Subcommittee on Benefits, Committee

on Veterans' Affairs,

House of Representatives

United States General Accounting Office

GAO

For Release on Delivery

Expected at 9:00 a.m., Tuesday,

October 30, 2001 VETERANS'

EMPLOYMENT AND

TRAINING SERVICE

Greater Flexibility and

Accountability Needed to

Better Serve Veterans

Statement of Sigurd R. Nilsen, Director,

Education, Workforce, and Income Security Issues

GAO-02-192T
Page 1 GAO-02-192T

Mr. Chairman and Members of the Subcommittee:

I am pleased to be here today to present the findings of our report on how

the Department of Labor’s two primary veterans’ employment assistance

grants—the Disabled Veterans’ Outreach Program (DVOP) specialists and

the Local Veterans’ Employment Representative (LVER) program—might

be improved.1

 These grants allow states to hire staff members to serve

veterans exclusively. The DVOP and LVER programs are mandatory

partners in the new one-stop center system created in 1998 by the

Workforce Investment Act (WIA). WIA requires that services provided by

numerous employment and training programs be made available through

one-stop centers and gives states the flexibility to design services better

suited to local workforce needs.

However, while the DVOP and LVER programs must operate within the

one-stop system, WIA does not govern the programs—and the law that

governs them does not provide the same flexibility as WIA. Because the

Congress sees employment service for veterans as a national

responsibility, the Congress established the Veterans’ Employment and

Training Service (VETS) to carry out the national policy that veterans

receive priority employment and training opportunities and that disabled

veterans and Vietnam-era veterans be made a special priority.2

 Because the

law that governs VETS and these programs does not provide the same

flexibility as WIA, this has caused some to question how well the DVOP

and LVER staff are being integrated into the one-stop center environment.

Our report assessed the efficiency and effectiveness of VETS’

administration of the DVOP and LVER staffing grants. Specifically, we

focused on

• how well veterans are provided employment services through the one-stop

center, including the DVOP and LVER staff;

• how well VETS oversees the DVOP and LVER grants awarded to states;

and

• how well the DVOP and LVER programs operate within the new one-stop

center environment.

 1 Veterans’ Employment and Training Service: Flexibility and Accountability Needed to

Improve Service to Veterans (GAO-01-928, Sept. 12, 2001).

2

 Federal laws pertaining to veterans’ issues are in title 38 of the U.S. Code. The portions

relating to the employment and training services are in chapters 41, 42, and 43.
Page 2 GAO-02-192T

Overall, we found that in order to make better use of DVOP and LVER staff

services, VETS needs the legislative authority to grant each state more

flexibility to design how this staff will fit into the one-stop center system.

VETS also needs to be able to hold states accountable for achieving agreed

upon goals. Specifically, we found:

• Veterans receive priority employment service at one-stop centers as

required under the law, but the effectiveness of the services, as indicated

by the resulting employment, cannot be determined because VETS does

not require states to collect sufficient data to measure the outcomes

veterans achieve from these services.

• VETS does not adequately oversee the DVOP and LVER program grants

because it does not have a comprehensive system in place to manage state

performance in serving veterans.

• VETS has not adequately adapted the DVOP and LVER programs to the

new one-stop center environment and determined how best to fit them

into the one-stop system.

In our report, we made several recommendations to the Secretary of Labor

to establish more effective management and monitoring of the DVOP and

LVER programs. We also suggest that the Congress take steps to ensure

that the DVOP and LVER programs can be more fully integrated into the

new one-stop center system environment by amending the law to provide

more flexibility and improved accountability to serve veterans.

Our review was based on discussions with VETS officials; visits to five

states—Connecticut, Florida, Ohio, Oregon, and Texas—where we

interviewed VETS and state employment agency officials, including local

office managers and DVOP and LVER staff; and telephone interviews with

employment agency officials in 25 additional states. We also contacted

officials from various veterans’ service organizations and the National

Association of State Workforce Agencies.

The Congress established VETS in 1980 to carry out the national policy

that veterans receive priority employment and training opportunities.

Faced with growing long-term challenges of new service delivery systems,

an evolving labor market, and changing technology, VETS’ vision is to find

innovative ways to maximize the effectiveness of its efforts. VETS’

strategic plan states that it will seek new and effective means to help

veterans compete successfully for better paying career jobs—helping them

get on a track that can provide improved income stability and growth

potential.

