actions: 

o	 9 percent of the states did not have policies that targeted “those hardest to 

serve” populations. 

o	 40 percent of the states had not devised Rapid Response strategies to 

announced and occurring layoffs. 

o	 20 percent of the states were not ready to implement overall program 

requirements. 

o	 22 percent of the states were not ready to track Recovery Act funds in a 

manner clearly distinguishable from non-Recovery Act funds. 

o	 24 percent of the states did not have adequate systems to track Recovery 

Act funds. 

o	 26 percent of the states did not have adequate One Stop centers, i.e. 

locally managed, but federally funded, centers where employment 

7

 DOL conducted this assessment between mid-April and May 22, 2009. DOL held consultations with all 

53 States and territories and with 156 local areas. 

8

 DOL did not review the readiness of Guam. 

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services from multiple federal and other programs are available to 

community residents. 

•	 The Brookings Institution completed an assessment of the One-Stop Career 

Center system in April 2009 which provided detailed information on the cost of 

providing core services (career counseling, skills workshops, job matching, and 

training) and who receives support. This report recommended improvements in 

UI claimant job search assistance and work search screening. The Study also 

suggested a revamping of performance measures to more effectively allocate 

limited training resources.9 

•	 The National Association of State Workforce Agencies (NASWA) examined how 

well state UI and workforce systems coordinate to provide services to UI 

claimants.10 NASWA’s September 2010 report noted the following: 

o	 Most One-Stop Career Centers nationwide have no UI program presence. 

o	 There is a lack of a strong connection between the UI program and the 

other services provided by the publicly-funded workforce system such as 

job search and career counseling. 

o	 The flat-funding of the Wagner-Peyser program over the last three 

decades has added to this disconnect and has made it difficult for states 

and local One-Stop Career Centers to provide more staff-assisted 

services to UI claimants and job seekers who need extra help. Limited 

efforts and funding have been made available by the federal government 

over the past several years to address the disconnect such as the Worker 

Profiling and Reemployment Services (WPRS) and/or the Reemployment 

and Eligibility Assessment (REA) initiatives. However, many UI claimants 

no longer have a clear connection point to the wide array of employment 

and training services offered through One Stop Career Centers and/or 

other parts of the workforce system. 

o	 Research over the years has shown that worker profiling or early and ongoing analysis of UI claimants’ skills and experience against the available 

job openings, coupled with the receipt of job search assistance, is an 

effective and efficient way to speed referred claimants' return to productive 

employment. 

o	 Current UI profiling models have a limited application. Many states have 

not updated or managed their models on an on-going basis. 

o	 One Stop Career Center staff members in some local areas do not receive 

UI profiling information on a regular basis on those individuals likely to 

exhaust in their benefits. 

9

 Report by The Hamilton Project/The Brookings Institution: “Strengthening One-Stop Career Centers: 

Helping More Unemployed Workers Find Jobs and Build Skills:, issued April 2009 10 Report of the Unemployment Insurance and Workforce System Connectivity Workgroup: “A National 

Call for Innovation: Rethinking Reemployment Services for UI Claimants”, issued September 2010.
 

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The Recovery Act provided what DOL itself called “an unprecedented level of funding”, 

but DOL did not direct the use of these funds in the most efficient and effective manner. 

DOL should have directed the states to spend a portion of their funds on long-standing 

weaknesses such as outdated profiling models, inadequate One-Stop centers, and 

financial and program results tracking system deficiencies. 

Objective 2 — Did states use reemployment services funds under the Recovery 

Act, as intended? 

DOL did not require states to report how they spent their RES allocations, the 

reports did not distinguish activities Recovery Act funding from regular WagnerPeyser funding and the reporting was inconsistent. However, for the states 

visited, it appears that the funds were spent in accordance with DOL guidance. 

States We Visited Spent RES Grant Funding for Authorized Purposes 

On March 18, 2009, DOL issued TEGL 14-08, which instructed states on the use of the 

$247.5 million in Recovery Act funds for reemployment services. The funds were to be 

used on services including: counseling, providing occupational and labor market 

information, completing reemployment assessments, and providing referrals to 

employers and job banks, portals, and job openings. The states were to use the funds to 

provide reemployment services to UI claimants through the One-Stop system.11 In 

addition, states could use the funds to identify technological changes and updates to 

their profiling systems that might result in serving more UI claimants, as appropriate. 

The funds were allocated to the states in March 2009 and had to be obligated by 

September 30, 2010, as required by the Recovery Act. 

State officials from the 4 states we visited were able to provide us information and 

reports on how funds were expended. Based on the reports provided, it appears that 

they expended the Recovery Act RES funding for allowable activities (see Exhibit 2 for 

state expenditures).12 All of these states told us that the majority of funding was devoted 

to hiring additional employees to assist more UI claimants and provide better 

reemployment services. Several officials in headquarters, the regions, and states called 

the Recovery Act RES funding a staffing grant. Table 1 shows the number of employees 

the state officials told us they hired: 

11Allowable activities are listed in Section 7(a) through (c) of the Wagner-Peyser Act. 12 Because DOL and its six regional offices did not require the States to provide information to them on 

how their funds were spent we were able to review only the financial information provided by the four 

States visited. Since we did not perform a financial audit of the costs incurred by DOL and the four 

States, we cannot express an opinion of the reasonableness of the costs incurred or reported. 

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For the U. S. Department of Labor – Office of Inspector General 

Table 1: Number of State Workforce Agency Employees Hired with Recovery Act 

RES Grant Funding 

State Number of workforce agency 

employees hired 

California 240 

Florida 251 

New York13 190 

Pennsylvania 78 

Officials we talked to at the DOL and state levels told us significant amounts of time 

were required to add staff capacity. Three of the four states had statewide hiring freezes 

which required exemptions in order to hire staff. In addition, because of the flat funding 

of the regular Wagner-Peyser employment services program over the past three 

decades, the states we visited were not in a position to quickly hire and train new staff. 

DOL headquarters officials said the $247.5 million in RES funding was the first increase 

in Federal funding for reemployment services since 1983. DOL officials added that the 

program had been ‘starved’ for a long time. 

Finding 2 — DOL Did Not Monitor How RES Funds were Spent to Achieve 

Transparency Regarding the Uses of the Funds. 

DOL officials required the states to report quarterly on the obligation amounts of the 

Recovery Act RES funding but did not require reporting on how states spent grant 

funds. The lack of information on how grant funds were used was not consistent with 

the Recovery Act’s requirement for transparency and accountability. The DOL officials 

told us there was not enough time to develop and implement a new data collection 

system, nor was it practical to do so, given the limited duration of the Recovery Act 

funding. 

For the states we reviewed, the officials told us that DOL never asked for reports on 

how they were spending their funds, but rather asked for reports on how quickly the 

funds were being obligated. The states were able to provide us with information on how 

they spent the RES funding. (See Exhibit 2 of this report.). 

We obtained several DOL monitoring reports and related documentation that stressed 

the need for funds to be obligated. However, none of these reports or documentation 

referenced the need for sound financial or fiduciary spending responsibility. For 

example, an August 2010 DOL memorandum to the states in one region contained the 

following statements that very emphatically stressed the need to obligate the funds by 

the deadline: 

13 The 190 employees is the number of Full Time Equivalent (FTE) positions at the highest FTE level 

expended under the Recovery Act RES program for any one quarter of the program year. 

Recovery Act: Reemployment Services Grant for UI Claimants 

12 Report No. 18-11-005-03-315 
 

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For the U. S. Department of Labor – Office of Inspector General 

The purpose of this memo is to alert you to growing concerns by ETA’s national 

and regional offices regarding the obligation of ARRA funds for the WagnerPeyser and ARRA Reemployment Services (RES) programs. 

During our last state Administrators’ meeting we discussed state strategies to 

ensure ARRA funds are fully obligated and expended within the established 

timeframes. 

In the coming weeks as the September 30 deadline approaches, it will be 

incumbent upon the Regional Office to report that the Region’s states are in good 

standing on this issue. 

Please be prepared to provide specific details on the plan your state has in place 

to fully obligate and expend these funds and on any issues that could prevent 

your state from meeting its goals in this area. 

In addition, a September 2010 state monitoring report stated that “there continues to be 

concern at the highest levels of national leadership regarding the expenditure of ARRA 

funds, especially regarding Wagner-Peyser, RES, and Dislocated Worker programs.” In 

fact, the same monitoring report contained the following statement: “Regional Office 

staff is available to assist the state in developing a plan that will ensure 100 percent 

obligation of these funds within the established parameters.” 

Because DOL did not establish adequate financial reporting and monitoring 

requirements, it could not provide a detailed accounting for all projects or activities for 

which Recovery Act funds were expended or obligated. DOL could only report that 

virtually all of the $247.5 million of RES funding provided for UI claimants was either 

obligated or spent. According to DOL reports, of the $247.5 million, only $964,754 was 

not obligated by the deadline. 

Finding 3 — Recovery Act RES Funds Were Not Obligated Early in the Grant 

Period and DOL Did Not Provide Proper Oversight to Determine if the Funds were 

Obligated Concurrently with Other Grant Funds. 

Funds Not Obligated Early in the Grant Period 

Our review of nationwide data showed that almost half of the RES funds were obligated 

in the last 6 months of the 18 month grant obligation period. Thirty-one states had not 

obligated half of the RES grants six months before the obligation deadline. With 3 

months remaining until the deadline, 20 states still had not obligated 40 percent or more 

of the grant funding. 

DOL policy stated that the RES grants be spent quickly and concurrently with other 

funding sources. For example, TEGL 13-08 stated that “States are expected to spend 

Recovery Act funding quickly and effectively” and that “It is the Congress’ intent, as well 

Recovery Act: Reemployment Services Grant for UI Claimants 

13 Report No. 18-11-005-03-315 
 

Prepared by Foxx & Company 

For the U. S. Department of Labor – Office of Inspector General 

as that of the Administration, that the majority of these funds will be utilized within the 

first year of availability.” 

TEGL 14-08 stated that the Recovery Act funds “must be used to supplement annual 

...Wagner-Peyser appropriations” and were “to be spent concurrently with other ... 

Wagner-Peyser funding.” This TEGL further stated that “While the law requires states to 

track and spend Recovery Act funds separately from other...Wagner-Peyser formula 

funds, ETA encourages states to strategically align all of their resources to meet both 

short- and long-term state and regional workforce development needs. States should 

anticipate that Congress and the public will be looking for expenditures and 

performance results very quickly.” 

However, as noted, there were delays in program implementation. According to DOL 

and state officials, state workforce agencies had to seek exemptions from statewide 

hiring freezes to hire staff for the one stop centers. In addition, because of the flat 

funding for this program over the years, some of the states we visited were operating at 

a ‘bare bones’ level. Therefore, many states were not in a position to quickly hire and 

train new staff. 

According to officials in the states we visited, state workforce agencies had to seek 

exemptions from statewide hiring freezes to hire staff for the one stop centers. In 

addition, because of the flat funding for this program over the years, some of the states 

we visited were operating at a ‘bare bones’ level. 

Officials in one state told us that the influx of Federal dollars provided by the Recovery 

Act actually created management challenges. Despite considerable time and effort 

being spent emphasizing the need to draw down RES funds as quickly as possible, a 

number of local areas in the state had difficulty putting the funds to use. We were 

provided financial documents which showed that 12 of their 24 workforce board areas 

would not be able to obligate large portions of the funding allocations by the September 

30, 2010 deadline. .Prior to the obligation deadline, the state officials told us that all 

funds not obligated by these workforce boards were redistributed to the other 12 

workforce boards. The state was eventually able to obligate all its Recovery Act dollars 

before the funding period expired. However, the officials told us they had to constantly 

emphasize the need to obligate the remaining funds. 

The fact that many states had difficulty obligating funds lessened the impact of the 

funding. According to DOL reports, nationwide, about 64 percent of the grant funding 

was obligated in the last half of the grant period (January through September 2010). In 

many states, the spending was concentrated in a briefer period. 

