U.S. Department of Labor 

FY 2006 Performance and Accountability Report

 FY 2006 Performance and Accountability Report 3 

Table of Contents 

Secretary’s Message...................................................................................................................................5

Management’s Discussion and Analysis ..................................................................................................7

Mission, Vision and Organization .......................................................................................................................8

Executive Summary...........................................................................................................................................12

Introduction.................................................................................................................................................12

Performance Section ...................................................................................................................................13

Financial Section.........................................................................................................................................28

Major Management Challenges ..................................................................................................................36

The President’s Management Agenda ........................................................................................................45

The Program Assessment Rating Tool........................................................................................................49

Performance Section................................................................................................................................51

Strategic Goal 1: A Prepared Workforce..........................................................................................................53

Strategic Goal 2: A Secure Workforce .............................................................................................................75

Strategic Goal 3: Quality Workplaces ..............................................................................................................97

Strategic Goal 4: A Competitive Workforce ..................................................................................................123

 Financial Section...................................................................................................................................149

Chief Financial Officer’s Letter.......................................................................................................................150

Independent Auditors’ Report .........................................................................................................................152

2006 Top Management Challenges Facing the Department of Labor.............................................................172

Annual Financial Statements ...........................................................................................................................181

Principal Financial Statements and Notes.................................................................................................183

Required Supplementary Stewardship Information ..................................................................................242

Required Supplementary Information.......................................................................................................248

Appendices..............................................................................................................................................273

1. Performance Goal Details............................................................................................................................274

2. Significant FY 2006 Audits and Evaluations ..............................................................................................295

3. Improper Payments Information Act Reporting Details..............................................................................321

4. Acronyms.....................................................................................................................................................332

5. Internet Links...............................................................................................................................................334

This report can be found on the Internet at http://www.dol.gov/_sec/media/reports

If you have questions or comments regarding this report, contact: 

Center for Program Planning and Results 

U.S. Department of Labor 

200 Constitution Avenue, NW, Room S-3317 

Washington, DC 20210 

202-693-7120 
4 United States Department of Labor 

The photographs in this publication were furnished by numerous individuals. All photographs are proprietary and 

prior permission from the photographer is required for any use or reproduction of the photographs. All references to 

non-governmental companies or organizations, their services, products or resources in this report are offered for 

informational purposes and should not be construed as an endorsement by the Department of Labor, of any of the 

companies or organizations, or their services, products or resources. The Department of Labor does not endorse, 

takes no responsibility for, and exercises no control over non-governmental organizations’ Web sites mentioned in 

this report, or their views or contents; nor does it vouch for the accuracy of the information contained on other 

organizations’ Web sites. 

The following companies were contracted to assist preparation of the FY 2006 DOL Performance and Accountability 

Report: 

Accounting services − Martin and Yarbrough, Joint Venture 

Graphic design – Grafik Industries, Ltd. 
 FY 2006 Performance and Accountability Report 5 

Secretary’s Message 

November 15, 2006 

Fiscal Year 2006 has been an exciting and productive year in which our efforts at the 

Department of Labor were keenly focused on Maximizing the Mission. I am proud to submit 

my sixth annual Performance and Accountability Report to Congress and the American 

people. Not only is this report the culmination of the Department’s assessment of its FY 

2006 program and financial performance, but it is the transition from the strategic goals set 

out in the Department’s FY 2003-2008 Strategic Plan to our new plan for FY 2006-2011. 

Our updated plan was submitted to Congress on September 29, 2006, and will guide the 

Department’s efforts over the coming years. 

The four strategic goals that are the basis of this report – A Prepared Workforce, A Secure 

Workforce, Quality Workplaces, and A Competitive Workforce – have served us well. The 

Strategic Plan update provided a fresh look at the goals, strategies, and targets to which we 

will hold ourselves accountable as we tackle the challenges of the future. The new goals are: 

• A Prepared Workforce provides training and services to new and incumbent workers and supplies quality 

information on the economy and labor market. 

• A Competitive Workforce enhances the effectiveness and efficiency of the workforce development and 

regulatory systems that assist workers and employers in meeting the challenges of worldwide competition. 

• Safe and Secure Workplaces ensures that workplaces are safe, healthful, and fair; provides workers with the 

wages due them; provides equal opportunity; and protects veterans’ employment and re-employment rights. 

• Strengthened Economic Protections protects and strengthens economic security; ensures union transparency; 

and secures pension and health benefits. 

President’s Management Agenda 

The President’s Management Agenda continues to be the central focus for the Department’s efforts in management 

improvement. As of September 2006, the Department remained the only Cabinet Department agency to achieve a 

“green” status on all five of the government-wide President’s Management Agenda initiatives: Strategic 

Management of Human Capital, Competitive Sourcing, Improved Financial Performance, Expanded Electronic 

Government, and Budget and Performance Integration. And last December, the Department received the President's 

Quality Award for Performance in Integrating Management Systems, becoming the first Department to achieve this 

overall award for management excellence. 

Responding to Evolving Employment and Training Needs 

The Department has been pursuing essential strategies for innovative approaches to spur regional workforce 

development, give workers greater flexibility to reach their career goals, and create a workforce investment system 

that better supports workers. Most job growth over the past five years has been in occupations that require postsecondary education. Linking workers to the information, training, and resources that will help them gain the skills 

they need to be competive is the key to accessing greater economic opportunities in the 21st century. 

To accomplish these goals, the Department has awarded grants to create partnerships among the public workforce 

system; business and industry; education and training providers; and the economic development community. This 

will help prepare workers for jobs in high-growth, high-demand sectors of the economy, such as health care, energy, 

and advanced manufacturing. The Department has also provided competitive grants to strengthen the capacity of 

community and technical colleges to train workers in the occupations and skills required by today's employers. 

Investments in competitively selected economic regions across the country promote innovative approaches to 

education and workforce development that transcend State borders and other traditional boundaries. By placing more 

training dollars directly in the hands of workers, workers are empowered to acquire the skills they need and control 

their own careers. 
Secretary’s Message 

6 United States Department of Labor 

Worker Protections 

The Department continues to focus on the challenges and opportunities to protect workers’ health, safety, benefits, 

and pay, and union members’ rights through strong and fair enforcement complemented by compliance assistance. 

Promoting worker safety and health remains a challenge as the demographics and nature of work evolve. By placing 

our emphasis on high-risk workplaces and focusing our resources on the strategies that can best mitigate these risks, 

we can make a difference. In the area of union transparency, for the first time ever, union members have access to 

information about their union’s financial solvency, integrity and priorities, as well as any financial conflicts of 

interest among their officials. The Department has maintained a strong capacity for directed investigations and a 

front-line enforcement presence to protect the hard-earned wages of our nation’s most vulnerable workers. The 

Department has also made great strides in protecting the rights of working veterans through outreach activities to 

employers and service members, particularly for those fighting the Global War on Terror. 

Retirement Security 

Retirement security remains a high priority of the Department and enactment of the Pension Protection Act of 2006 

will strengthen our ability to ensure a more secure retirement system for America’s workers. We will implement this 

historic new law and provide effective enforcement and compliance assistance to retirement and health plans. We 

will also strengthen management for the defined benefit plans trusteed by the PBGC and protect the retirement 

security of the 1.3 million participants whose benefits will be paid by the federal insurance program. 

Program Data and Financial Systems 

Department of Labor managers routinely use the performance and financial information summarized in this report to 

improve the quality and cost-effectiveness of the services we provide to the public. For management and 

accountability purposes, it is crucial to have confidence in the quality of this information. Program performance data 

presented in this report are complete and reliable; there are no material inadequacies as defined by the Office of 

Management and Budget (OMB) in Circular A-11. Program performance data quality, assessment of internal 

controls pursuant to the Federal Managers’ Financial Integrity Act (FMFIA) and compliance of financial 

management systems with the Federal Financial Management Improvement Act of 1996 (FFMIA) are discussed in 

greater detail in the Management’s Discussion and Analysis section of this report. 

Conclusion 

This 2006 Performance and Accountability Report is a comprehensive evaluation of our achievements against an 

ambitious and challenging set of goals and targets. The dedicated employees of the Department have helped to 

achieve program results that keep America's workers prepared, competitive, and safe and healthy on the job. We 

have also worked vigorously to protect retirement security, ensure fair compensation, and promote new and 

innovative ways to strengthen our Nation's workforce as we move forward in the 21st century. 

Elaine L. Chao 

Secretary of Labor 
Management’s Discussion and Analysis 
Management’s Discussion and Analysis 

8 United States Department of Labor 

Mission, Vision and Organization 

Mission 

The Department of Labor (DOL) fosters and promotes the welfare of the job seekers, wage earners, and retirees of 

the United States by improving their working conditions, advancing their opportunities for profitable employment, 

protecting their retirement and health care benefits, helping employers find workers, strengthening free collective 

bargaining, and tracking changes in employment, prices, and other national economic measurements. 

Vision 

We will promote the economic well-being of workers and their families; help them share in the American dream 

through rising wages, pensions, health benefits and expanded economic opportunities; and foster safe and healthful 

workplaces that are free from discrimination. 

Organization 

The Department of Labor accomplishes its mission through component agencies and offices that administer the 

various statutes and programs for which the Department is responsible. These programs are carried out through a 

network of regional offices and smaller field, district, and area offices, as well as through grantees and contractors. 

The largest program agencies, each headed by an Assistant Secretary, Commissioner, or Director, are the 

Employment and Training Administration (ETA), Employment Standards Administration (ESA), Occupational 

Safety and Health Administration (OSHA), Mine Safety and Health Administration (MSHA), Veterans’ Employment 

and Training Service (VETS), Employee Benefits Security Administration (EBSA), Pension Benefit Guaranty 

Corporation (PBGC), and the Bureau of Labor Statistics (BLS). Legal services are provided to the program agencies 

by the Office of the Solicitor. An organization chart and agency mission statements appear on the following pages.
FY 2006 Performance and Accountability Report 9

Office of 

Public 

Affairs 

Office of 

Congressional and 

Intergovernmental 

Affairs

Office of the 

Assistant Secretary 

for Administration 

and Management 

Mine Safety 

and 

Health 

Administration 

Office of the 

Inspector 

General 

Office of the 

Secretary 

of Labor 

Office of the 

Deputy Secretary 

of Labor 

Executive Secretariat 

Employment and 

Training 

Administration 

Veterans’ 

Employment & 

Training Service 

Employee Benefits 

Security 

Administration 

Bureau of 

International 

Labor Affairs 

Office of Small 

Business Programs 

Women's 

Bureau 

Office of the 

Assistant 

Secretary for 

Policy

Bureau of Labor 

Statistics 

U.S. Department of Labor

Office of the 21st

Century Workforce 

Center for Faith Based 

& Community Initiatives

Scheduling and 

Advance 

Chief of Staff

Office 

L

Be

C

A

A

R

Occupational 

Safety and 

Health 

Administration

Offic

Office of the 

Chief Financial 

Officer 

Office of the 

Solicitor 
Management’s Discussion and Analysis 

10 United States Department of Labor 

Agency Missions 

Bureau of International Labor Affairs (ILAB)

To carry out the Secretary of Labor's international responsibilities, develop Departmental policy and programs 

relating to international labor activities, and coordinate Departmental international activities involving other U.S. 

Government agencies, intergovernmental organizations, and nongovernmental organizations. 

Bureau of Labor Statistics (BLS)

To produce, analyze, and disseminate essential and accurate statistical data in the field of labor economics to the 

American public, the U.S. Congress, other Federal agencies, State and local governments, business, and labor. 

Center for Faith-Based and Community Initiatives (CFBCI)

To empower faith-based and community organizations (FBCO) as these organizations help their neighbors enter, 

succeed and thrive in the workforce. CFBCI targets those organizations that are trusted institutions providing 

valuable services but that may not be partnering with government programs. 

Employee Benefits Security Administration (EBSA)

To assist workers in getting the information they need to exercise their benefit rights; to assist plan officials to 

understand the requirements of the relevant statutes in order to meet their legal responsibilities; to develop policies 

and regulations that encourage the growth of employment-based benefits; and to deter and correct violations of the 

relevant statutes through strong administrative, civil and criminal enforcement. 

 

Employment Standards Administration (ESA)

To enhance the welfare and protect the rights of American workers. 

Office of Federal Contract Compliance Programs: To ensure that employers doing business with the Federal 

government comply with the laws and regulations requiring nondiscrimination. 

Office of Labor Management Standards: To ensure standards of democracy and financial integrity and 

transparency in labor organizations representing American workers. 

Office of Workers’ Compensation Programs: To protect the interests of eligible workers, employers and the 

Federal government by ensuring timely and accurate claims adjudication and provision of benefits, by 

responsibly administering the funds authorized for this purpose, and by restoring injured workers to gainful work 

when permitted by the effects of the injury. 

Wage and Hour Division: To promote and achieve compliance with labor standards to protect and enhance the 

welfare of the Nation's workforce. 

Employment and Training Administration (ETA)

To contribute to the more efficient functioning of the U.S. labor market by providing high quality job training, 

employment, labor market information, and income maintenance services primarily through state and local workforce 

investment systems. 

Mine Safety and Health Administration (MSHA)

To administer the provisions of the Federal Mine Safety and Health Act of 1977 (Mine Act) and to enforce 

compliance with mandatory safety and health standards as a means to eliminate fatal accidents; to reduce the 

frequency and severity of nonfatal accidents; to minimize health hazards; and to promote improved safety and health 

conditions in the Nation's mines. 

Office of the Assistant Secretary for Administration and Management (OASAM)

To provide the infrastructure and support that enables the Department of Labor to perform its mission. OASAM 

provides leadership and support for Departmental business operations and procurement; budget and finance; 

information technology; human resources and civil rights; security and emergency management; and strategic 

planning - and is the hub for DOL's implementation of the President's Management Agenda. 

Office of the Assistant Secretary for Policy (OASP)

To provide advice and assistance to the Secretary and Deputy Secretary in a number of areas, including policy 

development, regulations, program implementation, compliance assistance strategies, program evaluations, research, 

budget and performance analysis, and legislation. OASP also provides analytical support to the Secretary, Deputy 
Mission, Vision and Organization 

FY 2006 Performance and Accountability Report 11 

Secretary and Policy Planning Board with respect to policy issues and trends which require economic analyses or 

other expertise including preparing recommendations and analyses with respect to long- and short-term economic 

trends; preparation of economic studies and analyses related to the formulation of policy; and economic analyses 

related to economic impact of Departmental policies, regulations, and programs on general labor policy in the U.S. 

Office of the Chief Financial Officer (OCFO)

To deliver the right information to the right people at the right time. OCFO establishes financial management models 

based on principles of sound fiscal control, accountability, and customer service in order to ensure transparent, 

efficient, consistent, and effective stewardship of DOL's financial resources. 

Office of Disability Employment Policy (ODEP)

To provide national leadership by developing and influencing disability-related employment policy as well as 

practice affecting the employment of people with disabilities. 

Office of Inspector General (OIG)

To conduct audits and evaluations to review the effectiveness, efficiency, economy, and integrity of all DOL 

programs and operations, including those performed by its contractors and grantees. This work is conducted in order 

to determine whether: the programs and operations are in compliance with the applicable laws and regulations; DOL 

resources are efficiently and economically being utilized; and DOL programs achieve their intended results. 

In addition, the OIG is unique among Inspectors General because it has an “external” program function to conduct 

criminal investigations to combat the influence of labor racketeering and organized crime in the nation’s labor 

unions. The OIG conducts labor racketeering investigations in three areas: employee benefit plans, labormanagement relations, and internal union affairs. 

Occupational Safety and Health Administration (OSHA)

To assure the safety and health of America's workers by setting and enforcing standards; providing training, outreach, 

and education; establishing partnerships; and encouraging continual improvement in workplace safety and health. 

Office of Job Corps

As a national, residential training program, Job Corps' mission is to attract eligible young adults, teach them the skills 

they need to become employable and independent, and place them in meaningful jobs or further education. 

Office of Small Business Programs (OSBP)

To administer the Department of Labor's responsibility to ensure procurement opportunities for small businesses, 

small disadvantaged businesses, women-owned small businesses, HUBZone businesses, and businesses owned by 

service-disabled veterans. OSBP serves as the Department's Ombudsman for small businesses under the Small 

Business Regulatory Enforcement Fairness Act, and is active in the Department of Labor's compliance assistance 

activities. OSBP also manages the minority colleges and universities program in order to support the participation of 

Historically Black Colleges and Universities, Hispanic Serving Institutions, Tribal Colleges and Universities, and 

Asian Americans and Pacific Islanders within the Department's programs and plans. 

Office of the Solicitor (SOL)

To meet the legal service demands of the entire Department of Labor. 

Pension Benefit Guaranty Corporation (PBGC)

To encourage the continuation and maintenance of private-sector defined benefit pension plans, provide timely and 

uninterrupted payment of pension benefits, and keep pension insurance premiums at a minimum. 

Veterans' Employment and Training Service (VETS)

To provide veterans and transitioning service members with the resources and services to succeed in the 21st Century 

workforce by maximizing their employment opportunities, protecting their employment rights and meeting labormarket demands with qualified veterans. 

Women's Bureau (WB)

To promote the well being of wage-earning women, improve their working conditions, increase their efficiency, and 

advance their opportunities for profitable employment.
Management’s Discussion and Analysis 

12 United States Department of Labor 

Executive Summary 

Introduction 

This report, prepared in accordance with the Reports Consolidation Act of 2000, presents the results of the 

Department of Labor’s (DOL) program and financial performance for FY 2006. It is divided into four sections: 

• The Secretary’s Message is a letter from the chief executive that identifies the Department’s “bottom line” at 

the mission level. It includes highlights of achievements for the year and communicates direction and 

priorities. 

• Management’s Discussion and Analysis (MD&A) introduces the Department’s mission, vision and 

organization, summarizes program and financial performance, and addresses major management challenges. 

The MD&A also reports on President’s Management Agenda implementation and Program Assessment 

Rating Tool reviews. 

• The Performance Section narratives and graphic presentations of program results assess progress in 

achieving the Department’s goals as presented in the Strategic Plan and Performance Budget. 

• The Financial Section demonstrates our commitment to effective stewardship over the funds DOL receives 

to carry out the mission of the Department, including compliance with relevant financial management 

legislation. It includes the Independent Auditors’ Report – an independent opinion on the Financial 

Statements; Top Management Challenges Facing the Department of Labor – a report by the Office of 

Inspector General (OIG) on the Department’s most serious management and performance challenges; and the 

Annual Financial Statements.

In addition, five Appendices supplement the performance and financial sections by providing detailed performance 

information, summaries of significant audits and evaluations, additional information on improper payments 

reduction, a list of acronyms and a list of Web sites featuring labor programs and issues. 
Executive Summary 

FY 2006 Performance and Accountability Report 13 

Performance Section 

The diagram below illustrates the theoretical foundation of performance planning and evaluation structures, 

processes and results covered in this section of the Performance and Accountability Report. The outer circle 

represents the scope of the organization’s resources and influence. At the core is its mission. Everything in between 

is in continuous motion, clockwise and counter-clockwise. Quadrants represent the planning elements that are tied to 

periodic budget documents. Spokes incorporate the actual processes that follow resource allocation decisions and 

translate theory into practice. These elements are managed on a real-time basis; emergent cost and results 

information ultimately closes the feedback loop via reporting documents and the next period’s budget. A more 

detailed description of planning and evaluation processes follows the diagram. 

Planning Cycle 

Starting with the upper left quadrant and moving clockwise, budget formulation begins with definition and 

prioritization of desired outcomes, which are translated from mere notions into realistic program goals. Goals drive 

data collection needs (to determine success) through performance indicators. Performance indicators identify results 

of activities, inducing strategies. Cost estimates associated with pursuit of these strategies inform budget requests. 

Evaluation Cycle 

Starting with the same quadrant but this time moving counter-clockwise, the budget defines fiscal parameters for 

execution of strategies constrained by program authorization legislation. Strategies materialize as activities, the 

results of which are assessed using performance indicators. Data from the performance indicators demonstrate 

whether goals are achieved. Outcomes – in generic terms, demonstrated effectiveness at achieving goals – justify 

further budget requests. 

Program Performance Overview 

Fiscal Year (FY) 2006 marks the eighth year that the Department of Labor has reported program results under the 

Government Performance and Results Act (GPRA). Program goals that are key to the accomplishment of 

Departmental strategic and outcome goals as presented in the FY 2003-2008 Strategic PlanT

1

T were selected for 

 

1

 http://www.dol.gov/_sec/stratplan/main.htm 
Management’s Discussion and Analysis 

14 United States Department of Labor 

inclusion in the Department’s FY 2007 Performance Budget Overview.T

2

T These performance goals and their 

indicators provide the basis for assessments of the Department’s effectiveness in this section. 

This report includes performance goals from two different reporting periods in that Workforce Investment Act (WIA) 

programs are “forward-funded,” meaning that their spending and performance goals are tracked on a cycle that lags 

the Federal fiscal year by nine months. This period is referred to as a Program Year (PY); such goals being reported 

on in this document cover July 1, 2005 to June 30, 2006 (PY 2005). PY 2006 goals will appear in the FY 2007 

report. 

The Department’s goal structure has three levels. Strategic goals describe general aims that emerge from the 

Department’s mission. Each of these goals in turn has several outcome goals that define general results DOL 

agencies can influence. These are long term objectives that in most cases involve more than one DOL agency. 

Finally, performance goals that support each outcome goal provide program-level clarity of purpose. Each 

performance goal has associated indicators and targets to measure our impact on a continuous basis. 

DOL’s four strategic goals – A Prepared Workforce, A Secure Workforce, Quality Workplaces and A Competitive 

Workforce – express outcomes associated with our mission, vision and theme, and serve to focus Departmental 

efforts on the links between activities and their higher purpose. The table below indicates FY 2006 program 

performance goal achievement by strategic goal. The Department of Labor measures goal achievement by a rule 

requiring that all indicator targets are reached to qualify as Achieved. Substantially Achieved, which recognizes 

results that were very close, requires that 80 percent of targets are reached or substantially reached.3

TOf the 28 performance goals on which DOL is reporting in FY 2006, the Department achieved 14 and did not achieve 

14. The percentage achieved or substantially achieved totals 50 percent – somewhat lower than the 60 percent total 

for FY 2005. A swing of three goals would account for this. Strategic Goal 2 accounts for two of them. Five of its 

six performance goals were achieved or substantially achieved last year but just three were this time. The other 

change occurred in Strategic Goal 3, where the goal count increased from six to eight but the count of goals achieved 

remained at three. 

DOL Strategic Goal Achieved Substantially 

Achieved 

Not 

Achieved Total 

Goal 1 – A Prepared Workforce 

Enhance Opportunities for America’s Workforce 4 0 2 6 

Goal 2 – A Secure Workforce 

Promote the Economic Security of Workers and Families 3 0 3 6 

Goal 3 – Quality Workplaces 

Foster Quality Workplaces that are Safe, Healthy and Fair 3 0 5 8 

Goal 4 – A Competitive Workforce 

Maintain Competitiveness in the 21st Century Economy 4 0 4 8 

Total 14 0 14 28 

Below is a breakdown, by strategic goal, of FY 2006 goal achievement. Tables present the goal number, responsible 

agency, goal statement, and result for each performance goal being reported on in this document. The first two digits 

of each goal number indicate the funding year. In this report, all “05” goals are reporting on the Program Year period 

defined above. 

A tally of goals achieved, while providing an indication of whether DOL is on schedule with its plan, does not 

convey any actual performance information. To understand what was achieved in terms of benefits to the public, it is 

necessary to look not just at whether goals were achieved and targets were reached but also at whether observed 

 

2

 http://www.dol.gov/_sec/Budget2007/overview-pb.htm#app1 3

 Substantially reached is defined as 80 percent of targeted year-on-year improvement. 
Executive Summary 

FY 2006 Performance and Accountability Report 15 

results indicate positive program impacts. Summaries at the strategic goal level and separate performance goal 

narratives discuss significant trends and their implications. 

Strategic Goal 1 – A Prepared Workforce 

As indicated in the Program Performance Goal Achievement table below, DOL had six performance goals under this 

strategic goal in FY 2006, of which four were achieved or substantially achieved (67 percent) – above the 

Department wide average. The WIA Youth program achieved its goal of collecting baseline data for its two new 

common youth and lifelong learning performance measures for Federal employment and training programs. The Job 

Corps program, which uses the same two measures for placement and credentials, plus a third common measure for 

literacy/numeracy, did not achieve its goal. VETS’ goal was achieved; all six targets were reached. The goal for 

Apprenticeship was achieved; retention and earnings results improved over FY 2005. ODEP achieved its goal by 

establishing baselines for policy-related documents and formal agreements and reaching its target for identifying 

effective practices. BLS’ goal was not achieved, but four of its six targets were reached. 

Goal # Performance Goal (Agency) Result 

05-1.1A Increase placements and educational attainments of youth served through the WIA youth 

program. (ETA) Achieved 

05-1.1B Improve educational achievements of Job Corps students, and increase participation of Job Corps 

graduates in employment and education. (ETA) Not Achieved

05-1.1C Improve the employment outcomes for veterans who receive One-Stop Career Center services 

and veterans’ program services. (VETS) Achieved 

06-1.1A Improve the registered apprenticeship system to meet the training needs of business and workers 

in the 21st Century. (ETA) Achieved 

06-1.1B Advance knowledge and inform disability employment policy that affects systems change 

throughout the workforce development system. (ODEP) Achieved 

06-1.2A Improve information available to decision-makers on labor market conditions, and price and 

productivity changes. (BLS) Not Achieved

Strategic Goal 2 – A Secure Workforce 

Of six performance goals, DOL achieved or substantially achieved three – matching the Departmental average of 50 

percent. ESA’s Wage and Hour Division achieved its goal by reaching all five targets, but the Office of LaborManagement Standards missed one of its three targets, preventing it from achieving the goal. The Unemployment 

Insurance system also missed one target and therefore did not achieve the goal. The goal of improving outcomes for 

injured workers covered by ESA’s Office of Workers’ Compensation Programs was achieved; all ten indicator 

targets for Return to Work, Reducing Program Expenses, and Customer Service categories were reached. DOL 

achieved its pension and health benefit security goal by reaching all four targets. The pension insurance services 

(PBGC) goal was not achieved because neither of its customer satisfaction targets was reached. 

Goal # Performance Goal (Agency) Result 

06-2.1A American workplaces legally employ and compensate workers. (ESA) Achieved

06-2.1B Ensure union financial integrity, democracy and transparency. (ESA) Not Achieved

06-2.2A 

Make timely and accurate benefit payments to unemployed workers, facilitate the reemployment 

of Unemployment Insurance (UI) claimants, and set up unemployment tax accounts promptly for 

new employers. (ETA) 

Not Achieved

06-2.2B Minimize the impact of work-related injuries. (ESA) Achieved

06-2.2C Secure pension, health and welfare benefits. (EBSA) Achieved

06-2.2D Improve pension insurance program. (PBGC) Not Achieved
Management’s Discussion and Analysis 

16 United States Department of Labor 

Strategic Goal 3 – Quality Workplaces 

DOL achieved or substantially achieved three of eight performance goals (38 percent), which is below the 

Departmental average of 50 percent. MSHA did not achieve its fatality and injury reduction goal. The fatality rate 

rose and the injury rate declined, but not enough to reach the target. MSHA also failed to meet its health goal, 

despite reaching three of four targets. The all-industry occupational fatality rate decreased in FY 2006 but did not 

reach OSHA’s target. The safety and health goal (days away from work) was achieved. Both Federal contractor 

equal employment opportunity targets were reached, thus ESA's Office of Federal Contract Compliance Programs 

performance goal was achieved. The Uniformed Services Employment and Reemployment Rights Act goal was not 

achieved, despite improvement in the comprehensive Progress Index. The Bureau of International Labor Affairs, or 

ILAB, achieved its child labor goal by exceeding its target for removing or preventing children from exploitive work 

and increasing targeted countries’ capacity to address the issue. The goal to improve living standards and working 

conditions internationally was not achieved. 

Goal # Performance Goal (Agency) Result 

06-3.1A Reduce work-related fatalities and injuries. (MSHA) Not Achieved

06-3.1B Reduce mining-related illnesses. (MSHA) Not Achieved

06-3.1C Reduce work-related fatalities. (OSHA) Not Achieved

06-3.1D Reduce work-related injuries and illnesses. (OSHA) Achieved

06-3.2A Federal contractors achieve equal opportunity workplaces. (ESA) Achieved 

06-3.2B Reduce employer-employee employment issues originating from service members’ military 

obligations conflicting with their civilian employment. (VETS) Not Achieved

06-3.3A Contribute to the elimination of the worst forms of child labor internationally. (ILAB) Achieved 

06-3.3B Improve living standards and conditions of work internationally. (ILAB) Not Achieved

Strategic Goal 4 – A Competitive Workforce 

Of eight performance goals, DOL achieved or substantially achieved four, equaling the Departmental average of 50 

percent. The WIA Adult and One Stop employment services goals were achieved. In each case, all three targets 

were reached. However, entered employment and retention rates were slightly below PY 2004 results. The WIA 

Dislocated Worker (DW) and Trade Adjustment Assistance (TAA) goals were not achieved. For DW, entered 

employment reached the target, but retention dipped below the target and was three percentage points below the prior 

year’s performance. The TAA program achieved targeted levels for retention and earnings but fell just shy of the 

target for entered employment. The Senior Community Service Employment Program (SCSEP) did not achieve its 

performance goal. None of its targets were reached – entered employment and retention due to unrealistic targets, 

and average earnings because baseline data were not collected. The Department achieved its performance goal for 

electronic tools, exceeding the target for increased dissemination of O*NET data and setting baselines for Career 

Voyages and America’s Career InfoNet Web site page views. The Foreign Labor Certification goal was not 

achieved, but three of four targets were reached. 

The Department’s regulatory flexibility and benefits and flexible workplace goal was achieved. In the course of 

promulgating revised regulations, DOL agencies conducted cost benefit analyses to increase regulations’ net benefits. 

They also updated obsolete, non-substantive references in the Code of Federal Regulations. The Women's Bureau’s 

Flex-Options for Women project participation grew to six of ten Regional Offices and had its most successful year to 

date, with 23 companies implementing new, exemplary workplace policies and procedures. 

Goal # Performance Goal (Agency) Result 

05-4.1A Increase the employment, retention, and earnings of individuals registered under the Workforce 

Investment Act adult program. (ETA) Achieved

05-4.1B Improve the outcomes for job seekers and employers who receive One-Stop employment and 

workforce information services. (ETA) Achieved 
Executive Summary 

FY 2006 Performance and Accountability Report 17 

Goal # Performance Goal (Agency) Result 

05-4.1C Increase the employment, retention, and earnings replacement of individuals registered under the 

Workforce Investment Act Dislocated Worker Program. (ETA) Not Achieved

05-4.1D Assist older workers to participate in a demand-driven economy through the Senior Community 

Employment Service Program. (ETA) Not Achieved

05-4.1E Increase accessibility of workforce information through the National Electronic Tools. (ETA) Achieved

06-4.1A Address worker shortages through the Foreign Labor Certification Program. (ETA) Not Achieved

06-4.1B Increase the employment, retention, and earnings replacement of workers dislocated in important 

part because of trade who receive trade adjustment assistance benefits. (ETA) Not Achieved

06-4.2A Maximize regulatory flexibility and benefits and promote flexible workplace programs. (OASP) Achieved

The next table lists Program Year 2006 goals (July 1, 2006 – June 30, 2007) for which results will be reported in the 

FY 2007 Performance and Accountability Report. Due to restructuring of the Department’s goals in the FY 2006-

2011 Strategic Plan, identifying numbers have changed. The goals are listed according to their original 

nomenclature; the new labels are provided also, in bold type. 

Old Goal# 

New Goal# Performance Goal (Agency) 

06-1.1A 

06-1B 

Improve educational achievements of Job Corps students, and increase participation of Job Corps 

graduates in employment and education. (ETA) 

06-1.1B 

06-1C Increase placements and educational attainments of youth served through the WIA youth program. (ETA) 

06-1.1E 

06-1E 

Increase the employment outcomes for veterans who receive One Stop Career Center services and 

veterans’ program services. (VETS) 

06-4.1A 

06-2A 

Increase the employment, retention, and earnings of individuals registered under the Workforce Investment 

Act Adult program. (ETA) 

06-4.1B 

06-2C 

Improve the outcomes for job seekers and employers who receive One Stop employment and workforce 

information services. (ETA) 

06-4.1C 

06-2B 

Increase the employment, retention, and earnings replacement of individuals registered under the 

Workforce Investment Act Dislocated Worker program. (ETA) 

06-4.1D 

06-2F 

Assist older workers to participate in a demand-driven economy through the Senior Community Service 

Employment Program. (ETA) 

06-4.1E 

06-2D Build a demand-driven workforce system through Community Based Job Training Grants. (ETA) 

06-4.1F 

06-2E Increase accessibility of workforce information through the National Electronic Tools. (ETA) 

Total Net Cost4T of DOL activities for FY 2006 was $45.328 billion. As reflected in the table below, which provides 

an allocation based on the Department’s goal structure, the second strategic goal, A Secure Workforce, is dominant – 

accounting for $35.920 billion, or 79 percent of the total. This figure consists in large part ($33.227 billion, or 93 

percent) of mandatory benefit payments to unemployed workers or workers disabled as a result of work-related 

injuries or illnesses. The first goal, A Prepared Workforce, required $3.395 billion (7 percent) for employmentrelated services. Approximately $1.114 billion (2 percent) went toward the third goal, Quality Workplaces, to fund 

direct services (such as salaries of Federal employees) aimed at improving safety and health in the workplace. The 

 

4

 Net cost data are presented. Net Cost reflects the full cost of each program as assigned by DOL entities to the Department’s 

outcome goals less any exchange revenue earned. Full cost consists of (a) both direct and indirect costs, and (b) the costs of 

identifiable supporting services provided by other segments within the reporting entity and by other reporting entities. 
Management’s Discussion and Analysis 

18 United States Department of Labor 

fourth goal, A Competitive Workforce, accounted for $4.889 billion, 11 percent of the total, which went toward job 

training programs and other services aimed at building a demand-driven workforce system. 

DOL’s FY 2005 Performance and Accountability Report marked a milestone in accountability by featuring a 

statement of full costs at the performance goal level. This year’s statement adds another level of detail – 

performance indicators – which is significant because only by linking cost to units of measurement is it possible to 

analyze efficiency and cost-effectiveness. For a variety of reasons, this was not possible in all cases; therefore, the 

statement includes a row for each performance goal labeled “Dollars not associated with indicators.” Some of the 

difficulties will be resolved over time and lead to more complete allocations in future statements. Others, such as for 

job training program common measures,5

 cannot be resolved without dropping indicators – a choice that may reduce 

the overall value of performance information. As indicated in the preceding paragraph, several programs make 

mandatory benefit payments that account for the majority of their costs. Because performance indicators and the 

Department’s managerial cost accounting system that generates this information are designed to inform analysis and 

decision-making related to discretionary budgets and program management, such payments are shown separately and 

not included in allocation cost models. 

