United States General Accounting Office

GAO Report to the Ranking Minority Member,

Subcommittee on Oversight of

Government Management and the

District of Columbia, Committee on

Governmental Affairs, U.S. Senate

November 1995 DEPARTMENT OF

LABOR

Senior Community

Service Employment

Program Delivery

Could Be Improved

Through Legislative

and Administrative

Actions

GAO/HEHS-96-4

GAO United States

General Accounting Office

Washington, D.C. 20548

Health, Education, and

Human Services Division

B-257708 

November 2, 1995

The Honorable Carl Levin

Ranking Minority Member

Subcommittee on Oversight of

 Government Management and the

 District of Columbia

Committee on Governmental Affairs

United States Senate

Dear Mr. Levin:

Each year, the Department of Labor’s Senior Community Service

Employment Program (SCSEP) provides grants to finance part-time,

minimum-wage community service jobs for about 100,000 economically

disadvantaged older Americans. The program is authorized by title V of the

Older Americans Act (OAA), and it received an appropriation of

$396 million for fiscal year 1995. Labor awards the bulk of the SCSEP grant

funds to 10 nonprofit national sponsors and the remainder to the state

governments that administer the program for the Department.

Earlier, you expressed concern to us about Labor’s process for awarding

noncompetitive grants. Our first report to you on the subject covered

Labor’s 134 smaller grants,1

 and this, our final planned report on the

subject, covers the larger SCSEP program. Our objectives for this report

were to examine

• Labor’s process for making SCSEP grant awards;

• the extent to which Labor’s allocation of SCSEP funds equitably distributes

the subsidized job positions; and

• other administrative issues, including administrative expenses, for the

program.

To develop this information, we reviewed grant documents, the relevant

OAA provisions, Labor’s regulations and procedures,2 states’ reports

documenting the distribution of positions within states, and Labor’s

internal documents reporting the distribution of funds and positions to

1

Department of Labor: Noncompetitive, Discretionary Grants (GAO/HEHS-94-9, Feb. 22, 1994).

2

From 1980 to June 1995, Labor operated the SCSEP program under a series of draft revisions to the

1976 regulations. On May 17, 1995, Labor published revised final regulations in the Federal Register,

which became effective on June 30, 1995.

Page 1 GAO/HEHS-96-4 Senior Community Service Employment
B-257708 

states3 and national sponsors. During our review, we also interviewed

officials of Labor, 28 state offices responsible for SCSEP activities, and each

of the 10 national sponsors. To examine the appropriateness of expenses

allocated to specific budget categories, we relied on budget data in the

grant applications. We did so because Labor staff use these data in their

award and approval process and because actual cost data were not

available. We did not independently verify the data reported to us. We

conducted our review between April 1994 and April 1995 in accordance

with generally accepted government auditing standards. For further details

on the scope and methodology of our work, see appendix I.

In an earlier report on training programs, we identified SCSEP as 1 of 163

federal programs and funding sources constituting the federal effort to

support employment training assistance.4

 The 104th Congress is

considering proposals to consolidate and transfer to block grants many of

these programs, including SCSEP. Although this report does not address

such proposals, its information on SCSEP may be useful to those

considering them.

Results in Brief The OAA5

 requires Labor to award grants to national sponsors sufficient to

maintain their 1978 level of activities and in so doing to give preference to

organizations of proven ability. This requirement to maintain the 1978 level

of activity is commonly known as the “hold harmless” provision.6

 Of the

$410.5 million appropriation for program year 1994, $234.5 million was

distributed under this provision. In applying this provision, Labor uses

1978 state-by-state position allocation patterns. The remaining funds are

distributed in accordance with current age and per capita income data to

state governments and national sponsors.

Labor’s use of 1978 allocation patterns on a state-by-state rather than

nationwide basis greatly limits its ability to achieve equitable distribution

among the states on the basis of actual need. This results in overserved

3

In this report, we use the term “states” to refer also to the governments of the District of Columbia,

Puerto Rico, and the U.S. Territories. These governments also participate in the SCSEP program.

4

Multiple Employment Training Programs: Major Overhaul Needed to Reduce Costs, Streamline the

Bureaucracy, and Improve Results (GAO/T-HEHS-95-53, Jan. 19, 1995).

5

42 U.S.C. 3056d(a).

6

The statute provides that the Secretary of Labor must first reserve from annual appropriations “such

sums as may be necessary” for grants with public or nonprofit private organizations “to maintain the

level of activities carried on under such grants or contracts at least at the level of such activities” in

fiscal year 1978. 42 U.S.C. 3056d(a)(1)(A). In 1978, the program had five national sponsors. Over the

years, the number of national sponsors has increased to 10.

Page 2 GAO/HEHS-96-4 Senior Community Service Employment
B-257708 

and underserved states. Our analysis shows that had the hold harmless

funding for program year 1994 been distributed on the basis of up-to-date

age and income data, 25 states would have gained or lost at least $500,000.

Further, within states, Labor has permitted a continuing pattern of

overserved and underserved areas.

Appropriations statutes also affect equitable distribution. If title V funding

exceeds the 1978 funding level in subsequent years, another provision of

the OAA7

 requires that the excess be split—55 percent for states and

45 percent for the national sponsors. However, the “55/45” provision has

never been implemented. Every year since 1978, appropriations statutes

have overridden the 55/45 provision. These statutes have required that no

more than 22 percent of the SCSEP appropriation be allocated to the state

governments.8

 At least 78 percent must be allocated to the national

sponsors.

Under Labor’s regulations, expenditures that we believe to be

administrative in nature may be charged to another cost category—“other

enrollee costs”—thereby allowing the statutory 15-percent limit on

administrative expenses to be exceeded.9

 In program year 1994, this

resulted in national sponsors’ budgeted administrative costs exceeding the

15-percent limit by over $20 million. As a result, grant funds that could

have been spent to finance additional program positions have therefore

been improperly allocated.

Background SCSEP evolved from Operation Mainstream, which trained and employed

chronically unemployed adults under the Economic Opportunity Act of

1964. In 1965, Operation Mainstream provided funding to the Green

Thumb organization, at the time a nonprofit affiliate of the National

Farmers Union, to conduct a pilot training and employment program for

economically disadvantaged older workers in several rural areas. Green

Thumb was thus the first of the 10 nonprofit national sponsors that today

administer most of the SCSEP funds.

During the next 13 years (1965-1978), legislative and administrative actions

instituted most of the basic aspects of today’s SCSEP: responsibility for the

program was moved to the Department of Labor; the program was made

7

42 U.S.C. 3056d(a)(1)(B).

8

For example, Public Law 103-333.

9

42 U.S.C. 3056(c)(3).

Page 3 GAO/HEHS-96-4 Senior Community Service Employment
B-257708 

part of the OAA and given the goal of providing subsidized employment in

community service organizations to economically disadvantaged older

Americans; all grantees were asked to attempt to place at least 10 percent

of their program enrollees in unsubsidized jobs (the goal has been

20 percent since 1985); and 8 of the eventual 10 national sponsors, as well

as most state governments, were made grantees for the program.10

Of the current 10 national sponsors, 5 were added because of OAA

amendments and other congressional guidance to Labor, which directed

that Labor add sponsors oriented toward certain ethnic groups with high

concentrations of the elderly poor. Such direction explains Labor’s

funding, as national sponsors, two African American organizations

(1978) and three other organizations: one representing Hispanic

Americans (1978); one, American Indians (1989); and one, Asian

Americans (1989). The legislation, however, requires all sponsors to

provide all SCSEP applicants an equal opportunity to participate in the

program regardless of race or nationality.

Statutory Provisions on

Allocating Funds

The OAA contains several provisions for Labor’s allocation of SCSEP funds.

The hold harmless provision11 requires the Secretary of Labor to reserve

for the national sponsors a funding amount sufficient to maintain the 1978

activity level. Any balance of the appropriation over the hold harmless

amount is to be distributed to the sponsors and state governments mainly

on an “equitable distribution” basis—that is, in accordance with the

state-by-state distribution of persons 55 years old or older, adjusted for per

capita income.12 A minor limitation on such a distribution is the

requirement for a minimum allocation for each state, a provision designed

to protect the smaller states.13

Another provision requires that the portion of any appropriation that

exceeds the 1978 funding level in subsequent years will be

split—55 percent for states and 45 percent for the national sponsors.14

However, the “55/45” provision—designed to provide state governments

10Labor offers all states the opportunity to administer SCSEP grant funds. In program year 1994, five

states (Alabama, Arizona, Florida, Montana, and South Dakota) declined, and their SCSEP funds were

administered by one or more of the national sponsors.

1142 U.S.C. 3056d(a)(1)(A).

1242 U.S.C. 3056d(a)(3).

1342 U.S.C. 3056d(a)(3)-(4).

1442 U.S.C. 3056d(a)(1)(B).

Page 4 GAO/HEHS-96-4 Senior Community Service Employment
B-257708 

more parity with the national sponsors—has never been implemented.

Every year since 1978, appropriations acts have overridden the 55/45

provision. These statutes have required that no more than 22 percent of

the SCSEP appropriation be allocated to the state governments.15 At least

78 percent must be allocated to the national sponsors.

A third provision that also still applies is the requirement for an equitable

distribution of funds among areas within each state.16

SCSEP in Program Year

1994

The SCSEP appropriation for the 1994 program year17 ($410.5 million)

accounted for about 28 percent of all OAA funds. All but two of the OAA

programs are administered by the Department of Health and Human

Services.18 Labor administers SCSEP through its Employment and Training

Administration (ETA). Like other OAA programs, SCSEP’s authorization

expired at the end of fiscal year 1995. The Congress is reviewing proposals

for reauthorization.

To receive a SCSEP grant, a national sponsor or state government must

agree to provide a match, in cash or in kind, equal to at least 10 percent of

the grant award. Many state governments make their match in the form of

cash contributions. The national sponsors, on the other hand, normally

provide in-kind matches in the form of donated office space, staff time,

equipment, and the like. The in-kind matches for most national sponsors

come not from the sponsors’ own resources but from those of the

community service host agencies, where the SCSEP enrollees actually work.

These host agencies typically are local libraries, nutrition centers, parks,

and similar public service entities.

National sponsors and state governments use the SCSEP grants to finance

SCSEP part-time jobs in host agencies. The cost of such a job, or enrollee

position—which generally must include at least 20 hours of work a

week—is the amount determined sufficient to fund (1) an enrollee’s

minimum wages, benefits, training, and incidental expenses for up to 1,300

15Public Law 103-333.

1642 U.S.C. 3056d(c).

17The SCSEP program year runs from July 1 to June 30. For example, the period from July 1994

through June 1995 was the 1994 program year. Funds for the 1994 program year came from the

Department of Labor Appropriations Act for fiscal year 1994. Labor did not obligate the SCSEP

amounts in that appropriation until July 1994.

18Under title IV of the OAA, the U.S. Department of Agriculture administers a program that provides

surplus commodities for nutrition services.

Page 5 GAO/HEHS-96-4 Senior Community Service Employment
B-257708 

hours a year in the program and (2) the associated administrative

expenses. This cost amount, termed the “unit cost” by Labor, is adjusted

periodically by Labor in consultation with the Office of Management and

Budget (OMB). The unit cost is currently $6,061. Labor divides each year’s

SCSEP appropriation by the unit cost amount to determine how many

positions are available.

Program enrollees, who must be 55 or older and earn no more than

125 percent of the federal poverty level, are paid the federal or local

minimum wage—whichever is higher. For the 1994 program year, funding

permitted the establishment of about 65,000 positions nationwide. An

enrollee may leave a program position for such reasons as illness or

acceptance of an unsubsidized job. Thus, during the 1994 program year,

about 100,000 enrollees occupied the 65,000 positions; about

three-quarters of these enrollees were women.

Often, in the administration of SCSEP grants, entities other than the national

sponsors and state governments participate as intermediaries between the

sponsors and the host agencies. Some of these entities are municipalities;

many are Area Agencies on Aging, organizations the state designates to

plan and provide services to the elderly. These intermediaries sometimes

enter into agreements with states and national sponsors as subgrantees to

find specific host agencies for program enrollees.

The 10 National Sponsors Of the 1994 program year appropriation, Labor allocated the national

sponsors $320.2 million (78 percent) and the states and territories

$90.3 million (22 percent). The 10 national sponsors that received grant

awards were, as in previous years, the following:

• American Association of Retired Persons (AARP),

• Associacion Nacional Pro Personas Mayores (ANPPM),

• Green Thumb,

• National Asian Pacific Center on Aging (NAPCA),

• National Caucus and Center on Black Aged (NCCBA),

• National Council on Aging (NCOA),

• National Council of Senior Citizens (NCSC),

• National Indian Council on Aging (NICOA),

• National Urban League (NUL), and

• U.S. Forest Service (USFS).

Page 6 GAO/HEHS-96-4 Senior Community Service Employment
B-257708 

National sponsors operate locally through (1) subgrant agreements with

local organizations, such as agencies on aging or community groups, and

(2) local affiliates. Appendix II provides a short profile of the SCSEP

activities of each national sponsor.

Whenever the SCSEP program has a new appropriation level, Labor

conducts with the national sponsors a meeting known as the “melon

cutting.” At these meetings, Labor makes known its allocations to each of

the national sponsors and presides over discussions in which national

sponsors often trade enrollee positions in various areas. Sometimes, a

representative from the National Association of State Units on Aging

(NASUA) is invited to express states’ concerns, but the states have no

formal control over the distribution of positions.

As seen in figure 1, program year 1994 grant amounts to the national

sponsors varied widely: the $102.5 million Green Thumb grant was the

largest, and the $5.1 million grants each to the NICOA and NAPCA were the

smallest. This variation partially reflects the differences in time that these

organizations have participated in the program.

