Report to Congressional Requesters

United States General Accounting Office 

GAO

February 2004 WORKFORCE 

TRAINING 

Almost Half of States 

Fund Employment 

Placement and 

Training through 

Employer Taxes and 

Most Coordinate with 

Federally Funded 

Programs

GAO-04-282 
www.gao.gov/cgi-bin/getrpt?GAO-04-282.

To view the full product, including the scope 

and methodology, click on the link above. 

For more information, contact Sigurd R. 

Nilsen at (202) 512-7215 or nilsens@gao.gov.

Highlights of GAO-04-282, a report to 

congressional requesters 

February 2004

WORKFORCE TRAINING 

Almost Half of States Fund Employment 

Placement and Training through 

Employer Taxes and Most Coordinate 

with Federally Funded Programs 

Twenty-three states reported using employer tax revenues in 2002 to fund 

their own employment placement and training programs, and states most 

often provided job-specific training for workers. States used various types of

employer taxes and reported spending a total of $278 million to address 

state-specific workforce issues. States invested in a variety of industries, but 

manufacturing was the most frequently targeted. 

Most states with employment placement and training programs funded 

through employer taxes reported some coordination with federal workforce 

programs in 2002. States were most likely to coordinate with federal 

workforce programs by jointly promoting programs through outreach and 

referrals. According to most state officials, coordination with federal 

workforce programs raised awareness of their state-funded programs. Some 

state officials also reported that coordination improved the quality and 

availability of services. 

Twenty-two of the 23 states reported assessing the performance of their 

programs in 2002. However, none have used sufficiently rigorous research 

designs to allow them to make conclusive statements about the impact of 

their programs, such as their effect on worker wages or company earnings. 

Because these programs contribute to our nation’s ability to provide 

comprehensive workforce development services to meet employers’ needs 

for skilled workers, it would be helpful to have information on the impact of 

these efforts. The Department of Labor has valuable resources that might 

help states evaluate the impact of their programs. 

Twenty-three States Reported Using Employer Taxes to Fund Their Own Employment 

Placement and Training Programs in 2002 

Source: GAO's survey of states that used employer taxes to fund their own workforce programs in state fiscal year 2002.

States using employer taxes to fund their own workforce programs

As technological and other 

advances transform the U.S. 

economy, many of the nation’s six 

million employers may have 

trouble finding employees with the 

skills to do their jobs well. Some 

experts indicate that such a skill 

gap already affects many 

employers. 

To help close this skill gap, both 

federal- and state-funded programs 

are providing training and helping 

employers find qualified 

employees. In 2002, the federal 

government spent about $12 billion 

on workforce programs, and there 

are various studies on these 

programs. States also raised 

revenues in 2002—from taxes 

levied on employers—to fund their 

own workforce programs. 

However, little is known about 

these state programs. 

GAO was asked to provide 

information on how many states 

use these employer taxes to fund 

their own employment placement 

and training programs, what 

services are provided, the extent to 

which these state programs 

coordinate with federal programs, 

and how states assess the 

performance of these programs. 
Page i GAO-04-282 Workforce Training 

Letter 1

Results in Brief 3

Background 4

Nearly Half of All States Used Employer Taxes to Fund Their Own 

Employment Placement and Training Programs, and States Most 

Often Provided Job-Specific Training 10

Most States with Employment Placement and Training Programs 

Funded through Employer Taxes Reported Some Coordination 

with Federal Workforce Programs 23

Almost All States Reported Regularly Assessing the Performance of 

Their Programs, but Program Impact Cannot be Determined 29

Concluding Observations 32

Agency Comments 32

Appendix I Objectives, Scope, and Methodology 34 

Survey 35

Review of State Program Assessments 37

Site Visits 38

Appendix II Employer Tax Collections and Employer Tax-Funded 

Program Budgets in 2002, as Reported by States 39 

Appendix III Employer Tax-Funded Programs’ Primary Emphasis, 

Expenditures and Numbers Served, in 2002 41 

Appendix IV Coordination between Federal Workforce Programs 

and State Programs Funded through Employer 

Taxes in 2002 42 

Appendix V Assessment Approaches Used in 2002, as Reported by 

States 44 

Contents 
Page ii GAO-04-282 Workforce Training 

Appendix VI Indicators Used in State Assessments 45 

Appendix VII GAO Contacts and Staff Acknowledgments 46 

GAO Contacts 46

Staff Acknowledgments 46

Tables 

Table 1: One-Stop Center Mandatory Partners 5

Table 2: Types of Employer Taxes States Reported Collecting and 

Using to Fund Employment Placement and Training 

Services in 2002 15

Table 3: Select Outcome Indicators Used by States in Assessments 31

Table 4: The Year Employer Taxes Were First Used to Fund 

Employment Placement and Training Programs by 

Selected States 36

Table 5: Site-Selection Criteria 38

Figures 

Figure 1: Relationship between State Workforce Investment 

Boards, Local Workforce Investment Boards, and OneStop Centers 7

Figure 2: States that Reported Funding Their Own Employment 

Placement and Training Programs with Employer Taxes 

in 2002 12

Figure 3: Total Expenditures of Employer Tax-Funded Programs in 

2002, as Reported by States 13

Figure 4: Year that States First Used Employer Taxes to Fund 

Employment Placement and Training Services 16

Figure 5: Industries Targeted by Most Employer Tax-Funded 

Programs in 2002, as Reported by States 18

Figure 6: Size of Employers Targeted for Training Services by 

Employer Tax-Funded Programs in 2002, as Reported by 

States 19

Figure 7: Primary Service Focus of Employer Tax-Funded 

Programs in 2002, as Reported by States 20

Figure 8: Employer Tax-Funded Program Expenditures by Service 

Area in 2002, as Reported by States 21
Page iii GAO-04-282 Workforce Training 

Figure 9: Populations Targeted by Employer Tax-Funded Programs 

for Training in 2002, as Reported by States 21

Figure 10: Types of Training Services Provided in 2002, as Reported 

by States 22

Figure 11: Coordination Activities in 2002, as Reported by States 24

Figure 12: Number of States Reporting Coordination between Their 

Employer Funded Programs and Various Federal 

Workforce Programs, 2002 26

Figure 13: States Report on the Results of Their Coordination with 

Federal Workforce Programs, 2002 28

Figure 14: Evaluators of State Programs, as Reported by States 30

Abbreviations 

TANF Temporary Assistance for Needy Families 

UI Unemployment Insurance 

WIA Workforce Investment Act 

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Page 1 GAO-04-282 Workforce Training 

February 13, 2004 

The Honorable Edward M. Kennedy 

Ranking Minority Member 

Committee on Health, Education, Labor and Pensions 

United States Senate 

The Honorable Patty Murray 

Ranking Minority Member 

Subcommittee on Employment, Safety, and Training 

Committee on Health, Education, Labor and Pensions 

United States Senate 

As technological and other advances transform the U.S. economy, many of 

the nation’s six million employers may have trouble finding employees 

with the necessary skills. A recent study found that 46 percent of 

employers who participated in a workforce survey had difficulty recruiting 

qualified job applicants.1

 To help close the gap between employer needs 

and employee skills, both federal- and state-funded workforce programs 

are providing skills training and helping employers find qualified 

employees. Although many studies provide information on federally 

funded programs operating throughout the country, little is known about 

the state-funded programs. These state programs have the potential to 

enhance the federal workforce system and upgrade the skills of the 

nation’s workers. 

The federal government funds 44 employment and training programs, such 

as the Workforce Investment Act programs, that serve adults, dislocated 

workers, and youth. Some of the services provided through federally 

funded programs include: employment counseling and assessment, job 

search and placement activities, and basic skills such as GED preparation 

and basic adult literacy. In 2002, the federal government spent about 

$12 billion on employment and training activities. States have also raised 

their own funds to help upgrade the skills of their workforces and match 

employers with qualified employees. States often raise revenues for these 

 1

Dixon, K.A., Duke Storen, and Carl E. Van Horn. John J. Heldrich Center for Workforce 

Development, Rutgers University, Standing on Shaky Ground: Employers Sharply 

Concerned in Aftermath of Recession and Terror, (New Jersey, February 2002).

United States General Accounting Office 

Washington, DC 20548 
Page 2 GAO-04-282 Workforce Training 

programs through taxes levied on employers. While some states use these 

revenues to supplement federally funded services, like job training 

provided through the Workforce Investment Act, other states use these 

revenues to fund their own employment placement and training programs. 

Because of your interest in these state-funded employment and training 

efforts, and their relationship with those that are federally funded, you 

requested that we determine 

• how many states use employer taxes to fund their own employment 

placement and training programs, and what type of services do they 

provide; 

• the extent to which these state employment placement and training 

programs are coordinating with federal workforce programs; and 

• how states are assessing the performance of their employment placement 

and training programs. 