 

5

 Entered employment, employment retention and earnings change are measures of different outcomes for each individual 

participant, and program activities are not separable into categories associated with one or another of these measures. The 

statement indicates intentional combination of costs for these measures by merging cells. 
Executive Summary 

FY 2006 Performance and Accountability Report 19 

DOL Program Net Costs (Millions of Dollars) 

Goal FY 2004 FY 2005 FY 2006

Strategic Goal 1: A Prepared Workforce6 $8654 $3250 $3395

Outcome Goal 1.1 – Increase Opportunities for New and Re-emerging Entrants to the 

Workforce − $2714 $2822

Performance Goal 05-1.1A (WIA Youth) − 947 1017

Percent of youth who are in employment or the military or enrolled in post secondary 

education and/or advanced training/occupational skills training in the first quarter 

after exit 

− − 214

Percent of students who attain a GED, high school diploma, or certificate by the end of 

the third quarter after exit − − 803

Dollars not associated with indicators − − −

Performance Goal 05-1.1B (Job Corps) − 1309 1402

Percent of Job Corps graduates (within 1 year of program exit) and former enrollees 

(within 90 days of program exit) who will enter employment or enroll in postsecondary education or advanced training/occupational skills training 

− − −

Percent of students who will attain a GED, high school diploma or certificate while 

enrolled in the program − − −

Percent of students who achieve literacy or numeracy gains of one Adult Basic 

Education (ABE) level − − −

Dollars not associated with indicators − − 1402

Performance Goal 05-1.1C (VETS employment services) − 196 198

Percent of Veteran job seekers employed in the first or second quarter following 

registration − −

Percent of Veteran job seekers still employed two quarters after initial entry into 

employment with a new employer − −

78

Percent of Disabled Veteran job seekers employed in the first or second quarter 

following registration − −

Percent of Disabled Veteran job seekers still employed two quarters after initial entry 

into employment with a new employer − −

78

Entered employment rate for homeless veterans participating in the Homeless Veterans’ 

Reintegration Program (HVRP) − −

Employment retention rate after 6 months for homeless veteran HVRP participants − −

21

Dollars not associated with indicators − − 21

Performance Goal 06-1.1A (Apprenticeship) − 23 25

Percent of those employed nine months after registration as an apprentice − −

Average hourly wage gain for tracked entrants employed in the first quarter after 

registration and still employed nine months later − −

25

Dollars not associated with indicators − − −

 

6

 Costs reported in DOL’s FY 2004 and FY 2005 Performance and Accountability Reports for outcome goal and strategic goal 

subtotals for Strategic Goals 1 and 4 are not valid for comparison to FY 2006 due to restructuring. This also applies at the 

performance goal level for ETA grant programs due to a change in allocation methodology. FY 2005 totals in this table have 

been restated to reflect these changes and facilitate comparison. The restructuring moved several performance goals that 

appeared in the FY 2005 table under Outcome Goal 1.1 to Outcome Goal 4.1 (WIA Adult, One-Stop, WIA Dislocated Worker 

and Other). All performance goals in the FY 2005 table under Outcome Goal 1.2 (WIA Youth, Job Corps, and Other) were 

moved into Outcome Goal 1.1 in FY 2006. The grant allocation change affected WIA Youth, Job Corps, WIA Adult, OneStop, WIA Dislocated Worker, SCSEP, Etools and Other programs in Outcome Goals 1.1 and 4.1. 
Management’s Discussion and Analysis 

20 United States Department of Labor 

DOL Program Net Costs (Millions of Dollars) 

Goal FY 2004 FY 2005 FY 2006

Performance Goal 06-1.1B (ODEP) − 52 50

Number of policy related documents disseminated − − −

Number of formal agreements initiated − − −

Number of effective practices identified − − −

Dollars not associated with indicators − − 50

Other (Youth Offender Reintegration, Indian and Native American Youth Programs, etc.) − 187 131

Outcome Goal 1.2 – Improve the Effectiveness of Information and Analysis on the U.S. 

Economy $539 $536 $573

Performance Goal 06-1.2A (BLS) − 536 573

Percent of output, timeliness, accuracy, and long-term improvement targets achieved for 

labor force statistics − − −

Percent of output, timeliness, accuracy, and long-term improvement targets achieved for 

prices and living conditions − − −

Percent of output, timeliness, accuracy, and long-term improvement targets achieved for 

compensation and working conditions − − −

Percent of output, timeliness, accuracy, and long-term improvement targets achieved for 

productivity and technology − − −

Cost per transaction of the Internet Data Collection Facility − − −

Customer satisfaction with BLS products and services (e.g., the American Customer 

Satisfaction Index) − − −

Dollars not associated with indicators − − 573

Strategic Goal 2: A Secure Workforce $46,957 $40,811 $35,920

Outcome Goal 2.1 – Increase Compliance With Worker Protection Laws $296 $277 $270

Performance Goal 06-2.1A (Wage and Hour) − 214 214

Number of workers for whom there is an agreement to pay or an agreement to remedy 

per 1,000 enforcement hours − − 112

Percent of prior violators who achieved and maintained FLSA compliance following a 

full FLSA investigation − − 27

Percent of low-wage workers across identified low-wage industries paid and employed 

in compliance with FLSA − − 39

Number of wage determination data submission forms processed per 1000 hours − − 23

Percent of survey-based DBA wage determinations issued within 60 days of receipt of 

the underlying survey data − − 6

Dollars not associated with indicators − − 6

Performance Goal 06-2.1B (Labor-Management Standards) − 63 56

Percent of unions with fraud − − 18

Percent of unions complying with standards for democratic union officer elections − − 11

Percent of union reports meeting OLMS standards of acceptability for public disclosure − − 8

Dollars not associated with indicators − − 20
Executive Summary 

FY 2006 Performance and Accountability Report 21 

DOL Program Net Costs (Millions of Dollars) 

Goal FY 2004 FY 2005 FY 2006

Outcome Goal 2.2 – Protect Worker BenefitsT

7

T $46,661 $40,534 $35,650

Performance Goal 06-2.2A (Unemployment Insurance) − 34,243 33,340

Mandated benefit payments − − 31,322

Percent of intrastate first payments made within 21 days − − −

Percent of the amount of estimated detectable/recoverable overpayments that the States 

can establish for recovery − − −

Percent of UI claimants who were reemployed by the end of the first quarter after the 

quarter in which they received their first payment − − −

Percent of new employer liability determinations made within 90 days of the end of the 

first quarter in which liability occurred − − −

Dollars not associated with indicators − − 2018

Performance Goal 06-2.2B (Workers’ compensation) − 6131 2130

Mandated benefit payments − − 1905

Lost production days rate (LPD per 100 employees) for FECA cases of the United 

States Postal Service − − 3

Lost production days rate (LPD per 100 employees) for FECA cases of All Other 

Government Agencies − − 3

Cost savings through staff-initiated evaluation of cases under Periodic Roll 

Management for changes in medical condition and fitness for duty − − 9

Trend in the indexed cost per case of FECA cases receiving medical treatment 

(compared to nationwide health care costs) − − 4

Targets for five communications performance areas − − 3

Average days required to resolve disputed issues in Longshore and Harbor Worker’s 

Compensation Program contested cases − − 3

Percent of eligible Black Lung benefit claims for which there are no requests for further 

action pending one year after the date the claim is filed − − 13

Percent of Initial Claims for benefits in the Part B and Part E Energy Programs 

processed within standard timeframes − − 9

Percent of Final Decisions in the Part B Energy Program processed within standard 

timeframes − − 11

Percent of EEOICPA Part E claims backlog receiving recommended decisions − − −

Dollars not associated with indicators − − 166

Performance Goal 06-2.2C (EBSA) − 160 179

Ratio of closed civil cases with corrected violations to civil cases closed − − −

Ratio of criminal cases referred for prosecution to total criminal cases − − −

Customer Satisfaction Index for participants and beneficiaries who have contacted 

EBSA for assistance − − −

Applications to Voluntary Compliance programs − − −

Dollars not associated with indicators − − 179

 

7

 Costs for Performance Goal 06-2.2D (PBGC) are not included because the corporation’s financial statements are separate from 

those of the Department and are not included in this document. 
Management’s Discussion and Analysis 

22 United States Department of Labor 

DOL Program Net Costs (Millions of Dollars) 

Goal FY 2004 FY 2005 FY 2006

Strategic Goal 3: Quality Workplaces $1021 $1062 $1114

Outcome Goal 3.1 – Reduce Workplace Injuries, Illnesses, and Fatalities $812 $823 $868

Performance Goal 06-3.1A (MSHA safety) − − 223

Mine industry fatal injury incidence rate (per 200,000 hours worked) − − −

Mine industry all-injury incidence rate (per 200,000 hours worked) − − −

Dollars not associated with indicators − − 223

Performance Goal 06-3.1B (MSHA health) − − 125

Percent of respirable coal dust samples exceeding the applicable standards for 

designated occupations − − −

Percent of silica dust samples with at least 50% of the permissible exposure limits in 

metal and non-metal mines − − −

Percent of noise samples with at least 50% of the permissible exposure limits in metal 

and non-metal mines − − −

Percent of noise samples above the citation level in coal mines − − −

Dollars not associated with indicators − − 125

Performance Goals 06-3.1C&D (OSHA fatality, safety and health)8 − − 519

Outcome Goal 3.2 – Foster Equal Opportunity Workplaces $112 $115 $114

Performance Goal 06-3.2A (Federal Contractor Compliance) − 99 97

Incidence of discrimination among Federal contractors − − 68

Compliance among Federal contractors in all other aspects of equal opportunity 

workplace standards − − 29

Dollars not associated with indicators − − −

Performance Goal 06-3.2B (USERRA) − 16 17

USERRA Progress Index (measures compliance and assistance performance) − − 17

Dollars not associated with indicators − − −

Outcome Goal 3.3 – Reduce Exploitation of Child Labor, Protect the Basic Rights of 

Workers, and Strengthen Labor MarketsT 

$97 $124 $132

Performance Goal 06-3.3A (Child Labor) − 74 95

Number of children prevented or withdrawn from child labor and provided education 

and/or training opportunities as a result of DOL-funded child labor elimination 

projects 

− −

Number of countries with increased capacities to address child labor as a result of 

DOL-funded child labor elimination projects − −

95

Dollars not associated with indicators − − −

 

8

 Costs for OSHA’s two performance goals are combined because the same activities contribute to reductions in fatality and 

injury/illness indicators, i.e., their costs are not separable. Two indicators – one for each goal – account for all costs. Since no 

cost allocation is possible at that level, either, they are omitted. 
Executive Summary 

FY 2006 Performance and Accountability Report 23 

DOL Program Net Costs (Millions of Dollars) 

Goal FY 2004 FY 2005 FY 2006

Performance Goal 06-3.3B (International Labor Standards) − 43 30

Percent of USDOL project beneficiaries who consider a USDOL-funded project to have 

improved their conditions of work − − 10

Number of workers benefiting from compliance with national labor laws through 

improved inspections − − 10

Percent of targeted individuals whose economic situation has benefited from USDOL 

project assistance − − −

Number of targeted workers reporting a reduction in HIV/AIDS risk behaviors − − −

Number of workplaces adopting policies and procedures to reduce the level of 

employment related discrimination against persons living with HIV/AIDS − − 9

Dollars not associated with indicators − − −

Other (Other ILAB programs) − 7 7

Strategic Goal 4: A Competitive Workforce6 $6 $4943 $4889

Outcome Goal 4.1 – Build a Demand-Driven Workforce System − $4943 $4889

Performance Goal 05-4.1A (WIA Adult) − 906 912

Percent of participants employed in the first quarter after program exit − −

Percent of those employed in the first quarter after exit still employed in the second and 

third quarters after program exit − −

Average earnings gain for participants employed in the first quarter after program exit 

and still employed in the third quarter after program exit − −

912

Dollars not associated with indicators − − −

Performance Goal 05-4.1B (One-Stop) − 746 791

Percent of participants employed in the first quarter after program exit − −

Percent of those employed in the first quarter after exit still employed in the second and 

third quarters after program exit − −

Average earnings gain for participants employed in the first quarter after program exit 

and still employed in the third quarter after program exit − −

791

Dollars not associated with indicators − − −

Performance Goal 05-4.1C (WIA Dislocated Worker) − 1472 1543

Percent of participants employed in the first quarter after program exit − −

Percent of those employed in the first quarter after program exit still employed in the 

second and third quarters after program exit − −

Average percent of pre-separation earnings for participants employed in the first 

quarter after program exit and still employed in the third quarter after exit − −

1543

Dollars not associated with indicators − − −
Management’s Discussion and Analysis 

24 United States Department of Labor 

DOL Program Net Costs (Millions of Dollars) 

Goal FY 2004 FY 2005 FY 2006

Performance Goal 05-4.1D (Senior Community Service Employment Program)9 − 426 432

Percent of participants employed in the first quarter after program exit − −

Percent of participants employed in the first quarter after program exit still employed in 

the second and third quarters after program exit − −

Average earnings gain for participants employed in the first quarter after exit and still 

employed in the third quarter after exit − −

432

Dollars not associated with indicators − − −

Performance Goal 05-4.1E (Etools) − 111 120

Number of page views on America’s Career InfoNet − − −

Number of O*NET site visits − − −

Number of page views on Career Voyages − − −

Dollars not associated with indicators − − 120

Performance Goal 06-4.1A (Foreign Labor Certification) − 60 46

Percent of H-1B applications processed within seven days of the filing date for which no 

prevailing wage issues are identified − − −

Percent of employer applications for labor certification under the streamlined system 

that are resolved within six months of filing − − −

Percent of H-2B applications processed within 60 days of receipt − − −

Percent of accepted H-2A applications processed within 30 days of the date of need 

where there are no pending State actions − − −

Dollars not associated with indicators − − 46

Performance Goal 06-4.1B (Trade Adjustment Assistance) − 846 700

Percent of participants employed in the first quarter after program exit − −

Percent of participants employed in first quarter after exit who are still employed in the 

second and third quarters after exit − −

Average percent of pre-separation earnings for participants employed in the first 

quarter after exit and still employed in the third quarter after exit − −

700

Dollars not associated with indicators − − −

Other (Indian and Native American Adult Programs, National Farmworker Jobs Program, 

Work Incentive Grants, Transition Assistance Program, Pilots, Demonstrations, 

Research & Evaluations, and H-1B Technical Skills Training) 

− 376 345

Outcome Goal 4.2 – Promote Workplace Flexibility and Minimize Regulatory BurdenT

10T $6 − −

Costs Not Assigned to Goals $38 $11 $10

Total11 (may not be equal to sum of individual goal totals due to rounding) $56,676 $50,076 $45,328

Charts that display net costs from FY 1999-FY 2006 to illustrate trends are provided in each outcome goal summary; 

brief explanations of significant changes since FY 2005 are provided, as well. FY 2005 was the first year for which 

DOL had the capability of reporting costs at the performance goal level – thanks to more sophisticated cost models in 

 

9

 This is a new goal that was listed with Other in the FY 2005 table. 

10 Costs associated with this goal in FY 2004 were allocated to program performance goals in FY 2005. See the explanation in 

the Outcome Goal 4.2 narrative under Net Cost of Programs. 11 Total net costs in this table do not match total net costs in the Consolidated Statements of Net Cost as certain costs in this table 

are presented on a program year basis. All costs in the Consolidated Statements of Net Cost are on a fiscal year basis. 
Executive Summary 

FY 2006 Performance and Accountability Report 25 

our managerial cost accounting system, Cost Analysis Manager (CAM), that describe relationships between 

resources, activities, outputs and performance goals. 

Reporting Performance Results 

The Performance Section of this report presents, by strategic goal, summaries of performance at each level. Each 

strategic goal section is introduced by an overview of the goal and a summary of results, net cost and future plans for 

its component outcome goals. Within each strategic goal section are individual performance goal narratives that 

present results, describe the program and its operating environment, analyze performance and briefly address relevant 

audits and evaluations, data quality and major management challenges. Appendix 1 contains performance goal 

histories and Appendix 2 summarizes significant audits and evaluations of DOL programs completed during FY 

2006 that have implications for performance goals. 

Performance measurement is inherently difficult, especially for a large, diverse organization like DOL that works to 

accomplish its mission indirectly – in partnership and by assisting others. The Department seeks continuous 

improvement in its selection of indicators and in policies and procedures for collecting and reporting program 

performance data so that managers and other decision makers can rely on them. However, each program must 

consider the costs and benefits of gathering and managing such information. Changes take time to implement and 

reporting requirements can impose considerable burdens on staff, partners, beneficiaries and regulated entities. 

This report is published just six weeks after the end of the fiscal year. Because the Department receives a wide 

variety of performance data via diverse systems and agreements in cooperation with State agencies and grant 

recipients, it is not possible in all cases to report complete data for the reporting period. The Department requires 

each agency responsible for performance goals in this report to submit a Data Estimation Plan in February that 

identifies, for each indicator, whether complete data are expected by the deadline for clearance and final review of 

the report in early October. If the data will not be available by then, they must submit an acceptable plan to estimate 

results for the remainder of the year. Methodologies developed by agencies’ program analysts are reviewed by the 

Department’s Center for Program Planning and Results and Office of Inspector General. The most common methods 

are substitution or extrapolation of two or three quarters of data and – for data with significant seasonal variation – 

use of the missing period’s results from the previous year. Estimates are clearly identified wherever they are used. 

With very few exceptions, final (actual) data are available by the end of the calendar year; these data will be reported 

in the FY 2007 Performance and Accountability Report. 

New indicators often lack data needed to establish targets. For such indicators, the first year’s target may be to 

establish a baseline, and thus the Department gives the program a positive rating for gathering the data as planned 

and establishing targets for the subsequent year. 

The Office of Inspector General assesses the internal controls of DOL agencies – systems used to validate, verify and 

record data submitted by field staff and partners (e.g., grantees). These systems are identified as Data Sources in 

Appendix 1 at the bottom of each performance goal history. Lack of findings does not imply that data are factual. 

Material inadequacies, if any, are disclosed in the Secretary’s Message, which includes a statement on the adequacy 

of program performance data that is supported by signed attestations of each agency head responsible for a 

performance goal in this report. OMB Circular A-11defines a material inadequacy as a condition that significantly 

impedes the use of program performance data by agency managers and government decision makers. For 

Departmental management, this threshold is established at the performance goal level as data that are insufficient to 

permit determination of goal achievement. This is an unlikely occurrence for a goal with several indicators and 

historical data that allow reasonable estimation of results for most of them. Generally, if agency or program level 

managers do not trust their own data, they are not reported, because problems created by skewed targets and trends 

are much worse than a gap in the data. 

 

The Department of Labor aspires to standards beyond adequacy, and to that end has created a new Data Assessment 

process that will help improve the quality of performance information that is being used more than ever for decisionmaking and accountability. The Data Quality and Major Management Challenges section of each performance goal 

narrative includes an overall rating of indicator data completeness and reliability (Excellent, Very Good, Good, Fair, 

or Unsatisfactory). Discussions summarize the rationale and, where applicable, improvement plans. Data 
Management’s Discussion and Analysis 

26 United States Department of Labor 

assessments are based on seven criteria, of which two – accuracy and relevance – are threshold criteria that are 

weighted twice as much as the other five in the scoring system that determines ratings (see box below). If data do not 

satisfy the standards for both of these criteria, the rating is Data Quality Not Determined. This reflects the DOL 

policy that further assessments of quality are irrelevant if the information is not reasonably correct and worthwhile. 

Data Quality Rating System 

Both bulleted descriptions under a criterion must be satisfied to receive points. No partial credit is awarded. The rating scale 

reflects 20 points for Section One “threshold” criteria plus additional points earned in Section Two. Data that do not satisfy

both criteria presented in Section One are given the rating Data Quality Not Determined – regardless of the points achieved in 

Section Two. This rating indicates the agency is unable to assess data quality because it does not meet a minimum threshold. 

Section One: 20 points

Accurate Data are correct. (10 points) 

• Deviations can be anticipated or explained. 

• Errors are within an acceptable margin. 

Relevant Data are worth collecting and reporting. (10 points) 

• Data can be linked to program purpose to an extent they are representative of overall performance. 

• The data represent a significant budget activity or policy objective. 

Section Two: 25 points

Complete Data should cover the performance period and all operating units or areas. (5 points) 

• If collection lags prevent reporting full-year data, a reasonably accurate estimation method is in place for 

planning and reporting purposes. 

• Data do not contain any significant gaps resulting from missing data. 

Reliable Data are dependable. (5 points) 

• Trends are meaningful; i.e., data are comparable from year-to-year. 

• Sources employ consistent methods of data collection and reporting and uniform definitions across 

reporting units and over time. 

Timely Data are available at regular intervals during the performance period. (5 points) 

• The expectation is that data are reported quarterly. 

• Data are current enough to be useful in decision-making and program management. 

Valid Data measure the program’s effectiveness. (5 points) 

• The data indicate whether the agency is producing the desired result. 

• The data allow the agency and the public to draw conclusions about program performance. 

Verifiable Data quality is routinely monitored. (5 points) 

• Quality controls are used to determine whether the data are measured and reported correctly. 

• Quality controls are integrated into data collection systems.

Rating Points

Excellent 45 

Very Good 40 

Good 30-35 

Fair 25 

Unsatisfactory 20 

Data Quality Not Determined Varied 

Data for five goals are rated Excellent; nine are Very Good, ten are Good, three are Fair, and one is Data Quality Not 

Determined. This was the baseline year for these assessments, which were conducted late in the fiscal year, so in 
Executive Summary 

FY 2006 Performance and Accountability Report 27 

many cases agencies have not yet formulated improvement plans. As FY 2007/PY 2006 indicators and targets are 

finalized and data collection for the new fiscal year gets under way, program managers will prioritize data quality 

issues and consider feasible policies and practices that would have significant and positive impact on the criteria. 

The FY 2007 report will include a follow-up assessment and a more robust discussion of how the Department intends 

to make progress in this area. 

DOL Strategic Plan: FY 2006-2011 

In September 2006, the Department published its Strategic Plan for Fiscal Years 2006 through 2011. The strategic 

plan serves as a roadmap for programs to define priorities, refine strategies, and measure performance. In the 2007 

Performance and Accountability report, DOL will report its progress against four updated strategic goals: A 

Prepared Workforce provides training and services to new and incumbent workers and supplies high-quality 

information on the economy and labor market; A Competitive Workforce enhances the effectiveness and efficiency of 

the workforce development and regulatory systems that assist workers and employers in meeting the challenges of 

worldwide competition; Safe and Secure Workplaces ensures that workplaces are safe, healthful, and fair; provides 

workers with the wages due them; provides equal opportunity; and protects veterans’ employment and reemployment rights; and Strengthened Economic Protections protects and strengthens economic security; ensures 

union transparency; and secures pension and health benefits. 

 
28 United States Department of Labor 

Financial Section 

Improving Financial Performance Through Transparency 

Over the past fiscal year, the Department has also worked on enhancing its managerial cost accounting system, Cost 

Analysis Manager (CAM). The Department’s success in implementing a Department-wide managerial cost 

accounting system was highlighted in the Government Accountability Office’s (GAO) Survey of Managerial Cost 

Accounting Practices at Large Federal Agencies. In addition, the Department was praised for its efforts in making 

managerial cost accounting information readily available at a hearing before the U.S. House of Representatives on 

September 21, 2005. CAM is an indispensable tool for improving program performance. It improves accountability 

and transparency for how well tax dollars are spent. In FY 2005, the Department reported in its Performance and 

Accountability Report the cost of its Department-wide performance goals. This year, it is providing cost information 

on more than half of its Department-wide performance indicators. 

The Department continues to work on the implementation of a new core financial management system, known as 

Labor Executive Accountability Program (LEAP). LEAP will provide readily available, transparent data to managers 

and decision-makers for use on a day-to-day basis. This Financial Systems Integration Office (FSIO)-compliant 

COTS package will make available timely, accurate, and reliable financial information, and will provide the tools to 

conduct sophisticated financial analyses to better manage program resources. This will result in an increased use of 

integrated financial and performance information that will empower superior decision-making through better 

business intelligence. 

When fully implemented, the new system will be a strategic asset for the Department allowing, managers to create 

customized reports online at their desktops to meet their management needs in real time. LEAP is currently being 

hosted by a Shared Service Provider (SSP). This SSP was selected in Q2 FY 2006, and the SSP hosting of LEAP 

started in Q4 FY 2006. For Q1 FY 2007, LEAP is scheduled to complete the configuration of the Oracle Federal 

Administrator (Budget Execution) module for internal reporting and evaluation purposes. 

The Department is the first Federal agency to deploy an-end-to end web based electronic travel management system, 

which was completed on September 30, 2006. Now, DOL employees have the advantage of being able to assess 

their travel system 24-hours a day/7 days a week to enter travel authorizations, book travel reservations, and 

complete their travel vouchers. The system is accessible from the office, home, or while on the road. E-Gov Travel is 

totally paperless and affords DOL employees the ease of taking advantage of the latest technology while providing 

cost savings. 

The Debt Collection Improvement Act of 1996 (DCIA) designated the Department of the Treasury as the central 

agency for collection of Federal debts over 180 days delinquent. The Department cross-services all delinquent debts 

in accordance with this statute. Debt management accounts for a relatively small part of our financial management 

activity. The majority of debts managed by the Department relate to the assessment of fines and penalties in our 

enforcement programs. During FY 2006, the Department referred $84.2 million, which represents 79 percent of all 

eligible delinquent debt, to Treasury for collection. The Department continues to monitor and aggressively pursue its 

debt greater than 180 days old. 

The Department continues to make improvements in its efforts to meet guidance and regulations outlined in the 

Prompt Payment Act. The Prompt Payment Act requires Executive agencies to pay commercial obligations within 

discreet time periods and to pay interest penalties when those time constraints are not met. In FY 2006, of 
Executive Summary 

FY 2006 Performance and Accountability Report 29 

approximately $1.2 billion in gross payments, $452,000 was paid in interest fees and penalties. Additionally, during 

FY 2005, there were over 73,000 payments made to vendors and travelers. Of this amount, 2,476 invoices were paid 

late, resulting in only 3% of the total payments incurring interest penalties. These results represent significant 

improvements from the prior year. 

The Department continues to work aggressively with its agencies to increase the number of vendors receiving 

payments through electronic fund transfer (EFT). The percentage of vendors receiving EFT payments increased by 

7% to 95%. ESA benefit and medical programs, although increasing in EFT payments, continue to remain low.

Analysis of Financial Statements 

The principal financial statements summarize the Department’s financial position, net cost of operations, and changes 

in net position, provide information on budgetary resources and financing, and present the sources and disposition of 

custodial revenues for FY 2006 and FY 2005. Highlights of the financial information presented in the principal 

financial statements are shown below. 

Financial Position 

The Department’s Balance Sheet presents its financial position through the identification of agency assets, liabilities, 

and net position. The Department’s total assets increased from $71.5 billion in FY 2005 to $83.5 billion in FY 2006. 

The increase in total assets primarily was account for in the Department’s investments. The Department invests in 

non-marketable, special issue Treasury securities balances held in the Unemployment Trust Fund. The Department 

did not experience major changes in liabilities during FY 2006. Liabilities totaled $20 billion at the end of both FY 

2006 and 2005. Beginning in FY 2006, agencies were required to report earmarked non-exchange revenue and other 

financing sources, including appropriations. The Department was also required to report the portions of cumulative 

results of operations and unexpended appropriations on the face of the Balance Sheet. 

 

$0

$10,000,000

$20,000,000

$30,000,000

$40,000,000

$50,000,000

$60,000,000

$70,000,000

Funds with

Treasury

Investments Accounts

Receivable

Balance Sheet

(in thousands)

FY2006

FY2005
Management’s Discussion and Analysis 

30 United States Department of Labor 

Net Cost of Operations 

The Department’s total net cost of operations in FY 2006 was $44.8 billion, a decrease of $9.6 billion from the prior 

year. This decrease was attributable to the following crosscutting programs: 

$0

$10,000

$20,000

$30,000

$40,000

$50,000

Income

Maintenance

Employment

and Training

Standards Safety and

Health

Statistics

Crosscutting Programs

(in millions)

FY 2006

FY 2005

Income Maintenance programs continue to comprise the major portion of costs. These programs include costs such 

as unemployment benefits paid to individuals who are laid off or out of work and seeking employment as well as 

payments to individuals who qualify for disability benefits due to injury or illness suffered on the job. 

Employment and Training programs comprise the second largest cost. These programs are designed to help 

individuals deal with the loss of a job, research new opportunities, find training to acquire different skills, start a new 

job, or make long-term career plans. 

Statement of Budgetary Resources 

This statement reports the budgetary resources available to DOL during FY 2006 and FY 2005 to effectively carry 

out the activities of the Department as well as the status of these resources at the end of each fiscal year. The 

Department had direct obligations of $50.3 billion in FY 2006, a decrease of $1 billion from FY 2005. 

Limitations on the Principal Financial Statements 

As required by the Government Management Reform Act of 1994 (31 U.S.C. 3515 (b)), the principal financial 

statements report the Department’s financial position and results of operations. While the statements have been 

prepared from the Department’s books and records, in accordance with formats prescribed by OMB, the statements 

differ from the financial reports used to monitor and control budgetary resources, which are prepared from the same 

books and records. The statements should be read with the realization that they are a component of the U.S. 

Government, a sovereign entity, and that liabilities reported in the financial statements cannot be liquidated without 

legislation providing resources to do so. 

Management Assurances 

The Department committed significant resources in implementing the requirements outlined in the revised OMB 

Circular A-123, Management’s Responsibility for Internal Controls. The Department’s implementation leveraged 

and improved upon existing successes in financial management, including the Quarterly Financial Management 

Certification program, which requires managers at all levels to attest to the adequacy of effective management 

controls over program resources, financial systems, and financial reporting. The Department’s approach to the A123 requirement is compliance at managed cost, sustainability by reducing compliance mindset and reliance on 

outside parties to discover errors and problems, and improvement in effectiveness and efficiency of agency 

programs. 
Executive Summary 

FY 2006 Performance and Accountability Report 31 
Management’s Discussion and Analysis 

32 United States Department of Labor 

Disclosure of Federal Information Security Management Act (FISMA) 

Significant Deficiencies 

The Federal Information Security Management Act (FISMA) requires the Department of Labor (DOL), Office of 

Inspector General (OIG), to perform annual independent evaluations of the DOL information security program and 

practices based upon audits of a subset of DOL’s identified major information systems. The objective of the audits is 

to determine if security controls over the systems were in compliance with FISMA requirements. 

Based on the audits performed during FY 2006, the OIG identified 7 significant deficiencies in 2 non-financial 

systems in the following security control areas: 

• Enforcing appropriate access controls; 

• Developing and implementing change control procedures; 

• Ensuring service continuity; and 

• Implementing incident response procedures and training. 

To address the significant deficiencies in the security of the data, the OIG recommended that DOL document and 

implement procedures and processes to ensure that: 

• Only authorized personnel have access to the systems and system changes are authorized; 

• The Contingency Plans are current and tested and personnel are trained in their contingency planning and 

operational roles; and 

• Security incidents are handled in accordance with applicable requirements and personnel with incident 

handling responsibilities are trained. 

In its response to the audit reports, DOL generally concurred with the findings and recommendations and has already 

taken corrective actions to address several of the recommendations associated with these deficiencies and is in the 

process of taking corrective actions to address the remaining recommendations. 

IPIA Compliance 

Improved financial performance through the reduction of improper payments continues to be a key financial 

management focus of the Federal government. At Labor, developing strategies and the means to reduce improper 

payments is a matter of good stewardship. Accurate payments lower program costs. This is particularly important as 

budgets have become increasingly tight.

Over the past several years, identifying and reducing improper payments has been a major financial management 

focus of the Federal Government. A PMA key component is to improve agency financial performance through 

reductions in improper payments. OMB originally provided Section 57 of Circular A-11 as guidance for Federal 

agencies to identify and reduce improper payments for selected programs.12 The Improper Payments Information Act 

of 2002 (IPIA) broadened the original erroneous payment reporting requirements to programs and activities beyond 

those originally listed in Circular A-11. 

IPIA defines improper payments as those payments made to the wrong recipient, in the wrong amount, or used in an 

improper manner by the recipient. IPIA requires a Federal agency to identify all of its programs that are risk 

 

12 Section 57 identified Unemployment Insurance (UI), Federal Employees’ Compensation Act (FECA), and Workforce 

Investment Act (WIA) as programs required to report annual erroneous payments. 
Executive Summary 

FY 2006 Performance and Accountability Report 33 

susceptible to improper payments. It also requires the agency to implement a corrective action plan that includes 

improper payment reduction and recovery targets. The act also requires the agency to report annually on the extent 

of its improper payments and the actions taken to increase the accuracy of payments. 

To coordinate and facilitate the Department’s efforts under IPIA, the Chief Financial Officer (CFO) is the Erroneous 

Payment Reduction Coordinator for the Department. OCFO works with program offices to develop a coordinated 

strategy to perform annual reviews for all programs and activities susceptible to improper payments. This cooperative 

effort includes developing actions to reduce improper payments, identifying and conducting ongoing monitoring 

techniques, and establishing appropriate corrective action initiatives. 

Methodology 

Due to the inherent differences in managing and accounting for funds in a benefit versus a grant program, the 

Department conducted its FY 2006 risk assessment using different methodologies to assess their improper payment 

risk. Per OMB guidance, Unemployment Insurance (UI), Federal Employees’ Compensation Act (FECA), and the 

Workforce Investment Act (WIA) programs are deemed to be high risk irrespective of the determined improper 

payment error rate. This determination is based on the fact that the financial payments for each of these programs 

exceed $2 billion. UI and FECA are benefit programs. WIA is a grant program. 

FY 2006 benefit programs with FY 2005 outlays totaling less than $200 million were deemed to be low risk, unless a 

known weakness existed in the program management based on reports issued by oversight agencies such as the 

Department’s Inspector General (IG) and/or the U.S. Government Accountability Office (GAO). Hence, these 

benefit programs were not statistically sampled. For benefit programs with outlays greater than $200 million, the 

Department conducted sampling to determine their improper payment rates. This sampling included FECA, UI, 

Black Lung Disability Trust Fund, and Energy Employees Occupational Illness Compensation Fund. UI was the 

only program determined to be susceptible to risk13 as a result of this approach. However, the Department is also 

reporting on FECA’s improper payment rate since it is required per OMB guidance. 

As mentioned earlier, the Department used a separate methodology to assess the risk of improper payments in grant 

programs except for Job Corps which was sampled. The Department analyzed all FY 2004 Single Audit Reports14 to 

identify questioned costs, which were used as a proxy for improper payments, and to estimate an approximate risk for 

each of the Department’s grant programs. The improper payment rate was determined by calculating the projected 

questioned costs and dividing this total projection by the corresponding outlays.15 All error rates were determined to 

be well below the 2.5 percent threshold; therefore, no grant programs were determined to be susceptible to risk as a 

result of this approach. However, like FECA, the Department is reporting on WIA’s improper payment rate since it is 

required per OMB guidance, even though its improper payment rate is well below the 2.5 percent threshold. 

Challenges for IPIA Compliance 

Like many other Federal agencies, the Department faces challenges in meeting its improper payment reduction and 

recovery targets, particularly with programs that are sensitive to the U.S. economy fluctuations or natural disasters, 

such as the UI program. Despite implementing new initiatives that will reduce its improper payments, the UI 

program’s estimated improper payment error rate increased to 10.0%. The underpayment rate—the percentage of 

dollars paid made that was smaller than they should have been—was 0.67%, a rate that has remained steady for 

several years. 

Two factors appear to account for most of the increase in the overpayment rate from 9.3% a year earlier as the table 

below shows: 

 

13 OMB Implementation Guidance, M-03-13, further defined programs to be susceptible to risk if the improper payment rate 

exceeded 2.5 percent and the amount of overpayment exceeded $10 million. This guidance is now superseded by Appendix C 

of Circular A-123, which continues to define susceptibility to risk in the same manner. 14 The Single Audit Act of 1996 provides for consolidated financial and single audits of State, local, non-profit entities, and 

Indian tribes administering programs with Federal funds. The most recent year available for Single Audit Reports is 2004. 15 In the case of the WIA program, the projection was based on the WIA-specific questioned costs. For the non-WIA grant 

programs, the projection was made for all programs as an aggregate. The improper payment rate was determined by dividing 

this aggregate projection of questioned costs by the total outlays for all non-WIA grant programs. 
Management’s Discussion and Analysis 

34 United States Department of Labor 

• Several major hurricanes in 2005 had a devastating impact on Louisiana and Mississippi, and less severe 

impacts on Alabama, Florida, and Texas. Overpayments in these states increased significantly during the 

year, largely because of confusion about reinstated eligibility requirements that had been temporarily 

suspended due to disruption of the economy. We estimate that the increases in the Gulf States raised the 

aggregate Annual Report rate by a third of a percentage point and the operational rate by 0.13 percentage 

points. 