Page 7 GAO/HEHS-96-4 Senior Community Service Employment
B-257708 

Figure 1: Program Year 1994 SCSEP

Grants to National Sponsors and

States

Dollars in Millions

1

11

21

31

41

51

61

71

81

91

101

AARP ANPPM Green

Thumb

NCCBA NCOA NCSC NUL NICOA NAPCA USFS

With the exception of Alaska, Delaware, and Hawaii—which operate their

own SCSEP programs and have no national sponsors—each state has at

least two national sponsors. Fourteen states have six or more national

sponsors. The District of Columbia and Puerto Rico also have SCSEP

programs and national sponsors, but none of the U.S. Territories has. (See

fig. 2.)

Page 8 GAO/HEHS-96-4 Senior Community Service Employment
B-257708 

Figure 2: National Sponsors by State

0 National Sponsors 

1 or 2 National Sponsors 

3 to 5 National Sponsors 

6 or More National Sponsors 

As seen in figure 3, four of the sponsors operate in over half of the states;

five of the sponsors operate in 16 or fewer states.

Page 9 GAO/HEHS-96-4 Senior Community Service Employment
B-257708 

Figure 3: Number of States in Which

Each National Sponsor Operates Number of States

0

5

10

15

20

25

30

35

40

45

AARP ANPPM Green

Thumb

NCCBA NCOA NCSC NUL NICOA NAPCA USFS

Program Year 1994

34

11

45

11

21

28

16 16

8

40

Labor Awards Grants

Only to Existing

Grantees

Labor’s regulations allow SCSEP funds to be provided to eligible

organizations through grants, contracts, or other agreements pursuant to

the purposes of title V of the OAA. Department officials have chosen to fund

the program through noncompetitive grants. The regulations specify that

grants are the “appropriate instrument when the Department does not

need to exercise considerable direction and control over the project.”19

Labor provides annual grant applications only to national organizations

that currently sponsor SCSEP. Labor’s action is consistent with the statute

and with expressions of intent by the Senate Appropriations Committee.

Labor officials rely on annual Appropriations Committee report language

such as the following from a recent Senate Appropriations report that

seems to indicate support for the current sponsors: “It is the intent of the

Committee that the current sponsors continue to build upon their past

accomplishments.”20 In addition, the OAA, although it permits awards to

other entities, creates a specific preference for awards to “national

organizations and agencies of proven ability in providing employment

services . . .”

1929 C.F.R. 89.12.

20Senate Report 103-143, p. 16 (1993).

Page 10 GAO/HEHS-96-4 Senior Community Service Employment
B-257708 

Labor’s procedures require that noncompetitive grants over $25,000 be

included in an annual procurement plan that is forwarded for approval by

the responsible Assistant Secretary to the Procurement Review Board

(PRB). The PRB, whose members include designees of the Chief Financial

Officer and the Solicitor, as well as the Director of the Division of

Procurement and Grant Policy, is “to serve as a senior level clearinghouse

to review proposed noncompetitive and major acquisitions.” The PRB

advises whether competition is appropriate for each acquisition and

whether long-term relationships with the same organizations are

consistent with Labor policies. However, Labor exempts title V awards

and does not involve the PRB in reviewing the program’s annual grant

renewal decisions. Labor officials did not adequately explain the reason

for this exemption.

Inequities in Funding

Patterns

The hold harmless provision of the OAA’s title V, in effect, severely limits

Labor’s ability to allocate funds among states in a way that ensures

equitable distribution, that is, in accordance with the state-by-state

distribution of persons 55 years old and older, adjusted to give greater

weight to economically disadvantaged areas and persons. The result is a

pattern of too many SCSEP positions in some states and too few in other

states relative to their eligible populations. In addition, within states,

Labor’s administrative inaction has permitted a continuing pattern of

overserved and underserved counties.

Equitable Distribution

Among States Not Fully

Achieved

In applying the OAA’s hold harmless provision, Labor officials establish a

reserve amount from each year’s SCSEP appropriation, delineated by state

subtotals, to finance the 1978 level of national sponsor positions in each

state. So, if the national sponsors together administered 100 positions in a

certain state in 1978, they would receive thereafter, from a Labor set-aside

of appropriated funds, enough funds to finance at least 100 positions in

that state, assuming that the appropriation level is high enough to finance

the 1978 total number of positions.

Because the 1978 distribution of SCSEP positions did not, and still does not,

correspond to the size of each state’s economically disadvantaged elderly

population, the hold harmless provision in effect prevents a fully equitable

distribution. For the 1994 program year, for example, $234.5 million of the

total appropriation of $410 million was subject to the hold harmless

Page 11 GAO/HEHS-96-4 Senior Community Service Employment
B-257708 

provision and distributed accordingly.21 Had the $234.5 million been

distributed in accordance with current age and per capita income data,

every state would have received a different allocation and, in many cases,

the increase or decrease would have been substantial. A total of 25 states

would have gained or lost at least $500,000 each; in 13 of those states, the

amount would have been over $1 million. Florida would have gained the

most, $4.2 million, and New York would have lost the most, $3.9 million.22

(See app. III.)

Options for Overcoming the

Problem

The hold harmless provision could be modified in two ways. The relevant

provision states that the Secretary of Labor will reserve for the sponsors’

grants or contracts sums necessary to maintain at least their 1978 level of

activities “under such grants or contracts.” Labor interprets this provision

to require a state-by-state distribution of positions based on the sponsors’

1978 activities. One option is to amend the hold harmless provision to

specifically authorize Labor to base the distribution on the national

sponsors’ 1978 total positions nationwide, rather than on the levels in each

state. If the hold harmless provision were so amended, Labor would still

be required to provide sufficient grants to the national sponsors to finance

their 1978 number of total positions. But it would not necessarily be bound

to the 1978 number of sponsor positions in any state. With the amendment,

Labor could distribute all of the SCSEP dollars in accordance with the

pattern of need, as measured by each state’s 55 and older population size

and per capita income.

Another approach would be to repeal the entire hold harmless provision.

This would remove the authorizing legislation’s protection of the national

sponsors’ historic base of positions23 and permit Labor officials to allocate

funds according to need. Such a change could significantly shift funding

from the national sponsors to the states.

Equitable Distribution Within

States Not Fully Achieved

In some states, SCSEP positions may not be distributed among areas

according to the equitable distribution provision of the OAA’s title V.24

Though the national sponsors administer about 80 percent of the enrollee

21This is the amount that Labor determined was needed from the appropriation to fund 38,687

positions nationwide—the 1978 number of positions. Labor derived the $234.5 million by multiplying

the 38,687 positions by the unit cost of each position for 1994—$6,061.

22These results are based on our simulation using Labor’s program year 1994 data that also

incorporated the OAA provision guaranteeing a .5-percent SCSEP appropriation minimum to the states

and a .25-percent minimum to certain other areas, such as Guam and the Virgin Islands.

23Absent the hold harmless protection, the national sponsors would still receive most of the grant

monies as long as annual appropriations acts continued to contain provisions stipulating that

78 percent of the funds shall go to the national sponsors. See footnote 8.

2442 U.S.C. 3056d(c).

Page 12 GAO/HEHS-96-4 Senior Community Service Employment
B-257708 

positions, both states and national sponsors are responsible for equitably

distributing enrollee positions. Deficiencies in equitable distribution,

however, are evident in many cases when comparing a county-by-county

pattern of SCSEP positions in a state with the county-by-county pattern of

state residents who are eligible for participation as SCSEP enrollees.

For such a comparison, we reviewed the states’ equitable distribution

reports for 1989 and 1994. For example, in California, Illinois, and New

York, we found that most counties had either too many or too few

positions compared with the number that the distribution of eligible

people would indicate. In California, for example, for program year 1994,

51 of the 59 counties had too many or too few positions. In some cases, the

excess or shortfall was five positions or fewer, but, in several cases, the

amount was greater. Fourteen of the counties had excesses or shortfalls of

at least 15 positions. Orange County had a shortfall of 70 positions.

Humboldt and San Francisco Counties each had an excess of 32 positions.

State government and national sponsor officials offer several explanations

for the sponsors’ not always distributing their SCSEP positions within a

state strictly according to the equitable distribution guidance. First, the

national sponsors are sometimes restricted geographically. In New York

state, USFS, for example, does not enter such underserved areas as

Brooklyn and the Bronx because they are urban communities and the

Forest Service restricts its activities to national forests. Second, national

sponsors with an ethnic focus are reluctant to serve areas that do not have

significant numbers of their constituent ethnic group. Third, certain

national sponsors, to save on administrative costs, may prefer to

concentrate SCSEP positions in fewer locations, increasing the ratio of

program enrollees to administrators. Fourth, certain national sponsors

may be reluctant to shift positions from an overserved area where they

have had long working relationships with subgrantees. In the case of the

states, some have distributed their positions through existing

administrative structures, without sufficiently considering the distribution

of eligible people. Also, some states may have tried to achieve an equitable

distribution among political jurisdictions rather than among eligible

populations. Finally, some states have not adequately staffed their SCSEP

program efforts or were not sufficiently active in coordinating distribution

activities with national sponsors.

Duplication of Services in

Overserved Areas

In most states, the state government as well as several national sponsors

operate SCSEP programs. Thirty-six states have four or more sponsors;

while 14 states have six or more. In our talks with officials in 28 state

Page 13 GAO/HEHS-96-4 Senior Community Service Employment
B-257708 

governments, several expressed concern about duplicative national

sponsor programs in certain areas, some of which also overlapped state

government SCSEP programs.

For example, in a northeastern state where eight national sponsors had

been operating, a ninth sponsor was allowed to begin a SCSEP project in an

area that, according to state officials, was already overserved. In addition,

the state officials said, some national sponsors in the area were already

using television spots to attract people to the program. In a southern state,

state officials could not dissuade two national sponsors from operating in

a city’s downtown area already served by the state’s SCSEP office.

Program Participants May Be

Denied Most Appropriate

Training

National—and some state—sponsors defend their remaining in overserved

locations, citing many reasons for being in the communities where they

are. However, Labor officials acknowledge that one consequence of

several grantees operating in the same area is that program enrollees in

proximity may receive different wages and benefits depending on the

policies of the grantee organization.

In a mid-Atlantic state, for example, the state unit on aging administers its

own SCSEP positions as well as those of a national sponsor. The program

that the enrollee is placed in—whether state or nationally sponsored and,

consequently, the benefits package the enrollee receives—can depend on

the time of day the enrollee applied for the program. For example, a

morning applicant might be placed in the state program with a benefits

package including federal holidays, sick leave, and annual leave benefits;

the afternoon applicant might be placed in a national sponsor’s program

with a different benefits package.

Labor endorses an unwritten agreement among national sponsors that is

intended to prevent enrollees from different sponsors from working at the

same local host agency. The agreement is to help avoid situations in which

host agencies or sponsors must explain why enrollees performing the

same job tasks are compensated with different benefits and, perhaps, even

wages. The drawback of this agreement, however, is that an applicant may

be denied access to a particular host agency that could provide the best

job and training experience for that person.

Reallocation of National

Sponsor Positions Not Required

by Labor

Labor requires states and the national sponsors to ensure efficient and

effective coordination of programs under this title. One goal of this

coordination is to promote an equitable distribution of in-state funds.

National sponsors are required to notify relevant state government

Page 14 GAO/HEHS-96-4 Senior Community Service Employment
B-257708 

officials of their plans to establish projects; state officials are to review

and comment on such plans; and Labor is to review proposed project

relocations and the distribution of projects within states. As part of its

overview authority, Labor also has required states to compile annual

distribution reports showing which of their counties are overserved or

underserved, according to the size of their eligible populations. Most

importantly, Labor is to make—limited by the OAA’s hold harmless and

minimum funding provisions of title V—an equitable distribution of funds

among and within states.25

It appears that Labor has taken few actions to more equitably distribute

national sponsor activities within the states. The 1994 problems of

underserved and overserved counties in California, Illinois, and New York

were essentially the same ones that those states experienced 5 years

earlier, in 1989. Labor officials acknowledge that they stop short of forcing

the national sponsors to reallocate their positions, preferring instead to

encourage sponsors to shift positions to underserved areas when enrollees

vacate positions in overserved areas. State officials repeatedly pointed out

that they lack the authority, under law or Labor regulation, to require the

national sponsors to reallocate their positions to underserved counties.

Options for Overcoming the

Problem

Labor could do more to encourage more equitably distributed national

sponsor activities within a state. In extreme cases, Labor could increase

national sponsors’ funding levels, rewarding sponsors willing to establish

positions in underserved areas. Such encouragement would not contradict

the hold harmless provision, which only applies among the states rather

than within a state. Indeed, such encouragement could increase the

effectiveness of the national sponsor role in the program.

Another option for more equitably distributing SCSEP positions within the

states is to increase the percentage of funds dedicated to state

governments from each year’s appropriation from the current 22 percent

to a higher percentage. If the Congress were to stop enacting the

22-percent limit on state funding, the OAA provision requiring that state

governments receive 55 percent of all funding above the 1978 hold

harmless amount would take effect.26

At our request, Labor ran a simulated allocation of the program year 1994

funding formula without the “78/22” cap in place. Under that simulation,

the funds available to the states for program year 1994 would have

2542 U.S.C. 3056d(a)(3) and 3056d(c).

2642 U.S.C. 3056d(a)(1)(B).

Page 15 GAO/HEHS-96-4 Senior Community Service Employment
B-257708 

increased from $90 million to about $155 million. National sponsor funding

would have decreased from $320 million to $255 million (see app. IV). With

their statewide administrative structures and additional funds, state

governments might have more flexibility in serving their eligible

populations or a greater incentive than the national sponsors to administer

positions in underserved areas.