To address these questions, we surveyed all 50 states, the District of 

Columbia, and Puerto Rico to determine how many used employer taxes 

to fund their own employment placement and training programs in 2002.2

We conducted a follow-up survey of the states that had these programs to 

determine what services were provided, how they are assessed, and the 

type and extent of coordination with federal workforce programs. To learn 

more about state program assessments of the performance of the 

programs, we analyzed recent assessments from the states that could 

provide them to us. To gather more information about coordination, we 

surveyed staff from workforce investment boards in 6 states that began to 

fund their employment placement and training programs through 

employer taxes in the 1980s. In addition, we visited 3 states—California, 

Louisiana, and Rhode Island—where we interviewed officials from both 

state and federally funded workforce programs. We selected these states 

because they are geographically diverse and their employer-funded 

programs vary in age and funding levels. We also reviewed existing studies 

and literature on state employment and training programs. We conducted 

our work between February and November 2003 in accordance with 

 2

2002 is used throughout this report and covers the time period defined as state fiscal year 

2002, as reported by states. (For a complete description of the time periods reported by 

states for state fiscal year 2002, see app. I.) 
Page 3 GAO-04-282 Workforce Training 

generally accepted government auditing standards. (For a complete 

description of our scope and methodology, see app. I.) 

Twenty-three states reported using a variety of employer tax revenues in 

2002 to fund their own employment placement and training programs, and 

states most often provided job-specific training for workers. State officials 

reported several reasons why these state-funded employment placement 

and training services were offered in addition to those offered through 

federally funded programs. Some states reported establishing their 

programs as a way to address a variety of specific workforce and 

economic issues, such as chronic shortages of skilled workers. For 

example, Louisiana’s program used employer tax revenues to fund 

emergency medical services training after one of the state’s largest 

providers of paramedics and emergency medical care staff reported 

needing to hire most of its staff from out of state due to a lack of qualified 

workers. In addition, other states noted that their employment placement 

and training programs address service and eligibility gaps in federally 

funded workforce programs. States reported spending a total of $278 

million to provide these training and employment placement services. 

California pioneered this use of employer taxes in 1982, and most recently 

New Hampshire passed legislation in 2001 to create its program. States 

invested funds in a variety of industries, but manufacturing was the most 

frequently targeted, while accommodation and food service industries 

were least likely to be targeted. The primary focus of these state programs 

was worker training, in particular job-specific training, such as instruction 

on computer software and new production methods. States were less 

likely to use employer taxes to provide training services for nonjobspecific skills, including conflict resolution and team building. 

Twenty-one of the 23 states with employment placement and training 

programs funded through employer taxes reported some coordination 

with federal workforce programs in 2002. States were most likely to 

coordinate with federal workforce programs by jointly promoting 

programs through outreach and referrals. For example, officials in 

Louisiana provided information packets to employers about how to 

upgrade their employee’s skills or fill job openings using state and 

federally funded workforce programs. Other common coordination 

activities involved the exchange of technical assistance and the sharing of 

administrative resources. For example, California staff from both state and 

federal workforce programs worked together on a task force and provided 

each other with technical assistance to improve services to small 

businesses. Similarly, several states reported that they shared office space, 

Results in Brief 
Page 4 GAO-04-282 Workforce Training 

staff, and other administrative resources. Fewer states noted that they cofunded employment placement and training services or jointly developed 

policies with federal workforce programs. According to most state 

officials, coordination with federal workforce programs raised awareness 

of their state-funded programs. Some state officials also reported that 

coordination improved the quality and availability of services. For 

example, a state official in Michigan noted that as a result of coordination 

between the state program and federally funded career centers, workers 

were exposed to a broader range of employment and training services and 

job opportunities. 

While 22 of the 23 states reported assessing the performance of their 

programs in 2002, none have used sufficiently rigorous research designs to 

allow them to make conclusive statements about the impact of their 

programs, such as their effect on worker wages or company earnings. 

States used a range of approaches to assess their employment placement 

and training programs, including variations in who conducted the 

assessments, the data collection methods used for the assessments, and 

the frequency of the assessments. Most states used a combination of data 

collection methods for their assessments. For example, Tennessee’s 

assessment was based on data collected from site visits to training 

locations and surveys administered to employers, while self-reported 

feedback and a fiscal audit were the data sources used for Texas’s 

assessment. Of the 18 states that could provide us with assessments of 

their individual employment placement and training programs, we found 

that 4 states assessed their programs exclusively using process-oriented 

indicators, such as the number and type of workers and businesses served 

and the services offered. The 14 other states also included outcomeoriented indicators along with process-oriented indicators in their 

assessments, though none used appropriate comparison groups to allow 

them to conclusively attribute outcomes to their programs. 

Technological advances continue to transform the U.S. workforce, and 

workers must improve their skills to meet employers’ changing needs. 

Many employers report difficulties in finding qualified workers, and many 

unemployed workers lack the skills they need to find jobs. Training 

programs can help workers gain the skills needed for today’s jobs, and 

employment placement programs can help employers find qualified 

employees. 

Background 
Page 5 GAO-04-282 Workforce Training 

In 2002, the federal government funded 44 employment and training 

programs that provided services, such as job search assistance, 

employment counseling, basic adult literacy, and vocational training, to 

over 30 million people at a cost of approximately $12 billion.3

 Although 

these programs were administered by nine federal agencies, many of the 

programs provided services to the public through one-stop centers in 

communities throughout the country. When the Congress passed the 

Workforce Investment Act (WIA) in 1998, it mandated that at least 17 

federally funded programs provide employment and training services 

through a one-stop center system (see table 1). 

Table 1: One-Stop Center Mandatory Partners 

Federal agency Mandatory partner 

Department of Labor WIA Adult 

 WIA Dislocated Worker 

 WIA Youth 

 Employment Service (Wagner-Peyser) 

 Trade Adjustment Assistance Programs 

 Veterans’ employment and training programs 

 Unemployment Insurance 

 Job Corps 

 Welfare-to-Work Programa

 Senior Community Service Employment Program 

 Employment and training for migrant and seasonal farm workers 

 Employment and training for Native Americans 

Department of Education Vocational Rehabilitation Program 

 Adult Education and Literacy 

 Vocational Education (Perkins Act) 

Department of Health and Human Services Community Services Block Grant 

Department of Housing and Urban Development HUD-administered employment and training 

Source: 1998 Workforce Investment Act. 

 3

See U.S. General Accounting Office, Multiple Employment and Training Programs: 

Funding and Performance Measures for Major Programs, GAO-03-589 (Washington, D.C.: 

Apr. 18, 2003). 

Federally Funded 

Employment and Training 

Programs 
Page 6 GAO-04-282 Workforce Training 

a

The Welfare-to-Work Program provides a variety of services to move welfare recipients, custodial 

parents with incomes below the poverty line, and noncustodial parents of low-income children into 

employment. These services include transitional employment, wage subsidies, job training and 

placement, and post-employment services. 

WIA also established workforce investment boards. Each state workforce 

investment board is responsible for developing statewide workforce 

policies and overseeing its local workforce investment boards. The local 

workforce investment boards, in turn, are responsible for developing local 

workforce policies and overseeing one-stop center operations (see fig. 1). 
Page 7 GAO-04-282 Workforce Training 

Figure 1: Relationship between State Workforce Investment Boards, Local 

Workforce Investment Boards, and One-Stop Centers 

State Workforce Investment Boards

Local Workforce Investment Boards

 One-Stop Centers

54 boards in all 50 states, District of Columbia,

 U.S. Virgin Islands, Puerto Rico, and Guam

Workforce Board

595 across the states

and territories

JOBS

Source: GAO-03-353,GAO-03-725, and Labor.

1,972 across the states and territories
Page 8 GAO-04-282 Workforce Training 

Some of the federal employment and training programs are not required to 

provide services through the one-stop centers. These include the 

Temporary Assistance for Needy Families program (TANF) and the H-1B 

Technical Skills Training Grant Program. The TANF program is 

administered by the Department of Health and Human Services and assists 

needy adults with children in finding and retaining employment. The H-1B 

Technical Skills Training Grants are administered by the Department of 

Labor, and the funds are distributed to select local workforce investment 

boards to increase the supply of skilled workers in occupations identified 

as needing more workers. 