• In its aggressive emphasis on payment integrity over the past few years, the Department has developed a new 

core performance measure for overpayment detection and has begun to improve the Benefit Accuracy 

Measurement (BAM) program’s ability to detect individuals who are working and claiming UI benefits 

concurrently, the single largest cause of overpayment errors. This increased attention has heightened states’ 

overall awareness of the problem of UI benefit overpayments and led to improved--and higher--BAM 

estimates. For the year ending 06/30/06, eighteen states voluntarily crossmatched BAM cases with the State 

Directory of New Hires (SDNH) or National Directory of New Hires (NDNH). We estimate that this 

voluntary use of the new hire directories raised the measured overpayment rates by nearly a fifth of a point 

during FY 2006. 

Total Rate Operational Rate 

Year Ending 6/30/2005 Rates 9.32% 4.98% 

 

FY 2006 Targets 9.3% 4.75% 

Unadjusted YE 6/30/2006 Estimates 10.0% 5.63% 

New Hire Cross match -0.18% -0.18% 

Hurricane - affected States -0.35% -0.13% 

Adjusted Rates 9.47% 5.32% 

The Department has obtained authority to require states to use the NDNH to improve their BAM estimates of 

overpayments due to workers who return to work but continue claiming benefits. When this NDNH crossmatch 

requirement becomes mandatory in January 2008, we estimate that it will raise the measured BAM annual report and 

operational rates by 0.5 to 0.75 percentage points. 

Without the effects of these two elements, we estimate that the Annual Report rate would have been about 9.5% 

instead of 10.0%, and the operational rate 5.3% instead of 5.6%. Because both estimates are sample-based, they are 

subject to the usual sampling variation. The 95% confidence intervals are 10.0% +/- 0.54 percentage points for the 

Annual Report rate and 5.63% +/- 0.44 percentage points for the operational rate. 

Furthermore, meeting improper payment reduction and recovery targets of programs such as UI and WIA are 

contingent upon the cooperation and support of State agencies and other outside stakeholders who are intricately 

involved in the day-to-day management of these programs’ activities. 

Accomplishments and Plans for the Future 

Despite the increase in UI’s estimated improper payment error rate, the Department did meet its reduction targets for 

FECA and WIA. Their estimated improper payment error rates were 0.03% and 0.17% respectively. 

The Department’s analytical studies indicate that earlier detection of recoverable overpayments is the most costeffective way to address improper payments. Early detection allows agencies to stop payments before a claimant 

who has returned to work can exhaust benefits and to recover these overpayments more readily. The Department 

estimates that the forty-five states that crossmatch UI beneficiaries with the SNDH or the NDNH instead of UI wage 

records prevented approximately $75 million of overpayments in each of the past two fiscal years. Last year, three 

states participated in a pilot study initiated by the Office of the Chief Financial Officer and the UI program to 

determine whether a cross-match using the NDNH is more effective than the SDNH in identifying individuals no 

longer eligible to receive UI benefits. The results of this pilot showed that because the NDNH includes records for 

out-of-state employers, Federal agencies, and multi-state employers that report all of their new hires to a single state, 

it detects improper payments more effectively than the SDNH. The Department has provided states with funds to 

implement these NDNH cross-matches; as of 10/30/06, twenty-two states have implemented the NDNH crossmatch, 
Executive Summary 

FY 2006 Performance and Accountability Report 35 

twelve states have signed the computer-matching agreement with HHS that is the prelude to connecting with the 

NDNH, and seventeen are in the planning process. Seven States were awarded special FY 2006 supplemental funds 

to implement NDNH. 

In FY 2005, the Department began providing States funds to conduct Reemployment and Eligibility Assessment 

(REAs) with UI beneficiaries. These assessments reduce improper payments both by speeding claimants’ return to 

work and by detecting and preventing eligibility violations. Twenty states received funds to continue REAs during 

FY 2006; these REAs are estimated to return about $66 million to the UI trust fund. An impact evaluation of nine 

states’ REA programs is scheduled for March 2007. 
Management’s Discussion and Analysis 

36 United States Department of Labor 

Major Management Challenges

The table below lists management challenges the Department considers most important in terms of their impact on 

the accomplishment of goals in this report and their impact on the American workplace and taxpayers, overall. The 

achievement of all the Department’s goals is influenced by the successful management of its performance and 

financial data, its procurement integrity, and its ability to develop and secure information technology systems. 

The management challenge for Goal 1, A Prepared Workforce, pertains to ensuring the effectiveness of the Job Corps 

program. Management challenges for Goal 2, A Secure Workforce, include safeguarding unemployment insurance, 

improving the Federal Employees’ Compensation Act (FECA) program, and improving the security of employee 

benefit plan assets. For Goal 3, Quality Workplaces, the OIG identified challenges to ensuring the safety and health 

of miners that the Department recognizes as important. For Goal 4, A Competitive Workforce, the GAO, OIG, and 

others identified challenges for the Foreign Labor Certification Program. 

This year’s list includes eleven items, each of which has been identified as a concern by the Department’s Office of 

the Inspector General (OIG), the U.S. Government Accountability Office (GAO), DOL’s Office of the Chief 

Financial Officer (OCFO), or some combination thereof: 

I. Improve Accountability for Performance and Financial Data 

II. Safeguard Unemployment Insurance 

III. Improve the Federal Employees’ Compensation Act (FECA) Program 

IV. Maintain the Integrity of the Foreign Labor Certification Program 

V. Security of Employee Benefit Plan Assets 

VI. Improve Procurement Integrity 

VII. Ensure the Safety and Health of Miners 

VIII. Develop and Secure Information Technology Systems and Protecting Related Information Assets 

IX. Ensure the Effectiveness of the Job Corps Program 

X. Manage the Employment and Training Program to Meet the Demands for the Workforce of the 21st Century 

XI. Real Property 

Many of these challenges are continued from last year. Summaries of the issue, actions taken and actions remaining 

are presented for each challenge. More information on many of them may be found elsewhere in this report in 

discussions of program performance or in the Financial Section. At the end of the table are challenges X and XI 

from 2005 which are included to show their current status. The Department aggressively pursues corrective action 

for all significant challenges, whether identified by the OIG, GAO, OCFO or other sources within the Department. 

Management Challenge/ 

Significant Issue Actions Taken in FY 2006 Actions Remaining and Expected Completion Date 

 I. Improve Accountability for Performance and Financial Data — Progress assessment: Fair 

Challenge first identified in FY 2000. 

In order to manage DOL programs and 

integrate budget and performance, the 

Department needs timely financial data 

from a managerial accounting system that 

matches cost information with program 

outcomes, quality performance data, and 

useful information from single audits. 

Affects all goals. 

 

Managerial Cost Accounting System. 

Ensure that managers integrate updated 

cost information into day-to-day decision 

making. 

 

Further implemented Cost Analysis 

Manager (CAM); developed cost models 

for most major DOL agencies; and 

improved capabilities to integrate cost 

and performance information. 

Verified accuracy of non-financial data 

and implemented additional data 

Automate workload and time 

distribution systems and begin 

developing CAM web portal – June 

2007. Data collection tool – September 

2007. Predictive planning capabilities – 

January 2008 

Continue to implement additional 

procedures as necessary and as may be 
Executive Summary 

FY 2006 Performance and Accountability Report 37 

Management Challenge/ 

Significant Issue Actions Taken in FY 2006 Actions Remaining and Expected Completion Date 

validation systems. recommended by the OIG. 

Reliable Performance Data. GPRA and 

the Budget and Performance Integration 

PMA initiative call for reliable 

performance data. DOL faces challenges 

because much of its data are generated by 

States. In FY 2006, GAO pointed out 

instances where DOL and States need to 

improve performance data quality. 

 

Improve WIA data quality. Implemented clear definitions for points 

of registration and exit. 

Review WIA participant files to ensure 

validation is done correctly and hold states 

accountable for report and data element 

validation requirements.

Reviewed state validation results. 

Developed a standard comprehensive 

monitoring tool and a supplement for 

regional use including data validation 

procedures for each program and trained 

staff in its use. 

Investigate making a state's data 

validation results a criteria for incentive 

awards – December 2006.

Publish revised ETA Monitoring Guide 

for Data Validation – May 2007. 

Modify data validation software to 

allow Federal staff to sample records at 

the state level – July 2007.

Improve Apprenticeship Data Quality. 

Make better use of DOL performance data 

for management oversight. 

Established competency-based 

apprenticeships and interim credentials to 

allow niche employers to participate. 

The Secretary’s Advisory Committee on 

Apprenticeship proposed regulatory 

revisions to incorporate the changes. 

Implement strategies to allow niche 

employers to participate – October 

2007. 

Develop a cost-effective strategy for 

collecting data from council-monitoring 

states. 

Two additional states agreed to 

participate in the Registered 

Apprenticeship Information System 

(RAIS), DOL’s database for 

apprenticeship. Use of the Apprentice 

Electronic Registration process, which 

improves data integrity, increased. 

Continue to negotiate with states to 

participate in RAIS. 

Conduct regular reviews in states that 

regulate their own programs to ensure that 

state activities are in accord with DOL 

requirements. 

Completed the remainder of the reviews 

in State Apprenticeship Agency (SAA) 

states. 

Complete reviews of one-third of the 

SAA states for the next three years. 

Offer substantive feedback to states after 

reviews. 

Provided feedback (final reports of the 

SAA reviews). 

Improve follow-up to ensure 

recommendations are implemented. 

Improve Trade Adjustment Assistance 

(TAA) Data Quality. 

Promoted state-developed models of 

integrated WIA and TAA systems. 

Covered TAA under common measures. 

Trained program officials in reporting. 

Provided states with instructions, edit 

checks, and technical assistance. 

Develop a monitoring guide for the 

Trade Program as an addendum to the 

ETA Core Monitoring Guide – 

December 2006. Field test the 

monitoring guide – March 2007. 

Work with States to Improve Data 

Quality. Develop a more complete 

reporting system to provide greater 

comparability and clarity of performance 

data. 

Completed feasibility study on final 

reporting design. 

Implement reporting format to allow 

DOL to analyze performance across 

programs (Workforce Investment 

Streamlined Performance System) – 

July 2007. 
Management’s Discussion and Analysis 

38 United States Department of Labor 

Management Challenge/ 

Significant Issue Actions Taken in FY 2006 Actions Remaining and Expected Completion Date 

Revised data collection systems for WIA, 

Wagner-Peyser, Veterans Employment 

and Training Service, and Trade 

Adjustment Assistance programs to 

incorporate common performance 

measures. Completed data validation and 

began monitoring states to ensure 

compliance with guidelines. 

PY 2006 WIA Annual Report validation 

is due not later than October 2, 2006. 

Identify best practices and technology 

solutions to collect and report customer 

information. 

Revised Data Validation Reporting 

Software to allow states to calculate and 

validate common performance measures. 

States calculate and submit Program 

Year reports using ETA Version 6.0 of 

the Data Validation Reporting Software. 

Obtain Safety and Health Performance 

Data. While OSHA’s voluntary 

compliance programs appear to have 

yielded many positive outcomes, much of 

the agency’s data are insufficient for 

evaluation. GAO recommended that 

OSHA identify cost-effective methods of 

collecting complete and comparable data 

on program outcomes. 

Completed evaluation of impacts of 

Voluntary Protection Programs (VPP) on 

sites’ injury and illness rates from the 

inception of the decision to participate 

through to full VPP participation. 

Improved cooperative programs data 

management systems. 

Identify cost-effective methods of 

collecting more complete and sufficient 

data on voluntary programs through 

voluntary program refinements and 

development of new OSHA Information 

System – September 2009. 

Audit ETA Data Validation. Reliability of 

Audits conducted under the single audit 

act. DOL uses audits conducted under the 

Single Audit Act (SAA) conducted by 

independent public accountants or state 

auditors to provide oversight of the more 

than 90 percent of its expenditures spent by 

State and local governments and other nonDOL organizations. 

Respond to recommendations from the 

report on the National Single Audit 

Sampling Project which is designed to 

determine the quality of Single Audits by 

providing a statistically reliable estimate 

of the extent that Single Audits conform 

to applicable requirements and standards. 

ETA is waiting for the OIG data 

validation audit. 

OIG to audit ETA data validation. 

II. Safeguard Unemployment Insurance — Progress assessment: Good 

Challenge first identified in FY 2000. 

Unemployment Insurance (UI). The UI 

Program is one of the nation’s largest wage 

replacement programs. In 2005, the 

estimated improper payments for UI were 

$3 billion. DOL is challenged to prevent 

improper payments, particularly during 

national emergencies or disasters. Impacts 

Goal 06-2.2A, Make timely and accurate 

benefit payments to unemployed workers. 

Worked with the OIG and the Louisiana 

UI agency to facilitate investigations of 

potential fraud following Hurricane 

Katrina. 

Complete investigations of possible 

overpayments related to hurricanes 

Katrina and Rita – August 2007. 

Work with states to eliminate improper 

payments and insure payment integrity, 

especially during national emergencies and 

disasters. 

DOL was authorized to require states to 

cross-match UI payments selected for 

Benefit Accuracy Measurement audits 

with the National Directory of New Hires 

to improve the detection of erroneous 

payments. 

Coordinated with states and HHS to 

implement a process for matching with 

National Directory of New Hires 

(NDNH). Facilitated States’ Use of the 

NDNH and issued a report on its use. 

Collected information on the results of 

Publish regulation requiring states to 

cross-match UI payments selected for 

Benefit Accuracy Measurement audits 

with the National Directory of New 

Hires to improve the detection of 

erroneous payments – January 2008. 

Contingent upon the appropriation of 

funds and the passage of the Integrity 

Act included in the DOL FY 2007 

budget request, state UI agencies will 

increase efforts to prevent and detect 

fraudulent employment benefit claims. 

Encourage additional states to 
Executive Summary 

FY 2006 Performance and Accountability Report 39 

Management Challenge/ 

Significant Issue Actions Taken in FY 2006 Actions Remaining and Expected Completion Date 

the Reemployment and Eligibility 

Assessment grants. 

implement NDNH cross matches and 

track implementation. 

Report on the results of the 

Reemployment and Eligibility 

Assessment Grants – May 2007. 

Safeguard the funds in the 

Unemployment Trust Fund (UTF).

Administrative charges by the IRS to the 

UTF totaled $70 million for the first three 

quarters of FY 2006. The OIG has 

requested that the Treasury Inspector 

General audit the methodology for 

charging UTF administrative expenses. 

Review the states’ monthly submissions of 

ETA form 2112 reports to detect and 

correct errors. 

Implemented edit checks and 

reconciliation procedures for the ETA 

2112. 

Treasury OIG to audit IRS methodology 

for charging administrative expenses. 

Develop additional instructions for the 

UI reporting entities and implement 

procedures to more effectively review 

the data reported on the ETA 2112. 

III. Improve the Federal Employees’ Compensation Act (FECA) Program — Progress assessment: Good

Challenge first identified in FY 2005. 

Given the large volume of benefits 

delivered government-wide through the 

FECA Program, DOL is spearheading 

efforts to make FECA more cost-effective 

throughout the government through the 

Safety Health and Return to Work initiative 

and is working to improve the way the 

program is administered. Efforts are under 

way to address the findings below that 

encompass several areas for improvement. 

Impacts Goal 06-2.2B, Minimize the 

impact of work-related injuries.

Reduce Fraud. 

Legislative Reform. 

Seek legislative reforms to enhance 

incentives for injured employees to return 

to work; address benefit equity issues; 

discourage unsubstantiated claims; and 

make other improvements. 

With input from the IG community, 

DOL’s OIG developed a protocol for use 

by IGs across the government to reduce 

fraud and overpayments. 

ESA began developing written 

procedures that address accounting and 

financial reporting for FECA. 

Drafted legislation. Estimated savings 

over ten years is $592 million. 

Issue and implement written procedures 

that address accounting and financial 

reporting for FECA – 2007. 

Identify and work with a future sponsor 

to submit the proposed FECA reform 

legislation to the Congress – 2007. 

Reduce Improper Payments. FECA is one 

of three DOL programs classified as high 

risk for improper payments due to the 

amount of benefits paid. (The other two 

are UI and WIA.) In 2005, FECA’s 

overpayment rate was only 0.13 percent 

and its estimated improper payments 

totaled $3.3 million. Ensure that current 

medical information for claimants is on 

DOL met its improper payments 

reduction and recovery targets for the 

FECA program. 

Integrated Federal Employee 

Compensation System (iFECS), which 

tracks due dates of medical evaluations, 

was fully deployed. 

Monitor and adjust iFECS as necessary 

– 2007. 
Management’s Discussion and Analysis 

40 United States Department of Labor 

Management Challenge/ 

Significant Issue Actions Taken in FY 2006 Actions Remaining and Expected Completion Date 

file, so that payments are not made to those 

who are no longer disabled. 

IV. Maintain the Integrity of the Foreign Labor Certification Program — Progress assessment: Fair

Challenge first identified in FY 2001. 

Problems with the integrity of the labor 

certification process and fraud may result 

in economic hardship for American 

workers, the abuse of foreign workers, and 

may have national security implications 

when applications are not adequately 

screened. Impacts Goal 06-4.1A Address 

worker shortages through the Foreign 

Labor Certification Program.

Proposed regulatory changes to: 1) 

eliminate substitution of alien 

beneficiaries on applications and 

approved labor certifications; 2) 

implement a 45 day deadline to file 

approved permanent labor certifications 

in support of a petition with Homeland 

Security; 3) prohibit the sale, barter, or 

purchase of permanent labor 

certifications or applications; and 4) 

provide enforcement mechanisms to 

protect program integrity, including 

debarment with appeal rights. The 

regulation addresses many concerns of 

the OIG, OMB, and others. 

Final publication of the revised 

regulation – April 2007. 

Reduce Foreign Labor Certification 

Backlogs. 200,000 applications were 

backlogged as of August 2006. In 2006, 

DOL received 125,500 applications at the 

National Processing Centers in Atlanta and 

Chicago. In addition to reducing backlog, 

DOL is challenged to prevent new 

backlogs. 

DOL automated permanent labor 

certification application processing 

Backlog Elimination Centers eliminated 

over 50% of the permanent program 

backlog three weeks ahead of the 

September 30, 2006 goal. 

Eliminate the backlogs and prevent 

new backlogs – September 2007. 

GAO noted that DOL certified applications 

although the wage rate on the application 

was lower than the prevailing wage for that

occupation and some certified applications 

had erroneous employer identification 

numbers. 

Reduce the incidence of applications 

certified with wage rates on the 

application that are lower than the 

prevailing wage and erroneous 

employer identification numbers – 

March 2007. 

 V. Security of Employee Benefit Plan Assets — Progress assessment: Excellent 

Challenge first identified in FY 2000. 

Pension Benefit Guaranty Corporation 

(PBGC) The PBGC experienced an 

increased workload in recent years as more 

companies dropped their plans, increasing 

the burden on the private pension insurance 

system. Impacts Goal 06-2.2D Improve 

pension insurance program.

The Pension Protection Act of 2006 will 

place PBGC on sturdier financial footing 

and should reduce the number of pension 

plans in default. 

Implement the Pension Protection Act 

of 2006 

Employee Benefits Security 

Administration (EBSA) areas of concern 

include strengthening employee benefit 

plan audits, investigating benefit plan 

fraud, corrupt multiple employer welfare 

arrangements, and underpayments from 

cash balance plans. This challenge affects 

Goal 06-2.2C, Secure pension, health and 

welfare benefits.

August 17, 2006 – The President signed 

the Pension Protection Act of 2006 which 

strengthens DOL’s capabilities to protect 

pension benefits. 

Strengthen Audits. Implement a CPA firm 

“inspection program.”

Implemented a CPA firm inspection 

program and reviewed firms who audit 

approximately half of all employee 

benefit plan assets subject to audit. 

Ongoing 
Executive Summary 

FY 2006 Performance and Accountability Report 41 

Management Challenge/ 

Significant Issue Actions Taken in FY 2006 Actions Remaining and Expected Completion Date 

Performed augmented reviews of 450 

sets of audit work papers. Ongoing 

Referred 20 CPA firms to the American 

Institution of Certified Public 

Accountants (AICPA) Professional 

Ethics Division or a state board of public 

accountancy. 

Ongoing 

Benefit Plan Fraud. Continue to devote 

appropriate enforcement resources to the 

review of Taft-Hartley plans. 

EBSA spent about 6 percent of its 

investigative resources on civil and 

criminal investigations of these plans 

and produced monetary results of over 

$23 million through Q3 FY 2006. 

Ongoing 

Corrupt Multiple Employer Welfare 

Arrangements (MEWAs.) Stopping 

abusive practices of corrupt MEWAs 

should be a top enforcement priority. 

Worked closely with Department of 

Justice to prosecute these complex 

white-collar crimes. Obtained over $21 

million in results from MEWA 

investigations in 2006. 

Ongoing 

Underpayments from Cash Balance 

Pension Plans. DOL’s OIG conducted a 

study in 2002 on the accuracy of individual 

benefit payments in selected cash balance 

plans. EBSA referred the 13 problems 

identified by OIG to the IRS for guidance, 

but has not yet received any guidance. 

The Pension Protection Act of 2006 

modified how lump sum distributions are 

calculated and may eliminate or reduce 

the potential for underpayments. 

These statutory changes are likely to 

correct prospective problems. In FY 

2007, EBSA, SOL, and the OIG plan to 

resolve this matter. 

VI. Improve Procurement Integrity — Progress assessment: Good 

Challenge first identified in FY 2005. 

Ensuring controls are in place to properly 

award, manage, and document 

procurements is a challenge to the 

Department. This challenge affects the 

attainment of all goals. 

Hired management staff to provide onthe-job training and promote on-site and 

off-site training courses, online training, 

and continuing higher education; issued 

internal operating procedures to ensure 

standards of performance; and set target 

timelines for performance metrics. 

Properly award, manage and document 

procurements. 

 

Hired a supplemental specialist 

(contractor) to help process the workload 

in a timely manner. 

Improved the E-Procurement System to 

increase visibility of actions being 

processed and better manage workload. 

Met targets for satisfactory procurement 

management reviews, contracts awarded 

in compliance with customers’ requests 

and requirements, and agencies 

compliant with policy. Completed all 

corrective actions. No audits with major 

findings. 

Worked with agency representatives to 

promote agency staff understanding of 

sole source procurement criteria and 

proposed only properly documented 

cases. As a result, 91 percent of DOL’s 

Procurement Review Board requests 

were approved. 

Ongoing 

Ongoing 

Ongoing 

Ongoing 
Management’s Discussion and Analysis 

42 United States Department of Labor 

Management Challenge/ 

Significant Issue Actions Taken in FY 2006 Actions Remaining and Expected Completion Date 

There are several appropriated funds with 

procurement activities under the Chief 

Acquisition Officer (CAO); the Office of 

Procurement Services (full delegation); 

BLS (limited delegation); ETA (full 

delegation; regional offices (limited 

delegation); MSHA (full delegation). 

DOL’s OIG has limited procurement 

authority. OIG audits of two DOL 

agencies in FY 2005 found that a lack of 

segregation of the procurement function 

allowed program staff to exert undue 

influence over the procurement process. 

OIG recommended reassigning the 

procurement authority for MSHA to be 

completely independent of the agency, 

removing the procurement function from 

OASAM, and establishing a completely 

independent Acquisition Office to report 

directly to the Deputy Secretary. 

OIG recommendations to rescind and 

reassign MSHA’s procurement authority 

to be completely independent of MSHA 

and to create an independent DOL 

Acquisition Office remained “unresolved 

and open.” 

DOL responded to a request by conferees 

to H.R. 4939 to report on the steps 

necessary to establish a unified chief 

procurement officer. Steps include redesignating a non-career employee 

official as the CAO; establishing a new 

career position to serve as the 

Acquisition Office Director, who would 

also serve as the Senior Procurement 

executive in line with the 2003 SARA 

legislation; and realigning procurement 

authority delegated to DOL agencies to 

the Acquisition Office Director. 

Resolve the “unresolved and open” OIG 

procurement recommendations. 

VII. Ensure the Safety and Health of Miners — Progress assessment: Good 

Challenge first identified in FY 2005. 

The MINER Act of 2006 challenges 

MSHA and the mining industry to enhance 

mine safety training, improve safety and 

communications technology, enhance mine 

rescue teams and emergency capabilities, 

and enforce stronger civil and criminal 

penalties. Impacts Goals 06-3.1A, Reduce 

mine fatalities and injuries and 06-3.1B,

Reduce mining-related illnesses.

Developed phased timetable to 

implement the MINER Act of 2006. 

Implement the MINER Act in 

accordance with timetable. 

Improve Safety and Health Performance 

Data and Monitoring. GAO stated that 

MSHA headquarters did not ensure that 6-

month inspections of ventilation and roof 

support plans were being completed on a 

timely basis and that MSHA did not 

always ensure that hazards found during 

inspections are corrected promptly. 

GAO is currently determining whether 

previous recommendations addressed 

safety and health issues at MSHA, 

including performance data and 

monitoring. 

Address any new GAO 

recommendations. 

Replace Retiring Mine Inspectors. In 

2003, GAO reported that 44 percent of 

MSHA’s underground coal mine 

inspectors would be eligible to retire 

within the next five years. With an 18-24 

month lead time to fully train new 

inspectors, MSHA faces a challenge in 

reacting to its workload demands. 

Launched a Career Intern Program for 

mine safety inspectors which included 

recruitment and screening sessions at 

mining locations nationwide; recruitment 

now takes 45 days compared to the 180 

days it took in FY 2004. Recruited 

additional instructors to train new mine 

safety inspectors. 

Continue with an aggressive job fair 

schedule to address the requirements 

identified for mine safety inspectors. 

Implement localized and targeted 

recruiting to increase the applicant pool. 

 VIII. Develop and Secure Information Technology Systems and Protect Related Information Assets — Progress 

assessment: Excellent 

Challenge first identified in FY 2002. 

DOL relies heavily on Information 

Technology. Developing and maintaining 

efficient, effective and secure systems to 

perform is an ongoing challenge. This 

challenge affects all performance goals.

Created a DOL-wide Enterprise 

Architecture, conducted project 

management training, revitalized the 

Investment Control Review process, 

revised the IT Investment Management 

Quick Reference Guide, and began 

updating DOL’s Systems Development 

Monitor emerging technologies through 

DOL’s internal IT Governance process. 

Establish workgroups as necessary to 

use emerging technologies to support 

the DOL mission. 
Executive Summary 

FY 2006 Performance and Accountability Report 43 

Management Challenge/ 

Significant Issue Actions Taken in FY 2006 Actions Remaining and Expected Completion Date 

Lifecycle Management manual. 

Strengthen Systems Development and 

Management of High Risk System.s 

Strengthen DOL IT system planning, 

project management and decision for its 

projects classified as high-risk. 

Over 90 percent of major IT investments 

were managed within ten percent of 

planned cost, schedule, and performance 

goals and in compliance with the DOL 

target Enterprise Architecture. 

Developed documentation for 

performance measures to assess IT 

investment compliance with Systems 

Development Lifecycle Management 

requirements. 

Monitor high risk investments through 

the IT Capital Planning Control Review 

process each quarter to assess actual 

activities and milestones and their costs 

compared to the planned baseline. 

Provide IT investments specific 

guidance and action items for 

strengthening performance. Conduct 

training on this process – March 2007. 

Conduct quarterly reviews, Internal eGov 

reviews, and Federal Information Security 

Management Act (FISMA) reviews, 

Enterprise Vulnerability Management 

System reports. 

Conducted internal IT investment 

Control Reviews and eGov reviews. 

Collected and reported IT investment 

earned value management data. 

The OIG sampled five DOL IT systems 

as part of its recurring FISMA audit 

program: the Student Pay, Allotment, 

and Management Information System 

(SPAMIS), the BLS Employment Cost 

Index and Producer Price Index Systems, 

OSHA’s Whistleblower Web 

Application, and the DOL Employee 

Computer Network/Departmental 

Computer Network. These audits are 

summarized in the OIG’s Semiannual 

Report (http://www.oig.dol.gov/). 

Maintain Information Technology 

Security. Be proactive in identifying and 

mitigating IT security weaknesses. 

Major information systems achieved 

authority to operate based on FISMA 

requirements and were evaluated using 

vulnerability assessments and a security 

controls testing and evaluation program. 

Strengthen security testing and 

evaluation to test a wider range of 

controls more frequently. Validate the 

mitigation of previously identified 

weaknesses. 

Implement a Public Key Infrastructure 

(PKI) to support the Homeland Security 

Presidential Directive 12 (HSPD-12) 

requirements and Implement New Smart 

Card Requirements. The President 

directed a government-wide standard for 

secure and reliable forms of ID based on 

"smart cards" that use integrated circuit 

chips to store and process data. Agencies 

are challenged to meet the implementation 

deadline of October 27, 2006. 

In support of the DOLHSPD-12 

Implementation Plan, selected a 

contractor for PKI/HSPD -12 

requirements. (PKI is a system of 

hardware, software, policies, and people 

that, when fully and properly 

implemented, can provide a suite of 

information security assurances.) 

Issue PIV-2 HSPD-12 cards on a phased 

schedule starting with new employees 

and contractors in headquarters offices 

in October 27, 2006 and completing in 

October 27, 2008. 

IX. Ensuring the Effectiveness of the Job Corps Program

Challenge first identified in FY 2006. 

Promote Effective Regional Monitoring. 

Contractors operate 98 Job Corps Centers 

nationwide; the Departments of Interior 

and Agriculture operate another 28 centers 

via interagency agreements with DOL. 

These centers provide services to about 

60,000 students annually. DOL Regional 

Offices monitor contractors to ensure DOL 

policies are implemented, and DOL is 

challenged to ensure that regional 

Review Regional Reports of Monitoring 

Outcomes to hold the regions 

accountable for ensuring services 

provided by center operators comply 

with policies, requirements and 

contracts – June 2007. 

Review Regional Reports of Monitoring 

Outcomes to ensure that centers 

implement policies for facilities 

maintenance, zero tolerance for drugs 
Management’s Discussion and Analysis 

44 United States Department of Labor 

Management Challenge/ 

Significant Issue Actions Taken in FY 2006 Actions Remaining and Expected Completion Date 

monitoring is effective. This challenge 

affects Goal 05-1.1B, Improve educational 

achievements of Job Corps students and 

increase participation of Job Corps 

graduates in employment and education. Updated oversight policy and procedures 

(program assessment guide) to require 

regional offices to validate center 

performance data by sampling records 

and trained regional staff in the 

procedures. 

Transferred Job Corps procurement 

responsibilities to the Office of the 

Assistant Secretary for Administration 

and Management to better ensure that 

qualified companies that offer the best 

value and service are selected. 

and violence, student background 

checks, and student accountability – 

June 2007. 

Review reports of Regional Office 

Center Assessments to ensure that 

monitoring is effective in identifying 

manipulations of data on student 

absences and proper financial reporting 

– June 2007.

Update interagency agreements to 

define each agency’s responsibilities – 

June 2007. 

X. Real Property — Progress assessment: Excellent. 

Challenge first identified in FY 2004. 

Improving Management of Real Property 

Assets was previously discussed as a 2005 

Major Management Challenge. FY 2004 

financial audits revealed that Job Corps 

was not adequately accounting for real 

property and that DOL’s property tracking 

system and State Workforce Agency real 

property system lacked sufficient controls. 

DOL built upon FY 2005 efforts to 

strengthen control systems for real 

property in the Job Corps and State 

Workforce agencies. ETA reviewed its 

existing processes and restructured them 

to strengthen the property management 

system. 

Challenge completed. 

 XI. Manage the Employment and Training Program to Meet the Demands for the Workforce of the 21st Century

— Progress assessment: Fair

Challenge first identified in FY 2000. 

GAO identified implementing the Workforce Investment Act (WIA) as one of 

DOL’s major management challenges, but 

it is not listed because implementation of 

needed improvements is dependent on 

WIA authorization, which is still pending. 

Awaiting WIA authorization. 
Executive Summary 

FY 2006 Performance and Accountability Report 45 

The President’s Management Agenda 

On June 30, 2005, the U.S. Department of Labor became the first Executive Branch department or agency to achieve 

green status scores for all five government-wide President’s Management Agenda (PMA) initiatives. This 

achievement is not an end in itself – but it represents an ongoing commitment to good management to bring quality 

services to the American people. In FY 2006, DOL maintained green status scores in all five government-wide 

initiatives and achieved two additional green status scores in agency-specific initiatives (see table below). 

President George W. Bush’s Management Agenda, announced in 2001, is a strategy for improving the management 

and performance of the Federal government. The objective is a Federal government that is: 

• Citizen-centered, not bureaucracy-centered; 

• Results-oriented, not output-oriented; and 

• Market-based, actively promoting rather than stifling innovation through competition. 

Together, initiatives created to achieve these goals are referred to as the PMA. The five government-wide initiatives 

are Strategic Management of Human Capital, Competitive Sourcing, Improved Financial Performance, Expanded 

Electronic Government, and Budget and Performance Integration. DOL also participates in three additional 

initiatives referred to as agency-specific initiatives that apply to selected agencies: Eliminating Improper Payments, 

Faith-Based and Community Initiative, and Federal Real Property Asset Management. 

The Office of Management and Budget (OMB) regularly assesses all Federal agencies’ implementation of the PMA, 

issuing a quarterly Executive Branch Management Scorecard rating of green, yellow or red for both status and 

progress on each initiative. The breakdown by initiative, comparing last year’s ratings with those for FY 2006, is 

indicated in the table below. Now into the OMB-led Proud to Be IV campaign – which runs through June 30, 2007, 

DOL has set ambitious goals and continues to demonstrate measurable results in all five government-wide initiatives. 

The Department continues to be rated highest of all Cabinet agencies in overall implementation of the PMA. 

Highlights of achievements associated with each initiative follow the table. The Department uses a similar scorecard 

on a semi-annual basis to measure individual agency progress on the PMA. 

Department of Labor’s PMA Scorecard Status 

Executive Branch Management Scorecard September 2005 Status September 2006 Status 

Human Capital 

Green Green

Competitive Sourcing 

Green Green 

Financial Performance 

Green Green

E-Government 

Green Green 

Budget & Performance Integration 

Green Green 

Eliminating Improper Payments 

 Green Green 

Faith-Based and Community Initiative 

 Yellow Green 

Federal Real Property Asset Management

Yellow Yellow
Management’s Discussion and Analysis 

46 United States Department of Labor 

Strategic Management of Human Capital 

The Human Capital initiative requires Federal agencies and departments to develop and use a comprehensive human 

capital plan, with the aim of significantly reducing mission-critical skill gaps. The PMA has provided the impetus 

for DOL to overhaul the Department’s entire performance management system in order to hold executives, managers 

and employees accountable for achieving results. At DOL, 100 percent of mission-critical occupations at the 

Department are linked to DOL’s strategic goals – and in January 2006, the Office of Personnel Management and 

Office of Management and Budget determined that DOL’s Senior Executive Service appraisal system met the criteria 

for full certification for the 2006-2007 calendar years. DOL is the first Cabinet Department to receive full 

certification – which is premised on making clear distinctions in pay and performance recognition and on having an 

effective oversight system in place. 

Electronic government solutions like eOPF continue to bolster our Strategic Management of Human Capital efforts. 

Launched in 2006, eOPF – or the electronic Official Personnel Folder – allows employees to securely access their 

personnel folder from any DOL network computer connected to the Internet or from home. The eOPF provides 

employees with timely access to view and print their personnel documents – and employees are notified by e-mail 

when personnel actions are added to their file, reducing the need to contact Human Resources Offices for 

information.