In the three states where the state government administers 100 percent of

the SCSEP grant money, comparatively few counties are underserved or

overserved. For program year 1994, each of Delaware’s three counties had

an equitable distribution of positions; each of Hawaii’s five counties had

an equitable number of positions; and Alaska’s six geographic areas used

for the program had close to equitable numbers. For example, one area of

Alaska had 46 positions instead of the equitable number of 43; another had

34 instead of 36. These three states, however, are not typical in their

geographic and population features.

Increasing the states’ share of the SCSEP funds would most likely not result

in a dramatically different profile of enrollees by ethnicity or sex. In the

state programs, on average, the percentages of enrollees by ethnicity and

sex were about the same as those in the national sponsor programs for the

reporting period ending in June 1994. For example, in the state programs,

22 percent of the enrollees were black and 23 percent were male; the

comparable percentages in the national sponsor programs were 24 percent

black and 29 percent male.

Sponsors Shifted

Administrative

Expenses

Congressional hearings earlier in the program’s history questioned

national sponsors’ spending on their administration.27 In our review, we

found that, in program year 1994, eight of the national sponsors shifted

some administrative costs to another cost category, and therefore the true

administrative costs exceeded the 15-percent statutory limit. This problem

appears to be less widespread in the state-administered SCSEP programs.

Each of the national sponsors has its own approach to administration.

Some of the sponsors perform all of the administrative functions of the

program directly. Others subcontract or delegate aspects of administration

to other organizations or state agencies. In addition, all of the sponsors

fund at least a portion of national headquarters operations from SCSEP

grant funds. In 1994, to support about 850 full-time administrative

27Hearings before the Special Committee on Aging, U.S. Senate, October 29, 1981.

Page 16 GAO/HEHS-96-4 Senior Community Service Employment
B-257708 

positions, national sponsors budgeted about $6 million for travel and more

than $9 million for rental and other office expenses.28

The 1976 SCSEP regulations permit sponsors to spend their SCSEP grant

funds in three categories: administration, enrollee wages and benefits, and

other enrollee costs. The OAA has established a 13.5-percent limit for

administrative expenses.29 This limit may increase to 15 percent with a

waiver from the Secretary of Labor.30

These 1976 regulations, still in effect in program year 1994, note that the

first category, administration costs, includes, but is not limited to,

“. . . salaries, wages and fringe benefits for project administrators; costs of consumable

office supplies used by project staff; costs incurred in the development, preparation,

presentation, management and evaluation of the project; the costs of establishing and

maintaining accounting and management information systems; costs incurred in the

establishment and maintenance of advisory councils; travel of project administrators; rent,

utilities, custodial services and indirect costs allowable to the project; training of staff and

technical assistance to subproject sponsor staff; costs of equipment and material for use by

staff; and audit services.”31

The second category includes enrollee wages and benefits. The third

category, other enrollee costs, under the 1976 regulations, includes but is

not limited to,

“enrollee physical examinations; transportation; enrollee training; special job or personal

counseling for enrollees; and incidental expenses necessary for enrollee participation, such

as work shoes, safety eyeglasses, uniforms, tools, and similar items.”32

Sponsors’ Budgets

Exceeded the

Administrative Limit by

Over $20 Million

Using application documents that grantees submitted for Labor’s

approval—updated with some actual expense data not initially available

for the period under review—we examined national sponsors’ budget

documents for program year 1994 to see (1) how costs were apportioned

among the categories and (2) whether administrative cost limits were

28This number does not include the approximately 300 USFS staff used on a part-time basis in support

of the SCSEP program.

2942 U.S.C. 3056(c)(3).

30In the 1994 program year, five national sponsors and six states received such waivers.

3129 C.F.R. 89.42.

3229 C.F.R. 89.42.

Page 17 GAO/HEHS-96-4 Senior Community Service Employment
B-257708 

being adhered to. We also discussed administrative cost matters with

Labor staff and national sponsor officials. The results showed that eight of

the sponsors33 had budgeted administrative expenses in excess of the limit

by over $20 million, by classifying some administrative expenses as other

enrollee costs and not including them under administrative expenses.

The following case illustrates this practice: One national sponsor’s budget

documents showed about $14 million for administrative expenses, placing

the organization under the 13.5-percent limit. However, our examination

identified other amounts, classified in the documents as other enrollee

costs, that should have been treated as administrative costs. The sponsor

classified as other enrollee costs, rather than as administrative costs, all

salaries and benefits paid to its own field staff, including area supervisors,

managers of field operations, and program development specialists

($5.9 million), and field staff’s travel ($1.8 million). If combined with the

$14 million in acknowledged administrative costs, these expenses would

raise total administrative costs for this grantee to more than 20 percent of

the grant amount.

We similarly recomputed the administrative costs for the other sponsors

who understated these expenses (by classifying some as other enrollee

costs). We found that the administrative percentages of the eight national

sponsors that exceeded the 15-percent administrative expense limit ranged

from 16.8 to 23 percent. Appendix V details the administrative expenses of

each national sponsor for the 1994 program year.

We also reviewed the other enrollee costs average percentages for the

state governments in the SCSEP program and compared them with the

national sponsors. For the state governments, the average, as a percentage

of total grant amount, was about 6 percent in the 1994 program year; for

the national sponsors, the comparable figure was about 8 percent.

However, 23 state governments recorded other enrollee costs ranging from

7.0 to 13.2 percent.

Labor’s SCSEP officials could better identify such administrative expense

problems if Labor required that grantees provide better documentation of

their administrative expenses, particularly those in the category of other

enrollee costs. Because of grantees’ limited or vague reporting, Labor

officials cannot adequately explain the other enrollee cost entries in the

grantees’ application materials.

33The two that stayed within the limit were USFS and NCSC.

Page 18 GAO/HEHS-96-4 Senior Community Service Employment
B-257708 

For example, one grantee provided grant documentation that included an

item shown as “other” in the category of other enrollee costs. This item,

totaling $1,084,049, was delineated as $55,799 for the sponsor and

$1,028,250 for a subgrantee, with no further information provided. At our

request, Labor asked the sponsor for further documentation of this item.

This documentation indicated that the sponsor and subgrantee expenses

included costs that Labor could question for not being classified as

administration, including $51,170 for postage, $132,874 for telephone

service, and $522,494 for rent.

Use of Draft

Regulations Permitted

Expense Shifting

From 1985 through the first half of 1995, the sponsors relied on grant

provisions that incorporated proposed regulations instead of the 1976

regulations. These proposed regulations, published in July 1985, and never

finalized, expanded the definition of other enrollee costs to permit several

categories of costs that the 1976 regulations did not permit. These

included expenses for orientation of host agencies, development of

appropriate community service employment assignments, and “the costs

associated with providing those functions, services, and benefits not

categorized as administration or enrollee wages and fringe benefits.”34

Labor officials acknowledge that Labor operated the SCSEP program

without formally amending the 1976 regulations.

After the 1987 amendments to the OAA included the 1976 regulations’

15-percent administrative expense limit as part of the law, Labor’s

decision—to use as criteria the 1985 draft regulations—permitted

sponsors to improperly characterize administrative expenses as other

enrollee costs.

Indirect Costs in

SCSEP Grants

Labor’s regulations permit sponsors to include in their administrative

costs “. . . indirect costs allowable to the project.” A sponsor may use SCSEP

grant money to pay for some of its general operating expenses provided

that the sponsor can demonstrate that a part of those expenses indirectly

supports SCSEP activities. Although our review concentrated on

administrative issues other than indirect costs, Labor’s Office of Inspector

General (OIG) has identified a continuing problem of improper indirect

cost charges in the program.

3450 Fed. Reg. 29615.

Page 19 GAO/HEHS-96-4 Senior Community Service Employment
B-257708 

Labor Negotiates Indirect

Cost Rates With Sponsors

Under the policy of OMB Circular A-122, Labor’s Office of Cost

Determination periodically negotiates indirect cost rates with the national

sponsors. Each sponsor’s rate is the percentage of defined general

operating costs—termed the “base”—that may be charged against its SCSEP

grant as a SCSEP-related administrative expense. The categories of general

operating expenses that may be included in the base are defined in each

sponsor’s grant agreement with Labor. These categories vary somewhat

among sponsors, but they typically include such expenses as executive

salaries, payroll, accounting, personnel, depreciation, telephone, travel,

and supply expenses.

For example, one sponsor’s grant agreement with Labor specified that a

rate of 35.21 percent may be applied against the sponsor’s base, defined as

“Total direct costs excluding capital expenditures . . . membership fund

costs, flow-through funds and program participant costs.” This means that

35.21 percent of the sponsor’s base expenses may be funded with SCSEP

money, as long as that amount does not exceed the overall limit on the use

of SCSEP grant money for administrative expenses.

As shown in table 1, for the 1994 program year, the eight national sponsors

that charge indirect costs have approved rates that ranged from 4.95 to

108.1 percent.35 However, exact comparisons of the rates may not be

meaningful because these rates are applied to the sponsors’ different

bases.

35NICOA does not have an approved indirect cost rate. USFS does not charge indirect costs.

Page 20 GAO/HEHS-96-4 Senior Community Service Employment
B-257708 

Table 1: National Sponsor Indirect

Cost Rates Percent Dollars

American Association of Retired Persons 15.80 $0a

Associacion Nacional Pro Personal Mayores 35.21 491,011

Green Thumb 4.95 4,772,285b

National Asian Pacific Center on Aging 55.41 178,755

National Caucus and Center on Black Aged 48.80 427,652

National Council on Aging 57.00 727,328

National Council of Senior Citizens 108.00 2,570,481c

National Urban League 66.40 147,097d

aAARP states that it does not claim indirect costs unless its actual administrative costs in support

of the program are less than the administrative cost limit.

bGreen Thumb’s rate is applied to the entire amount of the grant as a base. This includes all funds

for enrollee wages and fringe benefits that are normally not included in typical direct cost bases.

cSponsor may claim a rate in excess of 100 percent. No maximum ceiling on reimbursements of

indirect costs exists.

dNUL is allowed an indirect cost rate of 66.4 percent but charges 35 percent on the basis of its

agreement with Labor.

Problems With Indirect

Costs

SCSEP grantees have sometimes used the grant funds to pay for

questionable indirect costs. One national sponsor charged to the grant

more than $21,000 in indirect costs “. . . to promote employee morale and

productivity including birthday, holiday and other cards, flowers, and

expenses related to the company picnic and other employee morale

events.” This was in addition to approximately $32,000 budgeted from

direct costs for “. . . the purchase of refrigerators, microwaves, toaster

ovens, and other appliances reasonably necessary to promote a positive

work environment, and the purchase of bottled water for employees to

promote health . . .” OMB guidance allows reasonable expenditures for such

items, and we found no record of Labor’s objection to these expenditures.

Sometimes, the use of SCSEP dollars for indirect costs involves

considerably larger sums. On more than one occasion, Labor’s OIG

questioned the propriety of a national sponsor’s use of SCSEP funds to pay

for some of its operating expenses. One OIG report stated that the sponsor

“. . . improperly charged to its indirect cost pool salaries and fringe

benefits of employees of those divisions and offices responsible for [the

national sponsor’s] own activities, such as fundraising and membership,

Page 21 GAO/HEHS-96-4 Senior Community Service Employment
B-257708 

and other non-Federal [sic] projects.”36 The questioned costs for program

years 1988 to 1990 totaled over $700,000.

The OIG stated, and program officials acknowledged, that if the amounts

were upheld as improper, the national sponsor had no way of paying the

money back. Yet for 3 years, while the dispute advanced through an

administrative appeals process, Labor continued to award the sponsor

SCSEP grants, with only a small modification to the sponsor’s indirect cost

rate. A Labor official explained that the Department wanted to continue

the funding while the matter was being adjudicated.

However, the national sponsor and Labor decided to settle the matter

before final adjudication: they agreed, early in 1995, that the sponsor

would pay $400,000 (in full settlement of the $700,000 of disallowed costs)

to Labor, without interest, over a 4-year period. The $400,000 is to be

repaid from the sponsor’s nonfederal income in fixed quarterly

installments: four payments of $12,500 in year 1, $18,750 in year 2, $31,250

in year 3, and $37,500 in year 4. At no time during the dispute did Labor’s

program officials impose a cutback in total administrative spending, even

a small one. Audits for additional program years are in process.

Labor’s Measure of

Unsubsidized

Placements

Along with SCSEP’s goals of providing training and subsidized jobs, Labor

has set for each sponsor a goal of placing at least 20 percent of the

enrollees in unsubsidized jobs each program year. During our review, we

noted that Labor had not clearly stated in any of its regulations the

meaning of an unsubsidized placement. This made it virtually impossible

for Labor to know how successful the sponsors are in achieving that

objective.

Without such a definition, the sponsors may interpret unsubsidized

placement in many ways. One sponsor has defined it as one in which a

program enrollee spends a specified minimum time and then moves into a

paying, non-SCSEP job and holds it for a specified minimum time. Other

sponsors have had no time requirements for post-SCSEP job retention or for

program participation for claiming an unsubsidized placement.

Labor officials agreed that determining SCSEP job placement success was a

problem and initiated efforts to produce a useful definition. As we were

concluding our review, Labor issued a directive defining unsubsidized

placement for SCSEP purposes.

36Audit Report No. 18-91-018-07-735, issued July 19, 1991.