In addition to federally funded programs, states use their own revenues to 

expand employment placement and training opportunities.4

 For example, 

states create unemployment insurance (UI) tax offsets by decreasing the 

UI tax amount paid by employers and at the same time imposing a 

separate tax on employers for the same amount as the UI tax deduction. In 

addition, states use other employer taxes, and revenues from each states’ 

UI interest fund or from UI penalty fees imposed on employers. Employers 

may be charged UI penalty fees for late payments, for failing to file a UI 

return for an employee, or for failing to report an employee’s wages. While 

all of these revenues are generated through employer taxes, states also 

commit general revenue funds to expand employment placement and 

training opportunities. A study for the National Governors’ Association 

Center for Best Practices found that state-funded worker training 

programs are operating in 48 states.5

States have increased the availability of employment placement and 

training opportunities in various ways. Some states have used their 

revenues to expand federally funded programs. In fact, a recent national 

study by National Association of State Workforce Agencies found that 19 

states used these revenues to supplement WIA job training services. Other 

states have used their revenues, including employer tax funds, to create 

their own employment placement and training programs; however, little is 

known about these programs. 

 4

NASWA State Supplemental Funding Survey – Estimated Data for 2002. 

5

Regional Technology Solutions, A Comprehensive Look at State-Funded, EmployerFocused Job Training Programs National Governors’ Association, Center for Best 

Practices (Washington, D.C.: 1999). 

State-Funded Employment 

and Training Programs 
Page 9 GAO-04-282 Workforce Training 

Some employers invest their own resources in training their workers. The 

exact amount of money that employers spend every year to train their 

workers is difficult to estimate; a study of trends in employer-provided 

training suggests that employers’ financial commitment to training has 

recently increased.6

 Some individuals, as well, invest their own funds for 

training as a way to either upgrade their job-related skills or to become 

employable. 

Impact evaluations for public programs, like employment and training 

programs, produce findings that allow conclusions about the effectiveness 

of the programs to be made. These evaluations may be implemented using 

a few different design strategies. Two designs that are used to isolate a 

program’s effects, such as those on participants, are experimental designs 

and quasi-experimental designs. 

• Experimental designs. These are characterized by the use of random 

selection and control groups. All individuals have an equal chance of being 

assigned to either the intervention group or the control group. The 

intervention group contains individuals who will receive the intervention, 

or program’s services, while the control group does not receive the 

intervention or services. This research design produces findings that allow 

conclusions about the effectiveness, or impact, of the intervention to be 

made. However, conducting experimental designs may be problematic 

because of the need to treat intervention and control groups differently. 

For example, to determine the impact of a training program on workers’ 

wages, a program would need to randomly provide services to some and 

randomly deny services to others, and track subsequent earnings for both 

groups of people. This approach requires services to be denied to some 

workers who qualify for training. Due to these difficulties, as well as the 

amount of time and money it takes to conduct experimental designs, quasiexperimental research designs are often preferable for their practicality. 

• Quasi-experimental designs. These designs are characterized by 

comparison groups that are not randomly selected. For training programs, 

a quasi-experimental design would compare a group of people who have 

elected to take the training courses with nonparticipants who may have 

characteristics, such as wage or education levels, that are comparable to 

the group receiving services. Comparing the two groups allows 

 6

ASTD, State of the Industry: ASTD’s Annual Review of Trends in Employer-Provided 

Training in the United States (February 2002). 

Employer-Funded Training 

Programs 

Types of Impact 

Evaluations for Public 

Programs 
Page 10 GAO-04-282 Workforce Training 

researchers to account for other factors, such as the local economy, that 

may have influenced outcomes. 

The Department of Labor’s Employment and Training Administration 

(ETA) Office of Policy Development, Evaluation and Research has 

valuable resources related to designing and implementing evaluations. 

Labor has established evaluation coordination liaisons in each state to 

help with evaluations of federal programs. These liaisons can help states 

access logistical support and technical assistance for program evaluations. 

Such resources include ETA’s recent review of alternative research 

methodologies, which contains guidance on conducting experimental and 

quasi-experimental evaluations of workforce programs to determine the 

social and economic values of the programs.7

Twenty-three states reported using employer tax revenues in 2002 from a 

variety of employer taxes to fund their own employment placement and 

training programs. States most often provided job-specific training for 

workers. States reported spending a total of $278 million to provide these 

training and employment placement services. Some states established 

their programs as a way to address a variety of specific workforce and 

economic issues, such as chronic shortages of skilled workers. 

Twenty-three states reported using a variety of employer taxes in 2002 to 

fund employment placement and training services to address specific 

workforce issues (see fig 2). These states reported spending a total of $278 

million on their workforce programs. Expenditures in 2002 varied 

dramatically from state to state, ranging from $100,000 in Kansas to over 

$84 million in California (see fig. 3). In 18 of the states, employer tax 

 7

U.S. Department of Labor, Employment and Training Administration, The Five-Year 

Strategic Plan for Pilots, Demonstrations Research and Evaluations July 2000-June 

2005.

Evaluation Resources at 

the Department of Labor 

Nearly Half of All 

States Used Employer 

Taxes to Fund Their 

Own Employment 

Placement and 

Training Programs, 

and States Most Often 

Provided Job-Specific 

Training 

States Used a Variety of 

Employer Taxes to Provide 

Services to Address 

Unique State Workforce 

Issues 
Page 11 GAO-04-282 Workforce Training 

revenues completely funded these employment and training programs, 

while in 3 of the states employer tax revenues made up at least 50 percent 

of the funding for these programs. Only 1 state reported that employer tax 

dollars constituted less than 50 percent of its program’s funds.8

 (For more 

information on individual state employment placement and training 

program budgets in 2002, see app. II.) 

 8

In addition, 1 state reported that employer tax revenues did not completely fund its 

program, but did not specify the portion of its program budget that was funded by 

employer tax revenues. 
Page 12 GAO-04-282 Workforce Training 

Figure 2: States that Reported Funding Their Own Employment Placement and Training Programs with Employer Taxes in 

2002 
Page 13 GAO-04-282 Workforce Training 

Figure 3: Total Expenditures of Employer Tax-Funded Programs in 2002, as 

Reported by States 
Page 14 GAO-04-282 Workforce Training 

Notes: This figure is based on the survey question responses of 22 states. Montana did not provide 

us with expenditure data. Delaware, Indiana, Michigan, and South Dakota reported that their program 

budgets included funds from other sources, making it difficult to isolate expenditures from their state 

employer tax revenues. While Oregon also reported that its program budget included funds from 

other sources, Oregon provided us with additional data. Oregon’s expenditures included in this figure 

are those that were solely funded through employer tax revenues. 

States used various types of employer taxes to fund employment 

placement and training services (see table 2). Eleven states reported using 

a UI tax offset. Eight states funded their programs through a separate state 

employer tax. For example, Delaware employers were taxed $12.75 for the 

first $8,500 of each employee’s annual salary. Similarly, Massachusetts’s 

employers were taxed up to $8.10 per employee annually. Five states used 

UI penalty and interest funds. One state, California, reported combining 

funds from more than one employer tax source and funded its program 

through revenues generated by a UI tax offset and a separate state 

employer tax of up to $7 per employee. (For more information on the total 

funds collected by states through these employer taxes in 2002, see app. 

II.) 
Page 15 GAO-04-282 Workforce Training 

Table 2: Types of Employer Taxes States Reported Collecting and Using to Fund 

Employment Placement and Training Services in 2002 

State UI tax off-set 

UI penalty or 

interest fund 

Separate state 

employer tax 

Alabama • 

California • • 

Delaware • 

Hawaii • 

Idaho • 

Indiana • 

Kansas • 

Louisiana • 

Massachusetts • 

Michigan • 

Montana • 

Nebraska • 

New Jersey • 

New Hampshire • 

New York • 

Nevada • 

Oregon • 

Rhode Island • 

South Dakota • 

Tennessee • 

Texas • 

Washington • 

Wyoming • 

Source: GAO’s survey of states that use employer taxes to fund their own workforce programs. 

Note: All 23 states that reported having these programs responded to our survey. 

California was the first state to use employer taxes for employment 

placement and worker training in 1982 and other states have followed suit 

(see fig. 4). In addition to California, 6 other states started using employer 

taxes to fund employment placement and training services by the end of 

the 1980s. New Hampshire most recently started to use these tax revenues 

to fund its program in 2001. Texas is the only state in our survey of 

programs operating in 2002 that has since terminated its worker training 

program. 
Page 16 GAO-04-282 Workforce Training 

Figure 4: Year that States First Used Employer Taxes to Fund Employment 

Placement and Training Services 

a

Texas’s program was no longer in operation after 2002. 