Competitive Sourcing 

DOL won the 2005 President’s Quality Award for its Competitive Sourcing program under the PMA and also 

achieved a green status score and has maintained a score of green for 6 consecutive quarters. Competitive Sourcing 

allows the government to take advantage of market-based competition while simultaneously allowing the existing 

Federal employees to compete for the work. Competitive sourcing requires Federal employees to compete against 

private sector bidders for work that is deemed commercial activity. The skills and competencies that are not required 

to be performed by government personnel can often be performed more effectively and efficiently when subject to 

the competition of the marketplace. 

The competitive sourcing process includes the development of a Most Efficient Organization (MEO), which is 

designed by affected employees, DOL managers and union representatives to make the function more competitive. 

Notably, of the 28 competitions undertaken to date, 21 have been completed and seven are in progress. Of the 21 

completed competitions, the Department’s employees have won 19 (90 percent). The competitions completed to date 

yielded efficiencies totaling $40.6 million over multiple performance periods, which included savings of about $29.4 

million and cost avoidance of approximately $11.2 million. 

Improved Financial Performance 

The availability of timely, accurate, and useful information is essential to any well-managed, effective organization. 

The Improved Financial Performance initiative requires Federal agencies to receive clean audit opinions on their 

annual financial statements, meet accelerated financial reporting deadlines, implement managerial cost accounting 

practices, improve internal controls, and have financial management systems that are compliant with Federal laws 

and regulations. The Office of the Chief Financial Officer (OCFO) has devoted significant resources to secure the 

Department’s achievement of excellence in financial management in the Federal Government. In FY 2006, the 

Department received its tenth unqualified audit opinion and its sixth Certificate of Excellence in Accountability 

Reporting (CEAR) Program Award from the Association of Government Accountants. Improving financial 

performance is a continuous journey of gaining experience rather than a race to the finish line. 

The Department also continues to expand the use of integrated financial and performance information in the 

planning, budgeting, and decision-making activities throughout its agencies. It also remains focused on improving 

accountability and transparency for how well tax dollars are spent. 

Expanded Electronic Government (E-government) 

The Expanding Electronic Government (E-government) initiative requires Federal agencies and departments to 

develop secure Information Technology (IT) systems and strictly adhere to IT project cost, schedule, and 

performance projections. The Department of Labor’s Enterprise Architecture (EA) Program aligns all DOL IT 

investments with the objectives set forth in the President’s Management Agenda (PMA). EA initiatives in support of 

DOL’s PMA efforts include: 
Executive Summary 

FY 2006 Performance and Accountability Report 47 

• EA was used to identify standardization opportunities and facilitate interoperability across DOL Human 

Resources functions and systems (Strategic Management of Human Capital);

• The Financial Management Line of Business (FMLoB), which is managed by the General Services 

Administration, will enable Department-wide visibility of the financial process and a link between finance 

and performance throughout the planning, analysis, reporting and management procedures (Improved 

Financial Performance); 

• Unified DOL Technology Infrastructure (UDTI) is a unified, end-to-end, IT service management initiative 

that consolidates the technology infrastructure acquired, deployed, and maintained at DOL. UDTI will result 

in millions of dollars in cost savings and/or cost avoidance (Expanded Electronic Government); and 

• The Departmental Budget Center is using EA to identify redundant budget systems across all agencies – with 

a projected Return-On-Investment for the Departmental Electronic Budget System (DEBS) of 110% and an 

anticipated payback period of 3.8 years (Budget and Performance Integration). 

On March 31, 2006, the Office of Management and Budget completed evaluating 29 Federal agency consolidated 

Enterprise Architectures for how EA is used to guide and inform IT investments to achieve strategic objectives. 

Evaluations included scoring agency EAs in three assessment areas – Completion, Use, and Results. Out of all the 

agencies assessed, the Department of Labor ranked second in terms of EA maturity and met all the criteria to receive 

a green score under the PMA. 

 

Budget and Performance Integration 

Budget and Performance Integration (BPI) seeks to ensure that performance is routinely considered in funding and 

management decisions – and that agency programs achieve expected results while working toward continual 

improvement. At DOL, BPI has helped exact a gradual cultural shift that fosters a closer dialogue among program, 

performance, budget, and finance staff. 

In support of DOL’s BPI efforts, DOL launched the pilot of the DEBS – an electronic government initiative designed 

to automate the budget formulation process. DEBS provides budget analysts the ability to more easily, accurately, 

and electronically merge budget data. Having completed the successful pilot project, DEBS was used in 2006 in 

selected agencies to build DOL’s FY 2008 budget. The expectation is that all DOL agencies will access the tool in 

time for the next budget cycle: 2009. BPI efforts have also continued to be bolstered through the Program 

Assessment Rating Tool (PART). Over the last five years, almost 800 Federal programs – including 32 at DOL – 

have been assessed through the PART. The PART consists of 25 questions about a program’s performance, design 

and management. Once assessments are completed, programs develop improvement plans to address PART findings. 

DOL’s overall efforts are being folded into a BPI green plan – which will be in effect in December 2006 and will 

capture our ongoing efforts to improve agency performance and efficiency.

 

Agency-specific PMA Initiatives 

In addition, DOL is responsible for three of the PMA components found in selected departments: Eliminating 

Improper Payments, Faith-Based and Community Initiative, and Federal Real Property Asset Management. DOL’s 

status scores for Eliminating Improper Payments and Faith-Based and Community Initiative are green – with a 

yellow status score for Federal Real Property Asset Management. DOL’s progress score for implementing each 

initiative is green. 

Eliminating Improper Payments 

In September 2005, DOL achieved a green status score in Eliminating Improper Payments. The Improper Payments 

Act of 2002 defines improper payments as payments made to the wrong recipient; in the wrong amount; or used in an 

improper manner by the recipient. Better detecting and preventing improper payments to ensure taxpayer dollars are 

wisely and efficiently spent is the goal of the Eliminating Improper Payments initiative. 

At DOL, developing strategies and the means to reduce improper payments is good stewardship – and good business. 

Accurate payments lower program costs, thus maximizing our resources. The Department has three programs 

classified as high-risk for improper payments. Two are benefit programs – Unemployment Insurance (UI) in the 

Employment and Training Administration (ETA) and the Federal Employees Compensation Act program in the 
Management’s Discussion and Analysis 

48 United States Department of Labor 

Employment Standards Administration – and the third is an ETA grant program administered under the Workforce 

Investment Act. 

While Eliminating Improper Payments is still a fairly new PMA initiative, we are making progress and achieving 

results. Last year, the Department’s Office of the Chief Financial Officer and ETA launched a UI pilot program in 

three states to determine how a cross-match between the National Directory of New Hires data and State UI claimant 

data could help identify individuals no longer eligible to receive UI benefits. 

Faith-Based and Community Initiative 

In June 2006, DOL achieved a green status score in the Faith-Based and Community Initiative, which is designed to 

strengthen and expand the role of faith-based and community organizations in addressing the Nation's social 

problems. Through this five-year march to green, DOL has significantly expanded opportunities for partnerships 

with faith-based and community non-profit organizations (FBCOs) to better serve Americans in need. Critical to this 

effort is removal of any unnecessary barriers to the participation of small and faith-based and community 

organizations in DOL grants and programs, thus establishing a level playing field for all. The Department has also 

employed a wide range of grants, technical assistance and other tools to draw upon the unique strengths of FBCOs in 

efforts such as serving the unemployed and underemployed, aiding homeless and incarcerated veterans, helping exoffenders transition from prison to work and reducing exploitative child labor abroad. A significant priority for DOL 

in the coming year is to build on its record of national achievement in strengthening partnerships between faith-based 

and community organizations and the workforce investment system at the state and local levels. 

In 2006, DOL’s Center for Faith-Based and Community Initiative worked with the Employment and Training 

Administration to triple the funding of Grassroots grants, which feature simplified application and reporting 

requirements. This allows DOL to draw upon the strengths of smaller organizations with significant potential to 

augment the workforce system. The Grassroots solicitation in 2006 drew a record 556 applications. 

Federal Real Property Asset Management 

Better managing the Department’s properties is at the core the Federal Real Property Asset Management effort. This 

PMA initiative is intended to eliminate surplus assets; better manage the cost of inventory, and improve the condition 

of critical assets. The Department’s ongoing efforts in real property management have yielded important benefits. In 

the last year, DOL closed ten offices, releasing more than 10,000 square feet of space and saving more than $300,000 

annually. DOL also implemented an on-line Space Management System – with data imported from GSA’s database 

– to monitor space utilization and identify targets for improvement through consolidation and co-location. DOL has 

enhanced its internal budget guidance beginning with FY 2008 to require that agency budget submissions address the 

real property management improvement goals of mission dependency, utilization, condition, and cost containment 

through prioritizing planned capital initiatives, disposing of assets, identifying opportunities for operating cost 

efficiencies and cost reduction, and reviewing leasing agreements.

President Bush has stated that “Government likes to begin things – to declare grand new programs and causes. But 

good beginnings are not the measure of success. What matters in the end is completion. Performance. Results. Not 

just making promises, but making good on promises.” In 2006 – with two upgrades to green in Eliminating Improper 

Payments and Faith-based and Community Initiative – DOL continued to make good on promises. 
Executive Summary 

FY 2006 Performance and Accountability Report 49 

The Program Assessment Rating Tool 

The Program Assessment Rating Tool (PART) was developed to assess and improve programs’ positive impact on 

outcomes that matter to the public. A PART review helps identify a program’s strengths and weaknesses to inform 

funding and management decisions aimed at making the program more effective. Federal programs are scored on 

their purpose and design, strategic and performance planning, management, and results and accountability. Total 

scores determine ratings: Effective, Moderately Effective, Adequate, Ineffective, or Results Not Demonstrated 

(RND). The final category can apply to a program with any score if performance goals and measures are not 

sufficiently outcome (results) oriented and/or the program does not have adequate data. Summaries of each 

program’s assessment and improvement plan are published on ExpectMore.gov, a site created earlier this year to 

make meaningful information about Federal program performance more accessible to the public. 

To date, 28 DOL programs have been assessed through the PART. One is rated Effective, eight Moderately 

Effective, twelve Adequate, four Ineffective, and three Results Not Demonstrated. The table below lists the 

programs as they are identified in ExpectMore.gov. For cross-referencing with the performance section of this 

report, where Departmental performance goal(s) apply, goal number(s) are provided. The list is sorted first by the 

calendar year in which the review was conducted, then by total score. DOL will publish the scores and ratings for 

four additional programs reviewed for the President’s FY 2008 Budget – the Homeless Veterans' Reintegration 

Program, Office of Disability Employment Policy, Wage-Hour Programs, and Office of the Solicitor – completing 

the first five-year cycle of assessments. 

PART assessments are useful because they lead to improvement plans intended to improve accountability and 

performance. Improvements DOL has recently implemented include: Development of new, outcome-oriented 

performance measures for two DOL programs currently rated Results Not Demonstrated: Job Training 

Apprenticeship and the Women’s Bureau; development and implementation of efficiency measures for each of the 

DOL programs assessed through the PART; and development and implementation of a union democracy measure 

and annual reporting of union fraud activity by the Office of Labor Management Standards.

DOL PART SCORES AND RATINGS 

Program/Goal Year Score Rating 

Veterans' Employment and Training State Grants/05-1.1C 2005 76 Moderately Effective 

Work Incentive Grants 2005 57 Adequate 

Longshore and Harbor's Workers Compensation Program/06-2.2B 2005 54 Adequate 

Office of Labor Management Standards/06-2.1B 2005 54 Adequate 

Workforce Investment Act - Adult Employment and Training/05-4.1A 2005 53 Adequate 

Job Training Apprenticeship/06-1.1A 2005 42 Results Not Demonstrated 

Women’s Bureau 2005 41 Results Not Demonstrated 

Pension Benefit Guaranty Corporation/06-2.2D 2004 79 Moderately Effective 

H-1B Work Visa for Specialty Occupations – Labor Condition 

Application/06-4.1A 2004 78 Moderately Effective 

Employee Benefits Security Administration/06-2.2C 2004 71 Moderately Effective 

Job Corps/05-1.1B 2004 70 Moderately Effective 

Office of Federal Contract Compliance Programs/06-3.2A 2004 65 Adequate 

Permanent Labor Certification/06-4.1A 2004 64 Adequate 
Management’s Discussion and Analysis 

50 United States Department of Labor 

DOL PART SCORES AND RATINGS 

Program/Goal Year Score Rating 

Employment Service/05-4.1B 2004 56 Adequate 

International Child Labor and Office of Foreign Relations/06-3.3A&B 2004 51 Adequate 

Native American 2004 51 Adequate 

Bureau of Labor Statistics/06-1.2A 2003 88 Effective 

Unemployment Insurance Administration State Grants/06-2.2A 2003 74 Moderately Effective 

Black Lung Benefits Program/06-2.2B 2003 71 Moderately Effective 

Mine Safety and Health Administration/06-3.1A&B 2003 55 Adequate 

Workforce Investment Act – Dislocated Worker Assistance/05-4.1C 2003 50 Adequate 

Trade Adjustment Assistance/06-4.1B 2003 45 Ineffective 

Workforce Investment Act – Youth Activities/05-1.1A 2003 45 Ineffective 

Workforce Investment Act – Migrant and Seasonal Farmworkers 2003 38 Ineffective 

Prevailing Wage Determination Program/06-2.1A 2003 29 Results Not Demonstrated 

Community Service Employment for Older Americans/05-4.1D 2003 27 Ineffective 

Federal Employees Compensation Act/06-2.2B 2002 75 Moderately Effective 

Occupational Safety and Health Administration/06-3.1C&D 2002 62 Adequate 
Performance Section

FY 2006 Performance and Accountability Report 53 

Strategic Goal 1: A Prepared Workforce 

Enhance Opportunities for America’s Workforce

America’s engine of prosperity is its skilled workforce. The maintenance of our strong national economy depends, in 

part, on developing a steady stream of workers that are qualified job candidates possessing skills relevant to the needs 

of today's employers. The Department must ensure that every available labor pool is tapped, including job seekers 

with disabilities, veterans, and disadvantaged youth. DOL agencies and offices supporting this goal are the 

Employment and Training Administration (ETA), the Office of Job Corps (JC), Veterans’ Employment and Training 

Service (VETS), the Office of Disability Employment Policy (ODEP), the Bureau of Labor Statistics (BLS), the 

Women’s Bureau and the Center for Faith-Based and Community Initiatives. 

The net cost dedicated to Strategic Goal 1 in FY 2006 was $3.395 billion. The first chart below is based on total 

Departmental costs of $45.328 billion; the second is based on an adjusted net cost of $12.101 billion that excludes 

the major non-discretionary program costs associated with Strategic Goal 2.16 Net cost dedicated to Strategic Goal 1 

in FY 2005 (restated to reflect current goal structure) was $3.250 billion. 

Strategic Goal 1 - Percent of Net 

Cost

7%

80%

2%

11%

1 - Prepared

2 - Secure

3 - Quality

4 - Competitive

Percent of Net Cost Excluding 

Income Maintenance

29%

9% 24%

38%

1 - Prepared

2 - Secure

3 - Quality

4 - Competitive

The Department’s performance in achieving this goal is determined by accomplishments organized at the outcome 

goal level and measured at the performance goal level. The two outcome goals are Increase Opportunities for New 

and Re-emerging Entrants to the Workforce (Outcome Goal 1.1) and Improve the Effectiveness of Information and 

Analysis on the U.S. Economy (Outcome Goal 1.2). Their results, costs, and future challenges are discussed below. 

Outcome Goal 1.1 – Increase Opportunities for New and Re-emerging Entrants to the 

Workforce 

The Department recognizes that some members of the workforce face unique challenges. These groups include atrisk and out-of-school youth, veterans returning from service to their country, women making a significant work-life 

transition, and people with disabilities. Just as initial entry to the workforce requires education and training, re-entry 

may also require updating skills to match the needs of employers. The Department is working to prepare new and 

returning workers to take advantage of the growing job opportunities, which means making sure that no group is left 

behind. Through targeted training and outreach programs, partnerships that include faith-based and community 

organizations, and performance-based approaches, DOL provides comprehensive services that enable individuals 

belonging to these groups to achieve their employment goals. 

The table below provides identifying information, goal statements, and achievement for DOL performance goals 

associated with this outcome goal. Those with labels that begin with “05” operate on a Program Year (PY) and are 

reporting on the period from July 1, 2005 to June 30, 2006 due to the forward funding mechanism of the Workforce 

Investment Act of 1998.

 

16 The excluded costs are referred to as Income Maintenance – unemployment benefit payments to individuals who are laid off or 

out of work and seeking employment ($31.322 billion) plus disability benefit payments to individuals who suffered injury or 

illness on the job ($1.905 billion). 
Performance Section 

54 United States Department of Labor 

Cost (millions) 

Goal (Agency) and Statement Performance Summary FY 2005

PY 2004 

FY 2006

PY 2005 

05-1.1A (ETA) 

Increase placements and educational attainments for youth served 

through the WIA youth program. 

Goal achieved. Both targets 

reached. $947 $1017

05-1.1B (JC) 

Improve educational achievements of Job Corps students and 

increase participation of Job Corps graduates in employment and 

education. 

Goal not achieved. One target 

reached and two not reached. 1309 1402

05-1.1C (VETS) 

Improve the employment outcomes for veterans who receive OneStop Career Center services and veterans’ program services. 

Goal achieved. All six targets 

reached. 196 198

06-1.1A (ETA) 

Improve the registered apprenticeship system to meet the training 

needs of business and workers in the 21st Century. 

Goal achieved. Both targets 

reached. 23 25

06-1.1B (ODEP) 

Advance knowledge and inform disability employment policy that 

affects systems change throughout the workforce development 

system. 

Goal achieved. All three targets 

reached. 52 50

Other (Youth Offender Reintegration, Indian and Native American Youth Programs, etc.) 187 131

Total for Outcome Goal 1.1 Four performance goals 

achieved and one not achieved $2714 $2822

Results Summary 

The WIA Youth program achieved its goal of collecting baseline data for its two new common measures for youth 

and lifelong learning performance in Federal employment and training programs. The Job Corps program, which 

uses the two common measures for placement and credentials, plus a third common measure for literacy/numeracy, 

did not achieve its goal. Job Corps established baselines for all three indicators in PY 2004 and set targets for PY 

2005. Literacy/numeracy scores easily exceeded expectations, but results for placement and credentials were several 

percentage points below their targets. Both shortfalls are attributed to changes in data definitions or methods that 

will not apply in PY 2006. 

VETS’ goal was achieved; all six targets were reached. Veterans’ employment rate improved as the retention rate 

was unchanged. Disabled veterans’ employment rate stayed the same while retention improved over PY 2004. The 

employment and retention rates for homeless veterans both rose, too. This positive trend in outcomes is accompanied 

by reversal of a recent decline in service levels. Veterans’ participation in One-Stop services increased 

approximately 5 percent over PY 2004; staff-assisted services increased approximately 10 percent. 

 

The goal for Apprenticeship was achieved; retention and earnings results improved over FY 2005. In addition, 

efficiency, or average cost per registered apprentice, also improved to just under $100. Federal cost of the National 

Registered Apprenticeship System is low because training is provided by employers. 

ODEP achieved its goal by establishing baselines for the number of policy-related documents disseminated and 

formal agreements initiated and reaching its target for identifying effective practices. These three indicators reflect 

ODEP’s mission. The latter indicator has been in place since FY 2004; the new indicators emphasize a strategic shift 

from a reliance on grant-making to a greater focus on internally generated policy analysis and development 

initiatives. 
Strategic Goal 1 

FY 2006 Performance and Accountability Report 55 

After years of intermittent homelessness marked by 

episodes in shelters and hospitals, Isaac joined the 

HomeWork Project, an ODEP funded collaboration of 

housing, homeless assistance, mental health and One 

Stop career centers led by the Boston Private Industry 

Council. HomeWork staff helped him find an 

apartment subsidized by HUD and search for 

employment. Through the assistance of Job Net and 

the One Stop center, Isaac found work at a local 

behavioral health agency as a Clerk, starting at $10 per 

hour. At first, his limited English proficiency, 

computer skills and familiarity with telephone 

switchboards were cause for concern. However, his 

employer was able and willing to assign Isaac a 

supervisor who could communicate with him in his 

native language, Spanish, and to redefine specific 

duties to fit his skills. Isaac later asked for and 

received assistance to learn the skills in the original 

Clerk’s job description. Isaac said of his experience, 

“I would recommend this project to anyone without a home or a job. I am grateful that HomeWork is able to work with my 

treatment and language needs. This project has given me the opportunity I was looking for.” 

Photo Credit: DOL/ODEP 

Net Cost of Programs 

The FY 2006 program costs of $2.822 billion supported ETA’s registered apprenticeship and Workforce Investment 

Act Youth programs; Job Corps; Veterans’ Employment and Training Service jobs programs; Office of Disability 

Employment Policy efforts to improve the workforce development system’s services to job seekers with disabilities; 

Center for Faith Based and Community Initiatives contracting outreach; and Women's Bureau efforts to increase job 

opportunities for women. 

The $2 billion increase in costs from FY 2003 to 2004 resulted almost entirely from moving the Dislocated Worker 

Program and Trade Adjustment Assistance (TAA) performance goals from Strategic Goal 2 (Outcome Goal 2.3 in 

the DOL FY 2003 Performance and Accountability Report). The TAA performance goal was moved again in FY 

2005, along with several smaller ETA programs, to Outcome Goal 4.1 – accounting for roughly $1 billion of the 

decrease. In FY 2006, WIA Youth and Job Corps programs (combined cost of $2.419 billion) were added to this 

goal, and the WIA Adult, One-Stop, and Dislocated Worker programs (combined cost of $3.246 billion) moved to 

Outcome Goal 4.1. The total shown for FY 2005 has been restated to reflect these changes and facilitate comparison 

to FY 2006. 

Outcome Goal 1.1

Net Costs ($Billions)

3.0 3.1 3.2

3.6 3.4

5.4

2.7 2.8

0

1

2

3

4

5

6

1999 2000 2001 2002 2003 2004 2005 2006

Fiscal Year

Future Challenges 

The Department’s FY 2006-2011 Strategic Plan – which was effective on September 29, 2006 – outlines a new 

vision for the delivery of youth services that emphasizes the potential of out-of-school and at-risk youth to help 

supply skilled workers for a globally competitive economy. Efforts are now focused on four major areas: alternative 

education, demand-driven strategies for serving youth that provide them with the skills businesses need, serving the 

neediest youth, and improved performance. For Job Corps, two key strategies are implementing integrated 
Performance Section 

56 United States Department of Labor 

competency-based career and academic training and improving outreach and recruitment services. Residential 

facilities will also be managed to ensure maximum utilization and support the program’s mission. 

To improve employment outcomes for veterans, DOL is developing and implementing State Workforce Agency 

performance standards. VETS is also expanding the Recovery and Employment Assistance Lifelines program and its 

crosscutting efforts with the Departments of Defense and Veterans Affairs to provide individualized job training, 

counseling and re-employment services to seriously injured or wounded veterans of Operation Iraqi Freedom, 

Operation Enduring Freedom and other recent conflicts. 

Apprenticeship program strategies include a re-examination of the Federal role, which may lead to proposed 

restructuring of the system. To strengthen program outcomes, DOL will more closely link apprenticeship programs 

with other workforce development and educational systems and enhance responsiveness to labor market demands 

through outreach to industry. DOL will expand credentialing in occupations and industries to increase options for 

career development. The Department will also promote recruitment, training, employment and retention of women 

in apprenticeship and nontraditional occupations. 

The Department will continue to: develop national disability employment policy; foster implementation of effective 

policies and practices to increase employment among people with disabilities within state and local workforce 

development systems and with employers; conduct research that validates effective strategies for providing 

disability-employment related services and supports; and, provide technical assistance for implementing effective 

systems-change strategies to both the demand and supply side of the labor market. 

Outcome Goal 1.2 – Improve the Effectiveness of Information and Analysis on the U.S. 

Economy 

Maintaining competitiveness in the 21st Century requires Americans to be knowledgeable about trends in the global, 

national, regional and local economies. Private citizens, business owners, and public officials need to have access to 

up-to-date, high-quality information and data to assist them in making better informed decisions. The Department’s 

Bureau of Labor Statistics (BLS), which produces some of the Nation’s most sensitive and important economic 

indicators, continuously seeks opportunities for innovation to improve the quality and usefulness of data products and 

services to customers. 

Cost (millions) Goal (Agency) and Statement Performance Summary 

FY 2005 FY 2006

06-1.2A (BLS) 

Improve information available to decision-makers on labor 

market conditions, and price and productivity changes. 

Goal not achieved. Four targets reached 

and two not reached. $536 $573

Results Summary 

The goal was not achieved. However, BLS reached four of its six performance indicator targets, which include 

quality measures for its four categories of statistical surveys, an efficiency measure and a customer satisfaction index. 

Cost per transaction of the Internet Data Collection Facility, the agency’s efficiency measure, improved over FY 

2005 and came in below the target. Customer satisfaction also improved to 79 percent. All output, timeliness, 

accuracy, and long-term improvement targets were reached for prices and living condition surveys and for 

productivity and technology surveys. For labor force statistics and compensation and working conditions surveys, 

however, achievement fell short of the targeted 85 percent performance levels. The labor force result reflects lowerthan-expected response rates for four surveys, below-target expected coverage for two others, and one missed 

publication deadline. Compensation and working conditions surveys also experienced lower than anticipated 

response rates for two surveys and slight delays to several publications. 
Strategic Goal 1 

FY 2006 Performance and Accountability Report 57 

For high school sophomores, the Morris Business and 

Professional Women operate a "Reality Store," which 

shows them the standard-of-living they can expect to 

achieve based on their career choices. Data from the 

Occupational Employment Statistics program helps 

the students determine how much "income" they may 

earn. Data from the Consumer Expenditure Survey 

sets the costs for various necessities and luxury goods 

available for "purchase" in stores set up at school. 

The Reality Store gives students a realistic look at the 

quality of life they can expect to attain from their 

chosen occupations, motivating them to take more 

seriously their remaining years in high school and 

possibly continuing on to higher education. Sara, of 

Minooka Community High School, said she had 

"heard the numbers before, but this really helped me 

realize what some things cost – groceries and kids are 

both expensive.” 

Photo Credit: Kellee Hill, Minooka High School 

Net Cost of Programs 

FY 2006 program costs of $573 million support BLS programs to produce and disseminate timely, accurate, and 

relevant information on the economy. Costs trended upward from 1999 to 2006, primarily due to built-in cost 

increases; the creation of new programs, such as the American Time Use Survey; and important improvements to 

increase the accuracy of survey programs, such as the Consumer Price Index (CPI), Producer Price Index (PPI), and 

Employment Cost Index (ECI). 

Outcome Goal 1.2

Net Costs ($Millions)

400 420 463

509 533 539 536 573

0

100

200

300

400

500

600

700

1999 2000 2001 2002 2003 2004 2005 2006

Fiscal Year

Future Challenges 

Several strategies support the goal of producing economic statistics that are relevant, timely, and accurate. The 

Department will better inform the public by increasing customer awareness and appropriate use of existing data 

products and will use feedback gathered from data users to determine how the data or dissemination media could be 

changed to better serve the American public. DOL will build value through innovation by analyzing and evaluating 

new economic survey methods, new technologies, and new survey design and collection approaches; and sponsoring 

research and evaluations by known experts to determine how best to improve BLS data. To reduce duplication of 

effort, the Department will collaborate with other statistical agencies to perform work more efficiently by improving 

communication and coordinating processes and methodologies. 
Performance Section 

58 United States Department of Labor 

Assist Youth in Making a Successful Transition to Work 

Performance Goal 05-1.1A (ETA) – PY 2005 

Increase placements and educational attainments for youth served through the WIA youth program. 

Indicators, Targets and Results PY 2004 

Result 

PY 2005 

Target 

PY 2005 

Result 

Target 

Reached*

Percent of youth who are in employment or the military or enrolled 

in post secondary education and/or advanced training/occupational 

skills training in the first quarter after exit 

– Baseline 58% Y 

Percent of students who attain a GED, high school diploma, or 

certificate by the end of the third quarter after exit 

– Baseline 36% Y 

Cost (millions) $947 – $1017 

*Indicator target reached (Y), substantially reached (S) or not reached (N) Goal Achieved

Program Perspective and Logic 

The Workforce Investment Act (WIA) authorizes services to low-income youth (age 14-21) with barriers to 

employment. Eligible youth are deficient in basic skills or are homeless, are a runaway, are pregnant or parenting, 

are offenders, school dropouts, or foster youth. The program serves both in- and out-of-school youth, including 

youth with disabilities and other youth who may require specialized assistance to complete an educational program or 

to secure and hold employment. Service providers prepare youth for employment and post-secondary education by 

stressing linkages between academic and occupational learning. They also assist youth by providing tutoring, 

alternative schools, summer employment, occupational training, work experience, supportive services, leadership 

development, mentoring, counseling, and follow-up services. 

For Program Year (PY) 2005, DOL collected data for two performance indicators, both of which are part of the 

common measures for youth and lifelong learning aspects of Federal employment and training programs. The first 

measures whether youth entered employment, advanced training or education after leaving the program. This 

indicates whether DOL is transitioning youth into the workforce or post-secondary education, which is a key to 

successful careers. The second indicator, which measures whether participants earned educational credentials, is a 

proxy for preparedness of participants to compete in the 21st century knowledge-based economy. 

Costs associated with this program increased by approximately seven percent from PY 2004 and PY 2005. States 

have two years to expend obligated funds, and some fluctuation from year to year is to be expected. In addition, 

Congress and the Administration have encouraged States and other grantees to spend funds more quickly. 

Analysis and Future Plans 

The goal of collecting baseline data for the placement in employment or education and attainment of a degree or 

certificate indicators was achieved. During PY 2005, DOL continued to implement strategies that emphasize that 

out-of-school and at-risk youth are an important part of the new workforce “supply pipeline” needed by businesses to 

fill job vacancies in the knowledge economy. WIA-funded youth programs connect these youth with quality 

secondary and post-secondary educational opportunities and high-growth and other employment opportunities. DOL 

works with the Departments of Health and Human Services, Education, Justice, Housing and Urban Development, 

plus the Social Security Administration and the Corporation for National and Community Service to assist States in 

coordinating resources and program delivery strategies to secure positive outcomes for the neediest youth. In 

addition, DOL is working specifically with the Department of Education to identify and replicate effective 

approaches to increasing graduation rates for disconnected and out-of-school youth. 

For PY 2006, DOL has set targets of 60 percent for placement in employment or education and 40 percent for degree 

or certificate attainment. In addition, DOL will collect baseline data during PY 2006 for literacy/numeracy gains, 

another common performance measure for youth and lifelong learning programs. One factor that will limit the rate 

of progress in measured results in the near term is increased emphasis on serving out-of-school youth and the 
Strategic Goal 1 

FY 2006 Performance and Accountability Report 59 

neediest youth, a population that has historically had lower performance on employment and education outcome 

measures. However, as the participant population stabilizes and programs become more effective in serving out-ofschool youth, results should subsequently improve. 

Brittany was married at 17. Focused on getting a job 

in the medical field, she dropped out of high school in 

2003 and soon began Certified Nurse’s Assistant 

classes. However, Brittany was also pregnant and 

soon found herself unable to complete her coursework. 

It looked like Brittany was going to have to scrap her 

plans of working in a health career altogether. In 2005, 

after giving birth to her son, Brittany realized the 

importance of her education and its place in her future 

success. She began working with JobWorks in 

September 2005, obtained her GED in October, and 

passed the CNA exam in November. Brittany is now 

not only a proud mother, but also a CNA employed at 

a local nursing home and researching classes to 

become an Obstetrics Technician. 

Photo Credit: Michelle Ginder 

PART, Program Evaluations and Audits 

The program received a rating of Ineffective in the 2003 PART review. The program improvement plan included 

recommendations to adopt common performance measures for Federal job training programs and conduct an impact 

evaluation of the WIA Youth program. For PY 2005, ETA issued revised reporting instructions to States that 

required reporting outcomes using the common measures, and the baseline results above represent DOL’s progress in 

completing this recommendation. An impact evaluation will be commissioned upon WIA reauthorization, as 

knowledge of the program’s new direction will be critical to the design of any meaningful study. 

In response to allegations regarding expenditure of funds granted to Arkansas, the OIG recommended that ETA 

strengthen its guidance to States on proper use of WIA funds (see Insufficient Federal Guidance Could Result in 

Misuse of Incumbent Worker Training Program Funds – Study 1 in Appendix 2). At issue was Arkansas’ award of 

WIA incumbent worker funds to attract business. ETA subsequently determined that all of the questioned costs were 

indeed allowable under WIA law and regulations. However, ETA agreed that additional policy guidance is needed to 

address incumbent worker training generally and specific economic development and employer assistance activities 

prohibited by WIA. In March 2006, ETA issued Training and Employment Guidance Letter No. 18-05, which 

clarifies appropriate use of WIA funds granted for incumbent worker training. 

In December 2005, the Government Accountability Office (GAO) examined those data quality issues that have 

affected States’ efforts to collect and report WIA performance data in Workforce Investment Act: Labor and States 

Have Taken Actions to Improve Data Quality, but Additional Steps Are Needed (Study 2 in Appendix 2). GAO 

found that DOL does not effectively hold States accountable for complying with its validation requirements; 

guidance on implementing common performance measures issued July 1, 2005 does not address all the issues; and 

the Department lacks a standard monitoring guide to address data quality. DOL has already conducted its own 

review of WIA participant files, has been working with States on data validation requirements, and has developed a 

standard monitoring tool for WIA performance data. DOL also plans to modify the current data validation software 

to allow Federal staff the opportunity to pull a sample of the validation records at the State level for review, and is in 

the process of designing the development and layout of the monitoring guide. 

Data Quality and Major Management Challenges 

Data quality for this performance goal was rated Very Good. Strengths of the data included its relevance, reliability, 

and routine verification. While verification remains an area for improvement, extensive effort has been directed 

toward improving data quality through the use of ETA’s data validation system and monitoring at both the national 

and regional levels. Per the PART improvement plan, the Youth program has now implemented two of the common 

performance measures. Data are reported quarterly, and there are no gaps. As mentioned in the preceding paragraph, 

further improvements are expected to result from planned enhancements to the current validation software and the 

monitoring guide. DOL is working to ensure data quality in response to the GAO study detailed above. 
Performance Section 

60 United States Department of Labor 

Increase Placements and Educational Attainments of Youth 

Performance Goal 05-1.1B (JC) – PY 2005 

Improve educational achievements of Job Corps students and increase participation of Job Corps graduates in 

employment and education. 

Indicators, Targets and Results PY 2004 

Result 

PY 2005 

Target 

PY 2005 

Result 

Target 

Reached*

Percent of Job Corps graduates (within 1 year of program exit) and 

former enrollees (within 90 days of program exit) who enter 

employment or enroll in post-secondary education or 

advanced/occupational skills training 

84% 85% 80% N 

Percent of students earning a high school diploma, General 

Equivalency Diploma (GED) or certificate while enrolled in a Job 

Corps program 

64% 64% 60% N 

Percent of students who will achieve literacy or numeracy gains of 

one Adult Basic Education (ABE) level (approximately equivalent 

to two grade levels) 

47% 45% 58% Y 

Cost (millions) $1309 – $1402 

*Indicator target reached (Y), substantially reached (S) or not reached (N) Goal Not Achieved

Program Perspective and Logic 

Job Corps is an intensive educational and vocational training program (primarily residential) for economically 

disadvantaged youth ages 16 through 24 who often face multiple barriers to gainful employment. This program 

provides career counseling, technical skills and academic training, social education, and other support services, such 

as housing, transportation and family support resources to more than 60,000 individuals at 122 centers nationwide. 

Job Corps centers, ranging in size from 200 to 2000 students, are located in both urban and rural communities, and 

are operated by large and small companies under performance-based contracts. Job Corps centers provide 

individually tailored services to help students achieve the skills and credentials required to be successful, productive 

citizens and to obtain work opportunities that lead to long-term employment. 