Page 22 GAO/HEHS-96-4 Senior Community Service Employment
B-257708 

Conclusions States’ populations of those 55 years of age and older have changed since

1978. The statutory hold harmless provision locks in 1978 funding levels

that do not correspond to each state’s eligible 55 and older population,

adjusted by income; this limits Labor’s ability to equitably distribute SCSEP

positions among the states. Consequently, some states in the SCSEP

program are overserved and some are underserved.

Labor could more equitably distribute SCSEP funds among states if the OAA’s

title V hold harmless provision were amended or eliminated. Amending it

to permit Labor to hold harmless only the sponsors’ 1978 nationwide total

number of positions, rather than the 1978 funding level in each state,

would enable Labor to (1) depart from the 1978 state-by-state pattern and

(2) allot the funds so as to correct the problem of overserved and

underserved states. Repealing the hold harmless provision, although an

option, could significantly change the program’s character if it resulted in

major shifts of funding allocations from national sponsors to state

governments.

Similarly, within states, the distribution of SCSEP funds leaves some

counties overserved and some underserved. National sponsors are

required by law to notify state governments and Labor of their plans for

SCSEP positions in each state, but only Labor has the authority to effect a

different pattern of positions among a state’s counties. Labor could adjust

national sponsors’ funding levels to reward those willing to establish

positions in underserved counties.

Another step that might improve the distribution of funds within states

would be legislative action to increase the percentage of positions funded

by grants to state governments from the current 22 percent imposed by

appropriations restrictions. The distribution patterns in the three states

solely responsible for SCSEP activities were comparatively equitable. If

these appropriations limitations did not exist, the share, over the hold

harmless amount, going to the state governments would increase to

55 percent under the 55/45 provision of the authorizing legislation.

The SCSEP program also has administrative expense problems. In the 1994

program year, we estimate that the national sponsors’ budgeted

administrative expenses collectively exceeded by over $20 million the limit

set by the OAA. This occurred because Labor’s 1985 draft regulations rather

than the 1976 regulations guided the national sponsors’ cost allocations.

Under the 1985 draft regulations, expenditures that we believe to be

administrative expenses may be charged to other enrollee costs. Labor

Page 23 GAO/HEHS-96-4 Senior Community Service Employment
B-257708 

failed to require specific and useful reporting by grantees of their other

enrollee costs. Therefore, sometimes, Labor could not readily identify

what kinds of expenses were included in that category.

The 1995 SCSEP regulations, which took effect in July 1995, allow a broad

interpretation of other enrollee costs. Unless modified, these new

regulations will permit the continuing allocation of administrative

expenses. These funds could otherwise be spent to finance additional

program positions.

Labor’s use of a modified noncompetitive process for making SCSEP grants

essentially results in continuing to offer grant applications only to

organizations already in the program. However, in SCSEP’s case, Labor does

not follow its normal procedure for noncompetitive grants, in which the

PRB reviews grant decisions. If followed, PRB reviews can advise whether

competition is appropriate for each acquisition and whether long-term

relationships with the same grantees are consistent with Labor’s policies.

Labor officials did not adequately explain the program’s exemption from

this review, and we see no justification for it.

Matters for

Congressional

Consideration

If the Congress wishes to ensure equitable distribution of SCSEP funds

among states, it should consider amending or eliminating the title’s hold

harmless provision. Such an amendment would authorize Labor to hold

harmless only the 1978 nationwide level of national sponsor positions. The

Department would not be required to hold harmless the 1978 state-by-state

levels. If the hold harmless provision were eliminated, (1) the national

sponsors could experience reduced funding levels and (2) Labor could

distribute the funds on the basis of the most current demographic data

available.

If the Congress wishes to better meet the OAA’s title V goal of equitably

distributing SCSEP funds within states, it should consider increasing the

portion of SCSEP grant funds allocated to state governments from the

current 22 percent. One way to do that would be to forgo appropriations

act language limiting the state governments to 22 percent of the annual

appropriation.

Recommendations to

the Secretary of Labor

We recommend that the Secretary better meet the OAA’s title V goal of

equitably distributing SCSEP funds within states. To do this, the Secretary

should (1) require greater cooperation among national sponsors and states

Page 24 GAO/HEHS-96-4 Senior Community Service Employment
B-257708 

in equitable distribution matters and (2) adjust, as necessary, sponsors’

funding levels to reward sponsors that are willing to establish positions in

underserved counties.

In addition, we recommend that the Secretary revise the 1995 regulations

to adopt the definition of administrative costs set out in the 1976

regulations.

We also recommend that the Secretary enforce the statutory limit on

administrative expenses and be prepared to reduce the funds available for

administration of any grantee exceeding the legal limit by improperly

categorizing costs or incurring improper indirect costs.

Finally, we recommend that the Secretary no longer permit title V grants

to be exempt from Labor’s normal review process and subject these grants

to the same review as other noncompetitive grants.

Agency Comments

and Our Evaluation

We provided copies of our draft report, for comment, to the Department of

Labor and, through Labor, to the national sponsors. We met with Labor

officials several times to discuss their concerns as well as those of the

national sponsors. Where appropriate, we revised the report to include

information provided by, and through, Labor. Labor’s comments and our

detailed responses appear in appendix VI.

Labor generally agreed with our recommendations that it (1) apply its

normal noncompetitive review process to SCSEP grants and (2) require

national sponsor grantees to cooperate more with states in the equitable

distribution process. Specifically, Labor agreed to (1) have PRB review of

SCSEP grant awards and (2) prepare procedures to enhance the role of

states in the annual equitable distribution meetings. Labor also agreed to

implement a process to ensure that it is apprised of disagreements on

equitable distribution.

Although Labor officials agreed to examine the matter more closely, they

disagreed with our estimate that for the 1994 program year budget funds of

over $20 million in administrative expenses were improperly allocated to

the category of other enrollee costs. Citing recent audits of national

sponsor organizations that did not disclose noncompliance, Labor and

several of the national sponsors questioned our (1) use of budget data

from grant applications and (2) criticism of criteria used for determining

what costs should be allowed in the category of other enrollee costs.

Page 25 GAO/HEHS-96-4 Senior Community Service Employment
B-257708 

First, budget data submitted by the national sponsors were the only data

available for the period we examined. More importantly, however,

decisions by Labor officials on the appropriateness of expenses to be

charged for the SCSEP program are made on budget data rather than actual

expenses. Thus, our use of budget numbers that Labor uses seems

appropriate.

Second, with regard to Labor’s questioning of our criticism of the cost

criteria used, during the period covered by our review, only the 1976

regulations had been formally promulgated. Because of Labor’s written

comments about other enrollee costs, we discussed the issue with officials

of Labor’s OIG and its contract auditors. Labor’s OIG staff told us that they

measure grantee performance against the grant agreement. Since ETA’s

program staff had incorporated the 1985 draft regulations into the grant

agreements, the OIG staff had reviewed the grantees’ performance against

those criteria and had not focused on this issue. However, OIG contract

auditor staff agreed that administrative costs appear to have been shifted

to the category of other enrollee costs after the 1985 draft regulations

became part of the grant agreements. Those discussions and Labor’s

position led us to recommend that the Secretary of Labor review the SCSEP

regulations implemented in July 1995.

Copies of this report are being sent to the Secretary of Labor and

interested congressional committees. We will make copies available to

others on request. Please call me on (202) 512-7014 if you have any

questions concerning the report. Other major contributors are listed in

appendix VII.

Sincerely yours,

Linda G. Morra

Director, Education

 and Employment Issues

Page 26 GAO/HEHS-96-4 Senior Community Service Employment
Page 27 GAO/HEHS-96-4 Senior Community Service Employment
Contents

Letter 1

Appendix I 

Scope and

Methodology

32

Limitations 33

Appendix II 

National Sponsor

Profiles

34

American Association of Retired Persons (AARP) 34

Associacion Nacional Pro Personas Mayores (ANPPM) 35

Green Thumb 36

National Pacific Asian Resources Center (NAPCA) 37

National Council and Caucus on Black Aged (NCCBA) 38

National Council on the Aging (NCOA) 39

National Council of Senior Citizens (NCSC) 40

National Indian Council on Aging (NICOA) 41

National Urban League (NUL) 42

U.S. Forest Service (USFS) 43

Appendix III 

Program Year 1994

State Allocations

Compared With

Simulated State

Allocations Without

Hold Harmless

Provision

45

Appendix IV 

Simulation of

Program Year 1994

State Allocations

Without 78/22 Limit

47

Page 28 GAO/HEHS-96-4 Senior Community Service Employment
Contents

Appendix V 

National Sponsors’

Administrative Costs

Placed in the Category

of Other Enrollee

Costs

52

Appendix VI 

Comments From the

Department of Labor

and Our Evaluation

60

GAO Comments 68

Appendix VII 

GAO Contacts and

Staff

Acknowledgments

75

Tables Table 1: National Sponsor Indirect Cost Rates 21

Table IV.1: Department of Labor Simulation of Program Year 1994

State Allocations Without 78/22 Provision

48

Table V.1: Additional Administrative Costs in SCSEP Grants 53

Table V.2: GAO Delineation of AARP Administrative Costs

Included in the Category of Other Enrollee Costs

54

Table V.3: GAO Delineation of ANPPM Administrative Costs

Included in the Category of Other Enrollee Costs

54

Table V.4: GAO Delineation of Green Thumb Administrative

Costs Included in the Category of Other Enrollee Costs

55

Table V.5: GAO Delineation of NAPCA Administrative Costs

Included in the Category of Other Enrollee Costs

55

Table V.6: GAO Delineation of NCCBA Administrative Costs

Included in the Category of Other Enrollee Costs

56

Table V.7: GAO Delineation of NCOA Administrative Costs

Included in the Category of Other Enrollee Costs

57

Table V.8: GAO Delineation of NCSC Administrative Costs

Included in the Category of Other Enrollee Costs

58

Page 29 GAO/HEHS-96-4 Senior Community Service Employment
Contents

Table V.9: GAO Delineation of NICOA Administrative Costs

Included in the Category of Other Enrollee Costs

58

Table V.10: GAO Delineation of NUL Administrative Costs

Included in the Category of Other Enrollee Costs

59

Table V.11: GAO Delineation of USFS Administrative Costs

Included in the Category of Other Enrollee Costs

59

Figures Figure 1: Program Year 1994 SCSEP Grants to National Sponsors

and States

8

Figure 2: National Sponsors by State 9

Figure 3: Number of States in Which Each National Sponsor

Operates

10

Abbreviations

AARP American Association of Retired Persons

ANPPM Association Nacional Pro Personas Mayores

ETA Employment and Training Administration

FICA Federal Insurance Contributions Act

NAPCA National Asian Pacific Center on Aging

NASUA National Association of State Units on Aging

NCCBA National Caucus and Center on Black Aged

NCOA National Council on Aging

NCSC National Council of Senior Citizens

NICOA National Indian Council on Aging

NUL National Urban League

OAA Older Americans Act

OIG Office of the Inspector General

OMB Office of Management and Budget

PRB Procurement Review Board

SCSEP Senior Community Service Employment Program

USFS U.S. Forest Service

Page 30 GAO/HEHS-96-4 Senior Community Service Employment
Page 31 GAO/HEHS-96-4 Senior Community Service Employment
Appendix I 

Scope and Methodology

To identify Senior Community Service Employment Program (SCSEP)

grants for program years 1993-94, we reviewed grant applications, the

Older Americans Act (OAA), and Labor’s regulations that relate to grant

awards and to title V. We also reviewed prior studies, audits, and reports

on SCSEP, including those by Labor’s Office of Inspector General (OIG). We

interviewed officials in the Employment and Training Administration’s

(ETA) divisions of Older Workers Programs and Acquisition and Assistance

(the “Grant Office”) and in Labor’s Office of Cost Determination and Office

of Procurement. We also interviewed the OIG staff currently involved in

program audits and several contract auditors engaged in audits of the

SCSEP national sponsors.

To learn about Labor’s oversight, coordination among sponsors,

subsidized placements, and the effects of administrative practices on

program goals, we interviewed officials from

• the 10 national sponsor organizations;

• 28 of the state units that administer or have the opportunity to administer

SCSEP;

• other organizations with an interest in SCSEP, including, the National

Association of State Units on Aging (NASUA), the National Association of

Area Agencies on Aging, and the U.S. Administration on Aging; and

• several organizations operating as subgrantees for national sponsors and

state agencies.

To learn about equitable distribution requirements and Labor’s

implementation of the OAA’s hold harmless provision, we interviewed staff

from ETA’s Office of the Comptroller and reviewed the data used in the

funding allocation process. We also reviewed states’ equitable distribution

reports for 1989 and 1994 to check compliance with and progress over

time in meeting the OAA’s equitable distribution provision.

To trace the evolution of SCSEP, we reviewed several legislative histories,

from the program’s beginning as a pilot project to its present status. We

also interviewed former congressional staff who had interests in SCSEP

authorization, appropriations, and oversight.

To select states for review, we tried to obtain a balanced perspective in

geography, size, and degree of direct involvement with SCSEP. Our selection

was not random.

Page 32 GAO/HEHS-96-4 Senior Community Service Employment
Appendix I 

Scope and Methodology

In discussing administrative and other enrollee costs for states or the

national sponsors, unless otherwise noted, we used amounts budgeted in

the grants rather than costs actually incurred. Labor acts on the budget

information in the sponsors’ grant application packages during its

approval process. Although we reviewed audits by Labor’s OIG and others,

we did not personally audit the grantees or examine specific sponsor

expenditures.

Limitations We did not try to assess (1) the outcomes of training offered by national

sponsors, states, or U.S. Territories; (2) the 502 (e)(1) section of the OAA

allowing Labor to use small amounts of SCSEP funds to conduct

experimental projects that involve placing enrollees in private business

concerns; or (3) the relative performance in administering SCSEP of

individual states and territories or individual national sponsors.