New employees hired using the Recovery Act RES funding received training in order to 

be ready to provide services to the UI claimants. The training included instruction in 

departmental programs such as UI, WIA, Wagner-Peyser and Reemployment 

Services/REA, Trade related programs, Worker Opportunity Tax Credit, Labor Market 

Information, Veterans Programs and Priority of Service, Performance Information, 

Recovery Act: Reemployment Services Grant for UI Claimants 

14 Report No. 18-11-005-03-315 
 

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For the U. S. Department of Labor – Office of Inspector General 

Sexual Harassment, Ethics, Diversity, Americans with Disabilities Act, and other related 

programs. Managers and staff at the One-Stops also provided job shadowing and 

additional assistance when requested by trainees. 

A December 2010 NASWA briefing stated that 13 of 16 states they visited used RES 

funds to hire temporary staff14. The actions by the states to add new employees and 

temporary staff to provide more and better services to UI claimants were well 

intentioned. However, as of September 30, 2010, several states have already 

terminated staff hired because the funding was coming to an end. Therefore, these 

trained and experienced resources were no longer available to assist UI claimants. 

Concurrent Spending 

Although a DOL TEGL stated that the RES funds were to be spent concurrently with 

other grant funds, DOL did not have a financial reporting requirement that would identify 

if regular grant funds were displaced by the RES grant funds. Furthermore, we could not 

find any reference to monitoring by DOL to be sure this guidance was followed. DOL’s 

monitoring reports did, however, address whether all RES funds were obligated by the 

September 30, 2010 deadline. 

The September 30, 2010 deadline may have delayed the use of the 2010 regular 

Wagner-Peyser program grant. Our analysis of DOL reports showed that 20 states still 

had not obligated 40 percent or more of their RES grants by June 30, 2010, just 3 

months before the obligation deadline. In the remaining 3 months, these states also had 

regular Wagner-Peyser grant funds to obligate. Nationally, 19 percent of the regular 

2010 grant funding was obligated during this period; however, these 20 states obligated 

only 8 percent of this regular funding source. In fact, 8 of the 20 states did not obligate 

any funds at all from the regular Wagner-Peyser grant during this 3-month period. An 

official in one state we visited told us the state had regular Wagner-Peyser funding to 

spend after the RES grant period expired that was used to pay the salaries of 

employees hired with the RES funding. Officials said these regular funds would have 

been spent earlier if the RES grant had not been available. 

Objective 3 — What were the outcomes of the states’ use of the Recovery Act 

RES funds? 

DOL did not collect enough reliable data to measure the impact of the grants or 

to assess whether states spent the grant funds effectively and efficiently. 

RES Grant Funding was an Important, but Temporary, Aid to States 

State officials told us that the RES funds helped them cope with a major increase in 

participants needing reemployment services. Prior to receiving the RES grant funds, 

14 Early Implementation of the Recover Act, Presentation at the Road to Recovery Reemployment 

Summit, Arlington, VA, December 14, 2010. (Richard Hobbie, Executive Director, NASWA) 

Recovery Act: Reemployment Services Grant for UI Claimants 

15 Report No. 18-11-005-03-315 
 

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For the U. S. Department of Labor – Office of Inspector General 

state officials told us there were shortcomings in the ability to respond to UI claimants 

that required reemployment services. According to the state officials we visited the 

increased RES funding enabled the four states to expand the mode of operations from a 

minimal level of interaction with claimants relying on group presentations to an 

approach that provided individualized and one-on-one focused assistance. The states 

reported increasing the percentage of UI claimants who were called into the one stop 

centers. In addition, states reported that staff members were able to provide more 

follow-up calls to get claimants into the one-stop centers and encourage the continued 

pursuit of assistance. This is especially useful because studies have demonstrated that 

“early intervention” is most effective for unemployed people. One state said that the 

addition of new hires was very helpful as their active case load in the state doubled from 

July 2008 to September 2010 because of the extension of unemployment benefits 

during the period. In addition to funding for the new hires, some states purchased 

computers and other technology for the One-Stop centers. 

Because the great majority of RES funds were spent on personnel costs by the states 

we visited, the benefits of the RES awards were mainly limited to the time when the 

extra staff could be kept on board. Two of the states visited had concerns about 

creating expectations for better levels of reemployment services with the personnel 

hired from RES funding. They feared that when the funding was no longer available, 

they might not be able to keep the additional staff and levels of services would decline. 

DOL Guidance on Reporting Outcomes 

DOL issued TEGL 24-08 which stated that “reporting requirements (for the Recovery 

Act funds) were designed to keep the additional reporting burden to a minimum, while 

ensuring that the agency collects the necessary data to report timely information to 

stakeholders about the use of the Recovery Act funds. Accountability guidelines for the 

Recovery Act emphasize data quality, streamlining data collection, and collection of 

information that demonstrates measurable program outputs and outcomes.”15 

The guidance also stated that it was difficult to determine the impact of the Recovery 

Act RES funding on individual clients because these funds were spent at the same time 

and on the same type of clients as the regular Wagner-Peyser grant funding. In other 

words, Recovery Act RES funded clients were not separately identified in the records. 

Accordingly, the states could not distinguish between clients served by the Recovery 

Act RES funding and those served by the ongoing Wagner-Peyser funding. 

Because of its inability to track RES funded clients separately, DOL required the states 

to report all UI claimants who received staff assisted services as an indicator of the 

effect of the Recovery Act funds. States were to report all UI claimants receiving the 

following staff assisted services as RES-funded participants: 

• workforce information services, 

15 TEGL 24-08 issued May 21, 2009; see page 3. 

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16 Report No. 18-11-005-03-315 
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For the U. S. Department of Labor – Office of Inspector General 

• career guidance, 

• job search activities, 

• referrals to employment, 

• referrals to WIA services, and 

• referrals to training, including WIA-funded training. 

We appreciate the difficulties in tracking which clients were served with each funding 

source and that DOL instead had the states report on the staff assisted services 

provided to all UI claimants as an indicator of the effect of the Recovery Act funds. 

However, the reports provided did not provide meaningful information or results 

achieved by the Recovery Act funds. 

Finding 4 — Unreliable DOL Reports on Grant Activities Prevented Assessments 

of Grant Outcomes 

The reports of grant outcomes that DOL and the states prepared under the guidance 

provided by DOL were flawed for two reasons. First, DOL’s use of all UI claimants 

receiving staff assisted services as an indicator for an actual count of RES funded 

clients overstated RES funded activities because regular Wagner-Peyser program 

grants also funded services to UI claimants. Second, states were not reporting the 

services provided to UI claimants consistently, credibly or in accordance with DOL 

guidance. These reporting problems prevented an overall assessment of the grant 

funding outcomes. 

We obtained DOL reports on services to participants for all states as of September 30, 

2010. We found that certain data elements were not credible or were reported 

inconsistently by the states. For example, New York reported that the total number of 

participants was the same number who received job search activities. For the other 

three states visited, the number who received job search activities was a fraction of the 

total number of participants. 

When we brought these inconsistencies to DOL’s attention, we were told that it was due 

to the states’ various interpretations of the broad reporting guidelines DOL provided. 

The officials said there had been difficulty obtaining consistency in the reporting. We 

requested the monthly reports for June 2009 through January 2011 for further analysis 

to assure that the September 2010 report was not an anomaly. We were provided June, 

July, August, and December 2010 reports. 

Our analysis of the same performance items for the same states showed the following 

wide variances. For example, the percent of participants receiving job search activities 

in Florida ranged from almost 87 percent in June to only 4 percent in August. For New 

York, the number of participants receiving services ranged from 79,759 in August, to 

538 in December. Regarding the number of job search activities, California reported 

such services to 28,031 participants in June and only 526 in August. There are wide 

variances for Pennsylvania also; the December statistics are zero as the state did not 

report information for that month. 

Recovery Act: Reemployment Services Grant for UI Claimants 

17 Report No. 18-11-005-03-315 
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For the U. S. Department of Labor – Office of Inspector General 

DOL also collected and reported data for all jobseekers, eligible UI claimants, and 

veterans by Program Year. We analyzed the number of eligible UI claimants for 

Program Years 2008 and 2009 from these reports on the ETA website. The $247.5 

million in Recovery Act RES funding represented a substantial percent increase in the 

regular Wagner-Peyser funding to states; the annual regular funding for Program Year 

2009 was $703.6 million. As shown below, available DOL data does not make clear that 

there was a proportionate increase in services to claimants with this increase in funding. 

Our analysis showed that: 

•	 In Program Year 2008, 5,174,664 eligible claimants received staff assisted 

services nationwide. 

•	 In Program Year 2009, when a substantial amount of the Recovery Act RES 

funding was expended by the states, 5,673,727 eligible claimants received these 

services, an increase of only 9.6 percent. 

•	 The number of eligible claimants receiving services actually decreased between 

Program Years 2008 and 2009 for the following 14 states: Alabama, Arkansas, 

Georgia, Idaho, Iowa, Mississippi, Missouri, New York, North Carolina, Ohio, 

Oregon, Puerto Rico, Rhode Island, and Tennessee. 

•	 New Mexico reported the same exact numbers for staff assisted services in both 

the 2008 and 2009 Program Years. 

•	 Within the reports DOL provided for Program Years 2008 and 2009, no data was 

shown for Pennsylvania and Texas and the Program Year shown for these two 

states was 2007. 

Because the reporting on client services was inconsistent and inaccurate, an analysis of 

funding accomplishments and state performance was not possible. The fact that the 

reports had obvious errors and inconsistencies indicated that DOL was not adequately 

reviewing the accuracy of the information. Accordingly the use of the reported data as a 

management tool was questionable. 

RECOMMENDATIONS 

We recommend that the Assistant Secretary for Employment and Training 

Administration: 

1. Establish priorities, outcome measures, and reliable data collection systems for 

future Wagner-Peyser funding to address program weaknesses and better 

measure the services states are providing to UI claimants. 

2. Develop adequate monitoring and financial reporting requirements to enable 

DOL to report how effectively federal funds are spent by states to provide 

employment and reemployment services. 

3. Determine from its own independent analysis what states’ experiences were with 

the Recovery Act RES funding to identify best practices, areas for improvement, 

and short and long-term achievements. DOL can then use this information to set 

Recovery Act: Reemployment Services Grant for UI Claimants 

18	 Report No. 18-11-005-03-315 
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For the U. S. Department of Labor – Office of Inspector General 

goals and measures for outcomes and achievements for all future funding 

provided by Congress for reemployment and employment services. 

We appreciate the cooperation and courtesies that ETA personnel extended to Foxx & 

Company during this audit. 

Foxx & Company 

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Exhibits 

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Exhibit 1 Pathways Out of 

 

Prepared by Foxx & Company 

For the U. S. Department of Labor – Office of Inspector General 

Exhibit 1 

Recovery Act RES Funding for States16 

State Allotment Unobligated 

Alabama $3,183,191 0 

Alaska 2,690,443 0 

Arizona 4,389,354 0 

Arkansas 2,068,659 0 

California 29,356,604 0 

Colorado 3,882,771 0 

Connecticut 2,780,996 0 

Delaware 691,311 0 

District of Columbia 892,142 $35,808 

Florida 13,841,612 0 

Georgia 7,319,681 0 

Hawaii 891,404 0 

Idaho 2,241,618 0 

Illinois 10,354,527 0 

Indiana 4,911,339 0 

Iowa 2,329,002 0 

Kansas 2,148,043 0 

Kentucky 3,216,272 0 

Louisiana 3,244,680 0 

Maine 1,333,069 62,135 

Maryland 4,180,276 0 

Massachusetts 5,039,660 0 

Michigan 8,661,262 0 

Minnesota 4,309,431 0 

Mississippi 2,261,200 0 

Missouri 4,624,505 0 

Montana 1,831,862 0 

Nebraska 2,201,537 749,290 

Nevada 2,169,475 0 

New Hampshire 1,010,732 0 

New Jersey 6,663,857 0 

New Mexico 2,055,671 0 

New York 14,284,511 0 

North Carolina 6,932,122 0 

16 This is as of March 10, 2011 

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For the U. S. Department of Labor – Office of Inspector General 

North Dakota 1,865,383 0 

Ohio 9,386,022 0 

Oklahoma 2,445,498 0 

Oregon 3,061,444 0 

Pennsylvania 9,436,706 0 

Puerto Rico 2,903,521 0 

Rhode Island 936,203 0 

South Carolina 3,502,884 0 

South Dakota 1,724,043 0 

Tennessee 4,634,046 90,941 

Texas 16,992,555 0 

Utah 2,686,910 0 

Vermont 807,640 0 

Virginia 5,508,640 26,580 

Washington 5,144,216 0 

West Virginia 1,973,337 0 

Wisconsin 4,557,218 0 

Wyoming 1,337,596 0 

Guam 115,811 0 

Virgin Islands 487,508 0 

TOTAL $247,500,000 $964,754 

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For the U. S. Department of Labor – Office of Inspector General 

Exhibit 2 

Expenditure Categories by Four States of the Recovery Act RES Funding 

As shown by the tables below, we found there was a wide variance in how the state 

maintained information on RES expenditures. California had 16 categories of 

expenditure, New York had 14, Pennsylvania had 12 and Florida had 9 categories of 

expenditures. Because the states were not required to track expenditures in a uniform 

manner, it would be very difficult to perform an overall comparison of how the 4 states 

much less the 54 states and territories expended the RES funds or whether expending 

funds in one category over another resulted in better results. 