Some states established their programs as a way to address a variety of 

specific workforce and economic issues, such as chronic shortages of 

skilled workers. For example, Louisiana used $1.3 million to create an 

emergency medical services training program at a local community college 

after one of the state’s largest providers of paramedics and emergency 

medical care staff reported needing to hire most of its staff from out of 

1982

1986

1989

1985

1987

1990

1991

1993

1995

1996

1997

1998

1999

2001

1994

California

Washington

Delaware, Kansas

Oregon

Alabama, Nevada

Montana

Hawaii

Rhode Island, New Jersey

Michigan

Texas

Nebraska, Idaho, South Dakota

Louisiana, Wyoming

Indiana, New York

Massachusetts, Tennessee

New Hampshire

Year employer taxes 

first used to fund services State

Source: GAO's survey of states that use employer taxes to fund their own workforce programs.

a
Page 17 GAO-04-282 Workforce Training 

state due to a lack of qualified workers. Similarly, to increase the supply of 

elder care providers, California funded training to certified nurses’ 

assistants so that they could become vocational nurses. 

In addition, other states noted that their employment placement and 

training programs address service and eligibility gaps in federally funded 

workforce programs. For example, Rhode Island officials said that 

because federal funds could not be used to provide training to employed 

workers prior to the passage of WIA, their employer tax-funded program 

provided employers with training funds specifically to improve employed 

worker skills.9

 New Jersey and Washington officials also noted that their 

states used employer tax funds to provide employment placement and 

training services that are not offered through federally funded workforce 

programs. Other states, such as Louisiana, used employer taxes to fund 

training services for individuals who do not meet the income eligibility 

requirements used in WIA programs.10

Most states focused on certain industries, particularly manufacturing, 

because of their overall benefit to the state’s economy. California’s worker 

training program specifically targets manufacturing industries because 

these industries tend to offer high-paying, stable employment. Other 

industries that were also frequently targeted for training include: 

information; health care or social assistance; professional, scientific, or 

technical; and construction. Our earlier study examining how states and 

local areas are training employed workers found similar results: 

manufacturing along with health care and social assistance are two of the 

most commonly targeted economic sectors for training workers.11 Our 

survey of employer tax-funded state programs also showed that industries 

that were least often targeted included wholesale and retail trade, finance 

and insurance, and accommodation and food service (see fig. 5). 

 9

Prior to the passage of federal workforce initiatives like TANF in 1996 and the WIA in 

1998, states generally did not use federal funds for employed worker training, because most 

federally funded services were not primarily intended for employed workers. 

10In areas where adult WIA funds are limited, priority for in-depth services, such as training, 

must be given to recipients of public assistance and other low-income individuals. 

11U.S. General Accounting Office, Workforce Training: Employed Worker Programs Focus 

on Business Needs, but Revised Performance Measures Could Improve Access for Some 

Workers, GAO-03-353 (Washington, D.C.: Feb. 14, 2003). 
Page 18 GAO-04-282 Workforce Training 

Figure 5: Industries Targeted by Most Employer Tax-Funded Programs in 2002, as 

Reported by States 

Notes: This figure is based on survey question responses from the 17 states that reported providing 

training services in 2002. Each state could target multiple industries, therefore, bars will not sum to 17 

states. Six states reported that they did not provide training services and were not included in this 

analysis. 

States also targeted their services to certain employers as part of their 

workforce and economic development strategies. Over 11,000 employers 

were provided training services, and most states provided services for 

employers with 100 or fewer employees (see fig. 6). Rhode Island, for 

example, offered employers with 100 or fewer employees training grants 

of up to $10,000. Rhode Island officials said that they targeted smaller 

employers because these employers often do not have the resources to 

provide their workers with training and that smaller employers make up 

the majority of the companies in the state. 
Page 19 GAO-04-282 Workforce Training 

Figure 6: Size of Employers Targeted for Training Services by Employer TaxFunded Programs in 2002, as Reported by States 

Notes: This figure is based on survey question responses from 15 states. Two states reported, “don’t 

know” to this survey question. Six states reported that they did not provide training services and were 

not included in this analysis. 

States provided services in a variety of ways. States reported providing 

worker training either directly or through grants awarded to employers or 

training providers. For example, Louisiana generally awarded grants in 

amounts that covered an employer’s entire training costs. Employers could 

use these funds to provide training themselves, hire private training 

contractors, or contract with public training providers. Funded training 

could occur either during normal working hours or off the clock. 

Louisiana officials noted that they encouraged employers to use public 

training providers, most often the state’s technical colleges. On the other 

hand, California required employers to contribute to training-related costs. 

Employers were expected to match up to 100 percent of the training grant 

to pay for related expenses, such as worker wages during training or 

training materials. Officials from California reported that most training 

grants are awarded contingent upon workers being trained on the job, as 

opposed to off the clock. States funding employment placement services, 

such as interview technique and resume writing workshops, provided 

services directly or through other service providers. 

States most often reported that worker training was the primary emphasis 

of their employer tax-funded programs and spent more on worker training 

services than on employment placement services (see fig. 7). Fourteen 

states reported that worker training was the primary emphasis of their 

programs, and 10 of these states funded worker training exclusively. States 

spent approximately $202 million on worker training services; this 

Training Services More 

Often Funded Than 

Employment Placement 

Services 
Page 20 GAO-04-282 Workforce Training 

represents 72 percent of the total funds spent on employment placement 

and training services (see fig. 8).12 States used these funds to provide a 

variety of training services. For example, in Louisiana funds were used to 

provide training related to automobile services and repairs, welding, 

painting, and sandblasting. Funds were also used in Louisiana to purchase 

training equipment, such as a Bridge Resource Management Simulator, 

which was used for river navigation training. States reported providing 

training services to about 200,000 people and were more likely to focus on 

the provision of training services to employed workers as opposed to 

dislocated workers or those receiving UI benefits (see fig. 9).13 (For a 

detailed review of states’ primary service focus, expenditures by service 

area, and the number of individuals served in 2002, see app. III.) 

Figure 7: Primary Service Focus of Employer Tax-Funded Programs in 2002, as 

Reported by States 

Notes: This figure is based on survey question responses from 23 states. One state reported its 

primary service focus as “other.” 

 12By way of comparison, the 23 states with employment placement and training programs 

funded by employer taxes received $1.15 billion in WIA adult and dislocated worker 

allocations in 2002. 

13Survey data capture the number of individuals that were provided employment placement 

and training services. However, the data do not describe the extent to which some 

individuals may have received both employment placement and training services. This does 

not affect our discussion about the total amount of people that received each service. 
Page 21 GAO-04-282 Workforce Training 

Figure 8: Employer Tax-Funded Program Expenditures by Service Area in 2002, as 

Reported by States 

Notes: This figure is based on survey question responses from 22 states. Delaware, Indiana, 

Michigan, and South Dakota reported that their program budgets included funds from other sources, 

making it difficult to isolate expenditures from their state employer tax revenues. While Oregon also 

reported that its program budget included funds from other sources, Oregon provided us with 

additional data. Oregon’s expenditures included in this figure are those that were solely funded 

through employer tax revenues. 

Figure 9: Populations Targeted by Employer Tax-Funded Programs for Training in 

2002, as Reported by States 
Page 22 GAO-04-282 Workforce Training 

States were most likely to provide job-specific training—such as on new 

production methods and computer software—and 17 states reported 

funding these types of services with employer tax revenues (see fig. 10). 

Officials from Louisiana said that they focus on job-specific training 

because this type of training contributes to increased worker productivity 

and company growth. State officials also noted that fostering company 

growth creates new jobs that can lower state unemployment rates. 

Figure 10: Types of Training Services Provided in 2002, as Reported by States 

Note: Twenty-three states responded to this survey question. 

States were less likely to use employer taxes to provide nonjob-specific 

training, including conflict resolution, team building, or how to dress 

appropriately for the workplace. Twelve of the 23 states reported 

providing this type of training. These findings echo our previous study on 

worker training that found similar trends: states were more likely to focus 

state and federal funds on occupational training as compared to nonjobspecific training.14 Basic skills training—such as math, GED preparation, 

and English as a second language—is least often provided, with only 10 

states reporting they used employer tax revenues to fund this type of 

training. 

Fewer state employer tax-funded programs emphasized employment 

placement services, such as career counseling, skill assessments, and selfaccess employment services like Internet job listings and career planning 

 14U.S. General Accounting Office, Workforce Training: Employed Worker Programs Focus 

on Business Needs, but Revised Performance Measures Could Improve Access for Some 

Workers, GAO-03-353 (Washington, D.C.: Feb. 14, 2003). 
Page 23 GAO-04-282 Workforce Training 

videos. Eight states reported that employment placement was their 

primary focus, and 6 of these states funded employment placement 

services exclusively. States reported spending approximately $77 million 

to provide employment placement services to approximately 1.17 million 

individuals. Despite the fact that fewer states reported emphasizing 

employment placement services, the total number of individuals receiving 

employment placement services is approximately six times as great as the 

total number of individuals receiving training services.15 The difference in 

the number of people served may be attributed to the time and resource 

intensity of training services compared with employment placement 

services. For example, Louisiana awards training grants that are up to 2 

years in length. In comparison with training services, many of the 

employment placement services that states reported providing are far less 

time- and resource-intensive. 