We did not attempt to independently verify the accuracy of the data

provided to us. We conducted our review between April 1994 and

April 1995 in accordance with generally accepted government auditing

standards.

Page 33 GAO/HEHS-96-4 Senior Community Service Employment
Appendix II 

National Sponsor Profiles

Senior Community Service Employment Program (SCSEP) national sponsor

projects operate locally under two general approaches: (1) by subgrant

agreements with local organizations, such as agencies on aging or

community groups, and (2) through local affiliates of the national sponsor.

National sponsor decisions on where they will administer their enrollee

positions—based on how they choose to operate and the constraints that

they operate under—alter the distribution of program resources within

states.

A profile of each national sponsor along with grant information for

program year 1993 (the most recent complete year for which performance

data were available) follows. (The number of staff shown as funded by the

grant is based on grant application materials. The number of staff funded

through the indirect cost portion of the grant may not be readily

identifiable.)

American Association

of Retired Persons

(AARP)

Program Year 1993 Data SCSEP federal grant for program year 1993: $48,806,554

Enrollee slots administered: 8,131

Enrollees served: 13,923

End of program year profile: male—29.6 percent, female—70.4 percent

Services to general community: 69.9 percent

Services to elderly community: 30.1 percent

Organizational

Characteristics

Year first provided funds: 1969

Administration: 10 area supervisors responsible for state projects run by

AARP staff and enrollees in administrative positions

Number of grant-funded employees: 144

Page 34 GAO/HEHS-96-4 Senior Community Service Employment
Appendix II 

National Sponsor Profiles

Number of enrollees used in SCSEP administration: 502 (7 percent)

States operating in: 34 (33 and Puerto Rico)

State slots administered: Florida (342), North Dakota (15)

Slots granted to states: none

Benefits to enrollees: Federal Insurance Contributions Act (FICA),

workers’ compensation, sick leave

Definition of unsubsidized placement: Placement of a person who

intends to stay for 30 days or more in an unsubsidized position

Associacion Nacional

Pro Personas Mayores

(ANPPM)

Program Year 1993 Data SCSEP federal grant for program year 1993: $11,403,935

Enrollee slots administered: 1,834

Enrollees served: 2,528

End of program year profile: male—33.7 percent, female—66.3 percent

Services to general community: 76.9 percent

Services to elderly community: 23.1 percent

Organizational

Characteristics

Year first provided funds: 1978

Administration: 13 regional offices, one subgrantee operates SCSEP as

Project Ayuda

Number of grant-funded employees: 38 (estimate)

Page 35 GAO/HEHS-96-4 Senior Community Service Employment
Appendix II 

National Sponsor Profiles

States operating in: 10 (9 states and District of Columbia) (Puerto Rico

added in program year 1994)

Number of enrollees used in SCSEP administration: 45 (2.6 percent)

State slots administered: Florida (23)

Slots granted to states: none

Benefits to enrollees: FICA, workers’ compensation, sick leave, vacation,

paid holidays, and Liberty Mutual Insurance

Definition of unsubsidized placement: Placement must have occurred

in the same fiscal year that a person was a SCSEP enrollee. Person must

stay on the job long enough to receive “a couple of paychecks.” Follow-up

is at 60 days.

Green Thumb

Program Year 1993 Data SCSEP federal grant for program year 1993: $102,163,953

Enrollee slots administered: 16,855

Enrollees served: 27,235

End of program year profile: male—26.7 percent, female—73.3 percent

Services to general community: 78.4 percent

Services to elderly community: 21.6 percent

Organizational

Characteristics

Year first provided funds: 1965

Administration: 30 SCSEP state offices serving one or more states

coordinate Green Thumb employees and enrollees used in administration

Number of grant-funded employees: 417

Page 36 GAO/HEHS-96-4 Senior Community Service Employment
Appendix II 

National Sponsor Profiles

States operating in: 45 (44 and Puerto Rico)

Number of enrollees in used in SCSEP administration: 439

(2.6 percent)

State slots administered: Montana, South Dakota, Ohio, Florida

Slots granted to states: none

Benefits to enrollees: FICA, workers’ compensation, personal leave (up

to 50 hours maximum), bereavement leave (up to 3 days), sick leave, jury

duty benefits, plus other fringe benefits in accordance with Green Thumb

policy

Definition of unsubsidized placement: Enrollee must have received job

orientation, assessment, and counseling. Placement must be expected to

last at least 90 days, must last at least 30 days. Job must have been

procured within 90 days of leaving enrollee status and pay a wage equal to

or greater than what they received as an enrollee.

National Pacific Asian

Resources Center

(NAPCA)

Program Year 1993 Data SCSEP federal grant for program year 1993: $2,097,953

Enrollee slots administered: 346

Enrollees served: 463

End of program year profile: male—62.1 percent, female—37.9 percent

Services to general community: 77.4 percent

Services to elderly community: 22.6 percent

Organizational

Characteristics

Year first provided funds: 1989

Page 37 GAO/HEHS-96-4 Senior Community Service Employment
Appendix II 

National Sponsor Profiles

Administration: Los Angeles and Seattle projects supervised by

headquarters staff, two subprojects

Number of grant-funded employees: 14

States operating in: three (increases to eight in program year 1994)

Number of enrollees in SCSEP administration: 26 (7.6 percent)

State slots administered: none

Slots granted to states: none

Benefits to enrollees: FICA, workers’ compensation, up to 13 holidays, 4

hours per month sick leave, 1 personal day, 3 days bereavement leave, 10

days jury duty

Definition of unsubsidized placement: Must go directly to the job from

enrollee status. No minimum time on the job is required.

National Council and

Caucus on Black Aged

(NCCBA)

Program Year 1993 Data SCSEP federal grant for program year 1993: $11,186,559

Enrollee slots administered: 1,923

Enrollees served: 2,805

End of program year profile: male—24.8 percent, female—75.2 percent

Services to general community: 65.5 percent

Services to elderly community: 34.5 percent

Organizational

Characteristics

Year first provided funds: 1978

Page 38 GAO/HEHS-96-4 Senior Community Service Employment
Appendix II 

National Sponsor Profiles

Administration: NCCBA staff operate state projects—no subcontracts

Number of grant-funded employees: 43

States operating in: 11 (10 states and District of Columbia)

Number of enrollees used in SCSEP administration: 68 (3.7 percent)

State slots administered: Florida

Slots granted to states: none

Benefits to enrollees: FICA, workers’ compensation, sick leave, annual

leave, 11 paid holidays

Definition of unsubsidized placement: Enrollee must have come from

program directly with jobs preferred to last at least 30 continuous days.

Job must have minimum hourly rate at least equal to $4.25. Follow up at

30, 60, and 90 days. No minimum time as an enrollee required.

National Council on

the Aging (NCOA)

Program Year 1993 Data SCSEP federal grant for program year 1993: $38,373,967

Enrollee slots administered: 6,425

Enrollees served: 10,298

End of program year profile: male—23.7 percent, female—76.3 percent

Services to general community: 63.4 percent

Services to the elderly community: 36.6 percent

Organizational

Characteristics

Year first provided funds: 1968

Page 39 GAO/HEHS-96-4 Senior Community Service Employment
Appendix II 

National Sponsor Profiles

Administration: 3 regional offices, 63 subsponsor agencies, direct

management of Los Angeles project

Number of grant-funded employees: 77

States operating in: 21

Number of enrollees used in SCSEP administration: 188 (2.9 percent)

State slots administered: (Arizona, New Jersey, Florida)

Slots granted to states: (Arizona, New Jersey, Virginia)

Benefits to enrollees: FICA, workers’ compensation, unemployment

insurance (where required), as well as benefits consistent with host

agency environment

Definition of unsubsidized placement: Any job not federally funded or

volunteer. No time limits in effect.

National Council of

Senior Citizens

(NCSC)

Program Year 1993 Data SCSEP federal grant for program year 1993: $62,084,256

Enrollee slots administered: 10,245

Enrollees served: 15,276

End of program year profile: male—24.0 percent, female—76.0 percent

Services to general community: 62.5 percent

Services to elderly community: 37.5 percent

Organizational

Characteristics

Year first provided funds: 1968

Page 40 GAO/HEHS-96-4 Senior Community Service Employment
Appendix II 

National Sponsor Profiles

Administration: All projects subcontracted to municipal, charitable,

local, or state organizations. NCSC staff involved in training and subproject

supervision.

Number of grant-funded employees: 65

States operating in: 28 (27 and the District of Columbia)

Number of enrollees used in SCSEP administration: 275 (2.7 percent)

State slots administered: Alabama, Florida

Slots granted to states: Maryland, District of Columbia

Benefits to enrollees: FICA, workers’ compensation, 8 paid holidays,

optional small hospital policy, 2 hours per pay period of leave

Definition of unsubsidized placement: A job with pay equal to or better

than that of the enrollee position. No time requirements exist on how long

the placement must last or on how long the enrollee must have been out of

the program.

National Indian

Council on Aging

(NICOA)

Program Year 1993 Data SCSEP federal grant for program year 1993: $2,062,027

Enrollee slots administered: 340

Enrollees served: 512

End of program year profile: male—30.9 percent, female—69.1 percent

Services to general community: 51.9 percent

Services to elderly community: 48.1 percent

Page 41 GAO/HEHS-96-4 Senior Community Service Employment
Appendix II 

National Sponsor Profiles

Organizational

Characteristics

Year first provided funds: 1989

Administration: State coordinators in three states, one subproject

Number of grant-funded employees: 10

States operating in: six (increased to 16 in program year 1994)

Number of enrollees used in SCSEP administration: one (0.3 percent)

State slots administered: none

Slots granted to states: none

Benefits to enrollees: FICA, workers’ compensation, paid holidays

consistent with worksite policy, sick and annual leave up to 20 hours per

grant year

Definition of unsubsidized placement: No specific time criteria for

departure or duration

National Urban

League (NUL)

Program Year 1993 Data SCSEP federal grant for program year 1993: $13,689,730

Enrollee slots administered: 2,260

Enrollees served: 3,470

End of program year profile: male—27.1 percent, female—72.9 percent

Services to general community: 68.7 percent

Services to elderly community: 31.3 percent

Organizational

Characteristics

Year first provided funds: 1978

Page 42 GAO/HEHS-96-4 Senior Community Service Employment
Appendix II 

National Sponsor Profiles

Administration: subcontracts with 23 NUL affiliates in urban areas

Number of grant-funded employees: 76

States operating in: 16

Number of enrollees used in SCSEP administration: 100 (4.5 percent)

State slots administered: Florida

Slots granted to states: none

Benefits to enrollees: FICA, workers’ compensation, and unemployment

compensation where applicable (New York and Michigan)

Definition of unsubsidized placement: Placement in a position not

funded by another government grant found within 30 days after leaving

enrollee status; must have been an enrollee at least a week and must

remain on the job at least 30 days.

U.S. Forest Service

(USFS)

Program Year 1993 Data SCSEP federal grant for program year 1993: $25,736,918

Enrollee slots administered: 4,323

Enrollees served: 5,691

End of program year profile: male—59.0 percent, female—41.0 percent

Services to general community: 99.9 percent

Services to elderly community: 0.1 percent

Organizational

Characteristics

Year first provided funds: 1972

Page 43 GAO/HEHS-96-4 Senior Community Service Employment
Appendix II 

National Sponsor Profiles

Administration: 225 projects at various USFS locations within the eight

Forest Service regions, nine regional experimental stations, and

headquarters; two subcontracts

Number of grant-funded employees: 287 (4 full time, 283 part time)

States operating in: 40 (38 states, the District of Columbia, and Puerto

Rico)

Number of enrollees used in SCSEP administration: 1 (0 percent)

State slots administered: Florida

Slots granted to states: New Hampshire, Vermont

Benefits to enrollees: FICA, workers’ compensation, one hour of paid

leave for every 20 hours worked, up to $35 allowance for annual physical

exam

Definition of unsubsidized placement: USFS has no required minimum

for placement duration or separation from the program.