California 

Expenditure Category 

RES 

Funding 

Direct Personal Services $10,340,030 

Annual Leave Taken 559,557 

Other Personal Services 2,189,795 

Personnel Benefits 5,451,761 

Supplies 100,625 

Communications 528,320 

Travel 132,036 

Equipment Rental 272,698 

Equipment Expenses 922,364 

Premises Rent 2,183,642 

Premises Expense 191,300 

Services 2,306,375 

Other 126,912 

Capital Expenditures 245,958 

Adjustment 686,225 

Sub grantee Training 114,386 

TOTAL $26,351,984 

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For the U. S. Department of Labor – Office of Inspector General 

Florida 

New York 

Expenditure Category 

RES 

Funding 

Salaries and Benefits $9,744,243 

AWI Administrative Operations 2,640,310 

WFI Administrative Operations 62,500 

Employ Florida Outreach 

Campaign 

254,616 

Florida Trends Next 512,046 

Help Wanted On-line (HWOL) 244,000 

Job Vacancy Hiring Survey 231,000 

Power Seeker Workshop 17,500 

Transferable Occupation 

Relationship Quotient - TORQ 

(software) 

125,000 

TOTAL $13,831,215 

Expenditure Category 

RES 

Funding 

Personnel Service (Salaries) $8,163,644 

Personnel Benefits (Health 

insurance, Worker’s comp) $3,526,299

 Supplies $110,114

 Communication $124,747

 Postage $18,478

 Travel $77,390

 Equipment Rent $8,224

 Equipment Expense $235,903

 Premises Rent $1,070,031

 Premises Expenses $286,235

 Services $470,574

 Other Expenses $19,458

 Capital Purchase $58,515 

Indirect Costs (State-wide central 

services $114,899 

TOTAL $14,284,511 

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Pennsylvania17 

Expenditure Category 

RES 

Funding 

Salaries and benefits $9,514,871 

Travel 144,828 

Training 63 

Telecommunications 1,953 

Specialized Services 16,729 

Electronic Data Processing 8,631 

Rentals/Leases 1,243 

Office Supplies 1,329 

Software 325 

Other Computer Equipment 48,186 

Miscellaneous 1,928 

Other Operating Expense18 (300,009) 

TOTAL $9,440,077 

17 Pennsylvania provided more categories than reflected in the chart above; consolidated these in to 

miscellaneous categories.

18 This is reflected of Pennsylvania’s adjustment to their records.
 

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Appendices 

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Appendix A Background 

 

Prepared by Foxx & Company 

For the U. S. Department of Labor – Office of Inspector General 

Appendix A 

Background 

President Obama signed the American Recovery and Reinvestment Act (Recovery Act) 

(P.L. 111-5) into law on February 17, 2009. The Recovery Act provides the U.S. 

Department of Labor (DOL) with funds to, among other things, increase employment 

and training opportunities. The stated purposes of the Recovery Act were to: 

•	 Preserve and create jobs and promote economic recovery; 

•	 Assist those most impacted by the recession; 

•	 Provide investments needed to increase economic efficiency by spurring 

technological advances in science and health; 

•	 Invest in transportation, environmental protection, and other infrastructure 

that will provide long-term economic benefits; and 

•	 Stabilize state and local government budgets, in order to minimize and 

avoid reductions in essential services and counterproductive state and 

local tax increases. 

The Recovery Act required agencies to implement an unprecedented level of 

transparency and accountability to ensure the public can see where and how their tax 

dollars are being spent and recipients of these funds deliver programmatic results. 

Accordingly, recipients of Recovery Act funding were required to report on a quarterly 

basis the amount of funds expended and the number of jobs created among other 

things, to FederalReporting.Gov. 

On April 3, 2009, the Office and Management and Budget (OMB) issued guidance, 

Updating Implementation Guidance for the American Recovery and Reinvestment Act of 

2009 (M-09-15), reinforcing the Administration's intent that Federal agencies award 

Recovery Act funds responsibly and with transparency. 

DOL's Recovery Act website provides information on the Recovery Act and DOL held 

periodic webinars and other informational forums, to provide timely information to 

Recovery Act stakeholders concerning DOL's responsibilities under the Act. DOL's 

Employment and Training Administration (ETA) also maintains a website for its 

Recovery Act activities. 

Grants to States for Reemployment Services for Unemployment Insurance Claimants 

Title VIII of the Recovery Act provided the Department of Labor an additional $400 

million in Wagner-Peyser19 funds for State Unemployment Insurance (UI) and 

19 The Wagner-Peyser Act of 1933 (Wagner-Peyser) established a nationwide system of public 

employment offices known as the “Employment Service” (ES). The Workforce Investment Act (WIA) of 

1998 amended Wagner-Peyser and made the Employment Service part of the WIA) One-Stop services 

delivery system. 

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Employment Service Operations for grants20 to states. In appropriating these funds, 

Congress required that $250 million of the $400 million be spent for reemployment 

services (RES) for UI claimants. States were to spend their allocation on the “integrated 

Employment Service, and UI information technology, required to identify and serve the 

needs of such claimants.” The Recovery Act also required the Department of Labor to 

establish planning and reporting procedures "necessary to provide oversight of funds 

used for the services." 

The distribution of the RES funds to the states was published by the ETA in Attachment 

V of TEGL 13-0821 on March 6, 2009. The actual amount available for allotment to the 

states was $247.5 million (the Recovery Act makes one percent of the funds available 

to the Federal agency to administer and oversee the funds). These funds were available 

to the states through September 30, 2010, but must be spent no later than the end of 

Program Year 2010 (June 30, 2011). ETA’s guidance states that both Congress and the 

Administration expect the majority of these funds to be spent within the first year of 

availability 

As required by OMB, DOL submitted a Recovery Act plan describing its objectives, 

administration, and oversight activities related to the use of the $400 million provided to 

the Employment Service—including the $250 million specifically for reemployment 

services. OMB also required the Department to develop a risk management plan for 

use of the additional funds, but set no deadline for submitting it. The OIG previously 

reported (September 2009) that the Department needs to update its Recovery Act Plans 

to fully reflect program-specific risks.22 

Reemployment Services to UI Claimants 

The RES funds available to the states under the Recovery Act have their origin with the 

1993 amendments to the Social Security Act—P.L. 103-152. Under these amendments, 

Congress required that states establish “Worker Profiling and Reemployment Service 

(WPRS) systems.” The purpose of the WPRS is to identify those UI claimants through 

“profiling methods” that are most likely to exhaust their UI benefits, refer them to 

reemployment services, and collect follow-up information on their post-program 

outcomes (e.g., employment status, earnings). 

20 The use of the term “grants” does not meet competitive grants. Rather, they are allotments to States 

and outlying areas based on a formula calculation described in Section 6 of the Wagner-Peyser Act 

(29.U.S.C. 49e). 21 TRAINING AND EMPLOYMENT GUIDANCE LETTER NO. 13-08. Allotments for training and 

employment services as specified in the American Recovery and Reinvestment Act of 2009 (Recovery 

Act) for activities under the Workforce Investment Act of 1998 (WIA). Workforce Investment Act Adult, 

Dislocated Worker and Youth Activities Program Allotments; Wagner-Peyser Act Allotments, and 

Reemployment Service (RES) Allotments. U.S. Department of Labor. Employment and Training 

Administration. March 6, 2009. http://wdr.doleta.gov/directives/corr_doc.cfm?DOCN=2718 

22 Recovery Act: Performance Reporting Creates Challenges for the Department of Labor is available at 

http://www.oig.dol.gov/public/reports/oa/2009/18-09-002-01-001.pdf. 

Recovery Act: Reemployment Services Grant for UI Claimants 

32 Report No. 18-11-005-03-315 
Prepared by Foxx & Company 

For the U. S. Department of Labor – Office of Inspector General 

Factors that states may consider in “profiling” may include a claimant’s age, education, 

and length of prior employment, occupation and work history. “Reemployment services” 

describes a range of activities to help a UI claimant secure a job. Examples include, but 

are not limited to: group workshops on resume writing, interviewing skills, and labor 

market information; and staff-assisted or self-service use of career assessment tools 

and job listings. In contrast to WIA Adult and Dislocated Worker formula grant funds, 

RES funds cannot be used to pay for long-term occupational skills training or an 

Individual Training Account. The focus of RES is on helping the UI claimant re-enter the 

workforce as quickly as possible. 

ETA Guidance 

On March 18, 2009, ETA issued TEGL 14-08, which included guidance to states on use 

of the $247.5 million in Recovery Act funds for RES. According to ETA, States must use 

the funds to provide RES to UI claimants through the One-Stop system, in addition to 

regular Wagner-Peyser-funded employment services (ES). Section 7(a) through (c) of 

the Wagner-Peyser Act allows ES funds to be used on the following services: 

counseling, testing, occupational and labor market information, assessment, referral to 

employers and appropriate recruitment services and technical services for employers. 

Specifically, this may include: 

1. Services provided to UI claimants identified through the UI profiling system; 

2. In-person staff assisted services; 

3. Initial claimant reemployment assessments; 

4. Career guidance and group and individual counseling, including provision of 

materials, suggestions, or advice which are intended to assist the job seeker in 

making occupation or career decisions; 

5. Provision of labor market, occupational, and skills transferability information that 

clarifies claimants’ reemployment opportunities and skills used in related or other 

industries; 

6. Referral to job banks, job portals, and job openings; 

7. Referral to employers and registered apprenticeship sponsors; 

8. Referral to training; 

9. Assessment, including interviews, testing, individual and group counseling, or 

employability planning; and 

10.Referral to training by WIA-funded or third party service providers. 

In addition, ETA encouraged states to identify technological changes and updates to 

their systems that might result in serving more UI claimants, and use RES funds for IT 

upgrades, as appropriate. ETA also provided instructions to the states on how to 

submit a modified State Plan to account for use of additional funds received under the 

Recovery Act. 

Recovery Act: Reemployment Services Grant for UI Claimants 

33 Report No. 18-11-005-03-315 
 

Prepared by Foxx & Company 

For the U. S. Department of Labor – Office of Inspector General 

Reporting Outcomes from Use of RES Funds under the Recovery Act 

In addition to reporting the use of Recovery Funds to FederalReporting.Gov, DOL’s 

Recovery Act Plan for the Wagner-Peyser Act Employment Service requires that states 

must continue to submit regular monthly Wagner-Peyser Act Employment Service 

report, but must add one new data element: the number of UI claimants served with 

Recovery Act funds that are referred to and placed in WIA-funded training. According to 

GAO, which originally reported on the RES initiative in 2005, adding this reporting 

requirement would help Congress and other oversight bodies understand “the impact of 

the $250 million” that the Recovery Act made available to specifically help UI claimants 

return to the workforce.23 

ETA Assessment of States’ Capacity to Use Additional Recovery Act Funds for 

Reemployment Services 

Between mid-April and May 22, 2009, Regional Office ETA staff engaged in a Recovery 

Act Assessment and Technical Assistance Consultation process to determine the 

“readiness” of states and local workforce areas to use Recovery Act funds quickly and 

effectively, as Congress intended. ETA staff held “consultations” with all 53 states and 

territories and 156 local areas—conducting a total of 209 site visits nationwide. One of 

ETA’s objectives in doing the “consultations” or “readiness reviews” was to identify the 

type of technical assistance the public workforce system required to effectively use 

Recovery Act funds. ETA summarized the results of the “consultations” in the report, 

“National Workforce System Readiness Level and Technical Assistance Needs for 

Implementation of the American Recovery and Reinvestment Act,” issued July 10, 2009. 