As with other employment and training programs, Job Corps’ performance can be influenced by external factors such 

as local labor market conditions and national economic trends. In recent years, an increasingly knowledge-based 

labor market has challenged Job Corps to redirect both academic and technical career training approaches. In 

Program Year (PY) 2005, Job Corps was presented with, and responded to, significant challenges as a result of 

Hurricane Katrina. Physical damage to Job Corps centers necessitated relocating students, moving staff and closing 

both the New Orleans and Gulfport centers until repairs to the infrastructure and full operations can be restored. 

Performance of the Job Corps program is assessed using the Federal job training common measures for youth and 

lifelong learning programs. These three measures – placement in employment or education, attainment of a degree or 

certificate, and literacy or numeracy gains – are indicators of student achievement in enhancing their long-term 

employability. 

Between PY 2004 and PY 2005, Job Corps’ cost rose by seven percent. The increase was due to escalating utility 

and health care rates and full funding of new centers. 

Analysis and Future Plans 

In PY 2005, the second year of measuring learning gains, Job Corps continued to exceed its target, increasing literacy 

or numeracy scores by one Adult Basic Education (ABE) level for 58 percent of all students who were deficient in 

basic skills at entry. However, certificate attainment – students achieving a high school diploma (HSD), GED or 

vocational certificate while enrolled in Job Corps – fell below the target of 64 percent. More aggressive data 
Strategic Goal 1 

FY 2006 Performance and Accountability Report 61 

integrity reviews revealed that in past years misreporting of certificate attainments may have occurred; the resulting 

stringent documentation requirements may have therefore contributed to the drop in HSD, GED and vocational 

certificate attainments reported. 

The pool of students included in employment/education outcome reporting (the first indicator in the table above) has 

grown over the past few years due to the addition of former enrollees who did not complete their programs, but were 

enrolled in Job Corps for more than 60 days. This lowered overall success rates because outcomes for most of these 

people are unknown. PY 2004 was the first year that former enrollees were included, producing a modest impact on 

the results. In PY 2005, however, the full effect was apparent, as placement results dropped five percentage points. 

To improve performance in PY 2006, Job Corps will continue to utilize performance-based service contracting for 

center operators and Career Transition Services (CTS) providers to link revenues to performance on specific 

measures of student success. Regional offices conduct assessments and annual contract reviews of outreach and 

admissions contractors, center operators and CTS providers that include compliance measures for operations and 

performance measures related to student outcomes. In addition to improving measured student outcomes, Job Corps 

continues to focus on customer needs by maintaining safe and healthy environments at all Job Corps centers by 

cooperatively working with other DOL agencies to conduct safety and health inspections annually. 

Busy filling prescriptions, Darshay can’t help 

but feel successful. A few years ago, when 

Darshay was still undecided about her future, 

she enrolled in the Jacksonville Job Corps 

Center, where she received training to 

become a pharmacy technician and even 

completed two internships in retail pharmacy 

sales. After graduating from Job Corps, she 

spent six weeks at Walgreens and six weeks 

at a local military base. She was then hired 

temporarily at the base and was quickly 

transferred into a permanent position at 

another local base, where she works at a 

pharmacy that fills between 1,500 and 2,000 

prescriptions daily. Although she has a good 

job, Darshay is continuing her education at a 

local community college so she can 

eventually go to pharmacy school. 

Photo Credit: Ken McCray 

PART, Program Evaluations and Audits 

In the 2004 Program Assessment Rating Tool (PART) process, the Job Corps program was reviewed and rated 

Moderately Effective. In response to findings, DOL created a strategic plan to improve services for Hispanic/Latino 

students and those who are English Language Learners, completed an Asset Management Plan and Capital Asset 

Plan for the FY 2007 Budget, improved decision-making processes for capital investments in real property, 

assembled a cost effectiveness workgroup to improve program efficiency, and obtained access to Unemployment 

Insurance wage record information to more completely report on student employment outcomes. 

In PY 2005, the Office of Inspector General (OIG) identified several areas of concern related to Job Corps’ data 

validation procedures and improper payments to the center operator. See San Diego Job Corps Center: Student 

Attendance and Training Data Overstated (Study 4 in Appendix 2). In response to the OIG findings, Job Corps 

updated its oversight policy to require regional offices to validate centers’ data using a targeted sampling of records 

during onsite center assessments and to take steps to recover overpayments if irregularities are identified. 

Another recent OIG study, Strengthening Efforts to Assess and Account for Students with Cognitive Disabilities 

Would Help Job Corps Achieve its Mission, suggested that Job Corps provide additional services to permit early 

identification of students with unknown or undisclosed disabilities (Study 3 in Appendix 2). In response, Job Corps 

developed policies for assessing students with cognitive disabilities and has established a formal audit system for 

tracking the accuracy of centers’ disabilities data. 
Performance Section 

62 United States Department of Labor 

Data Quality and Major Management Challenges

Data quality for this performance goal was rated Very Good. Strengths of the data include timeliness, validity, and 

accuracy. The Job Corps program has developed policies and procedures for its Management Information System 

(MIS) to address data integrity issues identified in recent OIG audits (see previous section). Steps being taken 

include revisions to the Program Assessment Guide, utilization of targeted sampling for audit reviews, and 

procedures for identification and collection of liquidated damages as necessary. To ensure system-wide data 

integrity, Job Corps is in the process of updating the guide and has implemented requirements for regional offices to 

include mandatory reviews of individual student files selected through a stringent targeted-sampling methodology. 

These changes will shortly be released to the field. While verification remains an area for improvement, Job Corps 

has implemented quality controls – on-site reviews of targeted samples by teams composed of National and Regional 

Office staff and experienced data analysts. 

Job Corps Real Property is listed as a Departmental Major Management Challenge (MMC) by virtue of the fact that 

this program controls roughly 95 percent of the DOL real property portfolio that is not leased through the General 

Services Administration (see item IX in the MMC table in the Executive Summary – Ensuring the Effectiveness of 

the Job Corps Program). Executive Order 13327, Federal Real Property Asset Management, was issued by 

President Bush in February 2004 “to promote the efficient and economical use of America's real property assets." In 

PY 2005, Job Corps instituted new controls in CATARS (Capital Asset Tracking and Reporting System), the 

Departmental tracking system. As a result, annual inventories of Job Corps Real Property are now conducted in 

accordance with Departmental guidance and the information in CATARS is verified. 
Strategic Goal 1 

FY 2006 Performance and Accountability Report 63 

Help Veterans Get and Keep Jobs 

Performance Goal 05-1.1C (VETS) – PY 2005 

Improve employment outcomes for veterans who receive One-Stop Career Center services and veterans’ program 

services. 

Indicators, Targets and Results PY 2004 

Result 

PY 2005 

Target 

PY 2005 

Result 

Target 

Reached*

Percent of veteran job seekers employed in the first or second 

quarter following registration 60% 59% 62% Y 

Percent of veteran job seekers still employed two quarters after 

initial entry into employment with a new employer 81% 81% 81% Y 

Percent of disabled veteran job seekers employed in the first or 

second quarter following registration 56% 55% 57% Y 

Percent of disabled veteran job seekers still employed two quarters 

after initial entry into employment with a new employer 79% 79% 80% Y 

Entered employment rate for homeless veterans participating in the 

Homeless Veterans’ Reintegration Program (HVRP) 65% 61% 68% Y 

Employment retention rate after 6 months for homeless veteran 

HVRP participants 58% 58% 67%** Y 

Cost (millions) $196 – $198 

*Indicator reached (Y), or substantially reached (S) or not reached(N) 

**Estimated based on results through the second quarter Goal Achieved

Program Perspective and Logic 

Jobs for Veterans State grants support the delivery of employment services needed by veterans and transitioning 

service members to promote their success in the civilian workforce. These grants support Disabled Veterans’ 

Outreach Program (DVOP) specialists and Local Veterans’ Employment Representative (LVER) staff members 

stationed at the nationwide network of One-Stop Career Centers. Both DVOP specialists and LVER staff members 

serve as experts on workforce resources available for veterans. LVER staff members emphasize the provision of 

services for recently separated veterans and handle outreach to employers. DVOP specialists focus their efforts on 

intensive services for disabled veterans and for other veterans with significant barriers to employment. The 

Homeless Veterans’ Reintegration Program (HVRP) is a competitive grant program emphasizing stable employment 

as the critical factor in mitigating homelessness among veterans. Program participants are served by communitybased grantees that provide pre-employment services, establish linkages with service providers funded by other 

federal agencies, and rely on DVOP specialists to assist in placing participants, once they are job-ready. 

One-Stop Career Centers serve younger, recently separated veterans who have limited civilian work experience and 

older veterans with civilian experience who have become unemployed. HVRP serves homeless veterans who have 

minimal attachment to the workforce. VETS applies the federal job training common measure definitions of entry to 

employment and retention in employment as the critical indicators of successful outcomes for all veterans and all 

disabled veterans who receive One-Stop services. For HVRP, VETS also uses entry to employment and retention in 

employment as the key outcome indicators and plans to apply the common measure definitions of these indicators 

starting in 2007. In setting performance targets, VETS seeks to improve service to veterans at a rate that is ambitious 

yet attainable. 

Cost for this performance goal rose by one percent between PY 2004 and PY 2005. This is considered a minor 

variance. 
Performance Section 

64 United States Department of Labor 

Analysis and Future Plans 

The goal was achieved; all six targets were 

reached. The veterans’ employment rate 

improved by two percentage points over PY 2004 

results, while the retention rate was unchanged. 

The employment rate and the retention rate for the 

disabled veterans cohort both improved by one 

percentage point. The employment rate for 

homeless veterans served by HVRP improved by 

three percentage points and surpassed the target. 

Based on preliminary results, the HVRP retention 

target was reached. Final data are received too 

late for inclusion in this report but are not 

expected to change this result. During 2006, 

VETS will continue efforts to emphasize retention 

for HVRP. 

Broad national economic indicators for 

unemployment and productivity remained 

generally positive over the past twelve months 

and helped to maintain positive performance by 

the veterans’ programs. These positive results also 

are attributable, in part, to continued efforts by 

VETS to facilitate coordination among VETS 

State offices, State Workforce Agencies and community-based grantees, such as those responsible for implementing 

HVRP. In addition to the positive impact of this coordination on veterans’ outcomes, it also played a role in reversing 

the downward trend in service levels that was noted in last year’s report. Specifically, a comparison with the previous 

year indicates that the overall level of veteran participation in One-Stop services (including self-services) increased 

approximately 5 percent, while the level of veteran participation in staff-assisted services increased approximately 10 

percent. 

Early in 2004, HVRP staff met and 

interviewed John when he was a resident at 

the Florida Volunteers of America (FVA) 

facility. John was not initially chosen to 

participate. Within two months, John 

vanished. In March 2005, FVA staff attended 

the Brevard County Homeless Veterans Stand 

Down event, where HVRP staff assisted with 

veterans’ employment issues. Sitting at a 

nearby table was John. His arm was badly 

bruised and needed medical attention. He 

had been sleeping in the woods since leaving 

their facility a year earlier. HVRP contacted 

the Brevard County Homeless Veterans 

Coordinator, who then arranged for medical 

help and lodging. A few weeks later, John 

returned to the FVA facility. By May, John 

had made remarkable improvements, and he 

was enrolled in the HVRP program. John 

found a job as a drywall installer but was lacking the necessary tools and equipment. HVRP staff procured the tools and 

equipment just in time to allow John to begin his new job – which paid $13 per hour. HVRP has since confirmed that John is 

still employed. John said he knows what it is like to really bottom out, and that he won’t be going there again. 

Photo Credit: DOL/VETS 

Entered Employment

50%

55%

60%

65%

70%

2003 2004 2005

Program Year

Target Result

Employment Retention

70%

75%

80%

85%

90%

2003 2004 2005

Program Year

Target Result
Strategic Goal 1 

FY 2006 Performance and Accountability Report 65 

PART, Program Evaluations and Audits 

The PART review of the Jobs for Veterans State Grants Program, published in February 2006, rated the program 

Moderately Effective and noted that it serves a large number of veterans, while focusing on those veterans requiring 

more intensive services by leveraging other resources within the workforce investment system. The improvement 

plan included setting more ambitious indicator targets and conducting an independent evaluation to assess the effects 

of recent program changes on employment outcomes. VETS has taken significant action on both items by including 

ambitious long-term targets in the DOL Strategic Plan and participating in the launch of the evaluation project in 

August 2006. 

In December 2005, GAO published a study on the implementation of the Jobs for Veterans Act, Labor Actions 

Needed to Improve Accountability and Help States Implement Reforms to Veterans’ Employment Services (see Study 

5 in Appendix 2). GAO’s recommendations included four areas for improved coordination between VETS and ETA: 

a) improved integration of veterans’ representatives at One-Stop Career Centers; b) improved provision of priority of 

service for veterans; c) coordination of monitoring activities; and d) application of monitoring results to improve 

program performance. GAO also recommended that VETS disseminate information on best practices and improve 

monitoring of federal contractors’ compliance with obligations related to veterans’ employment. These actions are 

expected to be completed during FY 2007. 

Employment Rates for Disabled Veterans, an evaluation of services and assistance provided referrals to DVOP 

specialists from the Office of Vocational Rehabilitation and Employment (VR&E) at the Department of Veterans 

Affairs (see Study 6 in Appendix 2), identifies areas for follow-up by VETS/VR&E workgroups. VETS and VR&E 

have a Memorandum of Agreement (MOA) which in part establishes three work groups; performance measures; 

training; and data collection and sharing. There are issues in the report that the work groups will address that will 

ultimately lead to better employment outcomes for this group of disabled veterans. Recommendations were made by 

DVOPs and VR&E staff that includes involving DVOP specialists in the development of employment and training 

plans for VR&E participants; consider having DVOPs become certified as Career Development Facilitators; and 

develop mutually agreeable outcome measures. The report was issued at the conclusion of FY 2006 and the work 

groups have not had an opportunity to review the report and outline a course of action. 

Data Quality and Major Management Challenges 

Data quality for this performance goal was rated Good. Strengths of the data include its relevance, timeliness, and 

completeness. The four indicators addressing the outcomes of veterans and disabled veterans served by One-Stop 

Career Centers rely upon the reporting system that produces similar outcome data for DOL Performance Goal 05-

4.1B. Therefore, in general, the data quality assessment for that goal also applies to these indicators. The two 

indicators addressing outcomes for homeless veterans served by HVRP rely upon the Veterans' Employment and 

Training Operations and Program Activity Report (VOPAR). VOPAR areas for improvement are reliability and 

verifiability. During 2007, VETS intends to develop a second generation VOPAR to accommodate common 

measures and to add internal consistency checks. VETS also intends to emphasize greater consistency in grantee 

reporting and more uniform verification of reports by VETS field staff members responsible for grantee oversight. 

Routine quality control measures include trouble-shooting by expert VETS field staff members who oversee HVRP 

and workshops on reporting at the annual conference attended by all grantees’ representatives and all VETS field 

staff members who oversee HVRP. VETS has no major management challenges. 
Performance Section 

66 United States Department of Labor 

Satisfy High-Growth Industry Labor Needs via Apprenticeships 

Performance Goal 06-1.1A (ETA) – FY 2006 

Improve the registered apprenticeship system to meet the training needs of business and workers in the 21st Century. 

Program Perspective and Logic 

The National Apprenticeship Act of 1937 established the foundation for developing and expanding the nation’s 

skilled workforce through apprenticeship programs and establishing standards for safeguarding the welfare of 

apprentices. The National Registered Apprenticeship System – a partnership of the Department of Labor, State 

agencies, businesses, program sponsors, industry leaders, employers, employer associations, and educational 

institutions – was established with the objective of providing opportunities for jobseekers to find jobs with career 

paths, earn competitive wages, and obtain nationally-recognized industry credentials. The system is responsible for 

promoting and registering programs and apprentices, certifying standards, safeguarding the welfare of the 

apprentices, and providing a nationally recognized system for skilled and technical occupational training programs 

throughout the U.S. 

DOL staff promotes the apprenticeship training system to potential sponsors and participants and registers and 

monitors the partners’ apprenticeship programs. Industry leaders, employers, or employer associations develop 

apprenticeship programs based on the skills and knowledge required for workers in particular occupations. The 

Department or a Federally-approved State Apprenticeship Council registers programs to certify that they meet 

standards for quality, fairness, and opportunity, and adequately incorporate the two critical components of a 

registered apprenticeship program – on-the-job learning with appropriate supervision and related technical 

instruction. Educational institutions, such as community colleges, may collaborate with sponsors to provide the 

occupation-related instruction. 

The apprenticeship model has demonstrated success in developing skilled workers for numerous industries and 

continues to provide employers with resources to develop new occupations and train a skilled workforce to remain 

globally competitive. Registered Apprenticeship functions as a self-sustaining system with employers financing 

most training expenses such as wages, classroom training, supervision, and mentoring for the duration of the 

program, which can be several years. 

FY 2005 was the baseline year for collecting data on the Federal job training program common performance 

measures of employment retention and wage gain, which reflect individual apprentice outcomes and allow for broad 

comparison with other ETA training and employment programs. With limited data available to assess trends in 

program performance, FY 2006 targets were set at levels deemed realistic and attainable. As additional data become 

available and as partners acclimate to these new performance indicators, the Department will analyze trends and set 

higher targets, as appropriate. As a system based on voluntary employer participation, apprenticeship program 

performance is directly impacted by external factors such as wage rates determined by local employer sponsors and 

by demand for skilled and technical labor in local markets. 

 

17 Twenty-three States have Federally registered apprenticeship programs and enter data on individuals into the Registered 

Apprenticeship Information System (RAIS). A group of “tracked entrants” is defined as the cohort of apprentices registered 

and entered into RAIS during a given reporting period.

Indicators, Targets and Results FY 2005 

Result 

FY 2006 

Target 

FY 2006 

Result 

Target 

Reached*

Percent of those employed nine months after registration as an 

apprentice 78% 78% 82% Y 

Average wage gain for tracked entrantsT

17T employed in the first 

quarter after registration and still employed nine months later $1.26 $1.26 $1.32 Y 

Cost (millions) $23 – $25 

*Indicator target reached (Y), substantially reached (S) or not reached (N) Goal Achieved
Strategic Goal 1 

FY 2006 Performance and Accountability Report 67 

Costs associated with this performance goal increased by one percent between FY 2005 and FY 2006, which is 

considered a minor variance. 

Analysis and Future Plans 

Results exceeded targets for both indicators; therefore the Department achieved its performance goal. Retention was 

82 percent, or 4 percentage points above the target of 78 percent. The hourly wage gain of $1.32 (from $12.16 to 

$13.48) is almost 5 percent greater than the FY 2005 wage gain of $1.26 (from $11.92 to $13.18). In addition, the 

average cost per registered apprentice was $97, or $12 less than the previous year’s result of $109. While the 

program’s operating budget increased by just one percent from FY 2005 to FY 2006, the number of registered 

apprentices increased by more than 20 percent – from 196,000 to over 237,00018. This considerably reduced the 

program’s cost per participant. Apprenticeship’s results continue to demonstrate that the Apprenticeship program is 

efficient as a Federal training and employment program. By leveraging large investments from employers and 

program sponsors, Apprenticeship is a low cost, market-driven approach to training America’s workers. 

To improve performance in future years, the Department and our stakeholders are re-engineering Registered 

Apprenticeship Information System (RAIS), the DOL’s database for registered apprenticeship programs. The RAIS 

re-engineering will enable DOL to better analyze program information and strategically target expansion in industries 

and occupations that demonstrate higher wages and apprentice retention rates. Additionally, DOL is preparing to 

conduct a survey of employer sponsors regarding their views on apprenticeship, knowledge of the apprenticeship 

system, data collection activities, and integration with the workforce development system. The survey information 

will help re-orient Federal policy on apprenticeship, and will help State Apprenticeship Councils promote 

apprenticeship in new industries and with more employer sponsors. Finally, the Department is promoting the 

recruitment, training, employment and retention of women in apprenticeship and nontraditional occupations through 

Women in Apprenticeship and Nontraditional Occupations (WANTO) grants in partnership with the Women’s 

Bureau. Grantees, which will be a consortium of apprenticeship sponsors, community-based organizations, and 

faith-based organizations, will successfully recruit, train, employ and retain women in apprenticeships and 

nontraditional occupations. 

For staff working in Maine’s veterinary hospitals and animal 

clinics, becoming certified as a Veterinary Technician has not 

really been a viable option, but the Maine Apprenticeship program 

has found a solution. Apprentices now can access an approved 

web-based Veterinary Technician program through a Texas 

community college that provides post-secondary education and onthe-job training. For Victoria at Bridgton Veterinary Hospital and 

Shelly (pictured in photo) at Falmouth Veterinary Hospital, this 

combination of on-the-job training and long distance learning has 

provided them the opportunity to advance their careers while 

continuing to work. Apprenticeship, as this program clearly 

demonstrates, can offer a flexible and creative alternative to postsecondary education that allows workers to become trained and 

well-rounded in their career choices. 

Photo Credit: Gene Ellis 

PART, Program Evaluations and Audits 

In 2005, the program was reviewed using the Program 

Assessment Rating Tool (PART) and rated Results Not Demonstrated – reflecting lack of data on the common 

measures at that time. The improvement plan included completing implementation of the common measures for 

retention and earnings; evaluating and reporting participants’ employment and earnings after they leave the program 

to compare apprenticeship program outcomes with those of other training models; and tracking the representation of 

women in apprenticeship programs through an Equal Employment Opportunity review process. The program has 

implemented the new measures and the aforementioned re-engineering of RAIS includes capture of post-training 

outcomes. In collaboration with the Women’s Bureau, ETA will award grants (using WANTO grants funds) to assist 

 

18 As of September 15 – two weeks prior to the end of the fiscal year. 
Performance Section 

68 United States Department of Labor 

employers and labor unions in the placement and retention of women in apprenticeship and nontraditional 

occupations. 

Data Quality and Major Management Challenges 

Data for this performance indicator was rated Fair. Strengths of the data include its validity and accuracy, but room 

for improvement remains in several areas. The primary data source is RAIS, an automated system that operates 

independently from State workforce information systems. For the 27 states in which State Apprenticeship Councils 

(SAC) register apprentices, participation in RAIS is voluntary; complete nationwide data are not available and the 

collection of retention and earnings data continues to be challenging. Recent implementation of common measures 

will affect the ability to compare performance trends in the short term. As indicated in the footnote on the first page 

of this goal narrative, wage gain data are limited to Federal efforts. RAIS will be redesigned to include trend analysis 

capability and offer features to encourage SACs to utilize the new data collection system, as well as greater quality 

controls to ensure data collected from the States are accurate. 

Efforts continue to determine how Unemployment Insurance wage record information may be accessed to verify 

employment outcomes of registered apprentices. It is anticipated that the redesigned RAIS will considerably reduce 

the estimated staff hours needed to report the earnings indicator. Both GAO’s 2005 study (Registered 

Apprenticeship Programs: Labor Can Make Better Use Data to Target Oversight) and the PART review discussed 

the potential of technology to improve services. These enhancements to RAIS will address a Major Management 

Challenge (MMC) – Improve Apprenticeship Data, item I in the MMC section of the Executive Summary – by 

making better use of performance data for program oversight and developing a cost-effective strategy for collecting 

data from SACs. For example, two additional states have agreed to participate in RAIS. Additionally, the 

Department continues to expand the Apprentice Electronic Registration (AER) project in RAIS to reduce application 

processing time, improve data quality, increase cost-effectiveness, and improve the program’s ability to track data. 

AER’s utilization rate increased to from nine percent of participating States in FY 2005 to 46 percent in FY 2006. 

The Department continues efforts that began in FY 2005 to review apprenticeship activities in SAC states. 

Monitoring reviews for SACs and the District of Columbia were completed in FY 2006 and final reports identifying 

areas for technical assistance will be issued in FY 2007.
Strategic Goal 1 

FY 2006 Performance and Accountability Report 69 

Increase Employment Opportunities for Youth and Adults with Disabilities

Performance Goal 06-1.1B (ODEP) – FY 2006 

Advance knowledge and inform disability employment policy that affects systems change throughout the workforce 

development system. 

Indicators, Targets and Results FY 2005 

Result 

FY 2006 

Target 

FY 2006 

Result 

Target 

Reached*

Number of policy related documents disseminated NA Baseline 20 Y 

Number of formal agreements initiated NA Baseline 20 Y 

Number of effective practices identified 19 21 26 Y 

Cost (millions) $52 – $50 

*Indicator target reached (Y), substantially reached (S) or not reached (N) Goal Achieved

Program Perspective and Logic 

The Office of Disability Employment Policy (ODEP) works to reduce and remove the significant barriers to 

employment faced by individuals with disabilities. ODEP also ensures coordination among DOL and other Federal 

agencies on matters related to or affecting employment of people with disabilities. 

Increasing workforce participation of people with disabilities requires the removal of barriers found on both the 

supply (those seeking employment) and demand (employers) sides of the labor market. Key components of ODEP’s 

investments include developing national policy related to and affecting employment of people with disabilities; 

fostering implementation of effective policies and practices within State and local workforce development systems 

and with employers; conducting research that validates effective strategies for providing disability-employment 

related services and supports; and providing technical assistance for effective implementation of systems-change 

strategies to both the demand and supply side of the labor market. In addition, ODEP seeks to ensure that employers’ 

perspectives on the recruitment, retention, and promotion of people with disabilities are fully integrated into 

disability employment policy analysis and development. ODEP works with key stakeholders in the Department, 

other Federal, state, and local governments, non-governmental organizations, and employers, developing policy and 

effective practices to increase employment opportunities for people with disabilities that will expand access to 

workforce systems, address the needs of employers, and ensure the availability of employment-related supports. 

ODEP also supports the implementation of the employment-related goals of President Bush's New Freedom 

Initiative. 

ODEP’s response to the traditionally low employment rates among people with disabilities is comprehensive and 

aggressive, and includes securing the active involvement and cooperation among a number of Federal, State, and 

local agencies as well as private sector organizations. ODEP strategically invests in initiatives to identify and 

develop policy options that will improve employment rates of people with disabilities and to validate effective 

practices for dissemination throughout the workforce development and other service delivery systems and to 

employers. ODEP’s investment provides the policy and practices for those systems so that they will achieve better 

employment outcomes for the individuals with disabilities they serve. These investments also provide employers 

with the information they need to benefit from their increased recruitment, retention and promotion of people with 

disabilities. The results of these initiatives and their activities – in the form of policy related documents, formal 

agreements, and effective practice identification – are reflected in the indicators and targets used to measure ODEP’s 

performance. 

Major external factors that influence performance outcomes include several workforce trends. These trends include 

projected workforce shortages, turn-over, retirement, and the trend of working beyond the traditional retirement age. 

Many of these workers may experience disabling conditions, increasing pressure on the employer to keep workers on 

the job and to have employees who are temporarily disabled return to work quickly. Additionally, small businesses – 
Performance Section 

70 United States Department of Labor 

which employ half of all private sector employees and are expected to generate a majority of new jobs – face unique 

challenges in hiring and retaining disabled workers. 

ODEP develops policies and practices that enable employers to include people with disabilities as they develop 

strategies for employee recruitment, development and transition with the goal of retaining long-term, high-quality, 

high-contributing employees. Additionally, ODEP develops policies and practices that enhance coordination of the 

support needed to keep workers on the job and return employees to work quickly following an injury or illness. This 

support includes access to healthcare, housing, and reliable transportation. 

Analysis and Future Plans 

ODEP achieved its goal. As planned, during FY 2006, a year in which ODEP underwent a management paradigm 

shift, it continued collecting data from activities and initiatives. ODEP has been tracking one indicator – number of 

effective practices identified – since FY 2004. ODEP also began developing definitions and valid tracking 

mechanisms for two new indicators. At the close of FY 2006, ODEP set baselines for these two indicators. The 

policy-related documents baseline is 20 and the formal agreements baseline is 20, also. These three indicators, which 

measure achievement of ODEP’s performance goal, more clearly and accurately reflect the agency’s focus on policy 

development than did previous indicators. ODEP exceeded its target of identifying 21 effective practices, having 

identified 26. 

In FY 2007, ODEP will complete its management paradigm shift, emphasizing different strategies than in the past. 

ODEP will move away from its earlier, heavy reliance on grant making to public and private organizations to a 

greater emphasis on using its own internal staff to conduct policy analysis and development initiatives. Activities 

will continue to focus on ODEP's core mission to develop and influence the implementation of policies and practices 

that will affect systems change, increasing employment opportunities for, and the recruitment, retention, and 

promotion of adults and youth with disabilities. Accordingly, the proposed FY 2007 Performance Goal will remain 

as presented in FY 2006. 

ODEP has reduced cost from $52 million in FY 2005 to $50 million in FY 2006. Cost for both years also reflects 

funds awarded in prior fiscal years; the reduction is attributed to a decrease in the budget request and appropriation. 

The impact of reduced funding was a significant reduction in pilot project and technical assistance grants. ODEP 

was able to use information from those grants in the development of policy. DOL expects ODEP’s budget to either 

remain at its current level or to be further reduced. While in the future ODEP will more heavily rely on its staff of 

disability and policy subject matter and technical experts as well as other strategies to achieve its goal, it will also 

continue to draw from information gained from previous pilot project grants. 

A career specialist from the MontgomeryWorks One 

Stop Career Center contacted Dr. Robert Morgenstein, 

a dentist in the Rockville, MD area, at the suggestion 

of a patient, to find out more about his practice. He 

and his staff welcomed a discussion of their office 

tasks and alternative work flow designs. Needs 

included ushering patients from the waiting area to the 

appropriate room, pulling and re-filing patient's charts, 

running errands to the post office, making bank 

deposits, and additional light clerical tasks. Ramon 

DePaula, who was seeking clerical work with some 

personal interaction, had some, but not all of the 

capabilities identified by Dr. Morgenstein and his staff. 

The career specialist was able to negotiate an 

opportunity for Ramon to demonstrate his fitness for 

the practice in conjunction with implementation of a 

streamlined office operation. After a volunteer work 

trial, Ramon was hired as a clerical assistant. His 

position was created to fill specific needs in the busy 

dental office and matched to his interests and skills. According to Dr. Morgenstein, "Ramon's new position allows the front 

office staff to spend more quality time updating patient charts." 

Photo Credit: DOL/ODEP 
Strategic Goal 1 

FY 2006 Performance and Accountability Report 71 

PART, Program Evaluations and Audits 

ODEP is being reviewed in this year’s PART process; results will be available with release of the FY 2008 

President’s Budget. ODEP’s independent evaluation is examining the nature and extent to which ODEP’s efforts in 

pilot projects have increased the capacity of the workforce development system and other systems to serve people 

with disabilities. As implementation has progressed, the evaluation is also examining capacity building (e.g., new 

policies and coordinating vocational rehabilitation, mental health, transportation, and housing funds; appropriately 

trained staff; formal cooperative agreements with local agencies; and intermediate outcomes (i.e., more people with 

disabilities being served leads to more people with disabilities getting jobs or moving out of government services 

such as Social Security). Findings continue to demonstrate that because of ODEP’s efforts: (1) The capacity of the 

workforce development system has expanded and the system is strengthened to better serve people with disabilities; 

(2) People with disabilities are moving from low-skill, minimum wage work to higher-paid jobs in technical or other 

new career fields; (3) Attitudes at One-Stop Centers regarding the provision of services to people with disabilities are 

changing; and (4) Governmental agencies are now working together to share information and leverage resources to 

better serve people with disabilities. 

Data Quality and Major Management Challenges 

Data for this goal was rated Good. Strengths of the data include timeliness, verifiability, and completeness. ODEP 

relies on contracted external evaluators to validate the data collection systems that support their performance 

measures. As ODEP continues to implement its strategic and performance plan, data quality can be improved to 

ensure uniform guidelines for collecting and reporting data as well as increasing their validity in measuring program 

performance. ODEP continues to refine data systems in an effort to raise the bar on the quality and nature of 

performance information reported. 
Performance Section 

72 United States Department of Labor 

Timely, Accurate, and Relevant Economic Information 

Performance Goal 06-1.2A (BLS) – FY 2006 

Improve information available to decision-makers on labor market conditions, and price and productivity changes. 

Indicators, Targets and Results FY 2005 

Result 

FY 2006 

Target 

FY 2006 

Result 

Target 

Reached*

Percent of output, timeliness, accuracy, and long-term improvement 

targets achieved for labor force statistics 

82% 85% 79% N 

Percent of output, timeliness, accuracy, and long-term improvement 

targets achieved for prices and living conditions 

87% 85% 94% Y 

Percent of output, timeliness, accuracy, and long-term improvement 

targets achieved for compensation and working conditions 

95% 85% 77% N 

Percent of output, timeliness, accuracy, and long-term improvement 

targets achieved for productivity and technology 

100% 85% 100% Y 

Cost per transaction of the Internet Data Collection Facility $2.44 $2.58 $1.82 Y 

Customer satisfaction with BLS products and services (e.g. the 

American Customer Satisfaction Index). 

74% 75% 79% Y 

Cost (millions) $536 – $573 

*Indicator target reached (Y), substantially reached (S) or not reached (N) Goal Not Achieved

Program Perspective and Logic 

BLS is the principal fact-finding agency in the Federal government in the broad field of labor economics. As an 

independent national statistical agency within the Department of Labor that collects, processes, analyzes, and 

disseminates essential statistical data to the American public, the U.S. Congress, other Federal agencies, State and 

local governments, business, and labor, BLS provides information that supports the formulation of economic and 

social policy, decisions in the business and labor communities, legislative and other programs affecting labor, and 

research on labor market issues. These important policies and decisions affect virtually all Americans. 

BLS reports performance for this goal by producing timely and accurate data, as well as by enhancing its outputs. 

For example, in order to better meet customer needs for timely and accurate data, BLS improves data relevancy, 

coverage, and response rates, among other improvements that comprise the BLS indicators. 

To continue improving its products and services, BLS analyzes and evaluates new economic and statistical 

methodologies, new technologies, and new survey design, collection, and dissemination approaches. Keeping 

abreast of improvements and using them to deliver data in a more timely and useful manner, while still maintaining 

cost effectiveness, are essential ingredients to meeting our goals and providing the quality of service our customers 

expect. For example, in FY 2006, BLS accelerated the release of Survey of Occupational Injuries and Illnesses data, 

which are used by employers, policymakers, and safety inspectors to identify and mitigate potential workplace 

hazards. BLS also released data that allows users to compare one metropolitan area's wages with over 75 other areas 

in the United States. In addition, BLS converted two more of its surveys to the North American Industry 

Classification System, which more accurately reflects new areas of economic growth and technological changes that 

have occurred in the economy over the past twenty years than the previous classification system. 

The costs for this performance goal increased by seven percent between FY 2005 and FY 2006, primarily due to 

built-in cost increases, including personnel compensation and benefits and other services, and small differences in the 

timing of certain expenditures. 
Strategic Goal 1 

FY 2006 Performance and Accountability Report 73 

Analysis and Future Plans 

BLS reached targets for four of its six performance indicators. BLS reached 79 percent of the underlying targets for 

its labor force statistics indicator, missing the target by six percentage points. Four surveys missed response rate 

targets. The hurricanes temporarily depressed response to the Current Employment Statistics program, and legal 

requirements made it more difficult for the National Longitudinal Survey to contact people in prison or the military. 

BLS also had difficulties with the response to its Job Openings and Labor Turnover Survey and American Time Use 

Survey. In the case of the Time Use Survey, a large proportion of nonrespondents stated that their decision not to 

participate was because of their previous Current Population Survey participation. BLS is continuing efforts to 

mitigate this problem. In addition, two surveys missed coverage targets. The Occupational Employment Statistics 

program released fewer estimates than anticipated to avoid the risk of disclosing confidential respondent information. 