Twenty-one of the 23 states with employment placement and training 

programs funded through employer taxes reported some coordination 

with federal workforce programs in 2002. The most common coordination 

activity reported by states was the joint promotion of state and federally 

funded workforce programs through outreach or referrals (see fig. 11). 

These promotion activities occurred in various ways. For example, in 

California, a local workforce investment board and its one-stop center 

hired staff to make cold calls to companies advertising the benefits of 

participating in the state-funded training program. In Louisiana, on the 

other hand, state officials provided information packets to employers 

about how to upgrade their employees’ skills or fill job openings using 

state and federally funded workforce programs. 

 15As noted previously, survey data capture the number of individuals that were provided 

employment placement and training services. However, the data do not describe the extent 

to which some individuals may have received both employment placement and training 

services. This does not affect our discussion about the total amount of people that received 

each service. 

Most States with 

Employment 

Placement and 

Training Programs 

Funded through 

Employer Taxes 

Reported Some 

Coordination with 

Federal Workforce 

Programs 
Page 24 GAO-04-282 Workforce Training 

Figure 11: Coordination Activities in 2002, as Reported by States 

Note: A coordination activity was counted if a state reported it for at least one federal partnership. 

In addition, many states reported that they coordinated with federal 

workforce programs by sharing technical assistance and administrative 

resources. Technical assistance involves the exchange of program 

information to improve program practices. For example, in California, 

staff from both state and federally funded workforce programs worked 

together on a task force and provided each other with technical assistance 

to improve services to small businesses. Sharing administrative resources, 

on the other hand, can involve activities such as using a common 

management information system, or sharing office space or staff. In Rhode 

Island, for example, staff at the local workforce investment boards were 

responsible for administering some of the training grants funded by the 

state program. Fewer states reported co-funding employment and training 

services or jointly developing policies with federal workforce programs. 

The number of partnerships between employer tax-funded programs and 

the federal workforce system varied from state to state. Some state 

programs coordinated with only one federal partner. For example, New 

Hampshire’s program chose to coordinate exclusively with its state 

workforce investment board. Other state programs coordinated with many 

federal partners. For example, Delaware’s program coordinated with a 

one-stop center, TANF, the H1-B technical skill grants program, and other 
Page 25 GAO-04-282 Workforce Training 

federal workforce programs. (For additional information on each state’s 

partnerships with federal programs, see app. IV.) 

Although state employer tax-funded programs vary in their relationships 

with federal workforce programs, some patterns are evident regarding the 

most common federal partners. The majority of the states (19) reported 

coordinating with at least one one-stop center during 2002. However, 

several one-stop centers can operate in a state, and we do not know if 

states coordinated with more than one of these centers. Thus, it is difficult 

to gauge the degree of coordination between state-funded programs and 

one-stop centers within each state. Nevertheless, we do know that many 

states also reported coordinating with state workforce investment boards, 

of which there is only one per state (see fig. 12). The number of federal 

partners that state employer-funded programs have does not seem to be 

closely associated with the number of years that the state programs have 

operated. Although Delaware’s program is older than New Hampshire’s 

and coordinated with more federal workforce programs, this is not a 

consistent pattern across the country. For example, Kansas reported fewer 

federal partners than Louisiana, despite the fact that Kansas’s employer 

tax-funded program has been in existence for about a decade longer. 
Page 26 GAO-04-282 Workforce Training 

Figure 12: Number of States Reporting Coordination between Their Employer 

Funded Programs and Various Federal Workforce Programs, 2002 

Notes: All 23 states that reported having these programs responded to the survey questions 

regarding coordination with state workforce investment boards, TANF, other federal employment and 

training programs, Department of Education employment and training programs, and the Welfare-toWork program. In addition, 22 states responded to the survey questions regarding coordination with 

one-stop centers and the H1-B program, while 20 states responded to the question regarding 

coordination with local workforce investment boards. 

The Welfare-to-Work program is a mandated partner of one-stop centers. While all states that 

reported coordinating with the Welfare-to-Work program also reported coordinating with a one-stop 

center, not all states that reported coordinating with a one-stop center also reported coordinating with 

the Welfare-to-Work program. States had the option to list multiple programs under both the 

“Department of Education Employment and Training” category and the “Other Federal Employment 

and Training program” category. For the “Department of Education” category, states noted programs 

such as Adult Education and Literacy and Vocational Education. For the “Other Federal Employment 

and Training program” category, programs ranged from Veterans’ Employment and Training Service 

to Job Corps. Both the Department of Education category and the Other Federal Employment and 

Training category included some programs that are mandated one-stop partners. 

As a result of their various partnerships with workforce investment boards 

and one-stop centers, almost all states reported an increase in awareness 

of their employer tax-funded programs. In addition, some state officials 
Page 27 GAO-04-282 Workforce Training 

noted that coordination had improved service quality and availability. For 

example, officials from Michigan and New Jersey’s state programs, as well 

as an official from an Oregon workforce investment board, noted that colocating staff from the state-funded programs at the one-stop centers 

improved the services delivered to individuals. By co-locating these 

programs, state officials said that they can help these individuals learn 

about a broader range of employment and training services and job 

opportunities. The Oregon official also pointed out that such co-location 

can reduce transportation and child care barriers for clients. Coordination 

can also assist states in improving services to employers. For example, a 

state official from Idaho reported that having staff members who are 

knowledgeable about both the state-funded program and WIA programs 

enables them to better meet the needs of employers looking to expand 

their businesses or move to the state. Although many state officials noted 

that coordination had improved services, they were less likely to report 

increases in funding for employment and training services as a result of 

these collaborative relationships (see fig. 13). 
Page 28 GAO-04-282 Workforce Training 

Figure 13: States Report on the Results of Their Coordination with Federal 

Workforce Programs, 2002 

Notes: All 23 states that reported having these programs responded to our survey. Of these states, all 

19 that reported coordinating with at least one one-stop center answered the survey questions on 

awareness, quality, and amount of services, while 18 of these states answered the funding question. 

In addition, 15 of the 17 states that reported coordinating with a state workforce investment board 

answered these survey questions. All 11 states that reported coordinating with at least one local 

workforce investment board also answered the questions related to awareness, quality, and amount 

of services, while 10 of these states responded to the survey question regarding funding results. 
Page 29 GAO-04-282 Workforce Training 

Twenty-two of the 23 states with employer-funded employment placement 

and training programs reported assessing the performance of their 

programs in 2002, though program impacts could not be determined. 

States reported using a range of approaches to assess their employment 

placement and training programs, including variations in who conducted 

the assessments, data collection methods used for the assessments, and 

the frequency of the assessments. Of the 18 states that could provide 

assessments of their individual employment placement and training 

programs, 4 assessed their programs exclusively using process-oriented 

indicators, while the other 14 used outcome-oriented indicators in their 

assessments. However, none of the states used sufficiently rigorous 

research designs to allow them to make conclusive statements about the 

impact of their programs. 

Twenty-two of the 23 states with employer-funded employment placement 

and training programs reported assessing the performance of their 

programs in 2002. States reported using a variety of data collection 

methods for their assessments, and most states used a combination of data 

sources for their assessments. For example, Tennessee’s assessment was 

based on data collected from site visits to training locations and surveys 

administered to employers, while self-reported feedback and a fiscal audit 

were the data sources used for Texas’s assessment. The most commonly 

used data sources were: surveys, self-reported feedback, and on-site visits. 

Only 2 states relied solely on quantitative data, such as program 

expenditures and employment statistics. For example, Alabama used its UI 

wage database to track how program participants fared in finding jobs. 

Most states used a combination of internal and external evaluators for 

their assessments (see fig. 14).16 For example, California used both inhouse program staff and external evaluators from several state universities 

to evaluate its program. On the other hand, 9 states used in-house 

evaluators exclusively, while only 1 state, Indiana, used external 

evaluators exclusively. 

 16For a detailed review of each state’s assessment approach, including the frequency, 

scope, and conductors of their assessments, see app. V. 

Almost All States 

Reported Regularly 

Assessing the 

Performance of Their 

Programs, but 

Program Impact 

Cannot be 

Determined 

Almost All States Reported 

Regularly Assessing the 

Performance of Their 

Programs in 2002 
Page 30 GAO-04-282 Workforce Training 

Figure 14: Evaluators of State Programs, as Reported by States 

Notes: Some states reported using combinations of evaluators, which may include in-house program 

staff and external evaluators. Percentages do not total to 100 due to rounding. 

Furthermore, states conducted their assessments at varying intervals. 

About two-thirds of the states (14) regularly conducted assessments—

annually, quarterly, and monthly. Eight states conducted assessments once 

training contracts were completed. For example, Tennessee sent surveys 

to employers once the contracts it awarded were completed. 