Page 44 GAO/HEHS-96-4 Senior Community Service Employment
Appendix III 

Program Year 1994 State Allocations

Compared With Simulated State Allocations

Without Hold Harmless Provision

State

Program year

1994 by state

Simulated

program

year 1994 Difference

Alabama $7,483,894 $7,841,642 $357,748

Alaska 1,782,400 2,050,682 268,282

Arizona 5,184,445 6,846,749 1,662,304

Arkansas 7,130,399 5,137,267 –1,993,132

California 34,116,026 36,635,152 2,519,126

Colorado 4,011,890 4,281,800 269,910

Connecticut 4,430,345 3,773,509 –656,836

Delaware 1,782,400 2,050,682 268,262

District of Columbia 2,291,524 2,050,682 –240,842

Florida 24,123,354 28,285,755 4,162,401

Georgia 8,895,159 9,464,973 569,814

Hawaii 1,782,400 2,050,682 268,282

Idaho 1,921,803 2,050,682 128,879

Illinois 15,892,863 15,805,235 –87,628

Indiana 10,542,397 9,518,356 –1,024,041

Iowa 5,243,313 5,344,361 101,048

Kansas 4,173,410 4,192,029 18,619

Kentucky 7,516,140 6,842,574 –673,566

Louisiana 6,865,985 7,305,237 439,252

Maine 2,463,484 2,211,421 –252,063

Maryland 5,485,015 5,625,343 140,328

Massachusetts 8,965,346 7,663,875 –1,301,471

Michigan 13,571,672 14,321,447 749,775

Minnesota 9,344,688 6,470,690 –2,873,998

Mississippi 5,035,305 5,212,635 177,330

Missouri 9,912,701 9,081,677 –831,024

Montana 2,467,293 2,050,682 –416,611

Nebraska 3,089,931 2,781,873 –308,058

Nevada 1,921,803 2,050,682 128,879

New Hampshire 1,849,071 2,050,682 201,611

New Jersey 11,238,803 8,937,395 –2,301,408

New Mexico 2,222,551 2,695,530 472,979

New York 26,826,145 22,913,434 –3,912,711

North Carolina 10,546,849 11,677,280 1,130,431

North Dakota 2,382,439 2,050,682 –331,757

Ohio 18,063,819 18,790,357 726,538

(continued)

Page 45 GAO/HEHS-96-4 Senior Community Service Employment
Appendix III 

Program Year 1994 State Allocations

Compared With Simulated State Allocations

Without Hold Harmless Provision

State

Program year

1994 by state

Simulated

program

year 1994 Difference

Oklahoma 6,403,028 6,169,013 –234,015

Oregon 5,801,089 5,104,446 –696,643

Pennsylvania 22,048,545 21,397,401 –651,144

Puerto Rico 5,644,846 7,510,552 1,865,706

Rhode Island 2,133,938 2,050,682 –83,256

South Carolina 5,453,038 6,285,795 832,757

South Dakota 2,721,855 2,050,682 –671,173

Tennessee 8,284,106 8,916,286 632,180

Texas 22,215,326 24,570,981 2,355,655

Utah 2,579,076 2,424,458 –154,618

Vermont 2,194,548 2,050,682 –143,866

Virginia 8,547,897 8,245,188 –302,709

Washington 5,945,604 6,756,045 810,441

West Virginia 4,498,913 4,088,906 –410,007

Wisconsin 10,180,156 8,249,502 –1,930,654

Wyoming 1,921,803 2,050,682 128,879

Note: Simulation based on demographic and income data available at time of allocations.

Simulation does not show funding levels that would be allocated for program activities in the U.S.

Territories.

Page 46 GAO/HEHS-96-4 Senior Community Service Employment
Appendix IV 

Simulation of Program Year 1994 State

Allocations Without 78/22 Limit

The amounts of the SCSEP grants have been affected by appropriations

language that distributes the grant funds between the national sponsors

and states in a way that differs from the language in the OAA. For program

year 1994, the national sponsors received about $320 million (78 percent of

the funds), and the states received about $90 million (22 percent of the

funds).

At our request, Labor ran a simulated allocation of the program year 1994

funding formula without the 78/22 appropriations language limit in place.

Under that simulation, the funds in excess of the 1978 appropriation would

have been split 55 percent for the states and 45 percent for the national

sponsors. Of the $410.3 million appropriated for program year 1994, funds

for the state sponsors would have increased by $65 million to about

$155 million; national sponsor funding would have decreased by that

amount to $255 million.

The first three columns of the simulation (see table IV.1) represent

simulated program year 1994 funding for the state sponsors. Column 1

shows each state’s 1978 funding level; column 2 shows the additional

funds, in excess of the 1978 level, that would have been distributed to

states on the basis of the “55-45” split; and column 3 is the sum of these

first two columns. The national total for the state sponsors, including

territorial allocations, is more than $155 million.

The next three columns represent simulated funding for the national

sponsors. Column 4 shows the amount of national sponsor funding in each

state in 1978; column 5 shows the additional funds, in excess of the 1978

level, that would have been distributed to the national sponsors on the

basis of the 55-45 split; and column 6 is the sum of columns 4 and 5. The

national total for the national sponsors is about $255 million.

Columns 7 to 9 combine the state sponsor and national sponsor funding.

Column 7 is the sum of columns 1 and 4. Nationally, column 7 totals about

$201 million, the amount of the 1978 allocation for the program. Column 8

is the sum of columns 2 and 5. Nationally, column 8 totals over

$209 million and represents the funds for program year 1994 that exceed of

the 1978 appropriation. Column 9 is the total of columns 7 and 8;

nationally, column 9 totals the $410.3 million appropriation for program

year 1994.

Page 47 GAO/HEHS-96-4 Senior Community Service Employment
Appendix IV 

Simulation of Program Year 1994 State

Allocations Without 78/22 Limit

Table IV.1: Department of Labor

Simulation of Program Year 1994 State

Allocations Without 78/22 Provision State

1978 state

sonsors

55%/45% state

sponsors

Total state

sponsors

Alabama $717,000 $2,145,756 $2,862,756

Alaska 813,000 1,047,250 1,860,250

Arizona 395,000 1,873,517 2,268,517

Arkansas 491,000 1,405,743 1,896,743

California 2,930,000 10,024,701 12,954,701

Colorado 344,000 1,171,655 1,515,655

Connecticut 447,000 1,032,568 1,479,568

Delaware 813,000 1,047,250 1,860,250

District of Columbia 185,000 562,661 747,661

Florida 1,973,000 7,740,004 9,713,004

Georgia 797,000 2,589,958 3,386,958

Hawaii 813,000 1,047,250 1,860,250

Idaho 185,000 562,661 747,661

Illinois 1,541,000 4,324,883 5,865,883

Indiana 849,000 2,604,566 3,453,566

Iowa 538,000 1,462,410 2,000,410

Kansas 410,000 1,147,090 1,557,090

Kentucky 653,000 1,872,375 2,525,375

Louisiana 639,000 1,998,977 2,637,977

Maine 220,000 605,124 825,124

Maryland 542,000 1,539,297 2,081,297

Massachusetts 995,000 2,097,113 3,092,113

Michigan 1,250,000 3,918,865 5,168,865

Minnesota 667,000 1,770,614 2,437,614

Mississippi 489,000 1,426,365 1,915,365

Missouri 925,000 2,485,075 3,410,075

Montana 185,000 562,661 747,661

Nebraska 289,000 761,221 1,050,221

Nevada 185,000 562,661 747,661

New Hampshire 185,000 562,661 747,661

New Jersey 1,062,000 2,445,594 3,507,594

New Mexico 185,000 737,594 922,594

New York 2,869,000 6,269,943 9,138,943

North Carolina 945,000 3,195,325 4,140,325

North Dakota 185,000 562,661 747,661

Ohio 1,689,000 5,141,720 6,830,720

Oklahoma 548,000 1,688,065 2,236,065

Page 48 GAO/HEHS-96-4 Senior Community Service Employment
Appendix IV 

Simulation of Program Year 1994 State

Allocations Without 78/22 Limit

e

s

1978 national

sponsors

55%/45% national

sponsors

Total national

sponsors 1978 total 55%/45% total Grand total

6 $2,872,000 $1,848,020 $4,720,020 $3,589,000 $3,993,776 $7,582,776

0 0 0 0 813,000 1,047,250 1,860,250

7 1,568,000 1,613,556 3,181,556 1,963,000 3,487,073 5,450,073

3 3,458,000 1,210,688 4,668,688 3,949,000 2,616,431 6,565,431

12,841,000 8,633,712 21,474,712 15,771,000 18,658,413 34,429,413

5 1,518,000 1,009,080 2,527,080 1,862,000 2,180,735 4,042,735

8 1,961,000 889,293 2,850,293 2,408,000 1,921,861 4,329,861

0 0 0 0 813,000 1,047,250 1,860,250

989,000 484,589 1,473,589 1,174,000 1,047,250 2,221,250

4 8,362,000 6,666,031 15,028,031 10,335,000 14,406,035 24,741,035

8 3,374,000 2,230,586 5,604,586 4,171,000 4,820,544 8,991,544

0 0 0 0 813,000 1,047,250 1,860,250

724,000 484,589 1,208,589 909,000 1,047,250 1,956,250

3 6,354,000 3,724,780 10,078,780 7,895,000 8,049,663 15,944,663

6 4,523,000 2,243,166 6,766,166 5,372,000 4,847,732 10,219,732

0 2,054,000 1,259,492 3,313,492 2,592,000 2,721,902 5,313,902

0 1,656,000 987,925 2,643,925 2,068,000 2,135,015 4,201,015

5 3,205,000 1,612,572 4,817,572 3,858,000 3,484,947 7,342,947

7 2,599,000 1,721,606 4,320,606 3,238,000 3,720,583 6,958,583

4 1,058,000 521,160 1,579,160 1,278,000 1,126,284 2,404,284

7 2,139,000 1,325,710 3,464,710 2,681,000 2,865,007 5,546,007

3 3,953,000 1,806,126 5,759,126 4,948,000 3,903,239 8,851,239

5 5,177,000 3,375,099 8,582,099 6,427,000 7,293,954 13,720,964

4 4,614,000 1,524,931 6,138,931 5,281,000 3,295,545 8,576,545

5 1,948,000 1,228,448 3,176,448 2,437,000 2,654,813 5,091,813

5 4,202,000 2,140,256 6,342,256 5,127,000 4,625,331 9,752,331

1,114,000 484,589 1,598,589 1,299,000 1,047.250 2,346,250

1,324,000 655,597 1,979,597 1,613,000 1,416,818 3,029818

724,000 484,589 1,208,589 909,000 1,047,250 1,956,250

672,000 484,589 1,156,589 857,000 1,047,250 1,904,250

4 5,178,000 2,106,253 7,284,253 6,240,000 4,551,847 10,791,847

4 741,000 635,248 1,376,248 926,000 1,372,842 2,298,842

3 11,849,000 5,399,950 17,248,950 14,718,000 11,669,893 26,387,893

5 3,862,000 2,751,955 8,613,955 4,807,000 5,947,280 10,754,280

1,054,000 484,589 1,538,589 1,239,000 1,047,250 2,286,250

0 6,975,000 4,428,276 11,403,276 8,664,000 9,569,996 18,233,996

5 2,625,000 1,453,835 4,078,835 3,173,000 3,141,900 6,314,900

(continued)

Page 49 GAO/HEHS-96-4 Senior Community Service Employment
Appendix IV 

Simulation of Program Year 1994 State

Allocations Without 78/22 Limit

State

1978 state

sonsors

55%/45% state

sponsors

Total state

sponsors

Oregon 415,000 1,396,761 1,811,761

Pennsylvania 2,192,000 5,855,101 8,047,101

Puerto Rico 449,000 2,055,158 2,504,158

Rhode Island 185,000 562,661 747,661

South Carolina 473,000 1,720,020 2,193,020

South Dakota 185,000 562,661 747,661

Tennessee 806,000 2,439,518 3,245,518

Texas 1,886,000 6,723,508 8,609,508

Utah 185,000 663,419 848,419

Vermont 185,000 562,661 747,661

Virginia 731,000 2,256,181 2,987,181

Washington 534,000 1,848,698 2,382,698

West Virginia 383,000 1,118,872 1,501,872

Wisconsin 809,000 2,257,361 3,066,361

Wyoming 185,000 562,661 747,661

American Samoa 407,000 523,625 930,625

Guam 407,000 523,625 930,625

Northern Marianas 203,500 523,625 727,125

Palau 203,500 523,625 727,125

Virgin Islands 407,000 523,625 930,625

U.S. Total $40,179,000 $115,197,500 $155,376,500

Page 50 GAO/HEHS-96-4 Senior Community Service Employment
Appendix IV 

Simulation of Program Year 1994 State

Allocations Without 78/22 Limit

e

s

1978 national

sponsors

55%/45% national

sponsors

Total national

sponsors 1978 total 55%/45% total Grand total

2,534,000 1,202,952 3,736,952 2,949,000 2,599,713 5,548,713

8,970,000 5,042,671 14,012,671 11,162,000 10,897,772 22,059,772

8 1,688,000 1,769,992 3,457,992 2,137,000 3,825,150 5,962,150

876,000 484,589 1,360,589 1,061,000 1,047,250 2,108,250

0 1,921,000 1,481,357 3,402,357 2,394,000 3,201,377 5,595,377

1,293,000 484,589 1,777,589 1,478,000 1,047,250 2,525,250

8 3,105,000 2,101,278 5,206,278 3,911,000 4,541,096 8,452,096

8 8,144,000 5,790,580 13,934,580 10,030,000 12,514,088 22,544,088

9 1,080,000 571,366 1,651,366 1,265,000 1,234,785 2,499,785

919,000 484,589 1,403,589 1,104,000 1,047,250 2,151,250

3,502,000 1,943,122 5,445,122 4,233,000 4,199,303 8,432,303

8 2,122,000 1,592,180 3,714,180 2,658,000 3,440,878 6,096,878

2 1,921,000 963,622 2,884,622 2,304,000 2,082,494 4,386,494

4,655,000 1,944,139 6,599,139 5,464,000 4,201,500 9,665,500

724,000 484,589 1,208,589 908,000 1,047,250 1,956,250

5 0 0 0 407,000 523,625 930,625

5 0 0 0 407,000 523,625 930,625

5 0 0 0 203,500 523,625 727,125

5 0 0 0 203,500 523,625 727,125

5 0 0 0 407,000 523,625 930,625

0 $160,721,000 $94,252,500 $254,973,500 $200,900,000 $209,450,000 $410,350,000

Page 51 GAO/HEHS-96-4 Senior Community Service Employment
Appendix V 

National Sponsors’ Administrative Costs

Placed in the Category of Other Enrollee

Costs

For program year 1994, most of the national sponsors allocated

administrative costs to the category of other enrollee costs rather than the

administrative category, which has an Older Americans Act (OAA) limit of

15 percent. Officials at Labor and some of the national sponsor

organizations justified this practice because the costs included support of

enrollee training or assessment activities or the costs of providing these

services, expenditures allowed under the 1985 proposed SCSEP regulations.