The Local Area Unemployment Statistics program target was based on population estimates from the Census Bureau, 

which were lower than expected. Finally, the Quarterly Census of Employment and Wages did not publish new 

Business Employment Dynamics series on unit counts in 2006, as originally planned. 

BLS reached 77 percent of the underlying targets for its compensation and working conditions indicator, not reaching 

its target for this indicator. BLS continues to struggle with response rates, which are dependent on businesses and 

individuals responding to strictly voluntary questions of an often highly personal or sensitive nature. The Employee 

Benefits Survey (EBS) and Employment Cost Index both had difficulty with nonresponse, each missing its target by 

one percentage point. EBS also missed its workload measure for number of benefits plans analyzed. The Locality 

Pay Survey missed a publication target because five area publications planned for late 2006 will not be published 

until early 2007. The Census of Fatal Occupational Injuries missed a measure when the size of revisions to the 

annual count of fatal work-related injuries was slightly higher than targeted. Finally, the Survey of Occupational 

Injuries and Illnesses missed two of its targets. A decrease in workplace injuries and illnesses that require days away 

from work led to fewer cases reported by employers. Improved reliability standards reduced the number of 

publishable national estimates on the characteristics of the worker and the circumstances of the injury or illness. 

BLS reached 94 percent of the underlying targets for its prices and living conditions indicator. The International 

Price Program missed two of its response rate targets and one of its workload targets. BLS reached 100 percent of 

the underlying targets for its productivity and technology indicator. BLS exceeded its target for decreasing the cost 

per transaction of its Internet Data Collection Facility – a manageable and secure architecture that survey respondents 

use to report data. The cost per transaction was $1.82 in FY 2006 – down from $2.44 in FY 2005. The BLS 

Occupational Outlook Handbook (OOH) website is the Bureau’s nationally recognized source of career information. 

Using the American Customer Satisfaction Index survey, the OOH website surpassed its target of 75 percent in the 

third quarter of 2006. The BLS score was 79 percent; the aggregated scores for the Federal government and the 

private sector for the same time period were both 74 percent. For more information, see Study 7, Customer 

Satisfaction with the BLS OOH Website, in Appendix 2. 

In the aftermath of Hurricanes Katrina and Rita, DHS 

was tasked with developing a plan to rebuild the 

devastated Gulf Coast region. Becca O'Brien, Director 

of Policy & Research at the Office of the Federal 

Coordinator for Gulf Coast Rebuilding, asked BLS to 

provide data to aid in assessing the cost-effectiveness 

of protecting various areas around New Orleans. 

Using geocoded data from the Quarterly Census of 

Employment and Wages, in which businesses were 

assigned detailed geographic coordinates, BLS 

provided Becca with the special tabulations she 

requested within one day. That evening, at a meeting 

at the White House, these measures were used to make 

decisions that impact the future of the Louisiana Gulf 

Coast. Per Becca, “Our decisions would certainly not 

have been as well-informed without these data.” BLS 

also worked closely with mapping experts in California 

and with the Louisiana Department of Labor to make 

these tabulations and clear their release. 

Photo Credit: DOL/BLS 
Performance Section 

74 United States Department of Labor 

PART, Program Evaluations and Audits 

Using the Program Assessment Rating Tool in FY 2003, BLS was rated Effective, the highest rating category. BLS 

resolved the three original PART findings in FY 2005. In January 2006, new follow-up recommendations replaced 

the ones that were completed. The new recommendations included conducting an independent evaluation of agency 

effectiveness, developing additional efficiency and cost-effectiveness measures, and establishing more ambitious 

targets. In response, BLS is examining options for an independent study and plans to begin the evaluation in FY 

2007 after it has determined the best course of action. BLS also will continue to work collaboratively with the 

Department in establishing new efficiency measures and ensuring that its targets are ambitious. 

BLS programs are evaluated both internally and externally to ensure that they provide taxpayer value. As required 

by OMB Statistical Policy Directive #3, the seven BLS statistical series that are designated as Principal Federal 

Economic Indicators are evaluated on a three-year schedule. In FY 2006, BLS completed performance evaluations 

for the U.S. Import and Export Price Indexes and the Consumer Price Index (see Study 8 in Appendix 2).

Data Quality and Major Management Challenges 

BLS has instituted rigorous, systematic, and comprehensive controls to ensure that all data are of "excellent" quality. 

For example, the BLS executive team meets with program management on a quarterly basis to discuss progress 

toward meeting performance indicators. BLS also conducts its own program reviews and contracts for external 

reviews as necessary. These assessments ensure that survey data are accurate, reliable, and released in a timely 

fashion; systems and procedures are documented adequately; program performance meets or exceeds standards; and 

pre-release data are kept confidential.
FY 2006 Performance and Accountability Report 75 

Strategic Goal 2: A Secure Workforce 

Promote the Economic Security of Workers and Families

Enforcing legal standards for workers’ wages and working conditions, providing unemployment compensation and 

other benefits when workers are unable to work, and protecting retirement and health benefit security are central to 

the DOL mission. Agencies supporting this strategic goal are the Employment and Training Administration (ETA), 

the Employment Standards Administration (ESA), the Employee Benefits Security Administration (EBSA), and the 

Pension Benefit Guaranty Corporation (PBGC). 

The net cost dedicated to Strategic Goal 2 in FY 2006 was $35.920 billion. The first chart below is based on total 

Departmental costs of $45.328 billion; the second is based on an adjusted net cost of $12.101 billion that excludes 

the major non-discretionary program costs associated with this goal.19 The adjusted net cost dedicated to Strategic 

Goal 2 for FY 2006 was $2.693 billion; the corresponding net cost in FY 2005 was $3.387 billion. 

Strategic Goal 2 - Percent of Net 

Cost

7%

80%

2%

11%

1 - Prepared

2 - Secure

3 - Quality

4 - Competitive

Percent of Net Cost Excluding 

Income Maintenance

28%

22% 9%

41%

1 - Prepared

2 - Secure

3 - Quality

4 - Competitive

The programs and associated performance goals that support A Secure Workforce are organized into two outcome 

goals – Increase Compliance With Worker Protection Laws (2.1) and Protect Worker Benefits (2.2). Their results, 

costs, and future challenges are discussed below. 

Outcome Goal 2.1 – Increase Compliance with Worker Protection Laws 

The Employment Standards Administration’s (ESA) primary challenge is to ensure that protections for workers keep 

pace with the changes occurring in the American workforce, such as flexible and virtual workplaces, demographic 

shifts, immigration, increasingly complex labor organizations, the growth of small businesses, and the shift from 

manufacturing to services. Under the Fair Labor Standards Act (FLSA), the Migrant and Seasonal Agricultural 

Worker Protection Act, the Family and Medical Leave Act, the Davis-Bacon Act (DBA) and the Service Contract 

Act, ESA’s Wage and Hour Division (WHD) administers standards for wages and working conditions such as the 

minimum wage and overtime; child labor protections; field sanitation standards in the agriculture industry; and 

prevailing wage requirements for government contracts. The key to ensuring worker protections is to focus on 

industries and employers with the most persistent and serious violations, to quickly resolve employee complaints, 

and to ensure accuracy in established wage rates. ESA’s Office of Labor-Management Standards (OLMS) ensures 

union transparency, financial integrity, and democracy by administering and enforcing the Labor-Management 

Reporting and Disclosure Act (LMRDA). OLMS responsibilities under LMRDA include compliance assistance; 

civil and criminal investigations and enforcement; union compliance audits; and reports/public disclosure 

administration. OLMS strategies are aimed at improving timeliness and quality of union reports filed for public 

disclosure and strengthening LMRDA compliance through union audits and outreach efforts. 

 

19 The excluded costs are referred to as Income Maintenance – unemployment benefit payments to individuals who are laid off or 

out of work and seeking employment ($31.322 billion) plus disability benefit payments to individuals who suffered injury or 

illness on the job ($1.905 billion). 
Performance Section 

76 United States Department of Labor 

Cost (millions) Goal (Agency) and Statement Performance Summary 

FY 2005 FY 2006 

06-2.1A (ESA) 

American workplaces legally employ and compensate workers. 

Goal achieved. All five targets 

reached. $214 $214

06-2.1B (ESA) 

Ensure union financial integrity, democracy and transparency. 

Goal not achieved. Two targets 

reached and one not reached. 63 56

Total for Outcome Goal 2.1 One performance goal achieved 

and one not achieved $277 $270

 

Results Summary 

WHD found 76 percent of a representative sample of prior violators in compliance, representing an increase of four 

percentage points over the FY 2005 result. Baselines were established for compliant investigations and low-wage 

industry compliance. Wage determination processing efficiency and timeliness significantly exceeded targets. 

OLMS reached its target of reducing the percentage of unions with fraud (to 8 percent) and set a baseline for unions 

complying with standards for democratic union officer elections (92 percent), but saw union transparency slip by one 

percentage point from FY 2005 – to 93 percent – missing the target of 96 percent.

Net Cost of Programs 

FY 2006 program costs of $270 million supported ESA's WHD and OLMS programs. As indicated by the chart, net 

costs for these programs have been stable for the last few years. The drop from FY 2002 to FY 2003 occurred 

because the Employee Benefits Security Administration’s performance goal was moved to Outcome Goal 2.2. 

Outcome Goal 2.1

Net Costs ($Millions)

260

290 299 273 296 277 270

350

0

100

200

300

400

1999 2000 2001 2002 2003 2004 2005 2006

Fiscal Year

Future Challenges 

The Department’s efforts to further improve compliance with wage and hour laws will include outreach and 

education to increase awareness of employment laws among employers, employees, and other stakeholders. Other 

strategies include using quantitative and qualitative performance indicators and targets to increase performance, 

conducting independent reviews of the program to identify opportunities for improvements, and improving data 

collection processes, especially those related to wage determinations in the administration of the Davis-Bacon and 

Service Contract Acts. 

Enforcement of the LMRDA to ensure union democracy, financial integrity, and transparency will continue to be 

complemented by compliance assistance. Union audits will monitor and promote compliance with the Act; followup action will attempt to correct statutory violations. The Department will expand its Internet public disclosure 

service to improve public access to information reported by unions and others under the Act. 

Outcome Goal 2.2 – Protect Worker Benefits 

DOL increases the economic security of America's working families by protecting the benefits earned and promised 

to workers. Three DOL agencies and one government corporation chaired by the Secretary of Labor – the 

Employment and Training Administration (ETA), the Employment Standards Administration (ESA), the Employee 

Benefits Security Administration (EBSA), and the Pension Benefit Guaranty Corporation (PBGC) – administer 

payment of temporary benefits for the unemployed; protect Federal workers from the economic effects of work-
Strategic Goal 2 

FY 2006 Performance and Accountability Report 77 

related injuries and illness; protect employee benefits plans against fraud and abuse; and insure defined benefit 

pension plan payments. 

 

ETA temporarily replaces the wages of the unemployed through the Unemployment Insurance (UI) program, which 

is a Federal-State partnership. ETA provides grants to States to administer their programs and assists the Treasury 

Department in administering the Unemployment Trust Fund. ETA ensures that States’ programs are administered 

efficiently according to Federal standards and requirements. The trust fund provides States a buffer to enable them to 

continue to pay benefits during volatile cycles in tax revenues and benefit claims. 

ESA protects Federal and certain other workers from the economic effects of work-related injuries and illnesses and 

death through the Office of Workers’ Compensation Programs’ (OWCP) four disability compensation programs. 

OWCP provides wage replacement and cash benefits, medical treatment, vocational rehabilitation, and other benefits 

to covered workers, their dependents and survivors. 

EBSA protects private employee pension plans, health plans and other benefit plans against fraud and abuse by 

enforcing Title I of the Employee Retirement Income Security Act of 1974 (ERISA) through compliance assistance, 

vigorous enforcement, and education. Where there has been malfeasance, EBSA restores benefits and assets by 

bringing civil and criminal cases. 

 

PBGC protects the pension benefits of participants in defined benefit plans that have been terminated, usually due to 

the sponsoring employer’s bankruptcy, by serving as both insurer and administrator. As an insurer, PBGC collects 

insurance premiums from employers that sponsor insured pension plans. As an administrator, PBGC pays monthly 

retirement benefits to the participants in terminated plans. 

Cost (millions) Goal (Agency) and Statement Performance Summary 

FY 2005 FY 2006 

06-2.2A (ETA) 

Make timely and accurate benefit payments to unemployed workers, 

facilitate the reemployment of Unemployment Insurance claimants, 

and set up Unemployment tax accounts promptly for new employers. 

Goal not achieved. Three targets 

reached and one not reached. $34,243 $33,340

06-2.2B (ESA) 

Minimize the impact of work-related injuries. 

Goal achieved. All ten targets 

reached. 6131 2130

06-2.2C (EBSA)

Secure pension, health and welfare benefits. 

Goal achieved. All four targets 

reached. 160 179

06-2.2D (PBGC)20

Improve pension insurance program. 

Goal not achieved. One target 

reached and one not reached. − −

Total for Outcome Goal 2.2 Two performance goals 

achieved and two not achieved $40,534 $35,650 

 

Results Summary 

The Unemployment Insurance system reached the overpayments detection target and the new employer status 

determinations timeliness target, and established a reemployment baseline of 62.4 percent. However, States’ first 

payment timeliness declined, in large part due to effects of Hurricanes Katrina and Rita on Gulf State workloads. 

The program demonstrated improved efficiency by exceeding its claims processing target. 

The goal of improving outcomes for injured workers covered by DOL’s OWCP was achieved; all ten indicator 

targets were reached. Results are organized into three categories: 

• Return to Work – Outcomes are expressed as reductions in average Lost Production Days (LPD). In FY 

2006, LPD declined again. Quality Case Management, one of FECA’s principal strategies to improve 

outcomes for injured workers, reduced compensation costs by approximately $50,000,000 annually since the 

first measurement of LPD 10 years ago. 

 

20 PBGC is not included in the Consolidated Statements of Net Cost, hence the costs of its programs are not reflected here. 
Performance Section 

78 United States Department of Labor 

• Managing Program Expenses – Measured in financial terms, DOL workers’ compensation outcomes reflect 

the efficiency and quality of benefit payment activities, the impact of case management and benefit services, 

and the utilization of administrative resources to produce those outcomes. Review of cases to determine if 

continued disability status is warranted and to determine the reemployment potential of those receiving 

compensation resulted in $15.8 million in savings. OWCP also kept the inflation rate of FECA medical costs 

below the national rate of health care inflation. 

• Customer Service – FECA communications efforts increased the use of electronic services, reducing average 

caller wait times, and meeting call handling quality standards. Longshore and Harbor Workers’ Program 

dispute resolution and Black Lung benefit eligibility decision processing efficiency targets were reached, as 

well. For the Energy Part B program, initial claims and final decisions were processed within standard time 

frames. Finally, the new Energy Part E Program exceeded its target of completing initial decisions on 75 

percent of the total available backlog. 

DOL achieved its goal to Enhance Pension and Health Benefit Security. In addition to meeting its criminal case, 

civil case, customer service and voluntary compliance targets, DOL obtained $1.4 billion in monetary results. 

Monetary results are a product of EBSA's investigative and participant assistance activities. DOL investigated a 

number of high profile, resource intensive cases with far reaching effects on the participant benefits community. 

PBGC’s American Customer Satisfaction Index for practitioner callers was 68, falling short of the targeted 69. For 

trusteed plan participants who call the toll-free Customer Contact center, the score was 75, down from FY 2005 and 

below the target of 80. 

Hurricane Katrina threw thousands of people in south Louisiana into the jobless line. Five weeks after the hurricane, more than 

224,200 victims of the hurricane were receiving Unemployment Insurance or Disaster Unemployment Assistance, a five-week 

total that surpassed all of the initial claims for 2004. The Baton Rouge Job Center on Wooddale Boulevard alone saw an average

of 300 people a day for weeks compared with about 50 per day pre-Katrina. This unprecedented evacuation of Louisiana 

residents sent evacuees to virtually every other state, causing massive problems with UI payments, a problem only compounded 

when Hurricane Rita hit the southwest corner of the state resulting in about 30,000 new disaster relief claims. Several states, 

however, partnered with Louisiana to process the staggering number of claims and by early May, Louisiana had paid about $750 

million in UI benefits to hurricane victims. 

Photo Credit: Ed Pratt 

Net Cost of Programs 

FY 2006 program costs of $35.652 billion supported ETA's Unemployment Insurance (UI) programs, ESA programs 

to reduce the consequences of work-related injuries and EBSA efforts to ensure that individuals receive promised 

benefits. PBGC is not included in the Consolidated Statements of Net Cost, hence the cost of its programs is not 

reflected here. Costs are driven almost entirely by UI and ESA’s OWCP; the $5 billion decrease from FY 2005 is 

explained by changes in these two programs’ costs for reasons discussed below. 

UI program costs, which account for $33.340 billion (94 percent) of FY 2006 cost for this outcome goal, were $900 

million lower than the $34.243 billion cost reported for FY 2005. Benefit payments were slightly lower – $31.322 in 

FY 2006 compared to $31.761 billion in FY 2005 – accounting for half of the decrease. This is consistent with the 

small decrease in claims, as measured by the comprehensive average weekly insured unemployment (AWIU) − the 

average number of people filing claims for continuing UI benefits each week. AWIU decreased from 2.770 million 
Strategic Goal 2 

FY 2006 Performance and Accountability Report 79 

in FY 2005 to an estimated 2.623 million in FY 2006. The balance of the difference resulted from an adjustment in 

cost allocation methodology among ETA grant programs. 

Net costs for this outcome goal in FY 2005 included a one-time increase in actuarial liability of $3.5 billion due to 

assumption of workers’ compensation costs associated with Part E of the Energy Employees Occupational Illness 

Compensation program, which Congress transferred to DOL from the Department of Energy. The remaining $500 

million reduction in costs resulted from changes to actuarial assumptions related to Part E payouts.

Outcome Goal 2.2

Net Costs ($Billions)

25 25

34

55 58

47

41

36

0

10

20

30

40

50

60

70

1999 2000 2001 2002 2003 2004 2005 2006

Fiscal Year

Future Challenges 

Strategies to pay UI claims accurately and promptly include providing oversight and assistance to States. DOL will 

continue to monitor State performance and ensure that States falling below minimum criteria establish corrective 

actions. Accuracy and integrity of UI payments will be improved by fostering States’ use of and access to tools such 

as the National Directory of New Hires; by conducting and sharing analyses of approaches to identify and prevent or 

recover overpayments; and by sharing information on States’ best practices. DOL provides States an incentive to 

prevent and detect overpayments through the use of a State-level detection of overpayments core measure with a 

performance criterion. In addition, the Department will support identity theft prevention activities and promote 

payment accuracy and swift reemployment of UI beneficiaries through reemployment and continued eligibility 

assessments. 

The Department will take a number of steps to improve coordination of benefits and service for workers who suffer 

work-related injuries or illnesses, which include: 

• Increase employer partnerships in administration of laws and service to injured workers. 

• Improve accuracy of benefits payments and liability forecasts and reduce risk to benefit funds. 

• Assist employers’ compliance with Federal workers’ compensation laws, including providing timely and 

accurate reports and compliance with insurance requirements. 

• Maintain fair and balanced adjudication, and reduce time delays and administrative costs in disputed claims 

• Improve case management quality for workers covered by the Federal Employees’ Compensation Act. 

• Better identification of potential Energy program claimants to guide them through the claims process. 

Starting in FY 2007, EBSA’s modified enforcement performance indicators will include the ratio of closed civil 

cases with corrected fiduciary violations to all closed civil cases. This ratio represents a more challenging measure 

than the previous one which included lower priority non-fiduciary cases. With respect to criminal case work, 

EBSA’s new performance targets will report cases accepted for prosecution rather than the less ambitious cases 

referred for litigation. EBSA will also establish a baseline measurement for a customer service index of compliance 

assistance programs. 

The Department will safeguard the pension insurance system for the benefit of participants, plan sponsors, and other 

stakeholders, provide exceptional service to customers and stakeholders, and exercise effective and efficient 

stewardship of its resources. More specifically, PBGC will increase its effectiveness in minimizing loss to the 

program and increase technical assistance to plan sponsors to encourage their voluntary compliance with pension 

laws and regulations. To fulfill its commitment to providing the highest level of service to its customers and 

stakeholders, PBGC will encourage customers to interact electronically and improve the quality and consistency of 

customer information. 
Performance Section 

80 United States Department of Labor 

Protect Workers’ Wages

Performance Goal 06-2.1A (ESA) – FY 2006 

American workplaces legally employ and compensate workers. 

Indicators, Targets and Results FY 2005 

Result 

FY 2006 

Target 

FY 2006 

Result 

Target 

Reached*

Number of workers for whom there is an agreement to pay or an 

agreement to remedy per 1,000 enforcement hours 

– Base 293 Y 

Percent of prior violators who achieved and maintained FLSA 

compliance following a full FLSA investigation. 

72% 73% 76% Y 

Percent of low-wage workers across identified low-wage industries 

paid and employed in compliance with FLSA 

– Base 92% Y 

Number of wage determination data submission forms processed 

per 1000 hours 

1667 1684 1834 Y 

Percent of survey-based DBA wage determinations issued within 

60 days of receipt of the underlying survey data. 

84% 82% 100% Y 

Cost (millions) $214 – $214 

*Indicator target reached (Y), substantially reached (S) or not reached (N) Goal Achieved

Program Perspective and Logic 

ESA’s Wage and Hour Division (WHD)’s mission is to promote and achieve compliance with labor standards to 

protect and enhance the welfare of the Nation’s workforce. WHD enforces laws establishing minimum standards for 

wages and working conditions. These include the minimum wage, overtime, and youth employment provisions of 

the Fair Labor Standards Act (FLSA); the Migrant and Seasonal Agricultural Worker Protection Act; and the Family 

and Medical Leave Act. WHD also enforces field sanitation standards in agriculture and the government contracts 

prevailing wage statutes, and administers the wage determination provisions of the Davis-Bacon and Service 

Contract Acts (SCA). 

The agency’s performance objectives are to maximize benefits for the greatest number of workers through efficient 

complaint resolution; to promote long-term sustained compliance among employers that the agency investigates; to 

increase compliance on behalf of low-wage workers in industries with the most persistent and serious violations; and 

to ensure that wage rates are established in an accurate and timely manner. 

To ensure efficiency in WHD complaint investigations and to achieve compliance on behalf of all potentially 

affected workers, WHD tracks the number of workers helped for every 1000 enforcement hours expended in 

complaint investigations. The agency’s low-wage indicator, i.e., percent of low-wage workers employed in 

compliance, enables WHD to track the effectiveness of its various compliance strategies in low-wage industries over 

the long term, while the annual recidivism survey measures the impact of prior WHD interventions on employer 

behavior. Wage determination indicators track key components of the wage determination survey process. 

Improvements in this process contribute to the timeliness of Davis-Bacon Act wage rates. 

The statutory protections administered by WHD, and the agency’s success in ensuring that workers are legally 

employed and compensated, are guaranteed by balancing resources among key strategies – compliance assistance; 

partnerships and collaborative efforts; and complaint-driven and directed enforcement. Compliance assistance 

activities promote voluntary compliance among employers and within industries. Partnerships leverage resources 

and broaden the impact of other strategies. WHD’s directed enforcement in low-wage industries serve to detect, 

remedy, and deter violations of the law in industries where workers are reluctant to complain. WHD’s complaint 

investigations serve individual complainants and provide opportunities for detecting and remedying violations on 

behalf of other employees. 
Strategic Goal 2 

FY 2006 Performance and Accountability Report 81 

WHD’s allocation of resources and performance indicators reflect enforcement priorities in three core areas. The 

strategic use of complaint investigations, which represent approximately 70 to 75 percent of enforcement resources, 

will increase labor standards outcomes for the greatest number of workers. Reinvestigations measure and reinforce 

WHD’s impact on employer recidivism; and directed investigations are a key component in ensuring greater 

compliance for workers in low-wage industries, including immigrant and young workers. WHD’s compliance 

assistance, including partnership activities, also contributes to the agency’s ability to promote compliance on behalf 

of all workers. The hours spent by WHD staff in these key activities are used to track the resources allocated for 

each indicator. Another priority seeks to guarantee appropriate worker compensation levels by issuing timely and 

accurate prevailing wage determinations. Wage determinations issued and wage surveys conducted provide output 

measures by which the agency measures progress. 

Two key factors influence WHD’s ability to meet and exceed its performance objectives – the increased reliance on 

foreign-born labor and the growth in the number of illegal or undocumented immigrants. The tension between the 

supply and demand for low-wage service sector workers constantly challenges WHD’s ability to target low-wage 

industries and maintain its effectiveness in resolving complaints. 

The costs for this performance goal were unchanged between FY 2005 and FY 2006. 

Analysis and Future Plans 

WHD achieved its targets in FY 2006. This fiscal year, WHD established a baseline to measure its efficiency in 

resolving complaint investigations. WHD expects only modest improvements in this indicator over the next several 

years, in large part because productivity has declined with the attrition of senior investigative staff. However, some 

efficiency gains are expected as investigators focus on producing quality investigations that ensure that full 

compliance reviews are completed in a timely manner. WHD also expects complaints to increase as its outreach and 

partnership activities in immigrant communities increase workers’ awareness and comfort in seeking remedies 

through the agency. 

In FY 2006, WHD completed its fourth statistically valid investigation-based compliance survey of prior FLSA 

violators. The agency found 76 percent of prior violators in compliance, representing an increase of four percentage 

points over the FY 2005 result. This significant increase in compliance – 71 percent as recent as FY 2004 – suggests 

that the newly implemented strategies of follow-up telephone calls and letters, documentation of employers’ stated 

commitments for future compliance, commitments for corporate-wide compliance, and the use of civil monetary 

penalties and other sanctions, are promoting employer compliance. In FY 2007, WHD will add a measure to track 

the percentage of prior violators who achieve and maintain “substantial” compliance to improve upon the existing 

measure, which only tracks those who have achieved “full” compliance. 

WHD has traditionally measured low-wage industry compliance by conducting surveys among previously 

investigated establishments within low-wage industries. In FY 2006, WHD conducted a nationwide survey of 

establishments across a broad spectrum of low-wage industries. This compliance survey will provide the baseline 

from which changes in industry behavior can be assessed over the long-term, and will inform the agency of the 

nature and patterns of non-compliant behavior. WHD will use this information to design and implement strategies 

for improving compliance during the intervening years between surveys. WHD will analyze low-wage industries to 

refine its targeting strategies. In the years between the FY 2006 baseline and a subsequent national survey, WHD 

will measure its performance and efficiency by reporting on the number of workers in low-wage industries that WHD 

helps for every 1000 enforcement hours expended. WHD also continues to implement upgrades in information 

technology to drive success in the wage determination program. 

PART, Program Evaluations and Audits 

A 2003 PART assessment of WHD’s prevailing wage determination program rated it Results Not Demonstrated. 

Despite recent process changes in the program, the review found the program lacked ambitious, outcome-oriented 

performance measures and procedures to measure and achieve efficiencies and cost effectiveness. In response, WHD 

developed performance indicators and targets and conducted an external review of the program. WHD continues to 

examine changes to the wage survey and outreach to improve data collection processes. 
Performance Section 

82 United States Department of Labor 

WHD completed two program evaluations in FY 2006. The first study, Evaluating the Wage and Hour Division Web 

Site (see Study 10 in Appendix 2), reported that 56 percent of respondents rated the Web site very good or excellent 

at providing information. Sixty-four percent said that the information they were looking for was easy to find. In 

response, WHD is redesigning and upgrading the information on its Web site. The second evaluation, Low Wage 

Industry Operational Models for Compliance, assessed the agency’s performance and efficiency in targeting lowwage industries (see Study 9 in Appendix 2). The evaluation helped WHD establish measures of incidence and 

severity of violations across industry sectors, provided a methodology for determining low-wage industries with the 

highest potential for violations, and analyzed the relationship between violation and complaint rates in order to 

strengthen targeted enforcement activities. The next phase will focus on efficiency measures, more effective and 

strategic use of enforcement tools, and an analysis of compliance within the eating and drinking industry. 

In October 2005, the Office of Inspector General (OIG) released the results of its audit, Agreement with Wal-Mart 

Indicates Need for Stronger Guidance and Procedures Regarding Settlement Agreements, which recommended 

developing written guidance and coordinating with the DOL Solicitor (see Study 11 in Appendix 2). The OIG 

acknowledged in its report that a new settlement agreement policy initiated by WHD in June 2005 resolved both OIG 

recommendations. WHD also started implementing recommendations from Government Accountability Office 

(GAO) reports. The SCA directory of occupations was updated, enforcement data was integrated into the FY 2007 

planning process, and WHD is revising the SCA poster to include agency contact information based on 

recommendations from the GAO report Service Contract Act: Wage Determination Process Could Benefit from 

Greater Transparency and Better Use of Violation Data Could Improve Enforcement (Study 13 in Appendix 2). 

WHD is also adding contact information to the FLSA poster and has started to evaluate how FLSA misclassification 

cases are referred to other agencies based on recommendations from the GAO report Employment Arrangements: 

Improved Outreach Could Help Ensure Proper Worker Classification (Study 12 in Appendix 2). 

Data Quality and Major Management Challenges 

Data quality for this performance goal was rated Good. Strengths of the data include relevance, completeness and 

the quality controls in place to verify the data. With the exception of the wage determination measures, performance 

information is extracted from the Wage Hour Investigator Support and Reporting Database, the agency’s record of its 

investigative case findings and investigator enforcement time. Investigative case records are reviewed by WHD 

management staff and are the subject of WHD internal accountability reviews. Although data are reported quarterly, 

year-end statistics are not available when the agency begins its planning cycle in April. As the agency gains 

experience with new measures and receives better trend information for recent indicators, these concerns will ease 

and the impact of year-end data on future planning will be minimal. 

For wage determination programs, almost all data submission forms come from two sources, paper forms and 

electronic forms submitted via the Internet. In both cases, the contents of the data submission forms are 

electronically entered into the Automated Survey Data System. The current IT infrastructure does not permit survey 

results from ASDS to be electronically transferred into the Wage Determination Generation System. A bridge 

between these two systems is in the final stages of development and is scheduled to be deployed in the first quarter of 

FY 2007.
Strategic Goal 2 

FY 2006 Performance and Accountability Report 83 

Union Financial Integrity and Transparency 

Performance Goal 06-2.1B (ESA) – FY 2006 

Ensure union financial integrity, democracy, and transparency. 

Indicators, Targets and Results FY 2005 

Result 

FY 2006 

Target 

FY 2006 

Result 

Target 

Reached*

Percent of unions with fraud – 8% 8% Y 

Percent of unions complying with standards for democratic union 

officer elections – Base 92% Y 

Percent of union reports meeting OLMS standards of acceptability 

for public disclosure 94% 96% 93% N 

Cost (millions) $63 – $56 

*Indicator target reached (Y), substantially reached (S) or not reached (N) Goal Not Achieved

Program Perspective and Logic 

OLMS ensures union transparency, financial integrity, and democracy by administering and enforcing the LaborManagement Reporting and Disclosure Act (LMRDA). The Act requires public disclosure reporting by unions and 

others; establishes standards for union officer elections; and imposes criminal sanctions for embezzlement of union 

funds. To implement the LMRDA protections, OLMS conducts criminal and civil investigations, audits unions, and 

administers the Act’s reporting and public disclosure program. 

Union transparency underpins the union democracy and financial integrity objectives of the LMRDA and is a critical 

component of the OLMS program. Therefore, a primary performance objective is to secure complete and accurate 

union financial reports for public disclosure. Approximately 25 percent of OLMS resources support the agency’s 

Internet public disclosure system and a wide range of compliance assistance, liaison, enforcement, and regulatory 

activities to increase union transparency and LMRDA reporting compliance. 

Enforcement of LMRDA union financial integrity protections is another critical OLMS responsibility. A primary 

performance objective is to reduce union fraud. Union audits and embezzlement investigations are key strategies 

aligned with that effort. Timely and complete filing of LMRDA public disclosure reports and the resulting increased 

union transparency are also factors that support union financial integrity. OLMS dedicates more than 50 percent of 

appropriated resources annually to support a program of audits and criminal investigations to protect the millions of 

dollars in dues paid by labor union members. 

Another critical responsibility for OLMS is to ensure union democracy. A primary goal is to ensure that union 

elections are run fairly and that union members have access to the rights guaranteed them under the LMRDA. In FY 

2006 OLMS conducted a study to determine the rate of union compliance with standards for democratic union officer 

elections. OLMS will seek to increase compliance through liaison and compliance assistance as well as through 

LMRDA enforcement. OLMS dedicates about 20 percent of its budget to investigating complaints of election 

misconduct and supervising union officer election reruns to enforce LMRDA union democracy provisions. 

The costs for this performance goal decreased by 11 percent between FY 2005 and FY 2006. 

Analysis and Future Plans 

OLMS did not achieve this performance goal. OLMS met its target, 8 percent, for the percentage of unions with 

fraud. OLMS also met its target to set a baseline for its new union democracy compliance rate measure, which was 

found to be 92 percent. However, not reached was OLMS’ target of 96 percent of unions filing timely and complete 

financial reports. Although performance fell short at 93 percent, OLMS has made considerable progress since its FY 

2003 baseline of 73 percent for this measure. 
Performance Section 

84 United States Department of Labor 

Acting on a complaint filed by a member of American 

Postal Workers Union (APWU) Local 199 in 

Richmond, Virginia concerning a union election held 

using mail-in ballots, an OLMS investigation 

determined that requirements of the LMRDA had been 

violated. On May 9, 2006, representatives from the 

Washington District Office of OLMS supervised a 

rerun of the contested election to ensure its compliance 

with the LMRDA. The violation in the original 

election involved 80 disputed ballots for which voter 

eligibility could not be confirmed. The presence of 

OLMS at the election rerun sends a message that the 

agency will not hesitate in taking corrective action to 

ensure conformity with federal law. In this photo, 

APWU member Junious (standing) assists OLMS 

representative Meng (sitting at left) and APWU 

Election Committee Chairman Kevin in reviewing 

returned ballots. 

Photo credit: DOL/ESA/OLMS 

PART, Program Evaluations and Audits 

The PART review conducted in 2005 resulted in a rating of Adequate. It found the program well defined but lacking 

sufficient tools to effectively enforce the Act’s public disclosure reporting provisions and a performance measure for 

mission critical union democracy goals. As a result, OLMS conducted a study in FY 2006 to determine compliance 

with standards for democratic union officer elections so that goals for improvement can be established and measured. 

In FY 2006, OLMS completed this study and established a baseline for a new indicator measuring the rate of 

compliance with union officer election standards. The PART also found that no recent independent review of 

OLMS’ programs had been conducted, noting that such a review “could help to identify and address weaknesses in 

procedures, compliance and enforcements strategies, or program design, as well as establish a clean performance 

baseline against which the program could manage.” OLMS has contracted with an independent research firm to 

conduct such an external review with the aim of identifying possible areas for improvement in the LMRDA reporting 

and public disclosure program. 

An FY 2005 evaluation of the OLMS Web site found a fairly low customer satisfaction rating, with the lowest scores 

going to the navigation and search functionality areas. In response, OLMS has redesigned their Web site, which was 

launched in January 2006 (see Study 14 in Appendix 2). 

Data Quality and Major Management Challenges 

Data for this performance goal was rated as Good. Strengths of the data include its relevance to program 

performance and accuracy. OLMS will continue refining data collection protocols to ensure the development of 

meaningful long-term trends for each of its performance indicators. In addition, OLMS will continue to examine 

sampling and data collection protocols, particularly for the recently implemented union democracy performance 

indicator. OLMS will continue to promote the use of electronic filing for union financial reports which will enable 

additional error checking for data accuracy. 
Strategic Goal 2 

FY 2006 Performance and Accountability Report 85 

Pay Unemployment Insurance Claims Accurately and Promptly 

Performance Goal 06-2.2A (ETA) – FY 2006 

Make timely and accurate benefit payments to unemployed workers, facilitate the reemployment of Unemployment 

Insurance (UI) claimants, and set up unemployment tax accounts promptly for new employers. 