According to the Readiness Review report, one of the key “readiness” questions used in 

ETA’s consultation reviews was, “Has the state/local area UI, WIA, and WP [WagnerPeyser] program staff collaborated to develop reemployment services to UI claimants 

most likely to exhaust UI benefits?” ETA reported that 46 states were “ready,” and that 

only 10 rated their technical assistance needs in this area as “medium/high.” 

Technical Assistance Provided by ETA 

In addition to the guidance provided in TEGL 14-08, ETA conducted several webinars 

that focused on how states could use RES funds under the Recovery Act. Examples of 

topics covered in these webinars included: targeting job development to UI claimants; 

strengthening reemployment through UI connections, and new strategies for laid off 

professional or “white-collar” workers. In addition to the webinars, ETA held regional 

reemployment conferences and other technical assistance forums throughout the RES 

grant period. 

23 See Unemployment Insurance: Better Data Needed to Assess Reemployment Services to Claimants. 

GAO-05-413 June 24, 2005. Summary. Status of Recommendations for Executive Action. 

http://www.gao.gov/products/GAO-05-413 

Recovery Act: Reemployment Services Grant for UI Claimants 

34 Report No. 18-11-005-03-315 
 

 

 

 

 

 

 

 

 

 

 

 

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For the U. S. Department of Labor – Office of Inspector General 

At least three published studies have examined states’ use of reemployment services 

funds to help UI claimants quickly return to work. In 2005, GAO reviewed the extent to 

which states had shifted to remote filing (e.g., via phone, Internet) and what they had 

done to make UI claimants aware of reemployment services and profiling requirements. 

GAO concluded there was insufficient data to “provides a complete picture of the 

services received or the outcomes obtained by UI claimants.” Additionally, GAO found 

that few states monitor whether UI claimants are receiving reemployment services, and 

that fewer monitor outcomes. According to GAO, states often lacked sufficient 

information technology to track outcomes from RES activities. As of August 19, 2010, 

Congress provided $70.8 billion to DOL (See Table 1 below.) 

Table 1: Department of Labor Recovery Act Funding, as of August 19, 2010 

Amount a 

Program (millions) Percent 

Unemployment Insurance $65,996 93.17 

Training and Employment Services 3,950 5.58 

State Unemployment Insurance and Employment 

Service Operations 400 0.56 

Community Service Employment for Older Americans 120 0.17 

National Emergency Grants for Health Insurance 

Coverage 40 0.06 

Job Corps 250 0.35 

Departmental Management 80 0.11 

Total $70,836b 100.00 

a – The amounts other than “Unemployment Insurance and National Emergency Grants for Health Insurance 

Coverage” were obtained from the Recovery Act dated February 17, 2009. The “Unemployment Insurance” amount 

was provided by the Office of the Assistant Secretary for Administration and Management, and includes amounts 

made available for Federal and State Extended Benefits, Extension of Emergency Unemployment Compensation, 

and Federal Additional Unemployment Compensation programs. The National Emergency Grants for Health 

Insurance Coverage amounts were adjusted in United States Public Law 111-226 (HR1586). b – The total amount does not include $6 million provided to the OIG to provide oversight over the Department’s 

Recovery Act activities. 

Recovery Act: Reemployment Services Grant for UI Claimants 

35 Report No. 18-11-005-03-315 
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Recovery Act: Reemployment Services Grant for UI Claimants 

36 Report No. 18-11-005-03-315 
 

Appendix B Objectives, Scope, Methodology, and Criteria 

Prepared by Foxx & Company 

For the U. S. Department of Labor – Office of Inspector General 

Appendix B 

Objectives, Scope, Methodology, and Criteria 

Objectives 

Our audit objectives were to answer the following questions: 

1. Did the Department establish sufficient and timely planning and reporting 

procedures to assure adequate oversight of how reemployment services 

funds are used? 

2. Did states use reemployment services funds under the Recovery Act, as 

intended? 

3. What were the outcomes of the states’ use of the Recovery Act RES 

funds? 

Scope 

We conducted this performance audit in accordance with generally accepted 

government auditing standards. Those standards require that we plan and perform the 

audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our 

findings and conclusions based on our audit objective. We believe that the evidence 

obtained provides a reasonable basis for our findings and conclusions based on our 

audit objective. We conducted our fieldwork at the ETA National Office in 

Washington, D.C., four ETA Regional Offices located in Boston, Philadelphia, Atlanta, 

and San Francisco, and the states of California, Florida, New York, and Pennsylvania. 

The audit included interviews and review of grant documents, guidance, and data 

available from ETA’s Office of Workforce Investment, Office of Grants Management, 

and Office of Regional Management, as well as external sources. The audit included 

interviews and review of data from four states: California, Florida, New York, and 

Pennsylvania. These states are geographically dispersed, characterize different 

economic and employment conditions and challenges, and represent a significant 

portion of the nation’s population. In addition to the state work, we collected nationwide 

information on RES funding expenditures. The audit work was completed in March 

2011. 

Methodology 

To accomplish our audit objectives, we obtained an understanding of the Recovery Act. 

We conducted interviews with ETA officials from the Office of Workforce Investment, 

Office of Policy, Office of Regional Management, and from four regional offices to gain 

an understanding of the grant monitoring processes. 

Recovery Act: Reemployment Services Grant for UI Claimants 

37 Report No. 18-11-005-03-315 
Prepared by Foxx & Company 

For the U. S. Department of Labor – Office of Inspector General 

The audit conducted at the Federal and State levels and included: 

•	 Determining the appropriate/allowable uses of reemployment services funds, 

•	 Assessing the guidance and oversight provided by the Department, 

•	 Reviewing a sample of states to determine how funds were used and whether 

those uses were appropriate/allowable, and 

•	 Reviewing the outcomes of the RES grant funding. 

We conducted this performance audit in accordance with generally accepted 

government auditing standards. Those standards require that we plan and perform the 

audit to obtain sufficient, appropriate evidence to provide a reasonable basis for our 

findings and conclusions based on our audit objectives. We believe that the evidence 

obtained provides a reasonable basis for our findings and conclusions based on our 

audit objectives. All required steps in the DOL/OIG reporting process were completed 

following the audit work. 

Examples of the audit results and the relevance of information analyzed to answer the 

audit’s objectives are provided in the in the body of the report. 

Criteria 

We used the following criteria to accomplish our audit: 

• American Recovery and Reinvestment Act of 2009, dated February 17, 2009 

• Workforce Investment Act of 1998, as amended, dated August 7, 1998 

• Training and Employment Guidance Letters: 

o	 No. 13-08, dated March 6, 2009 

o	 No. 14-08, dated March 18, 2009 

o	 No. 17-08, dated April 23, 2009 

o	 No. 24-08, dated May 21, 2009 

• Office of Management and Budget (OMB) Memorandums: 

o M-09-10: Initial Implementing Guidance for the American Recovery and 

Reinvestment Act of 2009, dated February 18, 2009 

o M-09-15: Updated Implementing Guidance for the American Recovery and 

Reinvestment Act of 2009, dated April 3, 2009 

o M-09-21: Implementing Guidance for the Reports on Use of Funds 

Pursuant to the American Recovery and Reinvestment Act of 2009, dated 

June 22, 2009 

Recovery Act: Reemployment Services Grant for UI Claimants 

38 Report No. 18-11-005-03-315 
Appendix C Acronyms and Abbreviations 

Prepared by Foxx & Company 

For the U. S. Department of Labor – Office of Inspector General 

Appendix C 

Acronyms and Abbreviations 

Recovery Act American Recovery and Reinvestment Act of 2009 

DOL Department of Labor 

ETA Employment and Training Administration 

GAO Government Accountability Office 

NASWA National Association of State Workforce Agencies 

OIG Office of Inspector General 

OMB Office of Management and Budget 

RES Reemployment Services 

TEGL Training and Employment Guidance Letter 

UI Unemployment Insurance 

WIA Workforce Investment Act 

Recovery Act: Reemployment Services Grant for UI Claimants 

39 Report No. 18-11-005-03-315 
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Recovery Act: Reemployment Services Grant for UI Claimants 

40 Report No. 18-11-005-03-315 
u.s. Department of Labor 

MEMORANDUM FOR: 

FROM: 

SUBJECT: 

Date: 

Employment and Training Administration 

200 Constitution Avenue, N.W. 

Washington. D.C. 20210 

ELLIOT P. LEWIS 

Assistant Inspector General 

JANE 

Assistant 

OATES 

Secretary U ~ ~ 

Response to the Office of the Inspector General's 

Audit of the Reemployment Services Program, Draft 

Audit Report 18-11-005-03-315 

March 30, 2011 

The Employment and Training Administration (ETA) appreciates the opportunity 

to respond to the Office of the Inspector General's (DIG) draft audit report on the 

Recovery Act: Reemployment SeNices Grant tor UI Claimants. We are pleased 

that the DIG audit states that the Labor Department (DOL) and the state 

workforce system did a good job implementing this new and temporary ARRA 

program to provide reemployment services to UI claimants at a time of great 

need in the economy. In the face of state hiring freezes and huge demand for 

services, states overcame many challenges to employ and train a temporary 

force to provide assistance to unemployed workers. DOL's timely guidance 

outlined allowable activities for the new program and also recommended to 

states which activities should be emphaSized. The OIG audit report recognizes 

DOL's timely allocations of resources as well as the comprehensive technical 

assistance delivered to the workforce system. It found that states spent the grant 

funds on allowable activities. As of January 2011 , over 5.4 million UI claimants 

received reemployment services with these funds. 

However, we are troubled that this OIG audit also presents findings that are 

inaccurate or in conflict with our legislative authority. Since DOL staff were 

responsive to the information requests from the OIG auditors and briefing them 

on all of the various law and policy requirements, we can only conclude that 

these findings are based on a lack of understanding or mistakes on the part of 

the auditors. This response puts forth a factual rebuttal to the findings and 

recommendations. 

Finding 1: DOL Did Provide Timely General Guidance But Missed an 

Opportunity to Direct the States to Address Identifl9d Long-Term Deficiencies 

and Weaknesses in the Reemployment Services Program. 

Prepared by Foxx & Company 

For the U. S. Department of Labor – Office of Inspector General 

Appendix D 

ETA Response to Draft Report 

Recovery Act: Reemployment Services Grant for UI Claimants 

41 Report No. 18-11-005-03-315 
ETA Response: We apprised the auditors that DOL did not have the authority 

nor was it our policy to "direct" grantee expenditures. In short, it is illegal for DOL 

to "direcr states without the express authorization from Congress to target the 

funds to a narrower scope of allowable activities than contained in law. As 

directed by the Recovery Act and per the Requirements of the Grants and 

Cooperative Agreements Act of 1977, ETA provided guidance within its authority 

and encouraged (without mandating) states to address every known area in need 

of further strengthening state reemployment services to UI claimants. These 

areas were initially discussed in the primary source of formal guidance on RES 

funds, Training and Employment Guidance letter (TEGl) 14-08, which 

recommended the following categories of suggested strategies for spending RES 

funds: 

• Profiling and the Use of Statistical Modeling 

• Collaboration Among State Employment Service, Unemployment 

Insurance, and Labor Market Information OfficeS 

• [providing the] Full Array of {Reemployment] Services 

• Upgrading of Information Technology 

ETA took the opportunity in its guidance to emphasize the strategies that the 

state RES programs should include; these strategies are based upon information 

from various information sources, including reports and audits identifying RESrelated program needs. The OIG auditors did not identify any speCifIC strategy or 

"weakness" that was not included in DOL's guidance recommendations. 