However, because the 1985 proposed regulations were never published in

final form, they never superseded the 1976 legally promulgated

regulations.

Labor, while defending the 1985 draft definition of other enrollee costs,

could not specifically explain how many of these allowed costs for

program year 1994 related directly to the enrollees—nor did most of the

documents provided by the national sponsors in response to Labor’s

request to provide explanatory data. Some grantees provided the results of

internal surveys of staff activity taken in 1985 or earlier to support their

budget allocations. Others provided only their stated reliance upon Labor’s

1985 proposed regulation language as the basis for their including such

administrative costs as other enrollee costs. When actual costs for

program year 1994 were provided, we reviewed them and, where

appropriate, included them in the tables.

Tables V.2 to V.11 delineate grant costs for administration and other

enrollee costs (1) from the individual national sponsor grant agreements

and (2) as we identified them. Our delineation identifies costs allocated to

other enrollee costs that, in our judgment, were administrative costs. All

costs that could be attributed directly to enrollee training, special

job-related or personal counseling, incidentals, or other direct support

were excluded from the following tables.

A combined total of (1) administrative costs from the grant agreement and

(2) additional administrative costs identified by GAO from the other

enrollee costs category is also shown for each grantee organization. A

combined percentage for administration is computed as well. When actual

cost data were provided by the grantees, those costs are shown in an

“actual costs” column. In these instances, actual costs were added to the

acknowledged administrative costs from the grant to derive totals and

percentages. In cases where no actual cost data were provided, the actual

cost column is blank.

Page 52 GAO/HEHS-96-4 Senior Community Service Employment
Appendix V 

National Sponsors’ Administrative Costs

Placed in the Category of Other Enrollee

Costs

Using the budget data from the grant applications and, where available,

actual cost data provided by the grantees, we found that administrative

costs for most of the sponsors were higher than the 15-percent limit in the

OAA. For program year 1994, the administrative costs labeled as other

enrollee costs exceeded $18 million. (Using budget data alone, the total

exceeded $20 million.) Table V.1 summarizes the additional administrative

costs for all the national sponsors.

Table V.1: Additional Administrative

Costs in SCSEP Grants

National sponsor

Additional

administrative

cost (budget)

Additional

administrative

cost (with actual)

Percent of grant

for all

administration

(with actual)

American Association of

Retired Persons (AARP) $4,473,499 $4,097,080 23.2

Association Nacional Pro

Personas Mayores

(ANPPM) 935,969 935,969 22.4

Green Thumb 8,133,633 7,095,487 20.4

National Asian Pacific

Center on Aging (NAPCA) 343,903 343,903 16.8

National Caucus and

Center on Black Aged

(NCCBA) 740,058 673,141 19.8

National Council on Aging

(NCOA) 3,645,028 3,645,028 23.2

National Council of Senior

Citizens (NCSC) 625,000 375,000 13.2

National Urban League

(NUL) 1,275,685 1,263,685 22.4

National Indian Council on

Aging (NICOA) 375,891 309,752 21.1

U.S. Forest Service (USFS) 0 0 10.0

Total $20,548,666 $18,739,045

Page 53 GAO/HEHS-96-4 Senior Community Service Employment
Appendix V 

National Sponsors’ Administrative Costs

Placed in the Category of Other Enrollee

Costs

Table V.2: GAO Delineation of AARP

Administrative Costs Included in the

Category of Other Enrollee Costs

AARP: SCSEP federal grant for program year 1994 ($49,894,391)

Budgeted amount Percent of grant Actual costs

Grant budget

Administration $7,481,421 14.99

Other enrollee cost 4,686,249 9.39

GAO-identified administrative costs

Personnel 2,649,745 $2,562,901

Fringe benefits 1,091,790 889,977

Travel 140,000 161,102

Rent 406,250 335,798

Telephone 185,714 147,302

Subtotal (A) 4,473,499 4,097,080

AARP-identified

administration (B) 7,481,421

GAO total of administration

(A) + (B) $11,954,920 23.2 $11,578,501

Table V.3: GAO Delineation of ANPPM

Administrative Costs Included in the

Category of Other Enrollee Costs

ANPPM: SCSEP federal grant for program year 1994 ($12,570,219)

Budgeted amount Percent of grant Actual costs

Grant budget

Administration $1,885,533 15 (with waiver)

Other enrollee cost 1,068,469 8.5

GAO-identified administrative costs

Personnel 530,000

Fringe benefits 180,000

Travel 50,000

Rent 105,000

Telephone 42,969

Postage 28,000

Subtotal (A) 935,969

ANPPM-identified

administration (B) 1,885,533

GAO total of

administration 

(A) + (B) $2,821,502 22.4

Page 54 GAO/HEHS-96-4 Senior Community Service Employment
Appendix V 

National Sponsors’ Administrative Costs

Placed in the Category of Other Enrollee

Costs

Table V.4: GAO Delineation of Green

Thumb Administrative Costs Included

in the Category of Other Enrollee

Costs

Green Thumb: SCSEP federal grant for program year 1994 ($102,509,745)

Budgeted amount Percent of grant Actual costs

Grant budget

Administration $13,838,815 13.5

Other enrollee cost 8,200,780 8.0

GAO-identified administrative costs

Personnel 4,564,516 $4,326,906

Fringe benefits 1,504,977 1,548,085

Travel 1,700,086 1,183,935

Insurance 364,054 22,860

Miscellaneous 13,701

Subtotal (A) 8,133,633 7,095,487

Green Thumbidentified administration

(B) 13,838,815

GAO total of

administration 

(A) + (B) $21,972,448 20.4 $20,934,302

Table V.5: GAO Delineation of NAPCA

Administrative Costs Included in the

Category of Other Enrollee Costs

NAPCA: SCSEP federal grant for program year 1994 ($5,067,315)

Budgeted amount Percent of grant Actual costs

Grant budget

Administration $509,839 10.06

Other enrollee cost 423,825 8.36

GAO-identified administrative costs

Personnel 49,655

Fringe benefits 14,967

Contractual 279,281

Subtotal (A) 343,903

NAPCA-identified

administration (B) 509,839

GAO total of

administration 

(A) + (B) $853,742 16.8

Page 55 GAO/HEHS-96-4 Senior Community Service Employment
Appendix V 

National Sponsors’ Administrative Costs

Placed in the Category of Other Enrollee

Costs

Table V.6: GAO Delineation of NCCBA

Administrative Costs Included in the

Category of Other Enrollee Costs

NCCBA: SCSEP federal grant for program year 1994 ($12,298,332)

Budgeted amount Percent of grant Actual costs

Grant budget

Administration $1,768,904 14.38

Other enrollee cost 867,785 7.06

GAO-identified administrative costs

Personnel 444,320 $396,152

Fringe benefits 172,892 154,143 (est.)

Travel 72,100 a

Equipment/supplies 10,646 a

Telephone 25,000 a

Contractual 15,100 a

Subtotal (A) 740,058 673,141

NCCBA-identified

administration (B) 1,768,904

GAO total of

administration 

(A) + (B) $2,508,962 19.8 $2,442,045

aNo actual costs provided for these categories.

Page 56 GAO/HEHS-96-4 Senior Community Service Employment
Appendix V 

National Sponsors’ Administrative Costs

Placed in the Category of Other Enrollee

Costs

Table V.7: GAO Delineation of NCOA

Administrative Costs Included in the

Category of Other Enrollee Costs

NCOA: SCSEP federal grant for program year 1994 ($37,442,704)

Budgeted amount Percent of grant Actual costs

Grant budget

Administration $5,054,765 13.5

Other enrollee cost 3,931,484 10.5

GAO-identified administrative costs

Personnel 1,992,691

Fringe benefits 494,793

Travel 153,757

Equipment 47,200

Supplies 158,995

Miscellaneous 55,065

Postage 51,170

Advertising 35,989

Rent 522,494

Telephone 132,874

Subtotal (A) 3,645,028

NCOA-identified

administration (B) 5,054,765

GAO total of

administration 

(A) + (B) $8,699,793 23.2

Page 57 GAO/HEHS-96-4 Senior Community Service Employment
Appendix V 

National Sponsors’ Administrative Costs

Placed in the Category of Other Enrollee

Costs

Table V.8: GAO Delineation of NCSC

Administrative Costs Included in the

Category of Other Enrollee Costs

NCSC: SCSEP federal grant for program year 1994 ($62,845,065)

Budgeted amount Percent of grant Actual costs

Grant budget

Administration $7,893,273 12.6

Other enrollee cost 1,432,000 2.3

GAO-identified administrative costs

Annual conference

235,000

$235,000

reclassified as

administration

Project training

140,000

140,000

reclassified 

as administration

Contingency for local

project administration 250,000

Subtotal (A) 625,000 375,000

NCSC-identified

administration (B) 7,893,273

GAO total of

administration 

(A) + (B) $8,518,273 13.2 $8,268,273

Table V.9: GAO Delineation of NICOA

Administrative Costs Included in the

Category of Other Enrollee Costs

NICOA: SCSEP federal grant for program year 1994 ($5,066,911)

Budgeted amount Percent of grant Actual costs

Grant budget

Administration $760,036 15.0

Other enrollee cost 386,891 7.6

GAO-identified administrative costs

Personnel 159,780 $115,127

Fringe benefits 35,639 22,960

Travel 25,000 17,125

Meeting expenses 144,291 144,291

Other 11,181 10,249

Subtotal (A) 375,891 309,762

NICOA-identified

administration (B) 760,036

GAO total of

administration 

(A) + (B) $1,135,927 21.1 $1,069,788

Page 58 GAO/HEHS-96-4 Senior Community Service Employment
Appendix V 

National Sponsors’ Administrative Costs

Placed in the Category of Other Enrollee

Costs

Table V.10: GAO Delineation of NUL

Administrative Costs Included in the

Category of Other Enrollee Costs

NUL: SCSEP federal grant for program year 1994 ($14,341,274)

Budgeted amount Percent of grant Actual costs

Grant budget

Administration $1,948,759 13.59

Other enrollee cost 1,316,535 9.18

GAO-identified administrative costs

Personnel 831,864

Fringe benefits 205,914

Travel 6,730

Equipment 52,000 $40,000

Rent 130,077

Telephone 35,100

Postage 14,000

Subtotal (A) 1,275,685 1,263,685

NUL-identified

administration (B) 1,948,765

GAO total of

administration 

(A) + (B) $3,224,450 22.4 $3,212,444

Table V.11: GAO Delineation of USFS

Administrative Costs Included in the

Category of Other Enrollee Costs

USFS: SCSEP federal grant for program year 1994 ($26,844,903)

Budgeted amount Percent of grant Actual costs

Grant budget

Administration $2,684,418 10.0

Other enrollee cost 1,238,996 4.6

GAO-identified administrative costs

None

Subtotal (A) 0

USFS-identified

administration (B) 2,684,418

GAO total of

administration 

(A) + (B) $2,684,418 10.0

Page 59 GAO/HEHS-96-4 Senior Community Service Employment
Appendix VI 

Comments From the Department of Labor

and Our Evaluation

Note: GAO comments

supplementing those in the

report text appear at the

end of this appendix.

See comment 1.

Page 60 GAO/HEHS-96-4 Senior Community Service Employment
Appendix VI 

Comments From the Department of Labor

and Our Evaluation

Page 61 GAO/HEHS-96-4 Senior Community Service Employment
Appendix VI 

Comments From the Department of Labor

and Our Evaluation

Now on p. 21.

See comment 2.

Now on p. 21.

Now on p. 5.

See comment 3.

Now on p. 6.

See comment 4.

Now on p. 7.

See comment 5.

Page 62 GAO/HEHS-96-4 Senior Community Service Employment
Appendix VI 

Comments From the Department of Labor

and Our Evaluation

Now on p. 11.

See comment 6.

Now on p. 11.

See comment 7.

Now on p. 15.

Page 63 GAO/HEHS-96-4 Senior Community Service Employment
Appendix VI 

Comments From the Department of Labor

and Our Evaluation

Now on p. 13.

Now on p. 15.

Now on p. 12.

See comment 8.

Page 64 GAO/HEHS-96-4 Senior Community Service Employment
Appendix VI 

Comments From the Department of Labor

and Our Evaluation

Now on p. 13.

See comment 9.

Now on p. 14.

See comment 10.

Now on pp. 15-16.

See comment 11.

Now on pp. 17-19.

See comment 12.

Page 65 GAO/HEHS-96-4 Senior Community Service Employment
Appendix VI 

Comments From the Department of Labor

and Our Evaluation

Now on p. 25.

See comment 13.

Page 66 GAO/HEHS-96-4 Senior Community Service Employment
Appendix VI 

Comments From the Department of Labor

and Our Evaluation

Now on pp. 21-22.

See comment 14.

Now on p. 22.

See comment 15.

Page 67 GAO/HEHS-96-4 Senior Community Service Employment
Appendix VI 

Comments From the Department of Labor

and Our Evaluation

The following are GAO’s comments on the Department of Labor’s letter

dated July 31, 1995.

GAO Comments 1. Concerning the appropriateness of the draft report title, SCSEP:

Significant Changes Needed, the purpose of our review was not to

question the need for the program or its results. We were asked to

examine SCSEP’s administration; therefore, we have changed the title to

Department of Labor: Senior Community Service Employment Program

Delivery Could Be Improved Through Legislative and Administrative

Actions to reflect that focus. More specifically, we found systemic flaws

that may deny eligible people an opportunity to participate in the program

and a cost allocation approach that allowed the improper budgeting and

expenditure of millions of dollars, permitting national sponsors to exceed

the statutory 15-percent limit on administrative costs.