Background
Page 3 GAO-02-192T

VETS provides states with grants for DVOP and LVER staff according to

the formula outlined in the law.3

 The grant agreements include assurances

by states that the DVOP and LVER staff members serve eligible veterans

exclusively. Under federal law, all employment service staff4

 must give

priority to serving veterans, and the assignment of DVOP and LVER staff

to local offices does not relieve other employment and training program

staff of this requirement. The law prescribes various duties to DVOP and

LVER staff members that are intended to provide veterans with job search

plans and referrals and job training opportunities.

While the state-employed DVOP and LVER staff are the front-line

providers for services to veterans, VETS carries out its responsibilities, as

outlined in the law, through a nationwide network that includes regional

and state representation. The Office of the Assistant Secretary for

Veterans’ Employment and Training administers the DVOP and LVER

staffing grants through regional administrators and directors in each state,

the District of Columbia, Puerto Rico, and the Virgin Islands. In larger

states, an assistant director is appointed for every 250,000 veterans in the

state. These federally paid VETS staff ensure that states carry out their

obligations to provide service to veterans, including the services provided

under the DVOP and LVER grants.

To ensure priority service to veterans, VETS expects states to provide

employment and training services to veterans at a rate exceeding the

service provided to nonveterans. For example, VETS requires that

veterans receive services at a rate 15 percent higher than nonveterans.

Thus, if a state’s placement rate for nonveterans was 10 percent, the

placement rate for veterans should be 11.5 percent, or 15 percent higher

than the nonveteran placement rate. There are also greater expectations

for serving Vietnam-era veterans and disabled veterans.

As required by law, VETS must report to the Congress on states’

performance in five service categories. Historically, VETS has used these

 3

 For fiscal year 2001, VETS’ total appropriation was about $187 million, including $81.6

million for DVOP specialists and $77.3 million for LVER staff. The appropriation also

provided $2 million for the National Veterans’ Training Institute, and the remaining amount,

$26 million, was allocated for VETS’ administrative costs.

4

 The Wagner-Peyser Act of 1933 created a national system of public employment service

offices to provide employment services to individuals seeking employment and to

employers seeking workers. These employment service staff members are now partners in

the new one-stop center system.
Page 4 GAO-02-192T

same performance categories to measure state performance for serving

veterans at a higher rate than nonveterans. The performance categories

include: (1) veterans placed in or obtaining employment; (2) Vietnam-era

veterans and special disabled veterans placed in jobs on the Federal

Contractor Job Listing; (3) veterans counseled; (4) veterans placed in

training; and (5) veterans who received some reportable service.

In our past reviews of VETS’ programs, we have recommended changes to

VETS’ performance measures and plans. Recently, we have noted that

VETS had proposed performance measures that were more in-line with

those established under WIA; the measures focused more on what VETS’

programs achieve and less on the number of services provided to veterans

relative to nonveterans.5

 Although the law still stipulates that VETS is to

report to the Congress on the five service categories, VETS plans to

eliminate the requirement that states compare services provided to

veterans with those provided to nonveterans. However, we have reported

that VETS still lacked measures to gauge the effectiveness of services or

whether more staff-intense services helped veterans obtain jobs.

Veterans receive priority employment services at one-stop centers as

required under the law, but the effectiveness of these services cannot be

determined. Based on state-gathered data reported to VETS and interviews

with state officials, we found that veterans generally received employment

service at a higher rate than nonveterans. However, the effectiveness of

these services is unknown because VETS lacks adequate outcome data

such as information on job retention and wages. The only outcome data

collected—the percentage of veterans served entering employment—are

often collected inconsistently from state to state.

Priority service to veterans at one-stop centers is usually demonstrated by

the higher rates of service for veterans as compared with those for

nonveterans. Most one-stop centers provide priority services to veterans

through the DVOP and LVER staff who can provide an elevated level of

service to veterans. Because veterans have these dedicated staff to serve

them, they also receive more intensive services, and receive these services

more readily, than nonveterans. Other examples of priority service include

 5

 See Veterans’ Employment and Training Service: Further Changes Needed to

Strengthen Its Performance Measurement System (GAO-01-757T, June 7, 2001) and

Veterans’ Employment and Training Service: Proposed Performance Measurement

System Improved, But Further Changes Needed (GAO-01-580, May 15, 2001).