In addition. ETA backed up its recommendations by providing extensive technical 

assistance on Reemployment Services. Since the passage of ARRA. ETA has 

held nearly 40 technical assistance webinars for this $250 million program to 

guide states in their use of RES funds or in direct support of better services to UI 

claimants (See Attachment A). Many additional resources were posted to the 

newly created RES Community of Practice (See Attachment 8). A sampling of 

webinar titles includes: 

• ETA's Vision and Guidance: Using your RES Funds 

• RES: Strengthening Your Reemployment Efforts through Strong U/ 

Connections 

• Innovative Approaches to Obligating Funds by Sept 30, 2010 

• Re-envisioning U/ Claimant Reemployment Strategies: A Call to Innovate 

• Quick Reference on Allowable Uses of ARRA RES Funds 

• NY's Innovative RES Function 

ETA also held six Regional Recovery and Reemployment Forums. These were 

implemented to provide timely and state-customized technical assistance to the 

system in a mode that enabled wide system participation. The Forums had a 

combined total attendance of 2,201 participants, with representatives from all 50 

states and three of four territories. According to our final report on the forums, 

2 

Prepared by Foxx & Company 

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Recovery Act: Reemployment Services Grant for UI Claimants 

42 Report No. 18-11-005-03-315 
the most frequently covered workshop topics were Flexible Service Delivery, 

Skills Assessment. Technology and Tools, and Actionable Workforce Data. 

These wor1<.shop topics coincided with areas highlighted in TEGl14-08. 

Beyond providing states with guidance, tools and access to program experts, the 

premise of directing states to focus on certain services also violates the 

Workforce Investment Act (WIA) of 1998, which established a decentralized 

public workforce system with a national network of local One·Stop Career 

Centers that are the access points for the delivery of employment-related and 

training services. As with many of its programs, DOL allocates funding to states, 

which in turn set statewide policies and then, distribute funding according to state 

and local needs. The OIG audit report does not reflect a full understanding of 

this fundamental concept. 

As a final note, the OIG audit took exception with DOL's guidance for states 10 

obligate funds by September 30, 2010. However, Congress and the Recovery 

Act itself emphasized rapid obligations to ensure an immediate positive impact 

and included September 30, 2010 as a statutory requirement. DOL carried out 

its role by reinforcing the Congressional intent and imposed deadline and 

equipping states with ideas about how and where to invest these funds to help 

make the program successful. 

Finding 2: DOL Did Not Monitor How RES Funds Were Spent to Achieve 

Transparency Regarding the Uses of the Funds. 

ETA Response: We disagree with many of the facts stated by the OIG auditors 

in this finding. As a result of incorrect facts and assumptions, we believe the 

analysis is flawed. Specifically: 

}> OIG Audit: "DOL officials required the States to report quarterly on the 

obligation amounts of the Recovery Act RES funding but did not require 

reporting on how states spent grant funds. The lack of information on how 

grant funds were used was not consistent with the Recovery Act's 

requirement for transparency and accountability.· 

o All RES grantees completed a quarterly ETA 9130 financial report. 

That report not only requires submission of data on obligations, but 

also revenue received , expenditures, and the unliquidated obligations 

that remain against the total funds authorized for grant activities. The 

ETA 9130 is the approved financial activity report (OMS approval 

through November 2012). Our reporting requirements are consistent 

with Federal rules throughout the Federal government. Additionally, all 

grantees further complied with ARRA Section 1512 reporting 

requirements for spending, which is a new, government-wide report for 

all spending under ARRA grants and contracts. Therefore, DOL has 

met all Recovery Act standards for transparency and accountability. 

3 

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For the U. S. Department of Labor – Office of Inspector General 

Recovery Act: Reemployment Services Grant for UI Claimants 

43 Report No. 18-11-005-03-315 
}> OIG Audit: "The DOL officials told us there was not enough time to develop 

and implement a new data collection system, nor was it practical to do so, 

given the limited duration of the Recovery Act funding." 

o This is an incorrect summary description of information provided to the 

auditors: ETA is constrained by the data collection requirements 

contained in the Paperwork Reduction Act and is not authorized to 

request additional detailed financial reports without PRA compliance, 

and OMS clearance follows an extensive process to justify the 

additional burden on a grantee. ETA already had a financial reporting 

system in place that provides the resuhs of financial activity in a 

manner consistent with all Federal reporting requirements. Recovery 

Act funding was appropriated under existing program authority in order 

to use existing systems and processes to expedite implementation and 

minimize the creation of new systems. 

}> DIG Audit: "For the States we reviewed, the officials told us that DOL never 

asked for repolts on how they were spending their funds, but rather asked for 

repolts on how quickly the funds were being obligated. The States wef"9 able 

to provide us with information on how they spent the RES funding. We found 

there was a wide variance in how the States maintained information on RES 

expendituf"9s which were not uniform or consistent among the four States. 

Califomia had 16 categories of expendilures, New Yorl< 14, Pennsylvania 12 

and Florida had 9." 

o The use of different "categories' is perfectly consistent with the 

differing state accounting and budget requirements. The different 

"categories" referenced in the report are accounting system 

budget/expense codes commonly found in accounting systems. Each 

state will account for the funds in a manner that allows them to fully 

track funds for state accounting purposes as well as for Federal 

reporting . We do not believe this paragraph or the breakdowns of 

different state accounting system codes used to support the auditor's 

opinion are relevant to this report. 

}> DIG Audit: "We obtained several DOL monitoring repolts and related 

documentation that stressed the need for funds to be obligated. However, 

none of these repolts or documentation referenced the need for sound 

financial or fiduciary spending responsibility." 

o We disagree with the statement and opinion expressed. It is accurate 

that ETA provided technical assistance to the states and stressed the 

early obligation and expenditure of funds in keeping with 

Congressional intent for the Recovery Act to provide services to those 

impacted by the recession. "is not accurate to state that ETA did not 

4 

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Recovery Act: Reemployment Services Grant for UI Claimants 

44 Report No. 18-11-005-03-315 
reference a need for sound financial management of its grants. ETA 

has an oversight system based on the use of the Core Monitoring 

Guide and the ARRA supplement. Our monitoring reviews the 

financial and grant management systems of all grantees and grant 

agreements contain specific requirements for the proper management 

of funds. The fact that the monitoring reports did not "reference" the 

need does not mean that the requirements were not present or that 

they were not reviewed. Rather, the monitoring reports found no 

issues in the review and therefore, no compliance findings needed to 

be addressed. In addition, ETA staff review progress and financial 

reports and conduct a desk review on a quarterty basis. Any 

discrepancies are discussed with grantees, and technical assistance is 

provided as needed. 

Finding 3: Recovery Act RES Funds Were Not Spent Earty in the Grant Period, 

and DOL Did Not Provide Proper Oversight to Determine if the Funds were Spent 

Concurrently with Other Grant Funds. 

ETA Response: We do not believe that this is a finding. The law established 

the period of time within which to spend the funds with no requirement for earty 

expenditure, and the RES funds were spent both within the grant period and 

concurrently with other Wagner.Peyser funds. ETA requires all grantees to 

report financial activity by fund source on a quarterly basis. An analysis of these 

reports shows that Wagner-Peyser ARRA funding and Wagner-Peyser regular 

formula funding were spent concurrently. Additionally, RES ARRA funds were 

spent concurrently with Wagner.Peyser regular appropriation and ARRA funds. 

(See Table below). The Core Monitoring Guide ARRA Supplement contains 

specifIC questions related to spending concurrently and 10 supplement non.ARRA 

funds in Objective 3.1 Budget Controls. Thus, this guide prescribes ETA's 

oversight on this point. These facts -were readily available to the auditors but 

unaccounted for in the report. 

In addition, the OIG audit report fails to accurately acknowledge DOL's 

implementation of the legislation which allowed states to obligate funds until 

September 30, 2010 and to expend funds up to June 30, 2011 . 

ObU allons 

7/1109 to 6/30MO IPY 20~ 

7/1110 to 9/301~ Y -to.date .!!!!D....ram 2010 

WP·ES Regular Appropriation 

Fundi 641185811 .99 190.624736.78 

WP-ES ARRA fundI 95 365 860.34 42 767 102.08 

RES ARRA fUndI 165.470.310.59 64.907.572.13 

Finding 4: Unreliable DOL Reports on Grant Activities Prevent Assessments of 

Grant Outcomes. 

5 

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Recovery Act: Reemployment Services Grant for UI Claimants 

45 Report No. 18-11-005-03-315 
ETA Response: We believe thatlhe audit finding is based on an 

oversimplification of the process of reporting and an incorrect understanding of 

ETA's guidance to states. As a result, the DIG audit report makes an inaccurate 

conclusion about reporting reliability. State reports to ETA capture the results of 

a state's activity (i.e., the number of UI claimants served and the type of services 

received). The OIG audit report makes a factual error by inferring that DOL did 

not track participants in the RES program separate from the larger Wagner. 

Peyser-funded Employment Service program. 

TEGL 24-08, The Worldorce Investment Act and Wagner-Peyser Act 

Performance Accountability Reporting for the American Recovery and 

Reinvestment Act of 2009, provides instructions for states to report on RES 

Recovery Act-funded participants separately. The TEGL provides a definition of 

an RES participant and goes on to cite two factors that make it necessary to 

create a separate rePort for the Reemployment Services portion of the Recovery 

Act: "(1 ) The Recovery Act makes a clear distinction between general Wagner. 

Peyser Act funds and Reemployment Services funds to support targeted services 

to Unemployment Insurance claimants. Oversight bodies, including Congress, 

have indicated the need to better understand the impact of the $250 million 

dedicated to UI claimants; and (2) the Wagner-Peyser Act Employment Service 

serves over 14 million individuals each year [since ARRA: 23 million]. If RES 

participants are not reported separately from the regular Wagner.Peyser Act 

reportlng, ETA would not have the ability to analyze and track positive effects of 

the new Reemployment Services funds. Separate identification and reporting of 

these participants ensures that ETA can demonstrate accountability for 

resources expended by these grant: ETA's most recent monthly report from 

January 2011 shows that over 5.4 million unemployed workers have received 

services through the RES funds since May 2009 (See Attachment D). 

The OIG audit report also stated that ·states were not reporting the services 

provided to UI claimants consistently ... • citing differences in numbers and 

proportion of services from state-te-state. This statement is another example of 

the lack of understanding of a decentralized workforce system. The numbers 

and proportion of services differ from state-te-state because of different state 

program service design strategies - and not inconsistent reporting. Reporting 

does not drive service delivery; it captures the outputs and outcomes of the 

state's overall strategy. The workforce system is decentralized, and states and 

local areas have discretion in the service strategies they choose and how they 

respond to their unique Jabor market needs. 

RecommendatJon 1: Establish priorities, outcome measures, and reliable data 

collection systems for future Wagner.Peyser funding to address program 

weaknesses and better measure the services states are providing to UI 

claimants. 

6 

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Recovery Act: Reemployment Services Grant for UI Claimants 

46 Report No. 18-11-005-03-315 
ETA Response: DOL operationalized all the elements of this recommendation 

(and more) in implementing the ARRA RES program, and DOL will do the same 

should additional funding be made available under the Wagner-Peyser Act, To 

recap: ETA set priorities through formal guidance and technical assistance; 

received quarterly data on outcomes (percent getting a job, retained in the job 

and earnings); and maintained the Labor Exchange Reporting System (LERS) for 

Wagner-Peyser funds. In addition to outcome reports, DOL implemented new 

monthly Recovery Act pertormance reporting requirements. The resulting report 

provided additional, timely information to DOL, the general public, and other 

stakeholders about the use of the Recovery Act funds. The monthly 9147 

pertormance reports (on participants and services) and quarterly 9002 

pertormance reports (on outcomes of program exiters) allowed users to view 

real-time pertormance progress and long-term employment outcomes for UI 

claimants who received RES. In summary, DOL's accountability guidelines for 

the Recovery Act, as outlined in TEGL 24-08, emphasized data quality, 

streamlining data collection, and collection of information that demonstrates 

measurable program outputs and outcomes consistent with the intent of the Act. 

There is no further action needed on this recommendation. 

Recommendation 2: Develop adequate monitoring and financial reporting 

requirements to enable DOL to report how effectively federal funds are spent by 

states to provide employment and reemployment services. 

ETA Response: ETA does not believe that this OIG audit recommendation is 

supported by fact. This recommendation appears to be based upon a 

misunderstanding of both OMB reporting burden requirements and the Recovery 

Act requirements. While we address this misunderstanding in our response to 

Finding 2, we elaborate on what appears to be a flawed analysis of requirements, 

reports and supporting documentation. 