Indicators, Targets and Results FY 2005 

Result 

FY 2006 

Target 

FY 2006 

Result 

Target 

Reached*

Percent of all intrastate first payments made within 21 days 89.3% 89.9% 87.4%** N 

Establish for recovery a percent of the amount of estimated 

overpayments that the States can detect and recover 

58.7% 59.5% 61.4%** Y 

Percent of UI claimants who were reemployed by the end of the 

first quarter after the quarter in which they received their first 

payment 

– Baseline 62.4% Y 

Percent of new employer liability determinations made within 90 

days of the end of the first quarter in which they became liable 

82.4% 82.5% 82.8%** Y 

Cost (millions) $34,243 – $33,340 

*Indicator target reached (Y), substantially reached (S) or not reached (N) 

**Estimated (actual data for year ending August 2006)

Goal Not Achieved

Program Perspective and Logic 

By temporarily replacing part of lost wages, the Federal-State Unemployment Insurance (UI) system minimizes 

individual financial hardship due to unemployment and stabilizes the economy during economic downturns. For 

both workers and employers, the program’s success depends upon timely payment of benefits, prevention or prompt 

detection of erroneous payments, timely establishment of new employers’ tax accounts to ensure the reporting of 

workers’ wages and payment of taxes to fund benefits, and promoting and facilitating workers’ return to suitable 

work. States operate their own programs under their own laws, which must conform to Federal law. As the Federal 

partner, DOL provides program leadership, allocates administrative funds, provides technical assistance, exercises 

performance oversight, and ensures that States meet requirements of Federal UI laws and regulations. Measuring 

efficiency and effectiveness of States’ administrative operations is an important aspect of program management. 

Economic conditions and the resulting program workloads affect many aspects of UI performance. For example, 

when unemployment rises, more claims are filed and UI payment timeliness generally declines; on the other hand, 

new business creation slows, reducing the number of new employer tax accounts, and the timeliness of tax liability 

determinations generally goes up. In addition, external factors such as natural disasters can be extensive enough to 

affect aggregate UI system performance negatively – e.g., the series of hurricanes that hit the Gulf during 2005. 

Performance targets are based on the Administration’s current economic assumptions. 

The costs for this performance goal fell by three percent from FY 2005 and FY 2006. As indicated in the preceding 

discussion of net costs for Outcome Goal 2.2, this is consistent with the small decline in the average weekly insured 

unemployment between reporting periods. This statistic, which represents the average number of people filing 

claims for continuing UI benefits each week, generally exhibits a positive correlation to benefit payments. 

Analysis and Future Plans 

The UI system performed well in FY 2006, aided by improving economic conditions; the total unemployment rate 

declined from 5.2 percent in FY 2005 to 4.8 percent in FY 2006, and the number of beneficiaries was virtually 

unchanged at 8.1 million. States exceeded the Detection of Overpayments target and the new employer status 

determinations timeliness target. States began reporting reemployment data in March 2006, establishing a baseline of 

62.4 percent. However, States’ first payment timeliness declined sharply, from 89.3 to 87.7 percent. Analysts 

estimate that two thirds of the decline was due to the effects of Hurricanes Katrina and Rita on timeliness in the Gulf 
Performance Section 

86 United States Department of Labor 

States, especially Louisiana, Mississippi, and 

Texas. Some of the remaining decline may 

be attributed to impacts on States that assisted 

them. 

The Department continues to improve UI 

payment integrity by providing funds for 

States to implement access to the National 

Directory of New Hires (NDNH), an 

additional tool for swiftly detecting and 

preventing payments to claimants who have 

returned to work; and conduct Reemployment 

and Eligibility Assistance (REA) reviews to 

enforce UI eligibility requirements and speed 

beneficiaries’ return to suitable work. Thirtyseven states were funded to implement a 

NDNH cross match and twenty states have 

been conducting REAs since 2005. DOL’s 

FY 2007 budget request included funding to 

raise the number of States conducting REAs to 40. 

The UI program demonstrated improved efficiency by processing 8.9 quality-weighted initial claims per $1,000 of 

inflation-adjusted base grant funds, versus a target of 8.7. The Department promoted efficiency through competitive 

grants for automation and remote systems (e.g., telephone and Internet claims-taking). 

PART, Program Evaluations and Audits 

The Program Assessment Rating Tool review of the UI program in 2003 rated it Moderately Effective. The 

improvement plan includes emphasizing use of the NDNH to quickly detect and prevent overpayments to claimants 

who have returned to work (37 States funded in FY 2005 to use the NDNH); funding States for REAs to enforce 

continuing eligibility for UI benefits and connect claimants with reemployment services (20 States funded in 2005; 

funds have been requested to raise the number to 40 in 2007); and simplification of the performance measurement 

system (announced in 2005 and 2006). 

A GAO report issued in May 2006, Unemployment Insurance: Enhancing Program Performance by Focusing on 

Improper Payments and Reemployment Services (Study 19 in Appendix 2), drew upon results of recent GAO and 

OIG reports and DOL sources to provide a useful overview of UI overpayments and what steps the Department has 

taken or planned to address them, as well as how the system promotes the reemployment of UI claimants. Although 

the report makes no formal recommendations, the GAO approves the steps taken so far to reduce overpayments, but 

believes that more needs to be known about the extent claimants receive reemployment services and the outcomes 

they achieve than what the new reemployment measure will yield. 

In March 2006, GAO issued Unemployment Insurance: Factors Associated with Benefit Receipt that examined the 

extent to which an individual worker’s characteristics are associated with the likelihood of UI benefit receipt and 

with unemployment duration (Study 18 in Appendix 2). The report revealed that workers who are younger, who 

have more years of education, and who have higher earnings are more likely to get benefits, as are workers with a 

history of UI receipt. Workers who do get UI benefits tend to be unemployed longer than others with similar 

characteristics, as do older workers and those with lower earnings before unemployment. 

In March 2006, the Government Accountability Office issued Offshoring in Six Human Services Programs: 

Offshoring Occurs in Most States, Primarily in Customer Service and Software Development (Study 15 in Appendix 

2) that examined the occurrence and nature of offshoring in six federally funded human services programs that 

included UI. Offshore contracting for software development was found in only 8 of 46 responding UI state programs 

in 2004. These contracts amounted to about $1.3 million, out of only $194 million in total outsourcing and $3 billion 

in total administration. 

Recent OIG studies addressed two UI integrity issues: overpayments and misclassified workers. Claimants with 

Unemployment Claims in both Mississippi and Louisiana Related to Hurricane Katrina (Study 16 in Appendix 2)

UI Indicators and Total Unemployment Rate

50%

55%

60%

65%

70%

75%

80%

85%

90%

95%

2001 2002 2003 2004 2005 2006

Fiscal Year

UI Indicators

3.5%

4.0%

4.5%

5.0%

5.5%

6.0%

6.5%

7.0%

7.5%

Unemployment Rate

Payment Timeliness

Liability Determinations

Detect Overpayments

Total Unemployment Rate
Strategic Goal 2 

FY 2006 Performance and Accountability Report 87 

reported on a crossmatch of 251,589 UI claims and 101,546 DUA claims that identified 213 overpaid claimants (0.06 

percent). The State agencies are taking steps to recover the $239,648 still outstanding. In December 2004, the OIG 

found that only nine States were using IRS 1099-MISC information to find employees misclassified as self-employed 

(see State Workforce Agencies Use of IRS Form 1099 Data to Identify Misclassified Workers – Study 17 in Appendix 

2). The Department sent the OIG report to all State UI agencies urging them to do so. By April 2006, 28 SWAs 

were using 1099 data, and more were expected to enroll in August. 

Data Quality and Major Management Challenges 

Data for this performance goal was rated Very Good. Strengths of the data include timeliness and reliability, which 

result from the use of consistent data collection and reporting methods. Quality controls and procedures for verifying 

program data could be strengthened in order to continue to reduce instances of overpayment and worker 

misclassification, for example, by assuring that definitions are uniformly applied among the States and that 

performance data are correctly reported. ETA continues to address these challenges by enhancing UI data validation 

efforts; in 2005 ETA provided funding to 25 states to have independent verifications of reported data conducted and 

expects to have an updated automated validation system in place by spring 2007. On August 31, 2006, the 

Department received OMB approval to collect additional data that will enhance the overpayment detection measure. 

Full implementation is expected in January 2008. 

The OIG expressed concern that the UI overpayment estimates reflected little improvement in the UI overpayment 

rates over the past several years, and in a 2004 report, the OIG listed reducing improper payments and improving the 

integrity and solvency of the UI program among the Department’s top management challenges (see item II, 

Safeguarding Unemployment Insurance, in the Major Management Challenges section of the Executive Summary). 

In addition to funding for identity theft detection and prevention and New Hires crossmatches, the Department has 

promulgated a State-level detection of overpayments Core measure with a performance criterion, giving States 

incentives to prevent and detect overpayments. Effectiveness of these tools is limited by State agency expertise. In 

April 2006, the Department held an Integrity Conference for State staff involved in overpayment prevention, 

detection and recovery activities, at which best practices and information about new tools to reduce overpayments 

were shared. 

To reduce overpayments and facilitate reemployment, REA grants were implemented in 21 States in FY 2005 and 

have been continued in 20 states in FY 2006. The REA grants have been used to conduct in-person claimant 

interviews in One-Stop Career Centers to assess UI beneficiaries’ need for reemployment services and their 

continued eligibility for benefits, and to assure that beneficiaries understand that they must stop claiming benefits 

upon their return to work. The program plans expansion to about 40 States during the FY 2007 budget cycle. A 

report on the FY 2005 REA activity is due in March 2007. 

UI trust fund solvency has improved over the last two years. Borrowing from the UI trust fund by States has 

declined, and significant portions of previously borrowed amounts have been repaid. As of August 2006, only one 

State had an outstanding loan from the Federal UI trust fund. As the result of an expanding economy and the counter 

cyclical financing mechanisms characteristic of UI tax systems, most States’ trust fund accounts had a positive cash 

flow over the last 12 months, and overall fund solvency is higher than last year. 
Performance Section 

88 United States Department of Labor 

Reduce the Consequences of Work-Related Injuries 

Performance Goal 06-2.2B (ESA) – FY 2006 

Minimize impact of work-related injuries 

Indicators, Targets and Results FY 2005 

Result 

FY 2006 

Target 

FY 2006 

Result 

Target 

Reached*

Lost production days rate (LPD per 100 employees) for Federal 

Employees’ Compensation Act (FECA) cases of the United States 

Postal Service 

134.4 146 139.9 Y 

Lost production days rate (LPD per 100 employees) for FECA 

cases of All Other Government Agencies 56.1 60 52.6 Y 

Cost savings through staff-initiated evaluation of cases under 

Periodic Roll Management for changes in medical condition and 

fitness for duty 

$23.2 

million 

$13 

million 

$16 

million Y 

Trend in the indexed cost per case of FECA cases receiving 

medical treatment (compared to nationwide health care costs) +2.8% +8.6% +6.3% Y 

Targets for five communications performance areas 3 targets 4 targets 4 targets Y 

Average days required to resolve disputed issues in Longshore and 

Harbor Worker’s Compensation Program contested cases 254 250 235 Y 

Percent of eligible Black Lung benefit claims for which there are no 

requests for further action pending one year after the date the claim 

is filed 

80.6% 79.5% 81.9% Y 

Percent of Initial Claims for benefits in the Part B and Part E 

Energy Programs processed within standard timeframes – 50% 72% Y 

Percent of Final Decisions in the Part B Energy Program processed 

within standard timeframes 94.7% 80% 89% Y 

Percent of Energy Program Part E claims backlog receiving initial 

decisions – 75% 85% Y 

Cost (millions) $6131 – $2130 

*Indicator target reached (Y), substantially reached (S) or not reached (N) Goal Achieved

Program Perspective and Logic 

DOL protects workers, their dependents and survivors from the economic effects of work-related injuries and 

illnesses by providing wage replacement and cash benefits, medical treatment, vocational rehabilitation and other 

benefits through four disability compensation programs: 

• Federal Employees’ Compensation Act (FECA) program for civilian Federal workers; 

• Longshore and Harbor Workers’ Compensation for private-sector maritime workers; 

• Black Lung Benefits program for coal miners; 

• Energy Employees Occupational Illness Compensation (EEOIC) for nuclear weapons employees of the 

Department of Energy or its contractors. 

Activities of the Office of Workers’ Compensation Programs (OWCP) include adjudicating claims; mediating 

disputed claims; processing payments; assisting with injury recovery and return to work; controlling costs; and 

providing technical assistance and other customer services. Effective deployment of resources among these activities 

ensures that OWCP is able to effectively deliver benefits, properly manage its benefit funds, and ensure that 

employers comply with regulatory requirements and support delivery of services and program administration. 
Strategic Goal 2 

FY 2006 Performance and Accountability Report 89 

Ten performance indicators measure the outcomes of key OWCP strategies and program priorities. Quality Case 

Management success in FECA is measured as reductions in Lost Production Days (LPD) rates. Financial integrity of 

the FECA Compensation Fund is the objective of beneficiary roll reviews and medical benefit cost control. 

Communications goals seek to improve customer service by increasing the accessibility, quality, and responsiveness 

of program information and services. The Black Lung and Longshore programs measure the effective mediation of 

disputes and improved decision quality. Ensuring efficient and accurate claims processing is a vital objective of the 

EEOIC program. 

This performance goal has been achieved or substantially achieved every year since FY 2002. Lost production days 

for both the Postal Service and for the rest of the Federal Government had been trending upward during the 

beginning of this decade, but both targets were met last year and this year. FECA has met its customer service and 

medical cost containment targets consistently. The Longshore program has met its ambitious targets to timely 

resolve disputed issues in contested cases three of the last five years, reducing the number of days to resolution by 

over 15 percent during that time. The Black Lung program has met its targets in each of the last five years, and 

EEOIC has met most of its timely and accurate claims processing targets since the program began in 2001. 

Several external factors influence the achievement of OWCP program goals. Economic and workplace trends change 

the nature of new injuries and job availability for workers ready to return to duty. Medical costs continue to rise with 

the expanded use of new technology, medicines and treatment procedures. For the Longshore program, the potential 

for greater security threats to U.S. contractor employees overseas results in a growing number of Defense Base Act 

and War Hazards Compensation claims, which require additional planning and resource investment. Customer 

demands for sophisticated information and assistance grow more rapidly than OWCP’s resources available to address 

these demands. 

FY 2006 cost for this performance goal was less than half the level reported in FY 2005. The majority of this 

decrease is explained by an event unique to FY 2005 – an actuarial liability charge of $3.5 billion due to assumption 

of workers’ compensation costs associated with Part E of the Energy Employees Occupational Illness Compensation 

program, which Congress transferred to DOL from the Department of Energy. The remaining $500 million reduction 

in costs resulted from changes to actuarial assumptions related to Part E payouts. 

Analysis and Future Plans 

Fulfilling DOL’s commitment to injured workers is measured by the ten indicators. In FY 2006, DOL achieved this 

goal, meeting or exceeding each of the targets. The results discussion is organized into three categories: Return to 

Work, Reducing Program Expenses and Customer Service. 

Returning Injured Employees to Work 

Return-to-work outcomes are expressed as reductions in average LPD. In FY 2006, the USPS and All Other 

Government LPD goals were exceeded. Total paid disability days declined overall, reflecting a better than 18% 

reduction in continuation-of-pay being reported, few new cases overall, and continuation of FECA’s principal 

strategy to reduce lost production days: Quality Case Management (QCM). QCM has reduced compensation costs 

by $50 million annually since the first measurement of LPD 11 years ago. 

DOL also continued its leadership role in the OWCP/OSHA Safety, Health and Return-to-Employment (SHARE) 

initiative. Under SHARE, Federal agencies set goals to reduce on-the-job injury rates, expedite notification of 

injuries to DOL, and reduce lost production day rates. To capitalize on the program’s momentum, the President has 

extended SHARE to FY 2009, with more ambitious SHARE performance targets. The Administration also has 

proposed legislation to reform and update the FECA program, which would build return-to-work incentives into the 

Federal Employees’ Compensation Act. 

Reducing Program Expenses 

Measured in financial terms, DOL workers’ compensation outcomes reflect the efficiency and quality of benefit 

payment activities, the impact of case management and benefit services, and the utilization of administrative 

resources to produce those outcomes. Periodic Roll Management (PRM) generates benefit cost savings through the 

careful review of cases to determine if continued disability status is warranted and to determine the reemployment 
Performance Section 

90 United States Department of Labor 

potential of those currently receiving compensation. Through PRM, DOL has saved over $1 billion since FY 1999. 

In FY 2006, OWCP exceeded its target with $15.8 million in savings. 

OWCP also reached its target of keeping the inflation rate of FECA medical costs below the national rate of health 

care inflation, as measured by the Milliman USA Health Cost Index. In the past year, the rate of increase in average 

FECA medical treatment costs rose by only 6.3 percent compared to a projected 8.6 percent for the nation’s average. 

DOL attributes this success to several recently implemented administrative procedures that include centralized bill 

processing, strengthened review of treatment authorization requests, fee schedules, and stronger automated edits and 

other controls. Since FY 2000, the growth rate for FECA medical costs has remained below the nationwide rate, 

resulting in savings of nearly $40 million annually. 

Customer Service 

OWCP met its FECA communications goal by increasing the use of electronic services, reducing average caller wait 

times, resolving more inquiries at the time of the call, and meeting call handling quality standards. OWCP exceeded 

its target to reduce the time required to resolve disputed issues in Longshore and Harbor Workers’ Program contested 

cases by 14 days. The Longshore program attributes this success to its district offices’ commitment to ensuring timely 

and amicable dispute resolutions in contested cases. Mediation will continue to play an important role in helping 

parties reach agreements. Longshore will continue conducting outreach and working closely with parties to 

contested cases in order to reach a timely resolution. 

OWCP exceeded its target to reduce requests for further action following Black Lung benefit eligibility decisions. 

The revised regulations for Black Lung benefit claims have produced faster and fairer final benefit determinations 

without changing eligibility requirements. The result has been an increase in the number of stakeholders who accept 

the district director’s initial decision and who decide not to pursue the claim further. 

DOL reached its targets for processing timeliness in the Energy Part B program. The program processed 72 percent 

of initial claims and 89 percent of final decisions within standard time frames, against targets of 50 percent and 80 

percent, respectively. In FY 2006, DOL established a new goal for the Energy Program of completing Initial 

Decisions on 75 percent of the Part E backlog inherited from the Department of Energy by returning decisions on 85 

percent of those cases. That goal was achieved, and DOL is committed to making initial decisions on the remainder 

of these backlogged cases by the close of calendar year 2006. The Energy program also established a new GPRA 

goal to reduce the average number of days to process initial claims. DOL will report against this measure in FY 

2007. 

In October 2004, Congress amended EEOICPA and transferred benefit coverage (Part E) for DOE contract 

employees who became ill from exposure to toxic substances to DOL from DOE. DOL hired staff to process the 

more than 25,000 claims transferred from DOE. Adjudicating the Part E cases will continue to be a major priority 

for the Energy program, which faces performance challenges resulting from the complexity of the additional covered 

exposures, illnesses, and benefit provisions. In addition, all new claims have to be reviewed for eligibility under both 

Part B and Part E. 

PART, Program Evaluations and Audits 

The Federal Employees’ Compensation Program received the PART rating Moderately Effective with 

recommendations to update the benefit structure, implement program evaluation findings, and to track customer 

satisfaction. In FY 2006, FECA sought sponsorship for legislation to update the benefit structure and convert 

benefits for retirement-age individuals to a typical retirement level. Following recommendations from a program 

evaluation completed in FY 2004, FECA adopted industry best practices for improving injury case management and 

strengthened technical assistance to Federal employers. 

The Black Lung Program’s PART, which resulted in a rating of Moderately Effective, recommended establishing 

efficiency measures and ambitious performance goals to encourage the efficient adjudication of claims. Black Lung 

has established efficiency measures tracking different aspects of the claims process, such as claims managed and 

claims adjudicated per FTE, and initiated a program evaluation of its performance systems, which will compare its 

efficiency and effectiveness with similar programs.
Strategic Goal 2 

FY 2006 Performance and Accountability Report 91 

The Longshore Program rating of Adequate on the PART was largely attributed to the program’s inability to measure 

the effectiveness of the services or outcomes of self-insured employers and insurance carriers and the lack of a 

comprehensive evaluation to gauge the program’s cost-effectiveness or efficiency. Their improvement plan 

recommends identifying needed reforms to strengthen the Longshore and Harbor Workers' Compensation Act; 

evaluating the automated claims system to identify more effective alternatives for tracking the benefit delivery 

services of employers and carriers and to allow comparisons with similar programs; and eliminating shortcomings 

identified in a 2004 audit by strengthening the processes and controls in the program's disbursement system. An 

evaluation, Measuring the Comparability of the Longshore Program, completed in FY 2006, outlined IT solutions to 

improve the Longshore Case Management System in order to track meaningful data for monitoring performance and 

benchmarking (see Study 24 in Appendix 2). 

 

OIG and GAO completed several audits of financial, security, and data systems: GPRA Data Validation Review – 

Federal Employees’ Compensation Act (Study 20 in Appendix 2); Compliance with Federal and Departmental 

Security Standards in Selected Control Areas for Three Employment Standards Administration Systems (Study 21 in 

Appendix 2); Federal Compensation Programs: Perspectives on Four Programs (Study 22 in Appendix 2); 

Disability Benefits – Benefit Amounts for Military Personnel and Civilian Public Safety Officers Vary by Program 

Provisions and Individual Circumstances (Study 24 in Appendix 2); and Special Report Relating to the Federal 

Employees’ Compensation Act Special Benefit Fund – FY 2005 (Study 25 in Appendix 2). 

Data Quality and Major Management Challenges 

Data for this performance goal was rated Very Good. This rating is reflective of OWCP’s long history of managing 

workers’ compensation case record and benefit payment history data and its extensive experience with performance 

measurement. Performance measurement in OWCP relies primarily upon data extracted from internal automated 

case management and benefit payment systems. Performance data is also obtained from outside sources that include 

other Federal agencies and Milliman USA, a nationally known research institute. 

OWCP maintains strict oversight of data entry into its internal systems, with regular on-site review by local managers 

and formal periodic reviews that check the quality of the data record. Other tools used to ensure data quality include 

extensive checks and edits built into Automated Data Processing system programming, second-tier certifications of 

claims and payment decisions, telephone call monitoring, and ongoing performance reviews by district management. 

Multiple OWCP analytical staff collaborate in the report production, data collection and results measurement 

processes. Performance results are reviewed frequently in formal sessions by OWCP management. 

The OIG considers the effective design and operation of the FECA program to be both a Departmental and 

government-wide major management challenge. DOL is spearheading efforts to improve injury case outcomes and 

reduce FECA costs throughout the government through the Safety Health and Return to Employment (SHARE) 

initiative and is making administrative improvements to that end. Actions are underway to better identify, report, and 

reduce fraud and overpayments, improve accounting and financial reporting, and reform the Federal Employees’ 

Compensation Act to provide more incentives for return to work, address benefit equity issues, and make other 

benefit and administrative improvements. 
Performance Section 

92 United States Department of Labor 

Provide for Secure Pension and Health Plans

Performance Goal 06-2.2C (EBSA) – FY 2006 

Secure pension, health and welfare benefits. 

Indicators, Targets and Results FY 2005 

Result 

FY 2006 

Target 

FY 2006 

Result 

Target 

Reached*

Ratio of closed civil cases with corrected violations to civil cases 

closed 

76% 69% 74 Y 

Ratio of criminal cases referred for prosecution to total criminal 

cases 

45% 40.2% 53 Y 

Customer Satisfaction Index for participants and beneficiaries who 

have contacted EBSA for assistance 

67 65 69 Y 

Applications to Voluntary Compliance programs 14,082 13,500 17,214 Y 

Cost (millions) $160 – $179 

*Indicator target reached (Y), substantially reached (S) or not reached (N) Goal Achieved

Program Perspective and Logic 

EBSA is responsible for enforcing the Employee Retirement Income Security Act (ERISA). EBSA’s activities are 

essential to maintaining the public’s trust and confidence in the employee benefits system. By achieving successful 

civil and criminal case closure and referral rates, DOL shows its success in identifying and pursuing wrongdoers. By 

providing outreach and education and directly assisting plan participants, beneficiaries, employers and plan officials 

in understanding their rights and responsibilities under the law, we help ensure workers’ and retirees’ benefits are 

protected. 

EBSA oversees benefit security for nearly 

seven million plans, 150 million participants 

and beneficiaries, and in excess of $4.5 trillion 

in assets with a relatively modest budget to 

achieve its performance goal of enhancing 

pension and health benefit security. 

Externalities such as the economy and tax 

policy have a significant impact on whether 

employers opt to offer benefits, whether 

employees choose to participate and to what 

extent. 

The 12 percent increase in net costs between 

FY 2005 and FY 2006 reflects increases in 

compensation and benefits, increases in DOL 

support agency and overhead expenses, and 

increases in accrued IT expenses.

While investigating a company located in Sugar Land, Texas, the Department learned that the employer, as plan administrator, 

failed to follow the plan’s rules to locate missing participants who were entitled to retirement benefits. As a result of the 

Department’s involvement, the employer hired a locator service to find the lost participants. Ultimately, $1,602,953 in lump sum 

payments were distributed to 145 previously missing participants and 64 other participants began to receive approximately 

$23,000 in monthly benefits. 

President Bush Signs the Pension Protection Act of 2006 

Photo Credit: White House
Strategic Goal 2 

FY 2006 Performance and Accountability Report 93 

Analysis and Future Plans 

DOL achieved its goal to enhance pension and health benefit security. In addition to meeting its criminal case, civil 

case, customer service and voluntary compliance targets, DOL obtained monetary results of over $1.4 billion. 

Monetary results are a product of EBSA's investigative, compliance and participant assistance activities. DOL 

investigated a number of high profile, resource-intensive cases with far reaching effects on the participant benefits 

community. Benefit Advisors responded to 98 percent of all written inquiries within 30 days of receipt and 

responded to over 99 percent of telephone inquiries by the close of the next business day. 

In addition to long-term targets for civil and criminal ratios, EBSA monitored annual targets to evaluate success with 

respect to national enforcement initiatives, which may change from year-to-year based on strategic priorities. EBSA 

completed work with The Gallup Organization (Gallup) to refine the long-term target for their customer service 

satisfaction index consistent with other industry standards and experience. EBSA achieved its performance target for 

customer service in its participant assistance program two years early and will now begin developing a customer 

service performance target for its compliance assistance programs. EBSA continued to monitor its compliance 

assistance measure that demonstrates success in voluntary compliance programs such as the Voluntary Fiduciary 

Correction Program and their Delinquent Filer Voluntary Compliance Program. 

 

Starting in FY 2007, EBSA will modify its enforcement 

performance indicators and will report the ratio of closed 

civil cases with corrected fiduciary violations to closed 

civil cases, a more challenging measure than the 

previous one which included lower priority nonfiduciary cases. With respect to criminal case work, 

EBSA will modify its performance targets to report 

cases accepted for prosecution rather than the less 

ambitious cases referred for litigation. In addition, 

EBSA’s publication in FY 2006 of final regulations for 

abandoned plans established an efficient framework for 

the winding up of abandoned plans and distribution of benefits to workers. Therefore, EBSA will eliminate its 

Orphan (abandoned) plan project from its national priority projects and replace it with the new Consultant Advisor 

Project. 

After receiving a participant complaint, the Department investigated a Green Brook, New Jersey heating and air conditioning 

business. The investigation revealed that, over a period of two and a half years, the business owner deducted approximately 

$75,000 from 13 employees’ paychecks for deposit into the company’s 401(k) plan. However, the money was never deposited 

into the plan, but instead used to operate the business. As a result of the Department’s investigation, the owner was arrested by 

New Jersey law enforcement officials and charged with theft of the employee contributions. The owner pled guilty and was 

sentenced to probation, community service, and restitution of the missing money to the plan, which was paid. 

PART, Program Evaluations and Audits 

In EBSA’s original PART assessment, 2002, it was rated Results Not Demonstrated. After implementing 

recommendations from the first assessment, in 2004 EBSA was assessed again through the PART, earning a rating of 

Moderately Effective. EBSA has acted on recommendations from its more recent PART, by conducting evaluations 

Customer Satisfaction

50

55

60

65

70

75

FY 2003 FY 2004 FY 2005 FY 2006

Target Result

Civil Ratio - corrected violations

40%

50%

60%

70%

80%

FY 2003 FY 2004 FY 2005 FY 2006

Target Result

Criminal Ratio - referred for prosecution

20%

30%

40%

50%

60%

FY 2003 FY 2004 FY 2005 FY 2006

Target Result
Performance Section 

94 United States Department of Labor 

and regulatory reviews. DOL contracted with Gallup to evaluate EBSA's participant assistance program (see Office 

of Participant Assistance Program Evaluation Studies – Study 26 in Appendix 2). EBSA was provided detailed 

performance information that helped improve the customer satisfaction score. In addition, with Gallup's assistance, 

EBSA conducted targeted training to address employee weaknesses and share best practices. Finally, field offices 

followed previously developed plans to continue improving their customer satisfaction scores. In FY 2006, Gallup 

conducted a follow-up study of EBSA's participant assistance program. Results will be reported in the FY 2007 

Performance and Accountability Report. With respect to the regulatory review program, EBSA will commence, in 

FY 2007 with the assistance of outside contractor ICF, the cost benefit analysis of selected regulations. We 

anticipate reporting on the results in the FY 2007 report. 

The GAO began conducting a review of EBSA’s enforcement program during FY 2006. GAO visited six regional 

cities, and EBSA continues to respond to requests for information. The last enforcement review was conducted in 

FY 2002, when EBSA was deemed to be a well-managed organization. GAO contemplates completing the review by 

the end of CY 2006. The results will be reported in the DOL FY 2007 Performance and Accountability Report. 

Data Quality and Major Management Challenges 

Data quality for this performance goal was rated Excellent. Strengths of the data include its timeliness and reliability. 

EBSA's Enforcement Management System (EMS) provides the data for the enforcement ratios. EBSA's quality 

assurance processes require that individuals not directly involved with the investigation at hand approve all case 

openings. Cases with monetary results receive several levels of scrutiny including national office oversight and 

review. Additionally, EBSA uses a peer review method to conduct quality assurance on randomly selected closed 

cases. In the participant assistance area, Gallup provided the customer satisfaction score. The voluntary correction 

program data is maintained in the EMS and the Delinquent Filer Voluntary Compliance Program tracking system. 

EBSA has one Major Management Challenge (MMC): Security of Employee Benefit Plan Assets (see item V in the 

MMC section of the Executive Summary). The specific areas of concern include benefit plan audits, benefit plan 

fraud, and corrupt multiple employer welfare arrangements. Because the risks associated with this challenge go to 

the heart of EBSA’s goal to secure pension and health plans, EBSA has taken specific actions to address this 

challenge, including strengthening benefit plan audits through increased oversight of accounting firms, meeting 

ambitious targets for civil and criminal cases, and vigorously pursuing fraudulent Multiple Employer Welfare 

Arrangements.
Strategic Goal 2 

FY 2006 Performance and Accountability Report 95 

Improving Pension Insurance

Performance Goal 06-2.2D (PBGC) – FY 2006 

Improve the pension insurance program. 

Indicators, Targets and Results FY 2005 

Result 

FY 2006 

Target 

FY 2006 

Result 

Target 

Reached*

Customer Satisfaction score for Premium Filers 68 74 68 N 

Customer Satisfaction score for responding to trusteed plan 

Participants' inquiries 

79 80 75 N 

Costs are not provided because PBGC is not included in the Consolidated 

Statement of Net Costs. 

*Indicator target reached (Y), substantially reached (S) or not reached (N) Goal Not Achieved

Program Perspective and Logic 

The Secretary of Labor chairs the Pension Benefit Guaranty Corporation’s Board of Directors. PBGC protects the 

retirement incomes of 44.1 million American workers in over 30,000 defined benefit pension plans. PBGC is 

committed to safeguarding the pension insurance program, providing exceptional service to its customers, and 

exercising effective stewardship over its resources. 

As insurer, PBGC monitors the financial health of defined benefit plans, minimizing risk of loss to the insurance 

program, to pension plans and to participants. When underfunded plans terminate, PBGC must trustee them and 

assume responsibility for paying benefits. PBGC is actively monitoring some 3712 plans with underfunding of over 

$397 billion. 

PBGC provides timely and uninterrupted payment of pension benefits to about 700,000 retirees in over 3600 pension 

plans that have failed since PBGC was established in 1974, providing benefit payments of about $4 billion annually. 

In FY 2006, PBGC assumed responsibility for an additional 50,000 plan participants, far less than in recent years. 

PBGC is now responsible for current and future pension benefits to over 1.3 million people. Providing exceptional 

service is an important part of PBGC’s mission. 

PBGC actively supported the Administration in promoting the Deficit Reduction Act (DRA), which passed in 

February 2006 and the Pension Protection Act (PPA), which passed in August 2006. These amendments to the 

Employee Retirement Income Security Act (ERISA) included new plan funding rules, new provisions for pension 

plan transparency, and reforms to the premium structure for defined benefit plans. PBGC is developing plans to 

implement the new law. 

PBGC monitors its progress in meeting participant, premium filer, and stakeholder needs and expectations using the 

American Customer Satisfaction Index (ACSI) survey methodology, which provides comparisons to both private 

businesses and the federal government. PBGC uses the customer feedback to make specific improvements to 

processes and services directly impacting its customers. As a customer-focused agency, PBGC allocates resources to 

provide exceptional service to customers and stakeholders. Approximately 75 percent of funds are allocated to 

participant activity, while 25 percent are used for plan sponsor and pension practitioner activity. PBGC’s FY 2005 

operating budget was $347 million, and its FY 2006 operating budget was $386 million 

Analysis and Future Plans 

Practitioner Performance Indicators 

Premium Filers gave PBGC a satisfaction index of 68, falling short of the targeted 74. Modest targets have been set 

in the short term as PBGC begins developing plans to implement the premium related provisions of the new law. 

PBGC’s Web-based My Premium Administration Account (MyPAA) supports mandatory premium e-filing that is 

now in effect. In FY 2007, PBGC will streamline the premium process and continue development of a new premium 

system. The new system will support improvements in timeliness and accuracy, in both responding to customers, 
Performance Section 

96 United States Department of Labor 

and premium notices and billings. In FY 2006, PBGC established a Web page for policymakers with links to 

regulations, white papers, and discussion papers to enable customers and stakeholders to quickly find information 

and guidance. PBGC has established new performance measures relating to its responsibilities implementing the 

DRA and PPA. 

Participant Performance Indicators 

PBGC did not reach the performance target in FY 

2006 for satisfaction of participants who call 

PBGC’s toll-free Customer Contact center. Using 

the ACSI, PBGC scored a 75, compared to its target 

of 80. The decrease was unanticipated after five 

years of steady increase in satisfaction scores. In FY 

2006, PBGC continued its efforts to enhance self 

service transactions which include the ability to 

request a benefit estimate on line. PBGC also 

implemented a customer relationship management 

system to create a unified desk top for tracking 

customer interactions from the telephone, e-mail, 

fax, incoming and outgoing correspondence, and 

Web-based transactions. In FY 2007, PBGC will 

continue to explore ways to meet and exceed 

customer expectations. 

While not included as a DOL-level measure, PBGC sustained remarkably high customer satisfaction levels for 

retirees. The score of 85 exceeded the PART target for this measure and was one of the highest ACSI scores in 

government. Retirees remain highly satisfied with the reliability and efficiency of monthly payments from PBGC 

and the respect shown by PBGC staff. PBGC continues to expand the self service transactions customers can 

perform online with My Pension Benefit Account (My PBA). 