2. SCSEP is a grant program for which applicants apply annually. Labor has

the authority to decrease or deny altogether the funding amount sought if

it has concerns about an applicant’s future performance. Therefore, Labor

had a choice in funding the national sponsor in question. For this national

sponsor, Labor had sufficient reason, on the basis of its Office of Inspector

General (OIG) reports, to (1) be concerned about future performance and

(2) consider a change to that grantee’s funding.

3. The statement, which we have rewritten to avoid the inference

mentioned, seeks to explain program funding by identifying contributors

and the differences between cash and in-kind contributions.

4. The report has been changed to include Labor’s updated data that

reflect the proper proportion of women in the SCSEP program.

5. Although funding amounts are related to the time sponsors have

participated in SCSEP, the wide variation in sponsors’ funding has been

cited as a problem by several national sponsors as well as several states.

Some of the smaller, ethnically targeted national sponsors have tried to

serve targeted groups, these sponsors said, but have been thwarted by a

reluctance on the part of some large national sponsors to leave areas they

served. According to some state officials, the significant disparity between

the funding they received and that received by some national sponsors left

the states in a relatively powerless position in disputes over equitable

distribution.

Page 68 GAO/HEHS-96-4 Senior Community Service Employment
Appendix VI 

Comments From the Department of Labor

and Our Evaluation

6. Noncompetitive grant awards that total several hundred million dollars

a year are sufficiently sensitive to warrant the Procurement Review

Board’s review. Further, constraints on the Board members’ time is not

justification for weakening internal control measures. An independent

review of grant award decisions, although administratively established and

not explicitly required by law, is an important internal control.

7. In objecting to our views on the inadequacy of attempts to achieve

equitable distribution of enrollee positions, Labor raised several issues.

Concerning the issue of responsibility by states, we have revised the report

to ensure that it clearly points out the responsibility that states, as well as

national sponsors, have in achieving equitable distribution of enrollee

positions. Concerning the issue of administrative efficiency related to the

goal of equitable distribution, Labor cited our 1979 report, The

Distribution of Senior Community Service Employment Positions

(GAO/HRD-80-13, Nov. 8, 1979). Labor quoted that report on the approach

taken by sponsors—and particularly national sponsors—to achieve

equitable distribution. The report noted that, relative to the administrative

limits required of the program, the national sponsors’ efforts to become

cost effective did have merit. But the relationship between national

sponsors’ and Labor’s efforts to achieve equitable distribution is more fully

detailed in a later report, Information on the Senior Community Service

Employment Program and the Proposed Transfer to the Department of

Health and Human Services (GAO/HRD-84-42, Mar. 12, 1984).

This 1984 report (p. 22) noted the following: “A Labor official stated that

the distribution of enrollee positions within the states may not be

equitable since some national sponsors established large clusters of

enrollee positions early in the development of SCSEP, and these have been

carried forward.” According to the 1984 report, Labor, in February 1979,

asked for SCSEP sponsors in each state to (1) discuss and agree upon a

rationale for distributing SCSEP funds, (2) identify areas that showed

inequitable distribution, (3) establish plans for eliminating inequities

without displacing current enrollees, and (4) send these plans to Labor.

Labor officials said they did not receive many plans. In 1981, following up

on that request, Labor asked national sponsors and state agencies, as a

group effort, to report on the progress made toward achieving equitable

distribution. Labor said that it received reports from approximately

90 percent of the states.

As also noted in our 1984 report, Labor officials established a panel of

representatives—from Labor, national sponsors, and state agencies—to

Page 69 GAO/HEHS-96-4 Senior Community Service Employment
Appendix VI 

Comments From the Department of Labor

and Our Evaluation

review the equitable distribution reports and determine which states were

making progress. The panel examined the state reports, but, according to

our 1984 report, “The results were never formalized by Labor, and no

general feedback was provided to the sponsors.” Labor did suggest to the

program sponsors that they use the reports during their next planning

sessions. In January 1984, Labor once again requested another equitable

distribution report. According to our 1984 report, “while such cooperative

efforts by national and state sponsors are directed toward equitable

distribution, Labor does not know that such distribution has occurred.”

When we began the review leading to this latest report, we asked Labor

officials if they knew the status of equitable distribution in the states

compared with its status 5 years earlier. Labor officials did not know for

certain which states had progressed in equitable distribution.

Concerning Labor’s complaint about census data, any comparison of

distribution of positions between 1989 and 1994 is, necessarily, skewed.

This is because the 1989 distribution of enrollee positions was made on

the basis of 1980 census data, and the 1994 distribution was made on the

basis of 1990 census data. The introduction of 1990 census data in the 1994

equitable distribution reports may have obscured progress made between

1989 and 1994 in some areas and exaggerated progress in others.

8. The number of enrollee positions available depends on the level of SCSEP

funding, not on the hold harmless provision. When funding levels decline,

past performance indicates that sponsors—state and national—leave some

positions unfilled to ensure that enrollees in other positions may continue

in the program. In receiving enrollee positions formerly available to a

national sponsor under the hold harmless provision, a state sponsor would

have the option of (1) administering these positions itself or

(2) subcontracting the administration to others, including the original

national sponsor. In addition, the forward funding nature of the program

(see footnote 7) would give all parties concerned ample time to adjust to a

change in sponsors. Therefore, it is not likely that removing the hold

harmless provision would “place many enrollees ‘on-the-street’ [sic]

without alternatives.”

9. Sponsors that emphasize different activities and target different groups

may, nevertheless, serve the same people. All sponsors must provide

enrollees positions and training that corresponds to their aptitudes and

preferences—just as all sponsors, regardless of their ethnic focus, must

Page 70 GAO/HEHS-96-4 Senior Community Service Employment
Appendix VI 

Comments From the Department of Labor

and Our Evaluation

accept potential enrollees only on the basis of age and income criteria, not

on ethnicity or sex.

10. The unwritten agreement mentioned allows national sponsors to avoid

situations that might provoke dissension because of differences in salaries

or benefits of enrollees participating through different sponsors. This

policy could possibly deny enrollees access to the type of training best

suited to their needs. Whether such a denial is permanent or not is

irrelevant. The policy serves the interests of SCSEP’s national sponsors

rather than those of the elderly poor, for whom the program exists.

11. Several national sponsors—the U.S. Forest Service is an

example—have geographic constraints on their decisions on areas to

serve. Other national sponsors have a preference for serving specific

ethnic or minority groups (whose languages and cultures may require

specialized knowledge), which guides some of their decisions on areas to

serve. States are not likely to face such constraints or preferences. In

addition, some states with small populations have said (1) their level of

effort in SCSEP has been curtailed by the minimal funding they receive and

(2) more funding would allow them to increase their SCSEP efforts.

12. Labor raised two issues: (1) our use of budgeted rather than actual

expense data in assessing administrative and other enrollee costs and

(2) our interpretation of acceptable administrative costs in the SCSEP

program. Regarding the first issue, during our review, we obtained from

Labor’s SCSEP staff the data relevant to SCSEP grant awards. When we

discussed actual cost data, staff described the separation of Labor’s

program and fiscal oversight activities and the limited use of actual cost

data in program planning and new grants approval. Actual cost data are

not normally available until well after the grant year is completed.

When we received Labor’s enclosure, indicating its revised view on the use

of actual cost data, we asked when these data would be available. Actual

data would not be available for 3 months or longer, Labor said. By that

time, program year 1995 allocations had already been made.

We also asked for any additional data the national sponsors had used to

justify their budgeted costs for the 1994-95 program year. Labor said it did

not have these data but would request them from the national sponsors.

Nine of the national sponsors provided data or information intended to

explain and support their allocation of costs to the category of other

enrollee costs. In instances in which these data indicated that the

Page 71 GAO/HEHS-96-4 Senior Community Service Employment
Appendix VI 

Comments From the Department of Labor

and Our Evaluation

expenses had directly supported other enrollee cost services, we have

revised the totals we had originally developed using budgeted amounts

and noted the revisions in the actual costs columns of tables V.2 through

V.11. However, little of the cost data adequately distinguished other

enrollee costs as being in direct support of the enrollees rather than

general administrative operations.

Ultimately, the relevance of the budgeted versus actual costs issue is

questionable because Labor’s SCSEP program officials historically have

based their application approval and oversight decisions primarily on

budgeted costs, which should be supported by up-to-date and accurate

cost data. Most of the data Labor received from the national sponsors did

not directly support the budgeted costs they were asked to support.

Regarding the second issue, Labor’s other response to our findings of

misallocations questions our interpretation of acceptable administrative

costs. Labor cites the authority of the 1985 SCSEP draft regulations and

their incorporation into the grant agreements. As noted earlier in this

report, these draft regulations have no legal authority. In 1976, Labor

published the only formal regulations in effect for SCSEP before program

year 1995. Labor’s proposed amended SCSEP regulations, published in 1985,

remained in draft form. Because these regulations never became final, they

never gained the force and effect of law. Between 1976 and 1995, the only

regulations in effect that pertained to SCSEP were the 1976 regulations.

Through its comments, Labor has (1) downplayed the existence of the

legally promulgated 1976 regulations and (2) interpreted the draft 1985

regulations as having the force and effect of law, when, in fact, they do

not. Labor officials have not provided us with an acceptable legal basis for

using the 1985 draft regulations instead of the legally promulgated

regulations of 1976.

Finally, these officials also suggested that other Labor programs under

other legislative authority may permit a different interpretation of cost

allocations. This may be true, but with respect to SCSEP, the regulations

and related provisions of the Older Americans Act (OAA) speak for

themselves.

A brief discussion of the context of the other enrollee costs issue may help

in understanding it. The national sponsors have repeatedly criticized

Labor’s refusal to recalculate the unit cost to administer an enrollee

position. Labor officials have informally acknowledged that the

Page 72 GAO/HEHS-96-4 Senior Community Service Employment
Appendix VI 

Comments From the Department of Labor

and Our Evaluation

administrative costs associated with a placement have increased

significantly over time. They also have acknowledged that some expenses

that have been allocated to the category of other enrollee costs by national

and state sponsors would have been more appropriately included in the

administrative cost category. Through the introduction of the 1985 SCSEP

draft regulations, Labor, in effect, used the category of other enrollee costs

as a way to provide sponsors, most national and some state, with

additional funds to cover administrative expenses.

The purpose of our review was not to determine whether the present level

of funding for administrative expenses is adequate but to identify whether

administrative expenses have been properly allocated under existing law

and regulations. We continue to conclude that in many instances

administrative expenses have not been properly allocated.

Finally, the July 1995 regulations, which became final as we concluded our

review, will allow many of the cost allocations of the type that violated the

1976 regulations to continue. We believe that Labor’s interpretation of

these new regulations is inconsistent with the OAA’s 15-percent limit on

administrative costs. This belief has prompted our recommendation that

the Secretary of Labor clearly delineate the expenses allowable as other

enrollee costs and adopt the definition of administrative costs set out in

the 1976 regulations.

13. Labor’s OIG officials and contract auditors have told us that significant

concern has existed about grantee indirect costs for several years. These

costs have been the focus of most of Labor’s OIG audit activity for several

of the grantee organizations.

14. While the Office of Management and Budget guidance allows

reasonable expenditures for “employee morale activities,” we questioned

the use of scarce program funds for such activities. In the report example

Labor cited, one of the grantee organizations budgeted about $57,000 for

items to promote staff morale and for recognition of staff achievement. We

have changed the report to reflect the fact that $25,000 of the budgeted

amount was from indirect costs and $31,944 was from direct costs. The

grantee organization in question provided actual cost data showing that

program year 1994 expenditures from its employee morale account were

$21,347.27 rather than the budgeted amount of $21,821.

Page 73 GAO/HEHS-96-4 Senior Community Service Employment
Appendix VI 

Comments From the Department of Labor

and Our Evaluation

15. We have changed the report to reflect that reporting of only legitimate

unsubsidized placements is the responsibility of states as well as national

sponsors.

Page 74 GAO/HEHS-96-4 Senior Community Service Employment
Appendix VII 

GAO Contacts and Staff Acknowledgments

GAO Contacts Larry Horinko, Assistant Director, (202) 512-7001

George A. Erhart, Senior Economist, (202) 512-7026

Edward C. Shepherd IV, Evaluator, (202) 512-7042

Staff

Acknowledgments

Laurel H. Rabin, Communications Analyst

Stefanie G. Weldon, Senior Attorney

(205270) Page 75 GAO/HEHS-96-4 Senior Community Service Employment
Ordering Information

The first copy of each GAO report and testimony is free.

Additional copies are $2 each. Orders should be sent to the

following address, accompanied by a check or money order

made out to the Superintendent of Documents, when

necessary. Orders for 100 or more copies to be mailed to a

single address are discounted 25 percent.

Orders by mail:

U.S. General Accounting Office

P.O. Box 6015

Gaithersburg, MD 20884-6015

or visit:

Room 1100

700 4th St. NW (corner of 4th and G Sts. NW)

U.S. General Accounting Office

Washington, DC

Orders may also be placed by calling (202) 512-6000 

or by using fax number (301) 258-4066, or TDD (301) 413-0006.

Each day, GAO issues a list of newly available reports and

testimony. To receive facsimile copies of the daily list or any

list from the past 30 days, please call (202) 512-6000 using a

touchtone phone. A recorded menu will provide information on

how to obtain these lists.

For information on how to access GAO reports on the INTERNET,

send an e-mail message with "info" in the body to:

info@www.gao.gov

PRINTED ON RECYCLED PAPER
United States

General Accounting Office

Washington, D.C. 20548-0001

Official Business

Penalty for Private Use $300

Address Correction Requested

Bulk Rate

Postage & Fees Paid

GAO

Permit No. G100