ETA has an apprOVed, robust system of monitoring and financial reporting in 

place that enables DOL to report to Congress and the public on how federal 

funds are spent by states. This system is supported by numerous documents 

that were provided to Of discussed with the auditors, including (1 ) Employment 

and Training Order-1-08, the ETA Core Monitoring Guide (with multiple 

supplements including the one for Recovery Act funding); (2) OMB approved 

forms 9130 and 9136 for grantee financial reporting; (3) the WIA Standardized 

Reporting Data system for grantee pertormance outcomes; and (4) the Grants 

Electronic Monitoring system, (GEMS) for management of grants during the 

period of pertormance. In addition, specifically for the ARRA programs ETA 

implemented the transparency requirements of Section 1512 of ARRA, under the 

guidelines provided by the Recovery Act Transparency Board (RATS), and OMB 

Memoranda M-09-1 0, M-09-15, and M-09-21. This compendium of policies and 

procedures provide a framework for the management of Federal grant funds that 

is comprehensive and in keeping with all Federal grant management standards 

and requirements. 

7 

Prepared by Foxx & Company 

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Recovery Act: Reemployment Services Grant for UI Claimants 

47 Report No. 18-11-005-03-315 
Recommendation 3: Determine from its own independent analysis what states' 

experiences were with the Recovery Act RES funding to identify best practices, 

areas for improvement, and short and long-term achievements . DOL can then 

use this information to set goals and measures for outcomes and achievements 

for all future funding provided by Congress for reemployment and employment 

services. 

ETA Response: ETA agrees that independent analysis of the results will be 

useful for informing the design and development of future initiatives. ETA 

already had planned or implemented such independent reviews before the OIG 

audit commenced. For example, ETA provided grant funding to the National 

Association of State Workforce Agencies (NASWA) to conduct a multi-state study 

of the implementation of Recovery Act Investments, including RES. We are 

about to release an interim report: Early Impl6mentation of the American 

Recovery and Reinvestment Act: Worliforce Development end Unemployment 

Insurance Provisions that contains information on best practices, results, and 

areas for improvement based on fIVe surveys and two rounds of site visits to 20 

states (See Attachment C). A final report will be issued later th is year. No 

further action is needed on this recommendation . 

• 

Prepared by Foxx & Company 

For the U. S. Department of Labor – Office of Inspector General 

Recovery Act: Reemployment Services Grant for UI Claimants 

48 Report No. 18-11-005-03-315 
signed into law, ETA hosted a 

Reemployment Works Summit with workforce 

professionals from all 50 states. Near1y 700 

individuals participated. The majority of workshops 

focused on reemployment strategies. Topics 

included UI claimant profiling and supporting 

National technologies; how to triage; Ul/reemployment 

~:;ir~,;~ ~;n~l~eg~,~a~tio~n ; real time labor mark~t information; and 

; 

Employment Guidance Leiter (TEGL) 13-08, 

ARRA allotments to states and outlying areas for 

the Wagner.Peyser Act (including Reemployment 

RES Allotments Services) • just 17 days after the passage of the 

I I i 

Guidance on March 18, 2009 TEGL No. 14-08. 

The guidance outlines the Department's 

expectations for implementing the Workforce 

RES Investment Act and Wagner.Peyser Act funding in 

I the Act and stale planning requirements 

RES Grant 

outlying areas on 

for timely Notice of 

ag",emen" bound 

allowed 

grant 

to new safeguards as 

; 

Internal Technical Wagner-Peyser 

27..Jan-09 

Assistance American Recovery and 

~~~----~~~ Live Broadcast: I the Recovery Act in 

Readiness and Technical Assistance Consultation 

Real Time Jobs in Demand: Finding Jobs in a 

9 

Prepared by Foxx & Company 

For the U. S. Department of Labor – Office of Inspector General 

Recovery Act: Reemployment Services Grant for UI Claimants 

49 Report No. 18-11-005-03-315 
Technical 

Assistance RES of Practice Kick-Off Technical 

; ; 

I ;"'A " slate funds YI:,,'~.:1 

conducted readiness consultations with each state. 

These consultations informed ETA's technical 

State Readiness 

assotance suategy. As p'anned, 209 v;s"" G;" by May 22, 2009. A consolidated 

I ~~~~2009nOM~'ea'ed , , and 171 .' 

'with a ',o:,a';: ' • ;n Engaged Inter- I the , ~,':':JO~~~~~,' , , , ; NCSL; Counties; 

~ ; .; NAWB, etc. 1 

I ~~~! Vision and Guidance: Using your RES 

~ ::e:~n and Reinvestment Act (ARRA) 

; ; 

Targeting Job Development for Unemployment , 

TEGL 24-08 (and TEGL 7-10) Workforce Updated Performance Investment Act and Wagner-Peyser Performance 

, and for lt~ American 8-Aug-09 

; , ; ; Access Points: Faith-Based and 

I ! ; 

IARRA 

; 

de~%:~~ ~"tr:~~~:s to resPO~d to the 

economic downturn and implement the Recovery 

Act by June 30, 2009. The June 30, 2009 

submission covered the period of July 1, 2009 

through June 30, 2010. ETA reviewed and 

State Plan plans within 90 days of receipt of the 

ID'an. 

10 

Prepared by Foxx & Company 

For the U. S. Department of Labor – Office of Inspector General 

Recovery Act: Reemployment Services Grant for UI Claimants 

50 Report No. 18-11-005-03-315 
Technical 

Assistance 

Connecting Unemployment Insurance Claimants to 

Pell Grants: The Financial Aid Basics for the 

~~~~--------~~ 

NASWA 

Recovery Act 

Utilizing labor Market Information to Job 

RES: Your Reemployment Efforts 

Utilizing labor Market Information to Job 

Utilizing l MI to 

ARRA (Recovery Act) Section 1512 Reporting 

ARRA Section 1512 Registration and Data Quality 

':;;';I:;'';' BBa;~,:ririers to 

ARRA 1512 Reporting Orientation for New 

iii 

II 

Prepared by Foxx & Company 

For the U. S. Department of Labor – Office of Inspector General 

Recovery Act: Reemployment Services Grant for UI Claimants 

51 Report No. 18-11-005-03-315 
6 Regional 

Forums: InPerson TA 

Meetings on 

Reemployment 

Services and 

state approaches 

to using RES 

Webinar (using 

RES funds for 

ETA's Regional Recovery and Reemployment 

Forums were implemented to provide timely and 

regionally-customized technical assistance to the 

system in a mode that enabled wide system 

participation. The Forums represented a 

significant component of the larger Reemployment 

initiative undertaken by ETA. The Forums had a 

combined total attendance of 2,201 participants, 

with from all 50 states and three of 

A collaborative presentation to states by NASWA, 

US DOL, and select states to discuss innovative 

ideasltechnologies that can be carried out using 

illi 

Grants provided have 

generated a host of creative and i 

approaches to helping the unemployed. In 

particular, we have leamed a great deal over the 

last year about how assessment tools can 

strengthen reemployment services. Personality 

assessments, work values assessments, skills 

transferability assessmentsltools, interest 

assessments, educational assessments, 

occupational skills assessments, work readiness 

assessments and the list goes on and on. All of 

these types of assessments and more increase the 

workforce system's ability to match job seekers 

and employers. If you are still looking for ways to 

invest your ARRA RES funds, we want to help you 

learn about which instruments are the most 

effective by connecting you with your workforce 

system colleagues who can give you unbiased, 

first-hand feedback on their experience with 

specific products. If you are interested in 

purchasing a particular assessment instrument or 

tool and would like to see if there is a workforce 

system colleague that is using the instrument you 

are interested in, please contact our resident 

on assessment tools: lauren Fairley-Wright 

12 

30-Mar-10 

to 

Prepared by Foxx & Company 

For the U. S. Department of Labor – Office of Inspector General 

Recovery Act: Reemployment Services Grant for UI Claimants 

52 Report No. 18-11-005-03-315 
Workforce Investment wrighl.lauren@dol.gov 

Strategic Doing is also a platform for moving 

quickly and collaboratively from innovative ideas to 

innovative actions in a simple, structured and -

most important in our fast-moving world where 

even a few focused hours are a lUxury - fast 

process that helps to solidify partnerships, define 

relationships, and create a "swarm" (to borrow a 

Strategic Doing term) of new ideas and solutions 

quickly. And with many states needing to decide 

how best to invest their expiring ARRA 

Reemployment Services (RES) and WagnerPeyser dollars, there may be no better time to 

Strategic Doing - become familiar with this action-oriented decision 

And What It making tool. As you will see from the materials, a 

Might Do for Your number of local, regional and state 

AR~~ I ;;:~ . are using this approach to "j ump-

~ ss,st 

I Reem~:orent Rollout of innovative skill matching website called 

; I , 

" 

13 

Prepared by Foxx & Company 

For the U. S. Department of Labor – Office of Inspector General 

Recovery Act: Reemployment Services Grant for UI Claimants 

53 Report No. 18-11-005-03-315 
The conference was designed to give the 

workforce community an opportunity to engage 

with experts and colleagues to broaden their 

understanding of critical labor issues and 

National challenges in the present economy. The 

Recovery and conference translated specific research, pilot, 

Reemployment demonstration, and evaluation efforts into 

Research actionable reemployment strategies that can be 

Conference used in the workforce svstem. 15-Sep-10 

Virtual Tool 

Assist 

Reemployment 

Unemploved Rollout of the Worker Reemnlovment Portal 20-Sep-10 

Virtual Tool 

Assist 

Reemployment On-line Unemployment Insurance (UI) Adjudication 

Unemploved Traininn Announcement 20-Sep.10 

Technical 

Assistance RAD Feedback Session Chat: Jump On A Moving 

Webinar Train: More RAD News 1-Nov-10 

Technical 

Assistance RAD Feedback Session Chat: Jump On A Moving 

Webinar Train: More RAD News 2-Nov-10 

Technical A National Vision for Reemploying Unemployment 

Assistance Insurance (UI) Claimants Through an 

Webinar Integrated/Interconnected Workforce S stem 22-Nov-10 

Brought together of 800 state and local workforce 

practitioners from across the country. The summit 

was an opportunity 10 advance the national 

discussion about the design and delivery of 

effective reemployment solutions for workers and 

businesses. A number of proposed workshops 

support ETA's vision of a stronger, more 

interconnected One-Stop delivery system. 

Examples of workshops especially pertinent to the 

Employment Service and its role include: 1) 

National Strategies for Serving the Longest Unemployed; 2) 

Reemployment Targe~~ Reemployment Services with Program 

Summit Data· 3 Translatin-aLabor Market 15-Dec-10 

14 

Prepared by Foxx & Company 

For the U. S. Department of Labor – Office of Inspector General 

Recovery Act: Reemployment Services Grant for UI Claimants 

54 Report No. 18-11-005-03-315 
Information for Improved local Area Service 

Delivery; and 4) Research on Reemployment 

Stratea-ies. 

Technical 

Assistance Reemployment and Eligibility Assessments Moving 

Webinar Forward (Part I) · 25.Jan-11 

Technical 

Assistance Reemployment and Eligibility Assessments Moving 

Webinar Forward (Part II) 31-Jan-11 

Virtual Tool 

Assist 

Reemployment 

Unemploved Introducing Mv Next Move 18-Feb-11 

Technical 

Assistance Reemployment and Eligibility Assessment Program 

Webinar Innovations in Tennessee and Utah 7-Mar-11 

Technical 

Assistance Program Performance-Calculation of Registered 

Webinar I Aop~enticeship PrOQram Completion Rates B-Mar-11 

Technical Re-envisioning UI Claimant Reemployment 

Assistance Strategies: A Call to Innovate (Connectivity Vision 

Webinar Series - Region 1) 8-Mar-11 

Technical Re-envisioning UI Claimant Reemployment 

Assistance Strategies: A Call to Innovate (Connectivity Vision 

Webinar Series· Region 6) 9-Mar-11 

Technical Re.envisioning UI Claimant Reemployment 

Assistance Strategies: A Call to Innovate (Connectivity Vision 

Webinar Series· Region 5) 9-Mar-11 

Technical Re-envisioning UI Claimant Reemployment 

Assistance Strategies: A Call to Innovate (Connectivity Vision 

Webinar Series - Region 4) 11-Mar-11 

Technical Re-envisioning UI Claimant Reemployment 

Assistance Strategies: A ca~)to Innovate (Connectivity Vision 

Webinar Series· Region 2 14-Mar-11 

Technical Re-envisioning UI Claimant Reemployment 

Assistance Strategies: A ca~)to Innovate (Connectivity Vision 

Webinar Series · Region 3 16-Mar-11 

15 

Prepared by Foxx & Company 

For the U. S. Department of Labor – Office of Inspector General 

Recovery Act: Reemployment Services Grant for UI Claimants 

55 Report No. 18-11-005-03-315 
Attachment B 

When Congress included $250 million for Reemployment Services (RES) in the 

American Recovery and Reinvestment Act's (ARRA), we knew it was a great 

opportunity to reinvigorate one of the public workforce system's most vital 

functions. Since February 2009, stales have made a variety of innovative 

investments to meet the urgent challenge of reemploying millions of Americans _ 

from mobile RES units, to new skill assessment tools, to integrated information 

management systems that support the seamless delivery of reemployment 

services to all job seekers. Through our travels to regional conferences and our 

conversations with you. we have learned of the steady progress toward our goal 

of system integration and transformation. 