Veterans Receive

Priority Service, but

Effectiveness of

Service Is Unknown
Page 5 GAO-02-192T

identifying and contacting qualified veterans before the universal

population has access to employers’ job openings that will be posted on

the states’ job database. States may have other special services exclusively

for veterans, such as designated computers or special information packets

on available resources.

While priority service can be provided in different ways depending on the

one-stop center, most state officials and one-stop center managers we

spoke with said that they primarily used DVOP and LVER staff to provide

priority service to veterans since these staff must assist veterans

exclusively. DVOP and LVER staff members have smaller caseloads than

other employment services staff and, consequently, have more time to

spend with individuals. Veterans also have better access to intensive

services, such as counseling and case management, than nonveterans

because DVOP and LVER staff are funded independently of WIA and are

not subject to restrictions applicable to WIA-funded programs.6

 According

to many state officials as well as DVOP and LVER staff, the DVOP and

LVER staff members relate better to veterans because they are generally

veterans themselves. For example, because they are familiar with the

processes at the Department of Veterans Affairs (VA), DVOP and LVER

staff can more easily help veterans file disability claims with the VA or

help them to receive the appropriate disability benefits.

While veterans received priority employment services at one-stop centers,

VETS does not currently collect appropriate data for determining the

effectiveness of these services and the agency lacks sufficient employment

outcome data that would indicate whether services provided to veterans

were effective. VETS has proposed changes to its performance measures,

such as requiring states to report job retention, but will not implement

these changes until July 1, 2002. In past reviews, we have pointed out that

VETS’ use of relative standards comparing the percentage of veterans

 6

 Moreover, where funding is limited, recipients of public assistance and other low-income

individuals must receive priority access to WIA-funded intensive services and training.

Because DVOP and LVER staff members are not WIA-funded, they may provide intensive

services for any eligible veteran without regard to this provision.
Page 6 GAO-02-192T

entering employment with that of nonveterans is not effective.7 This

comparison results in states with poor levels of service to nonveterans

being held to lower standards for service to veterans than states with

better overall performance.

The only outcome data that states currently report to VETS—the

percentage of veterans entering employment after registering for

employment services—is collected inconsistently from state to state.

Some states compare their employment service registration records with

unemployment insurance wage records, but others may simply call

employers for employment verification or send postcards or letters to

customers asking whether they have obtained employment. Some DVOP

and LVER staff had more time than other employment and training staff

for follow-ups by telephone or mail, resulting in more complete

employment data for some veterans.

In addition, states and local workforce investment areas choose to register

customers at different stages of the job search process, thus the

percentage of “registered” veterans entering employment may differ based

on when they were required to register. In some areas, customers register

to use any service, including self-service; in other areas, they are only

required to register when using staff-assisted services. Those who find

employment before being registered are not counted as having entered

employment after using self-service resources available through the onestop center. Consequently, the reported percentage of veterans served

who entered employment is not comparable from state to state.

 7

 See Veterans’ Employment and Training Service: Better Planning Needed to Address

Future Needs (GAO/T-HEHS-00-206, Sept. 27, 2000); Veterans’ Employment and Training

Service: Strategic and Performance Plans Lack Vision and Clarity (GA0/T-HEHS-99-177,

July 29, 1999); Veterans’ Employment and Training Service: Assessment of the Fiscal

Year 1999 Performance Plan (GAO/HEHS-98-240R, Sept. 30, 1998); Veterans’ Employment

and Training: Services Provided by Labor Department Programs (GAO/HEHS-98-7, Oct.

17, 1997); and Veterans’ Employment and Training Service: Focusing on Program

Results to Improve Agency Performance (GAO/T-HEHS-97-129, May 7, 1997).
Page 7 GAO-02-192T

Despite recently proposed improvements to its performance measures,

VETS’ overall management of the DVOP and LVER grants is ineffective

because the agency does not have a comprehensive system in place to

manage state performance in serving veterans with these grants. VETS

does not effectively communicate performance expectations to states

because its goals and measures are unclear. In addition, the agency does

not have meaningful incentives to encourage states to perform well.