None of the state assessments used sufficiently rigorous research designs 

to allow them to make conclusive statements about the impact of their 

programs. We asked states to provide us with copies of recent 

assessments of their programs.17 Although 5 states could not provide us 

with assessments of their individual employment and training programs, 

18 of the 23 states shared recent assessments with us. On the basis of the 

28 assessments received from 18 states, we examined indicators used by 

 17While New Jersey’s most recent evaluation was included in our analysis of state 

assessments, New Jersey is the only state that reported it did not regularly assess its 

program in 2002. The evaluation from New Jersey is based on data collected between 1994 

and 2001. 

Results Regarding 

Program Impact from 

States’ Assessments 

Cannot Be Determined by 

Methodologies Used 
Page 31 GAO-04-282 Workforce Training 

the states and found that 4 assessed their programs exclusively using 

process-oriented indicators.18 For example, Hawaii and New Hampshire 

collected data on the number of businesses served. Likewise, Alabama and 

Texas both collected data on how many people participated in their 

programs. Process-oriented indicators help assess a number of factors, 

including who uses the program, how funds are spent, and how well a 

program is being implemented. 

Fourteen states included outcome-oriented indicators along with processoriented indicators in their assessments, with 11 states measuring worker 

wages (see table 3). States also used a variety of other outcome-oriented 

indicators, including job placement and retention rates of trainees. 

Outcome-oriented indicators provide important data for states related to 

changes, such as those in: worker wages, employment stability, and 

advancement rates. 

Table 3: Select Outcome Indicators Used by States in Assessments 

Wage 

increases 

Retention 

rates 

Job 

placements 

Return on 

investment 

Employment 

stability 

Advancement 

rates 

Use of UI 

benefits 

California • • • • • • 

Idaho • 

Indiana • 

Kansas • 

Louisiana • • 

Massachusetts • 

Montana • 

Nebraska • 

Nevada • 

New Jersey • 

New York • 

Oregon • 

South Dakota • 

Wyoming • 

Source: GAO’s content analysis of assessments provided. 

Although 14 states used outcome-oriented indicators, none used 

sufficiently rigorous research designs to allow them to make conclusive 

 18For a detailed review of the indicators used in state assessments, see app. VI. 
Page 32 GAO-04-282 Workforce Training 

statements about the impact of their programs. Twelve of the 14 states 

that used outcome-oriented indicators did not use comparison groups in 

their evaluation design. Without comparing a program’s participants to 

similar nonparticipants, it is not possible to account for other factors, such 

as an upturn in the local economy, which may have influenced participant 

outcomes. While 2 states used comparison groups, their methodological 

design did not allow for the identification of conclusive impacts of these 

programs because their comparison groups were not comparable enough 

to their participant groups. 

To help close the gap between employer needs and employee skills, both 

federal- and state-funded workforce programs are providing skills training 

to employees and helping employers find qualified employees. Twentythree states used employer taxes in 2002 to fund their own employment 

placement and training programs. These state programs have the potential 

to enhance the federal workforce system by filling service and eligibility 

gaps. However, the impact of these programs is unknown because states 

have not adequately studied them. Because these programs contribute to 

our nation’s ability to provide comprehensive workforce development 

services to meet employers’ needs for skilled workers, it would be helpful 

to have information on the impact of these efforts. 

The Department of Labor’s Employment and Training Administration 

(ETA) Office of Policy Development, Evaluation and Research has 

valuable resources related to designing and implementing evaluations that 

might help address this lack of information. Labor has established 

evaluation coordination liaisons in each state and, although this position 

was designed to help with evaluations for federal programs, the liaison 

may be able to direct state program administrators to resources such as 

ETA’s recent review of alternative research methodologies. Furthermore, 

this liaison could help state administrators access other program 

evaluation expertise, such as logistical support and technical assistance. 

We provided a draft of this report to the Department of Labor for its 

review, and Labor provided technical comments. Labor expressed an 

interest in state employment placement and training programs funded by 

employer taxes. In addition, Labor acknowledged the importance of 

collaboration between these state-funded programs and federally funded 

programs, by noting that it may seek opportunities to better assist states in 

coordinating their programs with federal Workforce Investment Act 

programs. 

Concluding 

Observations 

Agency Comments 
Page 33 GAO-04-282 Workforce Training 

We will send copies of this report to the Secretary of Labor, relevant 

congressional committees, and other interested parties. Copies will be 

made available to others upon request. In addition, the report will be 

available at no charge on GAO’s Web site at http://www.gao.gov. Please 

contact me on (202) 512-7215 if you or your staffs have any questions 

about this report. Other major contributors to this report are listed in 

appendix VII. 

Sigurd R. Nilsen 

Director, Education, Workforce, 

 and Income Security Issues 
Appendix I: Objectives, Scope, and 

Methodology 

Page 34 GAO-04-282 Workforce Training 

We were asked to determine (1) How many states use employer taxes to 

fund their own employment placement and training programs, and what 

type of services do they provide;1

 (2) The extent to which these state 

employment placement and training programs are coordinating with 

federal workforce programs;2

 and (3) How states are assessing the 

performance of their employment placement and training programs. 

To address these questions, we conducted three surveys, reviewed 

program evaluations, and visited 3 states. First, we surveyed all 50 states 

and the District of Columbia and Puerto Rico to identify those that were 

using employer tax revenues to provide their own employment placement 

or training programs in 2002.3

 We then conducted a follow-up survey with 

the 23 states that reported using employer taxes to fund their own 

programs during state fiscal year 2002.4

 Specifically, we surveyed the state 

programs that reported receiving the largest portion of employer tax 

revenues collected in their state to provide employment placement and 

training services.5

 To gain a perspective on service coordination with 

federally funded workforce programs, we surveyed staff from workforce 

investment boards in 6 states that began to fund their employment 

placement and training programs through employer taxes in the 1980s.6

 We 

also requested recent assessments from the 23 states we surveyed and 

reviewed the assessments from the 18 states that could provide them to 

 1

When we surveyed states, we asked if they provided employment placement and training 

services independent of the federal workforce system in 2002. 

2

We asked states if they collaborated with federally funded workforce programs in 2002. 

We use the term coordinate in place of collaborate throughout this report. 

3

Nineteen states reported that their state fiscal year 2002 covered July 1, 2001 to June 30, 

2002; 2 states reported October 1, 2001 to September 30, 2002; 1 state reported September 

1, 2001 to August 31, 2002; and 1 state reported April 1, 2002 to March 31, 2003. When we 

refer to 2002 throughout this report, we mean state fiscal year 2002, as reported by states. 

4

Washington, D.C., did not report using employer taxes to fund their own employment 

placement and training program. While Puerto Rico did report using employer taxes to 

fund its own employment placement and training program, Puerto Rico did not respond to 

our follow-up survey. 

5

Two states reported that they did not know if their employment placement and training 

program received the largest portion of employer taxes collected in their respective state. 

6

Although Delaware’s program began in 1986, a separate survey of Delaware’s workforce 

investment board was unnecessary because the state’s employer-funded program also 

functions as Delaware’s only workforce investment board. All coordination questions in 

our workforce investment board survey were answered by an official from Delaware in our 

survey of employer-funded state employment placement and training programs. 

Appendix I: Objectives, Scope, and 

Methodology 
Appendix I: Objectives, Scope, and 

Methodology 

Page 35 GAO-04-282 Workforce Training 

us.7 Finally, we conducted site visits to 3 states—California, Louisiana, and 

Rhode Island. 

To determine how many states used employer taxes to fund their own 

employment placement and training programs, we surveyed workforce 

officials from the 50 states, the District of Columbia, and Puerto Rico. This 

structured survey was administered via e-mail and the telephone and had a 

100 percent response rate. Twenty-three states reported that they used 

employer tax revenues to fund their own employment placement and 

training programs in state fiscal year 2002.8

To determine the types of employment placement and training services 

states offered, we conducted a second survey of the 23 states that reported 

using employer taxes to fund these services in our first survey. This survey 

was designed to obtain information related to program mission, services 

provided, populations served (individuals and industries), budget size, and 

expenditures. To determine if states assessed their programs, we also 

asked questions related to the frequency of program performance 

assessments and the types of methods used to measure program 

performance. In addition, we requested copies of recent program 

assessment reports. 

To determine the extent to which state programs coordinated with federal 

workforce programs, we also asked states to report how their employment 

placement and training programs worked with federal organizations and 

programs, including workforce investment boards, one-stop centers, 

TANF, Welfare-to-Work, H1-B grants, employment placement and training 

programs administered by the U.S. Department of Education, and other 

federally funded programs. In addition, we asked states how these 

coordination efforts affected program awareness, quality of service, 

available funding, and the amount of employment placement and training 

services available. 