An important deadline is approaching: All ARRA RES funds must be obligated by 

September 30th. 2010. While states have through PY2011to spend the monies, 

any funds thaI have not been obligated by this September win expire. Over the 

course of the next six weeks. NASWA and ETA will focus on how states can 

invest their ARRA RES funds to strengthen services to unemployed workers and 

bolster the long-term capacity of the system to provide reemployment services by 

improvements in both staff training/capacity and service design. We will use 

webinars and the community of practice as vehicles for sharing information and 

providing technical assistance. Upcoming activities include: 

Weblnar: We will kick off the campaign this Friday, April 30th when NASWA and 

ETA jointly host a webinar featuring three innovative approaches to spending 

RES funds. The webinar will include presentations by Washington, WisconSin, 

and Utah. each of which invested their ARRA funds on creative and systemenhancing activities that will provide a foundation for continued program 

improvements. 

Sharing Beat Practices: The community of practice will host a series of blogs 

detailing how different states are responding to the challenges of serving the 

unemployed and strengthening system integration and performance. 

Peer-to-Peer Technical Assistance: The community of practice will also host 

live discussion threads. through which states can pose questions or suggestions 

around effective ways to obligate their funds. Community of Practice managers 

and NASWA staff will facilitate peer-to-peer information sharing across the 

states. 

ARRA RES Shopping LIst: The community of practice will host a collaborative 

' shopping list" of items that states are buying with their ARRA RES funds. We 

hope you will add your awn investments to this "wiki shopping list" and share any 

questions or suggestions you have about the use of ARRA RES funds. 

16 

Prepared by Foxx & Company 

For the U. S. Department of Labor – Office of Inspector General 

Recovery Act: Reemployment Services Grant for UI Claimants 

56 Report No. 18-11-005-03-315 
We believe this is a critical moment in our effort to transform and expand 

reemployment services. Any monies that are not obligated by September 30th, 

2010 represent a lost opportunity at a time when reemployment services are in 

greater demand than at any time in recent history. With the unemployment rate 

expected to remain high, it is essential that we continue to invent new and 

creative ways to help Americans get back to work. We know you share our goal 

and we look forward to working with you on this urgent challenge. 

17 

Prepared by Foxx & Company 

For the U. S. Department of Labor – Office of Inspector General 

Recovery Act: Reemployment Services Grant for UI Claimants 

57 Report No. 18-11-005-03-315 
Attachment C 

Snapshot of State Accomplishments Using RES Funds 

Except: Early Implementation of ARRA: World'olte Development and U/ 

Provisions (pg 108-109) by the National Association of State Workforce Agencies 

(NASWA). 

Many of the states visited by researchers (AZ., CO, FL, IL, OH, and WI) included 

RES activities among their major achievements under the Recovery Act. In 

Arizona, Recovery Act funds allowed the state to launch a new RES program 

across the state, including three dedicated reemployment centers in counties 

with significant unemployment. Colorado noted that its efforts under the 

Recovery Act have helped bring the UI and workforce systems closer together; 

staff on both sides is more knowledgeable about the other's programs and more 

willing to collaborate. Florida officials also viewed their RES program as an 

accomplishment, particularly the new emphasis on intensive staff-assisted 

services. Illinois successfully re-Iaunched its RES program, last offered in 2005, 

with Recovery Act funding. 

Ohio, with local workforce agencies facing budget cuts and hiring freezes. the 

additional Wagner-Peyser and RES Recovery Act funding enabled the state to 

bring on 100 intermittent (temporary, full-time) staff, which have been deployed in 

One-Stops across the state to handle burgeoning numbers of customers. This 

additional funding also helped to expand the numbers of RES orientation 

sessions and one-on-one case management services available to UI claimants. 

One of the biggest accomplishments in the Wisconsin workforce system that has 

resulted from the Recovery Act is that there has been a substantial expansion in 

RES services. Wagner-Peyser Recovery Act funds ($7.2 million) and UI 

Recovery Act administrative funding ($3.6 million) - for a total of nearly $11 

million - were used to expand and fundamentally change the way in which UI 

claimants are served by the One-Stop system. State officials noted that the 

Recovery Act provided the resources needed to re-engineer and make 

fundamental changes to the way in which RES is provided for UI claimants. 

Wisconsin's CSf96r Pathways model, developed several years ago through a 

Joyce Foundation grant, is now being applied to ur claimants with Recovery Act 

RES funds. 

These findings are echoed in NASWA's survey. Almost half of the survey 

respondents (46%) reported that their state's RES program or the UIM'orkforce 

system partnership in their state was an achievement of the Recovery Act 

implementation. Only 27% of those states, however, reported that their 

achievements in RES were sustainable. 

18 

Prepared by Foxx & Company 

For the U. S. Department of Labor – Office of Inspector General 

Recovery Act: Reemployment Services Grant for UI Claimants 

58 Report No. 18-11-005-03-315 
Attachment 0 

Recent 9147 Monthly Report and 9002 Quarterty Outcomes Report 

WAGNER-PEYSER REEMPLOYMENT SERVICES 

GRANTS MONTHLY REPORT 

Participant Infonnatlon 

Sample 9002 Outcomes Report from the Quarter Ending December, 2010 

Outcome. for UI Claimant. 

Entered Emplo ent (i.e. gol a Job) 

Entered Emplo nl Rate Base 

Entered Emplo enl Rate 

Employment Retention (i.e., kept a ' 

Employment Retention Bese 

Employment Retention at Six Months Rate 

2,632,595 

5.150,352 

2,077,806 

2,782,791 

,,% 

-Note the monthly report captures participants (active in the system) whereas the 

outcomes' report captures employment outcomes of those who exited the 

program. 

19 

Prepared by Foxx & Company 

For the U. S. Department of Labor – Office of Inspector General 

Recovery Act: Reemployment Services Grant for UI Claimants 

59 Report No. 18-11-005-03-315 
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For the U. S. Department of Labor – Office of Inspector General 

PAGE INTENTIONALLY LEFT BLANK 

Recovery Act: Reemployment Services Grant for UI Claimants 

60 Report No. 18-11-005-03-315 
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For the U. S. Department of Labor – Office of Inspector General 

Appendix E 

Auditor Response to Agency Comments 

Summary of ETA Response and Auditor Conclusion 

Finding 1: DOL Provided Timely General Guidance But Missed an Opportunity to 

Direct the states to Address Identified Long-Term Deficiencies and Weaknesses in the 

Reemployment Services Program. 

ETA said that it did not have the authority to direct states to use RES grant funds to 

correct program deficiencies. It said that “... it is illegal for DOL to “direct” states without 

express authorization for Congress to target the funds to a narrower scope of allowable 

activities than contained in the law.” ETA said that it acted as directed by the Recovery 

Act and the requirements of the Federal Grants and Cooperative Agreements Act of 

1977. However, the Recovery Act does not restrict DOL’s ability to target funds. It 

merely says that “funds shall be used by states for reemployment services....” The 

Federal Grants and Cooperative Agreements Act of 1977 also does not prohibit DOL 

from directing states on the use of funds. The Act distinguishes, in general language, 

the circumstances in which a grant or contract should be used by federal agencies and 

indicates that grants are authorized when federal control over a funded activity is 

expected to be lower and that contracts should be used when federal control will be 

greater. In fact, DOL guidance on the Federal Grants and Cooperative Agreements Act 

of 1977 that ETA cited stated the following: “At times DOL Agencies may find it 

necessary to increase their involvement in a grant-funded project during the period of 

time covered by the grant. This could happen, for example, when standard grant reports 

or monitoring indicate some sort of problem. If this occurs, Agencies should not view 

the Act as restricting their authority to intervene as necessary to bring the project into 

conformance with original intentions.” 

In addition, we noted during our review that ETA does negotiate goals for the program 

and requires actions that states need to address. Also, ETA performs monitoring 

reviews of the states and issues reports recommending that states take certain actions. 

The Wagner Peyser Act establishes grant management duties for ETA and specifies 

one means, i.e., approval authority over state spending plans, to exercise this 

management responsibility. According to Section (3) (a), “The Secretary shall assist in 

coordinating the state public employment services throughout the country and in 

increasing their usefulness by developing and prescribing minimum standards of 

efficiency, assisting them in meeting problems peculiar to their localities, promoting 

uniformity in their administrative and statistical procedure, ....”. Section 3(c) requires 

the Secretary to: “(1) assist in the coordination and development of a nationwide system 

of public labor exchange services, provided as part of the one-stop customer service 

systems of the states; “and “(2) assist in the development of continuous improvement 

models for such nationwide system that ensure private sector satisfaction with the 

system and meet the demands of jobseekers relating to the system....”. Moreover, 

Recovery Act: Reemployment Services Grant for UI Claimants 

61 Report No. 18-11-005-03-315 
Prepared by Foxx & Company 

For the U. S. Department of Labor – Office of Inspector General 

Section 8 (a) provides that “Any State desiring to receive assistance under this Act shall 

submit to the Secretary...detailed plans for carrying out the provisions of this Act within 

such State.” Section 112 (a) of the Workforce Investment Act of 1998 provides that “For 

a State to be eligible to receive ... financial assistance under the Wagner Peyser Act..., 

the Governor of the State shall submit to the Secretary for consideration by the 

Secretary, a single state plan ....”. The Workforce Act states that this plan shall include 

“with respect to the one-stop delivery systems...a description of the strategy of the State 

for assisting local areas in development and implementation of fully operational onestop delivery systems in the State....”. Section 8 (c) requires that the State plan for 

Wagner Peyser grants include the information mandated by the Workforce Act. 

Section 8(d) states that “If such detailed plans are in conformity with the provisions of 

this Act and reasonably appropriate and adequate to carry out its purposes, they shall 

be approved by the Secretary of Labor....”. 

In our view, these statutory provisions give DOL responsibilities with respect to the use 

of the grant and provide ETA with authority to use state plans as a mechanism for 

directing funds to the correction of problems discussed in our report. 

In addition, one of the chief shortcomings pointed out by various reports which ETA 

could have addressed more directly with the RES grant funds was inadequate state 

profiling systems, i.e., statistical models to forecast which UI claimants would exhaust 

benefits before finding employment. The purpose of these profiles is to refer the 

claimants most needing help to state reemployment services funded with Wagner 

Peyser grants. As described below, the Act requiring States to use these models also 

gives the Secretary of Labor responsibility for ensuring that States comply. 

Public Law 103-152, the Unemployment Compensation Amendments of 1993, 

contained requirements that States must meet as a condition of receiving UI grants. In 

guidance to all State Employment Security Services, ETA stated that P.L 103-152 

requires DOL to “provide technical assistance and advice to the States in implementing 

the worker profiling systems.” In response to this legislation, DOL launched a major 

initiative to establish an integrated, comprehensive worker profiling and reemployment 

services system including the Unemployment Insurance (UI) and Employment Services 

programs. DOL’s guidance to the States stated “the Department has determined the 

following minimum requirements: A State profiling system must identify all new 

claimants for regular UI claimants who are permanently laid off (and who are, therefore, 

likely to exhaust benefits)”. ETA guidance continues: “under the minimum required 

profiling system, States must use . . . to identify claimants for purposes of referral to 

reemployment services.” 