Furthermore, VETS is required by law to have federal staff in every state

and to conduct annual on-site evaluations at every local office, but this

monitoring is often unproductive.

In order to oversee a program effectively, an agency must have a

performance management system that establishes clear goals for those

administering the program; however, VETS does not communicate a

consistent message to states on expected performance. In fact, the agency

does not have clear goals that it communicates to states or that it tracks

with outcome data. For example, while one agency goal is to provide highquality case management to veterans, the agency does not have state

performance measures for assessing the quality of case management

provided to veterans.

Furthermore, VETS’ efforts to focus intensive services on those veterans

most in need by “targeting” specific groups of veterans are unfocused. In

its strategic plan, the agency, for case management and intensive services,

targets disabled veterans, minority veterans, female veterans, recently

separated veterans, veterans with significant barriers to employment,

special disabled veterans, homeless veterans, veterans provided vocational

rehabilitation under the VA, and veterans who served on active duty in the

armed forces under certain circumstances. This targeting includes nearly

all veterans, and not necessarily those most in need of service. The

numerous categories of targeted veterans could result in the vast majority

of veterans being targeted for case management. A VETS official said that

the focus for service should be on veterans with the greatest needs as

determined by the individual assessments because groups targeted on a

national level do not necessarily correlate to the needs of veterans in

particular states or local areas.

Unnecessary performance measures from VETS add to the DVOP and

LVER workload, without measuring quality of service to veterans. For

example, some state and VETS officials we spoke with expressed concern

about having performance measures that specifically focus on service to

Vietnam-era veterans. These veterans make up such a small percentage of

the workforce, due in part to the fact that many are at or near retirement

VETS Does Not

Adequately Manage

DVOP and LVER

Grants
Page 8 GAO-02-192T

age and may not be seeking employment, yet DVOP and LVER staff may

spend much of their time trying to identify and serve this group of veterans

in order to meet VETS’ performance goals.

State officials also identified one of VETS’ performance measures that

should be eliminated. VETS requires that Vietnam-era veterans, special

disabled veterans, and veterans who served on active duty under certain

circumstances are placed in jobs on the Federal Contractor Job Listing. To

do this, in addition to identifying qualified job candidates from this pool of

particular veterans, DVOP and LVER staff must monitor local federal

contractors to make sure that they are listing their job opportunities with

the one-stop centers on the Federal Contractor Job Listing and hiring

these veterans. Because the presence of federal contractors in a given

state or local area is unpredictable and is determined by the federal

agencies awarding contracts, state employment service officials said the

federal contractor measure should be eliminated. It is the responsibility of

contractors to list their job openings, and the Office of Federal Contract

Compliance Programs is responsible for ensuring that these companies list

their jobs with state employment service offices and take affirmative

action to hire qualified veterans. Eliminating this performance measure

would allow DVOP and LVER staff members more time to focus on the

employment needs of individual veterans rather than compliance issues

under the purview of another federal agency.

For effective oversight, in addition to having clear goals, an agency must

provide incentives for meeting the goals and VETS’ performance

management system lacks meaningful incentives to encourage states to

perform well. Presently, states are neither rewarded for meeting or

exceeding their performance measures, nor penalized for failing to meet

these measures. If a state fails to meet its performance measures, VETS

simply requires the state to develop a corrective action plan to address the

deficiencies in that state and there are no financial repercussions. States

will not lose funding for failing to adequately serve veterans, and an

agency official noted that taking funds away from a state would ultimately

deny services to veterans. On the other hand, VETS does not encourage

fiscal compliance with the grants, and a state can overspend DVOP or

LVER funds and submit a grant modification requesting additional funds. A

VETS official suggested that if the grants were awarded through a

competitive bid process within states, the grantees might have a greater

incentive to improve services to veterans.

To provide effective oversight, an agency must also gauge the quality of

service offered by the program and monitor the programs’ progress. As
Page 9 GAO-02-192T

prescribed by the law, VETS has federal staff in every state to monitor,

along with other duties, the DVOP and LVER grants. However, this federal

monitoring effort, which includes on-site evaluations at every local office,

is often unproductive, and state officials characterize the DVOP and LVER

grants as being “micro-managed” by VETS. The agency’s annual on-site

evaluations of employment services offices that we observed or whose

reports we reviewed produced few substantive findings by VETS staff.