To gain the perspective of officials from federally funded programs on 

coordination with these state programs, we administered a structured 

 7

We obtained additional assessments while conducting our preliminary research on 

employer tax-funded state employment placement and training programs. 

8

Puerto Rico also reported using employer tax revenues to fund its own program; however, 

Puerto Rico did not respond to our follow-up survey. 

Survey 
Appendix I: Objectives, Scope, and 

Methodology 

Page 36 GAO-04-282 Workforce Training 

telephone survey to representatives from workforce investment boards 

operating in 6 states that began their employer tax-funded employment 

placement or training programs during the 1980s (see table 4).9

 We chose 

these states with older programs, because we believed that they would 

have more established partnerships with federal programs and would be 

able to provide in-depth information on coordination. We surveyed 

representatives from 5 of the state workforce investment boards.10 We also 

surveyed a total of 10 purposively and randomly selected local workforce 

investment boards. At least one local workforce investment board was 

surveyed from each state that began operating its employer tax-funded 

program during the 1980s. 

Table 4: The Year Employer Taxes Were First Used to Fund Employment Placement 

and Training Programs by Selected States 

State 

Year employer taxes first 

used to fund services

Alabama 1989

California 1982

Delawarea1986

Kansas 1986

Nevada 1989

Oregon 1987

Washington 1985

Source: GAO’s survey of states that use employer taxes to fund their own workforce programs. 

a

As previously noted, although Delaware’s program began in 1986, a separate survey of Delaware’s 

workforce investment board was unnecessary because the state’s employer-funded program also 

functions as its only workforce investment board. All coordination questions in our workforce 

investment board survey were answered by an official from Delaware in our survey of employerfunded state employment placement and training programs. 

 9

As previously noted, although Delaware’s program began in 1986, a separate survey of 

Delaware’s workforce investment board was unnecessary because the state’s employerfunded program also functions as its only workforce investment board. All coordination 

questions in our workforce investment board survey were answered by an official from 

Delaware in our survey of employer-funded state employment placement and training 

programs. 

10Representatives from Oregon’s state workforce investment board did not respond to our 

survey request. 
Appendix I: Objectives, Scope, and 

Methodology 

Page 37 GAO-04-282 Workforce Training 

We included steps in both the survey data collection and data analysis 

stages to account for and minimize the variability that occurs when 

respondents interpret questions differently or have different information 

available to them. For example, survey specialists along with subject 

matter specialists designed each questionnaire, and we pre-tested each 

questionnaire with the appropriate target audience to ensure that 

questions were clear. We pre-tested our workforce investment board 

survey with representatives from state workforce investment boards and a 

local workforce investment board. We also reviewed survey questionnaire 

responses for consistency and in several cases contacted respondents to 

resolve inconsistencies. However, we did not otherwise verify the 

information provided in the responses. In order to increase our response 

rate for each survey, we followed up with program officials through e-mail 

and telephone contact. We analyzed these survey data by calculating 

descriptive statistics. 

We reviewed recent assessments from the 18 states that could provide 

them to us.11 Two of those states shared more than one recent assessment 

with us, all of which we used in our analysis. The assessments we 

collected ranged from annual reports to budget briefings to strategic plans 

to external evaluations. 

We analyzed these reports by performing a content analysis in which we 

coded the assessment indicators as outputs (process-oriented data) or 

outcomes (outcome-oriented data). Furthermore, when provided, we 

analyzed the research designs states used to assess their programs against 

standard evaluation research design characteristics as described by Rossi 

and Freeman (1993)12 and McBurney (1994).13

 11The remaining 5 states did not share their assessments for a variety of reasons. For 

example, some states did not have evaluations of their program exclusive of assessments 

of the federal workforce system, and others did not have evaluations that assessed the 

program as a whole. 

12Rossi, Peter H., and Howard E. Freeman. Evaluation: A Systematic Approach, 5th ed. 

Newbury Park, CA: SAGE Publications, Inc., 1993. 

13McBurney, Donald H. Research Methods, 3rd ed. Pacific Grove, CA: Brooks/Cole 

Publishing Company, 1994. 

Review of State 

Program Assessments 
Appendix I: Objectives, Scope, and 

Methodology 

Page 38 GAO-04-282 Workforce Training 

We selected 3 states for site visits according to several criteria, including 

the year employer taxes were first used to fund their employment 

placement and training program. We chose states that were early, mid- and 

late implementers. Site selection was also based on diverse program 

funding levels and geographic diversity (see table 5). In each state, we 

interviewed officials responsible for administering each state’s employer 

tax-funded employment placement or training program to gain further 

insight into the types of services provided and populations served by these 

programs. To learn more about the extent to which these state-funded 

employment placement and training programs coordinate with federally 

funded workforce programs, we also interviewed officials from each 

state’s workforce investment board. We also interviewed officials from 

two one-stop career centers operating in each state we visited. We 

purposively selected these one-stop career centers because they 

coordinated with employer-funded state programs. 

Table 5: Site-Selection Criteria 

State Budget

Year employer taxes were 

first used to fund services 

Geographic 

location 

California $94,000,000 1982 West 

Louisiana $50,000,000 1997 South 

Rhode Island $8,000,000 1993 Northeast 

Source: GAO’s survey of states that use employer taxes to fund their own workforce programs. 

Site Visits 
Appendix II: Employer Tax Collections and 

Employer Tax-Funded Program Budgets in 

2002, as Reported by States 

Page 39 GAO-04-282 Workforce Training 

State 

Total funds collected 

through 

employer taxes 

to be used in 2002a

2002 program 

budgets 

Program solely 

funded through 

employer taxes 

Alabama $8,200,000 $5,000,000 Yes 

California $148,900,000 $94,000,000 Yes 

Delawareb $3,600,000 $10,300,000 No 

Hawaiib $2,000,000 $6,800,000 Yes 

Idaho $3,400,000 $3,400,000 Yes 

Indianab $1,000,000 $4,000,000 No 

Kansas $1,000,000 $100,000 Yes 

Louisiana $50,000,000 $50,000,000 Yes 

Massachusettsb $22,200,000 $24,000,000 Yes 

Michigan c $1,500,000 No 

Montana $6,200,000 $286,000 Yes 

Nebraska $1,900,000 $1,900,000 Yes 

Nevadab $8,400,000 $9,400,000 Yes 

New Hampshire c$500,000 Yes 

New Jersey $92,400,000 $81,400,000 Yes 

New Yorkb $35,000,000 $40,800,000 Yes 

Oregonb $9,800,000 $1,189,400,000 No 

Rhode Island $8,000,000 $8,000,000 Yes 

South Dakota c$1,800,000 No 

Tennesseeb $8,200,000 $19,112,400 Yes 

Texas c $1,200,000 Yes 

Washingtonb $9,700,000 $10,700,000 Yes 

Wyomingb $1,300,000 $3,828,366 Yes 

Source: GAO’s survey of states that use employer taxes to fund their own workforce programs. 

a

Eleven states reported that their employer tax was collected in 2002, and 3 states reported that their 

employer tax was collected in 2001. Four states reported that employer tax funds used in 2002 were 

collected in 2001 and 2002. One state noted that tax funds collected in 2002 and from previous years 

were used in 2002. One state noted that employer tax funds used in 2002 were collected in 1991 and 

1995, and another state noted that employer tax funds used in 2002 were collected in 1997. Two 

states were unable to specify in which year the employer taxes used to fund their programs in 2002 

were collected. 

Appendix II: Employer Tax Collections and 

Employer Tax-Funded Program Budgets in 

2002, as Reported by States 
Appendix II: Employer Tax Collections and 

Employer Tax-Funded Program Budgets in 

2002, as Reported by States 

Page 40 GAO-04-282 Workforce Training 

b

These states’ program budgets for state fiscal year 2002 were greater than the amount collected 

through each state’s employer tax. Reasons for this disparity varied and included rollovers of unspent 

funds from previous years. Some states, specifically Delaware, Indiana, Michigan, Oregon, and South 

Dakota, also used other funding sources in addition to employer tax revenues to pay for these 

programs. In Indiana, Michigan, and South Dakota at least 50 percent of the funding for these 

programs came from employer taxes. However, in Oregon employer taxes constituted less than half 

of the funds used for the program. Delaware did not specify the portion of its program budget funded 

by employer taxes. 

c

Our survey permitted states to report “DK” or “Don’t Know.” 
Appendix III: Employer Tax-Funded 