The above Pubic Laws, DOL guidance, and actions directed by statements in its 

monitoring reports contradict ETA’s assertion that it cannot direct State grantees. One 

ETA regional monitoring report provided has references indicating that one State had 

stopped profiling. The monitoring report references Public Law 103-152 as justification 

for why the State needed to resume profiling. These statements are taken directly from 

the ETA monitoring report: “Action Required – The agency must reinstate profiling 

Recovery Act: Reemployment Services Grant for UI Claimants 

62 Report No. 18-11-005-03-315 
Prepared by Foxx & Company 

For the U. S. Department of Labor – Office of Inspector General 

immediately to comply with Federal law . . . Notify the regional office within 30 days of 

receipt of this report of a proposed date for profiling to be back online and operational.” 

The above information is important for several reasons: 

•	 DOL was charged by Public Law to direct State activity in the development of a 

profiling system, which it did. 

•	 Credible reports by several organizations reference the fact that there have been 

weaknesses and deficiencies in several State profiling systems for a number of 

years. 

•	 ETA’s Regional monitoring reports contain numerous references to inadequate 

State profiling systems. 

The information referred to in the second and third bullets above provided ETA with 

adequate knowledge that several States have not been complying with Public Law 103-

152. The Recovery Act provided $247.5 million of additional funding for the States, but 

ETA did not establish a goal for the States to spend at least a portion of their funds to 

address the profiling issue that clearly needed attention. 

Additional references where ETA has clearly directed State activity include the following 

quotes from several ETA regional monitoring reports: 

•	 Corrective actions must be addressed. 

•	 Actions are required to meet the noted discrepancies. 

•	 Evaluate whether grant programs and services are in compliance with applicable 

Federal, State, and local requirements. 

We concluded that ETA could have directed some portion of RES spending to correct 

shortcomings in the reemployment services program. ETA disagrees with this 

conclusion. However, if ETA would have established goals for States to update their 

profiling systems, it would have provided DOL with a good example to show its attempts 

to be in compliance with the Recovery Act requirements for demonstrating positive 

outcomes from the use of the funding. In addition, it would have enabled the States to 

become compliant with Public Law 103-152. Furthermore, DOL would have fulfilled its 

legislative mandate to assist the States in maintaining adequate profiling systems. 

ETA described the steps it had taken to provide States with guidance on how to spend 

RES funds. We agree that ETA did make extensive efforts in this regard and have 

acknowledged this effort in our report. We have also indicated the mainly positive 

reactions from States we reviewed to ETA’s guidance. 

Many of the problems discussed in our report are long-standing deficiencies in the 

program and have been documented repeatedly and should have been well known to 

managers. We have cited the information in our report as justification for how the RES 

grant could have been used more productively. Furthermore, ETA’s own review of the 

“readiness” of States for Recovery Act funds was conducted in April and May 2009, and 

could have been used for directing grant spending. 

Recovery Act: Reemployment Services Grant for UI Claimants 

63	 Report No. 18-11-005-03-315 
Prepared by Foxx & Company 

For the U. S. Department of Labor – Office of Inspector General 

ETA did not address a very significant finding in our report. That is, DOL cannot provide 

to Congress an analysis or report that shows how the States spent the $247.5 million 

provided by the Recovery Act. This clearly does not meet the Recovery Act’s 

requirement for accountability and transparency. 

Finding 2: DOL Did Not Monitor How RES Funds Were Spent to Achieve 

Transparency Regarding the Uses of the Funds. 

ETA did not disagree that more information on the uses of RES grant funds by the 

States would have been desirable but said it was constrained by the Paperwork 

Reduction Act and OMB rules from increasing data collection. Our report recognizes 

the constraints under which DOL operated. ETA also said that because a regional 

monitoring report of a state’s activities does not mention how funds were used does not 

indicate that the review did not cover this subject. Given the emphasis the Recovery 

Act placed on transparency and accountability, we believe that the monitoring reports 

should comment on this subject even if the States are in compliance to ensure that the 

issue was adequately covered. Monitoring how States are spending their funds, is 

important, especially since we noted that several ETA regional monitoring reports had 

findings that many States had not monitored their reemployment services program for 

years. 

We obtained several ETA monitoring reports in addition to the ones we received for the 

four States visited. Our analysis of these ETA monitoring reports found numerous 

references to the fact that many States were not performing adequate monitoring of 

their program. Following are some quotes from those reports: 

•	 Monitoring of the reemployment services program has not been completed by the 

agency. 

•	 Monitoring by the State has not been completed for reemployment services. 

•	 The monitoring, conducted by the State, has not been done in a few years. 

Thus, even though ETA had ample evidence that States were not complying with 20 

CFR 667.410, which requires monitoring by the States of expenditures, ETA was 

strongly encouraging States to obligate and spend the Recovery Act funds. This is not 

sound financial oversight and does not meet the unprecedented transparency and 

accountability required by the Recovery Act. 

A grant reporting system that collects only basic information -- gross obligations and 

expenditures -- does not adequately account for the nature or purpose of grant 

spending. Monitoring reports that do not mention how funds were used does not 

produce the level of transparency and accountability required by the Recovery Act. 

Recovery Act: Reemployment Services Grant for UI Claimants 

64	 Report No. 18-11-005-03-315 
Prepared by Foxx & Company 

For the U. S. Department of Labor – Office of Inspector General 

Finding 3: Recovery Act RES Funds Were Not Spent Early in the Grant Period, and 

DOL Did Not Provide Proper Oversight to Determine if the Funds were Spent 

Concurrently with Other Grant Funds. 

ETA stated that the OIG audit report fails to accurately acknowledge DOL’s 

implementation of the legislation which allows States to obligate funds until September 

30, 2010 and to expend funds up to June 30, 2011. This is an untrue statement. Page 

1 of the letter to the Assistant Secretary referred to the ETA TEGL which stated that the 

funds were available to the States for obligation through September 30, 2010 and that 

the funds were to be spent no later than the end of Program Year 2010 (June 30, 2011). 

In addition, Exhibit 1 of the report shows the Recovery Act RES funding for each State 

and any unobligated balance as of September 30, 2010. 

Regarding our analysis that found that the obligation of 64 percent of the RES grant 

funding was in the last nine months of the grant period (January through September 

2010), ETA said that “The law established the period of time within which to spend the 

funds with no requirement for early expenditure . . .”. However, ETA’s TEGL 13-08 

stated that “States are expected to spend Recovery Act funding quickly and effectively” 

and that “It is Congress’ intent, as well as the Administration, that the majority of these 

funds will be utilized within the first year of availability.” (March 6, 2009 through 

February 2010). 

ETA said that the RES award funds had been spent concurrently with regular Wagner 

Peyser funds. It offered as evidence a table showing that funds were spent from the 

regular grant and the RES grant in both PY 2009 and PY 2010. We did not say that no 

funds were spent concurrently. ETA did not address our finding that 20 States with 

large unobligated RES fund balances near the end of the grant period spent less of their 

PY 2010 regular Wagner-Peyser award than the national average in the first quarter of 

PY 2010, which was the last three months of the RES grant period. Nor did they 

address the fact that 8 of the 20 States did not spend any regular Wagner-Peyser 

funding in this period, or that in one State we visited, Wagner-Peyser funds that would 

ordinarily have been spent during the RES grant period were not spent until after the 

RES funding period was over. 

ETA commented that they added a step for checking for concurrent spending in their 

monitoring guide. It is good that they added this step, however, none of the ETA 

regional monitoring reports we reviewed contained reference to concurrent spending of 

the RES grant funding and headquarters officials we interviewed were unaware of 

whether the Recovery Act’s requirement for concurrent spending was met. 

Furthermore, in reviewing the various financial documents provided by the States we 

visited, we did not identify any documents referencing or indicating that concurrent 

spending of the RES funding was being monitored or addressed. Given the emphasis 

the Recovery Act placed on the need for concurrent spending, DOL’s actions were not 

sufficient to meet the transparency and accountability requirements of the Act. 

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65 Report No. 18-11-005-03-315 
Prepared by Foxx & Company 

For the U. S. Department of Labor – Office of Inspector General 

Finding 4: Unreliable DOL Reports on Grant Activities Prevent Assessments of Grant 

Outcomes. 

ETA said that ETA reports do distinguish RES clients from clients served by the regular 

Wagner Peyser grant and that ETA reports do separately count RES clients. But as we 

explain in our report, ETA TEGL 24-08 says that “because [client] characteristics and 

eligibility [for both the regular Wagner-Peyser and RES grants] are identical and 

because services will be paid for with both regular and Recovery Act funds it is not 

possible for States and local service providers to distinguish who is a Recovery Act 

participant in any meaningful way.” This statement is true for both reemployment 

services clients and employment services clients. Because participants served with 

Recovery Act funds could not be distinguished from those served by regular Wagner 

Peyser funding, ETA chose to count all UI claimants who received staff assisted 

services as RES clients when reporting RES program accomplishments. In this way, 

DOL did separately report on UI claimants as it said in its response to our report. Our 

point, which DOL did not dispute, is that this method overstates the number of clients 

served with RES funds and the accomplishments of the RES grant because the regular 

Wagner Peyser grant has always been used to provide reemployment services to UI 

claimants. According to an ETA report, in PY 2008, the year before most of the RES 

grant was obligated, 5.2 million (or 44%) of the total 11.9 million participants who 

received staff assisted services were eligible claimants. In reporting RES 

accomplishments, ETA included all UI claimants who would ordinarily have been 

counted as regular Wagner-Peyser funded clients and added the clients to the RES 

count. In its comments to our report, DOL does not dispute that its reporting policy 

overstates the effect of the RES grant. 

Our report references variations in State activity reports submitted to ETA that are not 

credible. We discussed these variances with ETA officials who acknowledged that 

there is inconsistency in the way States are defining the services provided to 

participants. In its written comments to the draft report, however, ETA defends its 

reports. It said that “Reporting simply captures the state’s activity.” It said that “The 

numbers and proportion of services differ from state-to-state because of different state 

program design strategies.” DOL offered no evidence to support this assertion. It 

ignored our data showing the month-to-month variation within the same states. 

The problem of inconsistent reporting by States is not limited to the States we visited. 

We analyzed the information on eligible participants who received various services in 

PY 2009 as reported on ETA’s website. The range of reported services among the 

States is similar to what we found for the States we visited. For example, Kansas 

reported that 16 percent of eligible participants received staff assisted services while 

Massachusetts reported 97 percent, Indiana reported 84 percent for career guidance 

and Kentucky 3 percent. Iowa reported that it had referred 77 percent of eligible 

participants for employment and Connecticut referred one percent. Vermont showed 

that 67 percent of eligible participants received workforce information and New York 

reported 13 percent. Differences in reporting practices on this scale make assessments 

of State performances extremely difficult, if not impossible. 

Recovery Act: Reemployment Services Grant for UI Claimants 

66 Report No. 18-11-005-03-315 
Prepared by Foxx & Company 

For the U. S. Department of Labor – Office of Inspector General 

Furthermore, in commenting on their Statement of Facts provided for review, one state 

has this quote regarding outcomes: “There was no US DOL requirement or 

expectations to track ARRA specific outcomes for RES.” Another State told us that 

DOL had an opportunity to demonstrate success but that it did not. 

Recommendations 

DOL disagreed that the actions we recommended were necessary because it said it 

already had adequate monitoring and reporting systems and that it had demonstrated 

adequate outcomes. We believe that our report accurately reflects a program that lacks 

sufficient transparency and accountability, as required by the Recovery Act. ETA does 

not have enough information on how funds are being spent, did not leverage its 

authority to fix longstanding weaknesses, and does not have adequate information on 

what is being accomplished with Recovery Act funds. 

DOL has not developed measurable goals, objectives, and outcomes for the WagnerPeyser program. Thus, DOL has not been in a position to provide adequate justification 

or support for Congress to provide any additional or increased funding for almost 30 

years. During this time period, the Federal budget has increased over 400 percent. 

The current serious budget situation facing the Federal government will require very 

difficult funding decisions and reductions will have to be made as the current Congress 

and Administration have promised. 

In our opinion, DOL now more than ever needs to provide better justification and 

produce quantifiable results for this program. This is the intent of our recommendations 

and why we continue to believe that they are sound and should be implemented by 

DOL. 

Recovery Act: Reemployment Services Grant for UI Claimants 

67 Report No. 18-11-005-03-315 
 

 

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Email: hotline@oig.dol.gov 

Telephone:	 1-800-347-3756 

202-693-6999 

Fax: 202-693-7020 

Address: Office of Inspector General 

U.S. Department of Labor 

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 Room S-5506 

Washington, D.C. 20210