Furthermore, according to some state officials, these evaluations have

little or no effect on how DVOP and LVER staff members perform their

duties.

Finally, we found multiple problems with VETS’ monitoring efforts. For

example, because states generally monitor performance at one-stop

centers, including the DVOP and LVER grants, VETS’ monitoring can be

redundant. VETS’ requirement for annual on-site monitoring may also be

unnecessary for those offices that exceed their performance expectations.

In addition, VETS’ oversight may result in confusion about the lines of

authority between the federal and state monitoring staff and the DVOP and

LVER staff, who are state employees. Also, VETS’ monitoring is often

inconsistent because operational manuals are outdated, training of

monitoring staff is limited, and interpretations of the law differ among

staff.

According to the state and local officials we interviewed, the DVOP and

LVER grant programs do not always operate well in one-stop centers.

DVOP and LVER programs continue to operate under a law established

prior to WIA, and states do not have the same flexibility granted under

WIA to design their services for veterans in a way that best meets the

needs of employers and veterans.

Because of statutory requirements, states cannot, in all cases, assign

DVOP and LVER staff to where the staff is most needed. For example, the

law prescribes how to assign DVOP and LVER staff to local offices and

does not give states the flexibility to move staff to locations where state

and local officials believe veterans could best be served. This restriction

may result in too many staff in some areas and too few in other areas. In

addition, because DVOP and LVER grants are separate funding streams,

states have little flexibility in staffing decisions. If a state does not spend

all of its grant money, states return the extra funding and VETS

redistributes it to states that request additional funding. A state that

overspends in its DVOP program but spends less than its allocation in the

LVER program would have to use other funds to cover the amount

DVOP and LVER

Programs Could be

Better Integrated in

One-Stop Centers
Page 10 GAO-02-192T

overspent in the DVOP program, and VETS would take back the additional

LVER grant money. The state may request more money from VETS for its

DVOP program, but there is no guarantee that it will get the additional

funding.

States are also constrained when it comes to deciding what DVOP and

LVER staff members do and whom they serve. The law specifies the

separate duties for DVOP and LVER staff, although we found that they

generally performed similar duties. Furthermore, DVOP and LVER staff

members may not serve certain individuals who may qualify for veteran

services under other employment and training programs. The law

governing the DVOP and LVER programs defines veterans eligible for

employment assistance more narrowly than WIA or VETS for its other

veterans’ activities. Because of this more restricted definition, DVOP and

LVER staff are not allowed, for example, to serve veterans who were on

active duty for 180 days or less, and they are not permitted to serve

Reservists8

 or National Guard members.

Another sign that the DVOP and LVER grants are not well integrated into

the one-stop environment is that the funding year for DVOP and LVER

programs does not coincide with the funding year for other employment

programs offered in the one-stop center system. The appropriation to fund

the DVOP and LVER grants is made available on a federal fiscal year

basis—October 1 through September 30—while other employment

programs and states operate on a program year basis—July 1 through June

30. Having Labor programs’ funding streams on different schedules is

burdensome for states and makes the budgeting process more

complicated.

VETS has taken a more reactive rather than proactive approach to

adapting to the one-stop system and has not taken adequate steps to adapt

the DVOP and LVER programs to the new environment. For example,

instead of coordinating with other programs to determine how best to fit

the DVOP and LVER programs into the one-stop system, VETS officials

reported that they are waiting to see how states implement their programs

and will then decide how to integrate the staff or adjust their programs.

VETS has required states to sign an agreement to ensure that veterans will

continue to receive priority services, but these agreements contained no

 8

 Except for Reservists who served on active duty during a period of war or under certain

other circumstances.
Page 11 GAO-02-192T

insightful information about how DVOP and LVER staff might serve

veterans within this new one-stop center environment.

VETS has not developed practices for operating within the one-stop

system or adequately shared innovative ways to help veterans find and

retain jobs. Because of outdated policies and procedures, DVOP and LVER

staff in many states may continue to operate separately as if they were in

the old employment services system and continue to assume duties very

similar to those they had in the old employment services system.