Programs’ Primary Emphasis, Expenditures 

and Numbers Served, in 2002 

Page 41 GAO-04-282 Workforce Training 

 Primary emphasis Numbers serviced by service Expenditures by service 

State Worker training 

Employment 

placement Training

Employment 

placement Training

Employment 

placement

Alabama • N/Aa122,447 N/A $5,000,000

California • 75,000 5,000 $84,200,000 b 

Delawarec • 1,666 1,666 $3,142,000 $360,000

Hawaii • 10,000 N/A $3,300,000 N/A

Idahoe b b $2,600,000 b 

Indianacf • 2,780 b $33,000,000 $14,000,000

Kansas • N/A 1,134 N/A $100,000

Louisiana • 17,564 N/A $18,610,000 N/A

Massachusetts • 27,000 N/A $21,700,000 N/A

Michigancf • N/A 185 N/A $2,820,000

Montana • 1,100 N/A b N/A 

Nebraska • 16,732 N/A $1,800,000 N/A

Nevada • 4,256 8,310 $1,000,000 $1,000,000

New Hampshire • 939 N/A $180,000 N/A

New Jersey • 34,685 0 $11,800,000 b 

New York • N/A 332,000 N/A $39,700,000

Oregonc • b 462,549 $5,500,000g$4,300,000

Rhode Island • b b $3,000,000 $560,000

South Dakotac • 2,051 N/A $1,100,000 N/A

Tennessee • 4,200 N/A $8,600,000 N/A

Texasd • d N/A $390,000 N/A

Washington • N/A 252,487 N/A $8,800,000

Wyoming • 1,081 0 $1,920,000 b 

Source: GAO’s survey of states that use employer taxes to fund their own workforce programs. 

a

We use the not applicable notation “N/A” for states that did not provide this service. 

b

Applicable data not provided. 

c

Delaware, Indiana, Michigan, and South Dakota reported that their program budgets included funds 

from other sources, making it difficult to isolate expenditures from their state employer tax revenues. 

While Oregon also reported that its program budget included funds from other sources, Oregon 

provided us with additional data. Oregon’s expenditures included in this figure are those that were 

solely funded through employer tax revenues. 

d

Texas was unable to provide us with the number of individuals that received training services in 

2002. 

e

Idaho reported its program emphasis as “other.” 

f

Indiana and Michigan reported expenditures that exceeded their program budgets. 

g

Oregon, however, noted in our survey that it did not provide training in 2002.

Appendix III: Employer Tax-Funded 

Programs’ Primary Emphasis, Expenditures 

and Numbers Served, in 2002 
Appendix IV: Coordination between Federal 

Workforce Programs and State Programs 

Funded through Employer Taxes in 2002 

Page 42 GAO-04-282 Workforce Training 

State 

State 

Workforce 

Investment 

Board 

Local 

Workforce 

Investment 

Board(s) 

One-Stop 

Center(s) TANF

H1-B 

Technical 

Skills 

Grants 

Welfareto-Work 

Department of 

Education, 

Employment, 

& Training 

Programs 

Other Federal 

Employment 

& Training 

Programs 

Alabama • • • • • 

California • • • • 

Delaware • N/A • • • • • • 

Hawaii • • • • 

Idaho • • • • • 

Indiana • 

Kansas • 

Louisiana • • • 

Massachusetts • • • • 

Michigan • • • 

Montana • • • • • 

Nebraska • • 

Nevada • • • • • • • 

New Hampshire • N/A 

New Jersey • • • 

New York • • • • • • • 

Oregon • • • • • • • 

Rhode Island • • • • a • • 

South Dakota • N/A • 

Tennessee 

Texas a 

Washington • a • • 

Wyoming • N/A • • • 

Totals 17 11 19 10 3 7 8 9 

Source: GAO’s survey of states that use employer taxes to fund their own workforce programs. 

Notes: All 23 states that reported having these programs responded to the survey questions 

regarding coordination with state workforce investment boards, TANF, other federal employment and 

training programs, Department of Education employment and training programs, and the Welfare-toWork program. 

In addition, 22 states responded to the survey questions regarding coordination with one-stop centers 

and the H1-B program, while 20 states responded to the question regarding coordination with local 

workforce investment boards. 

N/A signifies not applicable and is listed for Del, N.H., S.Dak., and Wyo. These are states that have a 

single workforce investment board, which functions as both the state and local board. 

Appendix IV: Coordination between Federal 

Workforce Programs and State Programs 

Funded through Employer Taxes in 2002 
Appendix IV: Coordination between Federal 

Workforce Programs and State Programs 

Funded through Employer Taxes in 2002 

Page 43 GAO-04-282 Workforce Training 

The Welfare-to-Work program is a mandated partner of the one-stop centers. While all states that 

reported coordinating with the Welfare-to-Work program also reported coordinating with a one-stop 

center, not all states that reported coordinating with a one-stop center also reported coordinating with 

the Welfare-to-Work program. States had the option to list multiple programs under both the 

“Department of Education Employment and Training” category and the “Other Federal Employment 

and Training” category. For the “Department of Education” category, states noted programs such as 

Adult Education and Literacy, and Vocational Education. For the “Other Federal Employment and 

Training” category, programs ranged from Veterans’ Employment and Training Service to Job Corps. 

Both the “Department of Education” category and the “Other Federal Employment and Training” 

category included some programs that are mandated one-stop partners. 

a

Denotes that a state did not respond to this question. 
Appendix V: Assessment Approaches Used in 

2002, as Reported by States 

Page 44 GAO-04-282 Workforce Training 

State Frequency Scope Evaluator 

Alabama Monthly Program In-house program staff 

California Quarterly, annually and as 

contracts are completed 

Program and 

contracts 

In–house program staff and external evaluators 

Delaware Quarterly Program and 

contracts 

In-house program staff and contract recipient staff 

Hawaii Quarterly Contract In-house program staff and contract recipient staff 

Idaho Monthly Program and 

contracts 

In-house program staff and contract recipient staff 

Indiana Quarterly Contract External evaluators 

Kansas As contracts are completed Program In-house program staff 

Louisiana Quarterly, annually and as 

contracts are completed 

Program and 

contracts 

In-house program staff and contract recipient staff 

Massachusetts As contracts are completed Program and 

contracts 

External evaluators and contract recipient staff 

Michigan Annually a In-house program staff 

Montana As contracts are completed Program and 

contracts 

In-house program staff 

Nebraska As contracts are completed Program and 

contracts 

In–house program staff, external evaluators and 

contract recipient staff 

Nevada Monthly Program In-house program staff 

New Hampshire As contracts are completed Contract In-house program staff and contract recipient staff 

New Jerseyb Not available Not available Not available 

New York Monthly Program In-house program staff 

Oregon Annually and monthly Program In-house program staff 

Rhode Island Annually Contract In-house program staff and contract recipient staff 

South Dakota As contracts are completed Contract In-house program staff and contract recipient staff 

Tennessee As contracts are completed Contract In-house program staff, external evaluators, and 

contract recipient staff 

Texas As contracts are completed Program and 

contracts 

In-house program staff and contract recipient staff 

Washington Quarterly Program In-house program staff 

Wyoming Quarterly Program and 

contracts 

In-house program staff 

Source: GAO’s survey of states that use employer taxes to fund their own workforce programs. 

a

Michigan’s performance assessments were conducted against agreed upon goals and objectives for 

each of the program’s local areas. 

b

New Jersey is the only state that reported it did not regularly assess its program in 2002. 

Appendix V: Assessment Approaches Used in 

2002, as Reported by States 
Appendix VI: Indicators Used in State 

Assessments 

Page 45 GAO-04-282 Workforce Training 

Indicators 

State Process-oriented Outcome-oriented 

Alabama • 

California • • 

Delaware Not available Not available 

Hawaii • 

Idaho • • 

Indiana • • 

Kansas • • 

Louisiana • • 

Massachusetts • • 

Michigan Not available Not available 

Montana • • 

Nebraska • • 

Nevada • • 

New Hampshire • 

New Jersey • • 

New York • • 

Oregon • • 

Rhode Island Not available Not available 

South Dakota • • 

Tennessee Not available Not available 

Texas • 

Washington Not available Not available 

Wyoming • • 

Source: GAO’s content analysis of assessments provided. 

Appendix VI: Indicators Used in State 

Assessments 
Appendix VII: GAO Contacts and Staff 

Acknowledgments 

Page 46 GAO-04-282 Workforce Training 

Joan Mahagan (617) 788-0521 

Melissa Emrey-Arras (617) 788-0534 

Irene J. Barnett and Holly C. Ciampi made significant contributions to this 

report, in all aspects of the work throughout the assignment. In addition, 

Debra Waterstone and Shirley Hwang contributed to the administration of 

our survey of state programs and Kevin Murphy assisted in the initial 

planning of the assignment. Avrum Ashery, Michele Fejfar, Alison Martin, 

Corinna Nicolaou, Audrey Ruge, Daniel Schwimer, and Shana Wallace 

provided key technical assistance. 

Appendix VII: GAO Contacts and Staff 

Acknowledgments 

GAO Contacts 

Staff 

Acknowledgments 

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