Consequently, they fail to adapt to the new workforce environment

created by WIA. According to one-stop managers we interviewed, this

failure to adapt may diminish the quality of services to veterans.

While the Congress has clearly defined employment service to veterans as

a national responsibility, the law has not been amended to reflect the

recent changes in the employment and training service delivery system

introduced by WIA. The prescriptive nature of the law also creates a onesize-fits-all approach for service delivery, mandating many of the DVOP

and LVER program activities and requirements. This approach is

ineffective because it does not account for the fact that each state and

one-stop center may have a different approach to satisfying the needs of

local employers as well as different types of veterans who may need

employment assistance. Although the law stipulates separate roles and

responsibilities for DVOP and LVER staff, they perform similar duties and

may not need to be separately funded. The law that governs VETS also

stipulates how grant funds and staff must be allocated as well as how the

grants should be monitored. These requirements hamper VETS’ ability to

consider alternative ways of administering or overseeing the grants.

Furthermore, the law requires that VETS report annually on states’

performance for serving veterans relative to serving nonveterans, which

may not be a good indicator if a state serves its nonveteran population

poorly. The law also requires VETS to report on requirements pertaining to

the Federal Contractor Job Listing and this detracts DVOP and LVER staff

members from serving veterans.

While VETS’ vision is to find innovative ways to assist veterans with

employment, it has not been proactive in helping DVOP and LVER staff

become an integral part of the one-stop center environment. The new onestop center system, while giving veterans priority for employment

services, gives states flexibility in planning and implementing employment

and training systems and holds them accountable for performance.

However, VETS has not taken steps to adjust to this new environment. The

Conclusions and

Recommendations
Page 12 GAO-02-192T

agency has not updated its oversight guidelines of staff training

procedures to ensure consistent and effective monitoring of the DVOP and

LVER programs within the one-stop centers. VETS has not established

clear performance goals for states, nor has it given states the flexibility to

decide how best to serve their veteran population. VETS has proposed

ways of improving performance measures, but these measures have not

yet been implemented. VETS has not proposed any incentives to hold

states accountable for meeting performance goals.

Our report recommended that the Secretary of Labor direct VETS to

establish more effective management and monitoring of the DVOP and

LVER programs by allowing states flexibility in planning how to best serve

veterans, while at the same time holding states accountable for meeting

the agency’s goals and expectations. Specifically, our report recommended

that the Secretary of Labor implement a more effective performance

management system as soon as possible and take steps to ensure that the

DVOP and LVER programs are more effectively monitored. In addition,

because title 38 limits the amount of flexibility that VETS can grant to

states, we recommended that Congress consider how the DVOP and LVER

programs best fit in the current employment and training system and take

steps to ensure that these programs become more fully integrated into this

new environment. These steps may include updating the applicable law to

provide more flexibility and taking other actions such as eliminating

certain requirements and adjusting the DVOP and LVER grant funding

cycle to correspond with that of other programs. Specifically, we

suggested that the Congress consider revising title 38 to

• provide states and local offices more discretion to decide where to locate

DVOP and LVER staff and provide states the discretion to have half-time

DVOP positions;

• allow VETS and/or states the flexibility to better define the roles and

responsibilities of staff serving veterans instead of including these duties

in the law;

• combine the DVOP and LVER grant programs into one staffing grant to

better meet states’ needs for serving veterans;

• provide VETS with the flexibility to consider alternative ways to improve

administration and oversight of the staffing grants, for example,

eliminating the prescriptive requirements for monitoring DVOP and LVER

grants;

• eliminate the requirement that VETS report to the Congress a comparison

of the job placement rate of veterans with that of nonveterans; and

• eliminate the requirement that VETS report on Federal Contractor Job

Listings.
Page 13 GAO-02-192T

The Congress should also consider making the DVOP and LVER grant

funding cycle consistent with that of other employment and training

programs.

Mr. Chairman, this concludes my prepared statement. I will be happy to

answer any questions that you or other members of the Subcommittee

may have.

For further questions regarding this testimony, I can be contacted at (202)

512-7215. Key contributors to this testimony were Joan Mahagan, Betty

Clark, and Corinna Nicolaou.

GAO Contact and

Staff

Acknowledgments

(130093)