Improving Efficiency 

In the last few years, an increased workload has developed from the benefit determinations that must be issued to 

participants associated with newly terminated plans. Although the workload increased, PBGC’s administrative cost 

to support this workload has decreased. In FY 2004, the cost was $219 per participant, and in FY 2006 the cost has 

dropped to $198. Continuous technological upgrades enable PBGC to provide better and faster service to 

participants. 

PART, Program Evaluations and Audits 

In its 2004 PART review, PBGC was rated Moderately Effective. Following the review and according to its PART 

Improvement Plan, PBGC increased efforts to support the Administration in amending ERISA. On August 17, 2006, 

the President signed into law the Pension Protection Act of 2006. PBGC is drafting an implementation plan that 

encompasses the various reforms. The new law is expected to improve the PBGC’s financial condition for the near 

term. In FY 2006, PBGC continued to improve the ability to manage risk of loss to the pension insurance program. 

A GAO report, Private Pensions: Opportunities Exist to Further Improve the Transparency of PBGC’s Financial 

Disclosures, highlights the challenges PBGC faces and actions it has taken in making and publishing single-employer 

probable claims forecasts (see Study 27 in Appendix 2). 

Data Quality and Major Management Challenges 

Data quality for this performance goal is rated Not Determined due to the relevance criterion. Measures of customer 

satisfaction for premium filers and participant inquiries are not representative of PBGC’s overall performance in 

Improving the Pension Insurance Program. Under PPA employers will provide PBGC and other ERISA agencies 

with more relevant pension plan underfunding information. This is made possible because PPA provides more 

specific guidance on the valuation of single employer and multiemployer liabilities and assets. PBGC has one Major 

Management Challenge (MMC): Security of Employee Benefit Plan Assets (see item V in the MMC section of the 

Executive Summary). PBGC experienced an increased workload in recent years as more companies dropped their 

plans, increasing the burden on the private pension insurance system. The PPA will place PBGC on sturdier 

financial footing and should reduce the number of pension plans in default. 

Customer Satisfaction

65

70

75

80

85

90

2001 2002 2003 2004 2005 2006

Part. Caller Target Part. Caller Actual

Retiree Target Retiree Actual

Premium Filers Target Premium Filers Actual
FY 2006 Performance and Accountability Report 97 

Strategic Goal 3: Quality Workplaces 

Foster Quality Workplaces that are Safe, Healthy and Fair

All workers are entitled to safe, healthy, and fair workplaces. The Department has committed to achieving this goal 

by promoting practices that minimize safety and health hazards and provide equal opportunities for workers. In 

recent years, significant progress has been made in these areas. However, rapid technological advances and dynamic 

workplace environments have changed the nature of work, leading to new challenges for our safety and health 

mission. DOL promotes equal employment opportunity by enforcing regulations that deal with Federal contracting 

practices and the reemployment rights of veterans. In recognition of the global nature of labor markets, DOL also 

promotes respect for internationally recognized core labor standards. Agencies with programs supporting this goal 

are the Mine Safety and Health Administration (MSHA), the Occupational Safety and Health Administration 

(OSHA), the Employment Standards Administration (ESA), the Veterans’ Employment and Training Service 

(VETS), and the Bureau of International Labor Affairs (ILAB). 

The net cost dedicated to Strategic Goal 3 in FY 2006 was $1.114 billion. The first chart below is based on total 

Departmental costs of $45.328 billion; the second is based on an adjusted net cost of $12.101 billion that excludes 

the major non-discretionary program costs associated with Strategic Goal 2.T

21T Net cost dedicated to Strategic Goal 3 

in FY 2005 was $1.062 billion. 

Strategic Goal 3 - Percent of Net 

Cost

7%

80%

2%

11%

1 - Prepared

2 - Secure

3 - Quality

4 - Competitive

Percent of Net Cost Excluding 

Income Maintenance

28%

22%

9%

41%

1 - Prepared

2 - Secure

3 - Quality

4 - Competitive

The Department’s performance in achieving Quality Workplaces is determined by accomplishment of three broad 

objectives: Outcome Goal 3.1 – Reduce Workplace Injuries, Illnesses, and Fatalities; Outcome Goal 3.2 – Foster 

Equal Opportunity Workplaces; and Outcome Goal 3.3 – Reduce Exploitation of Child Labor, Protect the Basic 

Rights of Workers, and Strengthen Labor Markets. Their results, costs, and future challenges are discussed below.

Outcome Goal 3.1 – Reduce Workplace Injuries, Illnesses, and Fatalities 

Under the provisions of the Federal Mine Safety and Health Act (Mine Act) of 1977 and the Mine Improvement and 

New Emergency Response Act of 2006 (MINER Act), the Department protects the health and safety of workers in 

the mining industry. More than 300,000 people work directly in the mining sector, and the mining environment is an 

inherently hazardous workplace. Critical to the Department’s success is an effective blend of enforcement, technical 

support, and education and training, with compliance assistance as a fundamental ingredient of each. Four 

performance goals directly measure reductions in workplace injuries, illnesses and fatalities, across general industries 

and specifically within the mining industry. 

The Mine Safety and Health Administration (MSHA) and the Occupational Safety and Health Administration 

(OSHA) strive to improve workplace safety – an important part of the Department’s mission. OSHA enforces the 

 

21 The excluded costs are referred to as Income Maintenance – unemployment benefit payments to individuals who are laid off or 

out of work and seeking employment ($31.322 billion) plus disability benefit payments to individuals who suffered injury or 

illness on the job ($1.905 billion). 
Performance Section 

98 United States Department of Labor 

Occupational Health and Safety Act of 1970 by responding promptly to imminent danger situations; investigating 

fatalities, catastrophes and worker complaints; enforcing whistle blower rights; and inspecting workplaces. The 

Department targets inspections and outreach to work sites and industries with the highest injury and illness rates. In 

addition to workplace inspections, the Department employs a variety of compliance assistance and educational and 

outreach programs to improve employer health and safety management systems. 

Cost (millions) Goal (Agency) and Statement Performance Summary 

FY 2005 FY 2006 

06-3.1A (MSHA) 

Reduce work-related fatalities and injuries. Goal not achieved. Neither target reached. $223

06-3.1B (MSHA) 

Reduce mining-related illnesses. 

Goal not achieved. Three targets reached and one not 

reached. 125

06-3.1C (OSHA) 23

Reduce work-related fatalities. Goal not achieved. One target not reached. 

06-3.1D (OSHA) 

Reduce work-related injuries and illnesses. Goal achieved. One target reached. 

$82322

519

Total for Outcome Goal 3.1 One performance goal achieved and three not achieved $823 $868

Results Summary 

MSHA did not achieve its fatality and injury reduction goal. From FY 2000-2005, fatalities and injuries in the 

mining industry declined dramatically. However, in 2006 tragedies at the Sago and Alma mines in West Virginia 

and the Darby mine in Kentucky claimed the lives of 19 miners, reversing the positive trend in fatalities. The injury 

rate declined, but not enough to reach the ambitious target. MSHA also failed to meet its health goal, despite 

reaching the noise target for coal mines and both silica dust and noise targets for metal and non-metal mines. The 

target for respirable coal dust was not reached, as the percent of samples exceeding standards rose to a level not seen 

since FY 2002. This result is in part attributed to a significant increase in production in response to higher energy 

prices and revisions to the coal sampling procedures to be more representative of today’s production level conditions. 

Pam, mine owner and operator, did not realize the 

importance of first aid training MSHA asked her to 

take. Pam operates a small mine, frequently running 

the mine’s large front end loader herself. On 

December 31, 2005 her husband Curtis choked on a 

piece of food, resulting in a complete obstruction of 

his airway. Within seconds he collapsed to the floor 

and Pam realized she must act quickly. She 

immediately implemented the MSHA-required first 

aid training that she had recently taken at the 

American Red Cross. Pam and Curtis live in a 

remote area where emergency medical service is 

more than 40 minutes away. Due to her recent 

training, Pam was able to save her husband’s life. 

Pam stated that her husband would have died that 

night if she had not known immediately what 

actions she needed to take. Pam and Curtis credit 

the Southeastern District MSHA inspector Billy, and 

state that “this type of training is not only important 

at the mine but as in this case can benefit everyone.” 

Photo Credit: Judith Etterer 

 

22 In FY 2005, MSHA and OSHA shared performance goals for which costs could not be separated (see next note). 

23 The same activities contribute to reductions in both injuries and fatalities, so costs are not separable between OSHA’s two 

performance goals. 
Strategic Goal 3 

FY 2006 Performance and Accountability Report 99 

The workplace fatality rate decreased slightly, but OSHA had targeted a significant reduction, so the goal was not 

achieved. Data show that both the number of deaths and the fatality rate have been fairly constant for at least six 

years. A substantial and disproportionate percentage of deaths still occur in the construction industry. The safety 

and health goal was achieved. The estimated days away from work case rate equaled its target, continuing a steady 

four year-decline. Contributing to this success are OSHA’s cooperative programs, such as the Voluntary Protection 

Programs (VPP). In FY 2006, an evaluation of the VPP program concluded that injury rates at the VPP sites 

declined from the inception of the decision to participate in the VPP through to their full participation. 

Net Cost of Programs 

FY 2006 program costs of $868 million, which supported MSHA and OSHA programs to reduce worker fatalities, 

injuries, and illnesses, is five percent higher than FY 2005 costs of $823 million. Cost containment efforts, including 

operating and administrative efficiencies, have kept safety and health compliance assistance and enforcement costs 

relatively flat for the last several years. 

Outcome Goal 3.1

Net Costs ($Millions)

636 710 723 781 815 812 823 868

0

200

400

600

800

1,000

1999 2000 2001 2002 2003 2004 2005 2006

Fiscal Year

Future Challenges 

In the Department’s FY 2006-2011 Strategic Plan, MSHA combined its safety and health goals and OSHA combined 

its fatality and safety and health goals. Both are part of the new Safe and Secure Workplaces goal (still Goal 3). 

Prominent in MSHA’s immediate plan is to successfully implement the MINER Act of 2006, which is the most 

significant mine safety legislation in 30 years. The Act requires each underground coal mine to have an up-to-date 

emergency response plan; to have experienced rescue teams, each with a one-hour response time; and to be equipped 

with wireless two-way communications and electronic tracking systems within three years. It gives MSHA the 

authority to request an injunction to shut down a mine in cases where the mine operator has refused to pay a final 

MSHA penalty, and raises criminal and civil penalty caps dramatically. DOL will continue expanding its active 

partnerships with industry, labor, and equipment manufacturers in order to identify and evaluate new technologies for 

their potential to strengthen miners’ health and safety, reduce accidents, and strengthen mine rescue efforts. 

Outreach efforts will address priority issues, and MSHA will ensure that its training specialists and technical support 

personnel are readily accessible to assist the mining industry in its efforts to mitigate hazards. 

OSHA will continue to protect the safety and health of America’s workers through a balanced approach utilizing 

enforcement and compliance assistance. Regulations and standards will continue to be developed or revised under 

the agency’s focused regulatory agenda. DOL will continue to direct inspections and outreach at establishments and 

industries with the highest injury, illness, and fatality rates and will respond to complaints of serious workplace 

hazards. Since construction fatalities occur more than six times as often as all workplace fatal incidents, OSHA is 

addressing the growth in the construction field of immigrant and non-English speaking workers and workers in hardto-reach work sites via a new Voluntary Protection Program for Mobile Workforce in Construction. OSHA is also 

further implementing its Enhanced Enforcement Program, which focuses on employers who repeatedly ignore safety 

and health obligations and targets inspection resources where they can have the greatest impact. 

Outcome Goal 3.2 – Foster Equal Opportunity Workplaces 

The Department is committed to fostering workplaces that provide equal opportunities to all working Americans. 

DOL pursues this commitment through two performance goals addressing equality in the workplace. The 

Employment Standards Administration’s (ESA's) Office of Federal Contract Compliance Programs (OFCCP) 

protects the employment rights of thousands of American workers by enforcing laws and providing compliance 

assistance regarding equal employment opportunity in companies that do business with the Federal government. 
Performance Section 

100 United States Department of Labor 

DOL’s Veterans’ Employment and Training Service (VETS) administers the Uniformed Services Employment and 

Reemployment Rights Act (USERRA), which protects the employment and reemployment rights of uniformed 

service members who encounter barriers in civilian employment related to their service. VETS educates employers 

and service members about rights established by the law and investigates complaints filed by veterans who believe 

their rights have been violated. 

Cost (millions) Goal (Agency) and Statement Performance Summary 

FY 2005 FY 2006 

06-3.2A (ESA) 

Federal contractors achieve equal opportunity workplaces. Goal achieved. Two targets reached. $99 $97

06-3.2B (VETS) 

Reduce employer-employee employment issues 

originating from service members’ military obligations 

conflicting with their civilian employment. 

Goal not achieved. One target not reached. 16 17

Total for Outcome Goal 3.2 One performance goal achieved and one 

not achieved $115 $114

 

Results Summary 

OFCCP exceeded its targets of reducing the incidence of discrimination and increasing compliance in all other 

aspects of EEO standards among Federal contractors. OFCCP believes its efforts to more effectively target noncompliant Federal contractors and utilize compliance assistance largely contributed to its continued success in 

exceeding its annual and long-term goals. 

The USERRA goal was not achieved, despite improvement in the comprehensive Progress Index, which measures 

reduction of violations and meritless complaints. Claims and violations increased, primarily due to continued 

mobilizations and demobilizations of Guard and Reserve units fighting the War on Terrorism. Claims also increased 

due to the introduction of a new electronic form that enabled filing via the Internet. The improvement in USERRA 

performance according to the Progress Index is attributed to a significant reduction of average case processing time. 

Net Cost of Programs 

FY 2006 program costs of $114 million supported programs to assure that Federal tax dollars do not support 

workplace discrimination or discrimination in the availability of program services. Costs associated with this goal 

have been virtually constant for several years.

Outcome Goal 3.2

Net Costs ($Millions)

105 100 108

117 118 112 115 114

0

20

40

60

80

100

120

140

1999 2000 2001 2002 2003 2004 2005 2006

Fiscal Year

Future Challenges 

Continued efforts to achieve equal opportunity workplaces will emphasize compliance assistance to inform Federal 

contractors of their obligations and to help them comply with requirements. In addition to vigorously enforcing 

compliance with Federal equal employment opportunity laws, DOL will evaluate its data collection processes and 

review program regulations and requirements to identify areas for improvement or reform. 
Strategic Goal 3 

FY 2006 Performance and Accountability Report 101 

USERRA plans include increasing the quantity and quality of information available on the World Wide Web for both 

service members and employers. DOL will also continue to work with the Department of Defense and the individual 

Military Services to maximize the direct delivery of information to Reserve and National Guard members and units. 

Outcome Goal 3.3 – Reduce Exploitation of Child Labor, Protect the Basic Rights of 

Workers, and Strengthen Labor Markets 

Today’s global economy is having an undeniable impact on the 21st Century American workforce. The well-being of 

American workers is increasingly tied to international stability, which is in part a function of broad-based economic 

prosperity. Through its complementary missions of supporting the expansion of free and fair trade and providing 

technical assistance grants to eliminate exploitive child labor and promote basic rights of workers, the Department’s 

Bureau of International Labor Affairs (ILAB) strives to increase economic well-being around the world. 

ILAB-supported international technical assistance programs focus on raising living standards through labor and 

workplace-related interventions. These programs focus on supporting initiatives to combat the trafficking and 

commercial sexual exploitation of children; promote education in developing countries; increase compliance with 

labor laws; and fulfill the Department’s role in negotiating international trade agreements. 

Cost (millions) Goal (Agency) and Statement Performance Summary 

FY 2005 FY 2006 

06-3.3A (ILAB) 

Contribute to the elimination of the worst forms of child labor 

internationally. 

Goal achieved. Both targets 

reached. $74 $95

06-3.3B (ILAB) 

Improve living standards and conditions of work internationally. 

Goal not achieved. One target 

reached and two not reached. 43 30

Other ILAB programs 7 7

Total for Outcome Goal 3.3 One performance goal achieved 

and one not achieved $124 $132

South-West Railway is one of the successful examples 

of HIV/AIDS workplace prevention programs 

implemented in cooperation with DOL-funded 

SMARTWork project in Ukraine. It employs about 

70,000 workers and covers 6 regions in Ukraine, 

including Kyiv. In 2005, the Youth Council of the 

Trade Union of Railway Workers and Transport 

Builders of Ukraine began to work with SMARTWork 

to implement a pilot HIV/AIDS Workplace Education 

project on the South-West Railway with future plans to 

transfer the project to all Ukrainian railways. Through 

this HIV/AIDS prevention program, young trade union 

leaders mobilized themselves at the railway subdivisions to unite young people and to inspire them to 

work towards the goal of increasing HIV/AIDS 

awareness among their coworkers. In the future, 

South-West Railway intends to increase workplace 

activities, making HIV/AIDS workplace prevention 

one of the highest priorities for workers’ health. Plans 

include the adoption of an HIV/AIDS workplace prevention policy by the railway administration, wider use of trainers and 

volunteers, and adaptation of South-West Railway’s HIV/AIDS workplace prevention activities for other railway networks. 

Photo Credit: DOL/ILAB 
Performance Section 

102 United States Department of Labor 

Results Summary 

The child labor goal was achieved. In 2006, 236,787 children were removed or prevented from exploitive work 

through the provision of education or training opportunities in programs funded by DOL, exceeding the target by 

over 20 percent. Increasing capacity to address child labor is defined by a country’s legal framework, public policy, 

and monitoring of child labor. To this end, DOL reached its target, as DOL-funded programs increased the capacity 

of 53 countries to address child labor. 

DOL did not achieve its goal to improve living standards and working conditions internationally. ILAB projects 

exceeded expectations for measures to reduce employment discrimination against persons living with HIV/AIDS. 

However, the target for improving beneficiaries’ perception of DOL-funded projects’ impact on conditions of work 

was not reached. Labor law improvement performance was significantly below the target due to measurement 

changes in one of the compliance projects. 

Net Cost of Programs 

FY 2006 program costs of $132 million supported ILAB’s efforts to reduce the worst forms of exploitive child labor 

internationally and to address core international labor standards issues. The growth in spending since FY 2003 is 

attributable to increased budget authority from FY 2001-03 that was largely expended via grants to foreign entities. 

ILAB grants traditionally have their highest expenditures two to three years after grants are obligated. 

Outcome Goal 3.3

Net Costs ($Millions)

25

50 45 51 58

97

124 132

0

50

100

150

200

1999 2000 2001 2002 2003 2004 2005 2006

Fiscal Year

Future Challenges 

Key strategies for ILAB include research, monitoring and reporting on international labor developments, including 

the labor dimension of U.S. trade and investment agreements, the application of labor standards, and exploitive child 

labor in foreign countries; policy development and representation in the negotiation of trade agreements, in 

international organizations such as the International Labor Organization and the Organization for Economic Cooperation and Development, and at international forums where labor issues are addressed. 
Strategic Goal 3 

FY 2006 Performance and Accountability Report 103 

Reduce Mine Fatalities and Injuries 

Performance Goal 06-3.1A (MSHA) – FY 2006 

Reduce work-related fatalities and injuries. 

Indicators, Targets and Results FY 2005 

Result 

FY 2006 

Target 

FY 2006 

Result 

Target 

Reached*

Mine industry fatal injury incidence rate (per 200,000 hours 

worked) .018 .021 .026** N 

Mine industry all-injury incidence rate (per 200,000 hours worked) 3.93 3.13 3.65** N 

Cost (millions) – – $223 

*Indicator target reached (Y), substantially reached (S) or not reached (N) 

**Estimated (3rd Qtr.) Goal Not Achieved

Program Perspective and Logic 

The purpose of the Mine Safety and Health Administration is to enforce the Federal Mine Safety and Health Act of 

1977 and the Mine Improvement and New Emergency Response (MINER) Act and their implementing regulations. 

The MINER Act was signed into law by the President on June 15, 2006, and it is the most significant mine safety 

legislation in nearly 30 years. 

The MINER Act builds upon MSHA’s efforts to improve mine safety and calls for the modernization of safety 

practices and development of enhanced communication technology. It requires each underground coal mine to 

develop and continuously update a written emergency response plan which includes making available two 

experienced rescue teams capable of a one-hour response time. Underground coal mines will be required to have 

wireless two-way communications and electronic tracking systems in place within three years. The MINER Act 

gives MSHA new enforcement authorities, including the authority to request an injunction to shut down a mine in 

cases where the mine operator has refused to pay a final MSHA penalty. The Act also raises the criminal penalty cap 

to $250,000 for first offenses and $500,000 for second offenses, and establishes a maximum civil penalty of 

$220,000 for flagrant violations of the Mine Safety and Health and MINER Acts. 

MSHA’s performance indicators assess effectiveness of assistance to miners and mine operators in attaining safer 

workplaces. Incidence rates, which measure the number of fatalities and injuries per 200,000 hours worked by 

miners, are used by MSHA to report on performance because they reflect not only the number of fatalities and 

injuries that occur each year but also the amount of time miners are exposed to potential hazards. In establishing 

performance targets, MSHA considers factors such as the increased demand for coal and the consequent opening of 

new mines and re-opening of previously inactive sites, which create new work environments and safety challenges. 

The fatality rate target (.0208) represents an eight percent reduction from the FY 2003 baseline (.0229) and was 

selected as an ambitious but potentially attainable goal. The all-incidence injury rate is a calculation of all mining 

injuries and fatalities per 200,000 hours worked at mining facilities. The all injury target represents a 38 percent 

reduction from the FY 2000 baseline of 5.07. 

Analysis and Future Plans

MSHA did not achieve the goal. From FY 2003 to FY 2005, fatalities in the mining industry declined to the lowest 

levels since 1910 when statistics were first recorded. The all-injury incident rate also dropped in that same time 

period. These were outstanding achievements. However, in January 2006 the nation witnessed the tragedies at the 

Sago Mine and Alma Mine in West Virginia and the Darby Mine in Kentucky which claimed the lives of 19 miners. 

These incidents are the primary cause for the fatality rate increase in FY 2006. Although the target was not reached, 

the all-incidence injury rate dropped for the third year in a row in FY 2006 to 3.65. 

MSHA initiated comprehensive accident investigations for the incidences at the Sago, Alma, and Darby mines, 

which will include an evaluation of potential causes and mine operator compliance with health and safety standards. 

In addition, MSHA issued an emergency temporary standard to strengthen mine safety practices in four key areas: 

Self-Contained Self Rescue Devices, lifelines, training, and accident notification. The MINER Act of 2006 will 
Performance Section 

104 United States Department of Labor 

build upon MSHA’s efforts to improve mine safety nationwide. Future plans include successfully implementing the 

MINER Act while continuing to remain vigilant in its safety and health efforts. Strong enforcement will be 

supplemented by helping mine operators understand the law and how to comply with the law’s requirements. 

 

All Injury Rate - All Mines

Incidents per 200,000 hours worked

0.000

1.000

2.000

3.000

4.000

5.000

2003 2004 2005 2006

Target Result

PART, Program Evaluations and Audits 

The Program Assessment Rating Tool review of the MSHA program in 2003 produced a rating of Adequate. The 

improvement plan includes continuing targeted enforcement and compliance assistance actions at high-risk mines 

beyond the requirements of the Mine Act with initiatives such as the Cooperative Accident Reduction Effort, 

analyzing the costs and benefits of major regulatory alternatives in the agency's Regulatory Impact Analyses for 

proposed regulations, and developing efficiency and cost-effectiveness measures for a larger percentage of the 

agency's program activities. 

In January 2006, GAO was asked to submit to Congress a statement for the record, MSHA’s Programs for Ensuring 

the Safety and Health of Coal Miners Could be Strengthened (Study 28 in Appendix 2). This statement highlighted 

findings from a 2003 GAO report on how well MSHA oversees its process for reviewing and approving critical types 

of mine plans and the extent to which MSHA’s inspections and accident investigations help ensure the safety and 

health of underground coal miners. Revisions to MSHA’s corrective actions may result from a GAO follow-up study 

now in progress. MSHA is developing its response to the GAO recommendation to collect hours by independent 

contractors at the mine level and to develop a plan to improve services to independent contractors as a part of its plan 

to implement the MINER Act. 

Two recent OIG audits addressed MSHA’s oversight of its Coal Mine Safety and Health Program. Coal Mine 

Hazardous Condition Complaint Process Should Be Strengthened (Study 29 in Appendix 2) addressed MSHA’s coal 

mine hazardous condition complaint process and recommended that the process be strengthened. The OIG also 

issued a Management Letter regarding MSHA’s accountability program (MSHA Accountability Program: Coal Mine 

Safety and Health, Study 30in Appendix 2). Normally, the OIG provides a Management Letter in conjunction with 

an accompanying audit report. However, the OIG issued this letter in advance of its completed ongoing audit to 

assist MSHA with the reviews it is currently conducting. To address the letter’s one open recommendation, MSHA 

is drafting a policy memorandum to require that mine visits are included in all Headquarters Reviews and the District 

Peer Reviews include visits to a percentage of mines selected for review. 

 

Data Quality and Major Management Challenges 

Data quality for this goal is rated Good. The data for fatality and the all-injury rate are calculated by dividing the 

number of fatalities and injuries times 200,000 hours worked by actual hours worked at mines. Mine operators are 

required by regulation to submit, either electronically or manually, information on all injuries and fatalities as well as 

data on the number of hours worked at mines.24 Information quality assurance is maintained through the use of builtin edit checks of the data at the electronic and manual points of data entry as well as through audits conducted by 

MSHA enforcement personnel of accident, injury, and hourly data. 

Ensuring the Safety and Health of Miners is a Major Management Challenge (MMC) for the Department (see item 

VII in the MMC section of the Executive Summary). MSHA has an initiative in place to replace the mine inspectors 

who will be retiring in the near future. MSHA has developed and implemented systems that ensure that mine 

 

24 Certain independent contractors are exempt from reporting employment and injury information if they participate in “low 

hazard” mining activities as defined by MSHA policy. Non-exempt contractors report employment information for aggregate 

work locations, not by individual mine site. 

Fatality Rate - All Mines

Incidents per 200,000 hours worked

0.000

0.010

0.020

0.030

2003 2004 2005 2006

Target Result
Strategic Goal 3 

FY 2006 Performance and Accountability Report 105 

operators and contractors comply with the Mine Act including the Mine Plan Approval Database which enables 

headquarters to monitor the timely submission and approval of all required and optional plans including critical 

ventilation and roof control plans; and the Hazardous Condition Complaints Database which tracks hazardous 

condition complaints from receipt to investigation and resolution for complaints received by online, telephone, 

written or verbal submissions. Headquarters and district management can monitor daily activities to ensure that 

complaints which allege imminent danger are followed up with timely field office inspections.
Performance Section 

106 United States Department of Labor 

Reduce Miners’ Exposure to Health Hazards

Performance Goal 06-3.1B (MSHA) – FY 2006 

Reduce mining-related illnesses. 

Indicators, Targets and Results FY 2005 

Result 

FY 2006 

Target 

FY 2006 

Result 

Target 

Reached*

Percent of respirable coal dust samples exceeding the applicable 

standards for designated occupations 

10.8% 9.5% 12.2%** N 

Percent of noise samples above the citation level in coal mines 5.3% 5.0% 4.4%** Y 

Percent of silica dust samples with at least 50% of the 

permissible exposure limits in metal and non-metal mines 

16.3% 17.1% 19.3%** Y 

Percent of noise samples with at least 50% of the permissible 

exposure limits in metal and non-metal mines 

20.9% 21.9% 24.3%** Y 

Cost (millions) – – $125 

*Indicator target reached (Y), substantially reached (S) or not reached (N) 

**Estimated (3rd Qtr.) Goal Not Achieved

Program Perspective and Logic 

The MSHA program also ensures compliance with regulations to prevent serious occupational illnesses and health 

hazards in the mining industry. Overexposures to respirable dust and noise are significant health concerns in the 

mining industry. Health issues such as lung diseases and impairment of respiratory function among miners caused by 

respirable coal mine dust, silica-bearing dusts, asbestos, diesel exhaust, and toxic chemicals remain pervasive, but 

preventable. Noise exposures above regulatory standards could lead to permanent loss of hearing. MSHA is 

committed to strengthening the protections for miners exposed to these health hazards and to reducing their 

incidence. Because these conditions develop gradually after repeated exposures, determining the rate at which 

miners are overexposed to respirable dust and noise is a proxy measure of future miner health. Reducing miner 

exposure to well-known health hazards in the near term, MSHA believes, contributes to the longer term goal of 

reducing the incidence of black lung disease, silicosis, and hearing loss. 

There are two sets of health indicators for this performance goal, including two indicators for coal mines and two 

indicators for metal and non-metal mines. The coal mine health indicators assess MSHA’s performance in reducing 

miner overexposures to respirable coal mine dust and noise. For the coal mine health program at MSHA, targets are 

set for decreasing the percent of respirable coal mine dust samples exceeding the applicable standards for designated 

occupations and the percent of noise samples above the citation level in coal mines. By reducing the number of 

miner overexposures to coal dust and noise, the future health of the coal miners is better protected. Six years ago, 

MSHA issued a uniform rule for coal and metal/non-metal mining industries so that all miners, regardless of the 

commodity in which they work, are protected from occupational noise. The noise standard is performance-based; 

mine operators can install and implement controls to fit their needs and comply with the provisions of the 

regulations. The regulation also recognizes the importance of engineering or administrative controls, or a suite of 

controls, to minimize miners’ occupational noise exposures and to achieve compliance. 

For the metal/non-metal mine program MSHA undertook an internal process improvement for sampling practices of 

MSHA inspectors. This goal is for the metal/non-metal MSHA inspectors to identify more silica and noise hazards 

and near hazards in the short term. By finding more areas that need improvement, metal and non-metal mine 

operators will be provided with appropriate notice and will be able to initiate abatement and personal protective 

actions and improve health of the miners in this way. 

Analysis and Future Plans 

MSHA did not reach its target for reducing coal miners’ over-exposures to respirable coal mine dust. The agency has 

set ambitious targets for reducing miner exposure to coal dust since FY 2002 and targets further reduction to a low of 
Strategic Goal 3 

FY 2006 Performance and Accountability Report 107 

6.9 percent in FY 2011. Reduced exposure to coal dust reduces 

the miners’ risk of developing black lung disease. The attainment 

of this target is complicated by many factors, including increased 

coal production due to high natural gas and oil prices. Coal 

production in the U.S. for the first three quarters of FY 2006 alone 

was 864 million tons, which exceeded the entire FY 2005 

production of 846 million tons. MSHA has revised its sampling 

procedures to be more representative of today’s production level 

conditions. This strategy is intended capture the increased number 

of new sampling entities with inadequately verified dust control 

parameters that came on line to meet the increased production 

demand. It is also intended to capture the higher dust generation 

rates produced in more difficult mining conditions. To achieve this ambitious goal, MSHA will examine respirable 

coal mine dust overexposures, trends, and operations plans to promote adequate controls. 

MSHA reached its target for reducing noise samples above the citation level for coal mines. The U.S. coal mining 

industry overall has made significant progress in controlling occupational noise since the implementation of the noise 

rule in FY 2001. Benefits include reduced workers’ compensation costs, better running equipment, improved 

working conditions and productivity, and satisfied employees who do not suffer from hearing loss. 

Strategies for achieving MSHA’s health goals include making the technical support program – which applies 

scientific and engineering solutions to mitigate hazards – available to mine inspectors and mine operators. Education 

and training for the mining industry is also crucial to the reduction of miner illnesses. MSHA will be working to 

continue to ensure that its training specialists and technical support personnel are readily accessible to the mining 

industry. 

Joe is a Virginia coal miner with an outstanding safety 

record – thirty-five years in coal mining without a 

single lost time accident. In recognition of this 

accomplishment, MSHA’s Coal District 5 Manager 

Edward Morgan presented Joe with a Certificate of 

Appreciation from MSHA. Because this was such an 

extraordinary achievement, Joe was also presented with 

a Certificate of Honor at the April 13, 2006 regular 

meeting of the Lonesome Pine Council of the Joseph A. 

Holmes Safety Association. 

Photo Credit: DOL/MSHA 

PART, Program Evaluations and Audits 

See discussion in Performance Goal 3.1A. 

Data Quality and Major Management 

Challenges 

Data quality for this goal is rated Good. MSHA 

safety and health compliance specialists conduct dust and noise sampling in accordance with established written 

procedures. While data for some health indicators lacked timeliness in the past, MSHA has worked diligently to 

correct this issue. Over the past year, MSHA has implemented more rigorous sampling protocols to concentrate 

resources on the higher risk occupations by identifying and controlling mining conditions where excessive silica 

exposures in metal and nonmetal mines are more likely to occur. In addition, the metal and non-metal data indicators 

have been recently revised to enhance their use by the agency and to assist the public in drawing conclusions about 

program performance. 

% Respirable Coal Dust Samples Exceeding

Applicable Standards for Designated 

Occupations

0

5

10

15

20

2002 2003 2004 2005 2006

Coal Dust - Target Coal Dust - Actual
Performance Section 

108 United States Department of Labor 

Reduce Occupational Fatalities 

Performance Goal 06-3.1C (OSHA) – FY 2006 

Reduce work-related fatalities. 

Indicators, Targets and Results25 FY 2005 

Result 

FY 2006 

Target 

FY 2006 

Result 

Target 

Reached*

Workplace fatalities per 100,000 workers (for sectors covered by 

the Occupational Safety and Health Act)T

 26T

1.71 1.47 1.73** N 

*Indicator target reached (Y), substantially reached (S) or not reached (N) 

**Estimated Goal Not Achieved

Program Perspective and Logic 

The Occupational Safety and Health Administration (OSHA) aims to promote employee safety and health in the 

United States by working with employers and employees to create safer working environments. As the agency 

celebrates its 35th Anniversary, it is proud of its long-term record of reduced injuries, illnesses, and fatalities. A 

strong, fair, and effective enforcement program establishes the foundation for OSHA’s efforts to protect the safety 

and health of the nation’s employees. As a complement to its enforcement program, OSHA seeks to assist employers 

through compliance assistance. The agency strategically focuses its enforcement resources on sites in more hazardous 

industries. Additionally, outreach, education and compliance assistance enable OSHA to play a vital role in 

preventing on-the-job injuries, illnesses and fatalities. 

Falls continue to be a leading cause of construction 

fatalities. Falls from roofs and through roof openings 

produce a significant number of construction fatalities. 

Employees doing roofing work must contend with 

unprotected sides, edges and through roof openings while 

working on slightly to steeply sloped surfaces. Weather 

conditions confound the employee attempts to find 

secure footing. Wind, rain, ice, snow, and dust all affect 

the employees’ ability to see the walking working 

surface and to achieve stable footing. Loss of footing on 

a residential roof can result in an outright fall through a 

hole in the roof (as for a skylight or dormer), over the 

eaves, or rake edge. The same loss of footing can result 

in a long slide down the roof and over the eaves followed 

by a fall to the ground. The employee pictured is 

wearing a full body harness, which is attached to a 

lifeline running from the self-retracting reel (yo-yo) 

anchored to the pole mounted at the roof’s peak. The 

system allows freedom of movement at normal speeds but locks like an automotive seatbelt within two feet if the employee 

accelerates too quickly as in a fall or slide. In addition, the employee is wearing head protection and sturdy work footwear 

necessary for placing the roofing tile and doing this kind of roofing. 

Photo Credit: DOL/OSHA 

External factors affecting performance include changes in the economy and employment, emerging and new 

technologies, and workforce characteristics. The entirety of OSHA’s budget is directed towards achieving the 

outcomes of reducing workplace fatalities and injuries and illnesses. OSHA helps reduce on-the-job deaths by 

intervening at the workplaces where it has evidence that fatalities are most likely to occur and by responding to 

reports about potentially life-threatening workplace hazards. OSHA uses fatality data from its Integrated 

Management Information System (IMIS) to track fatalities, looking for emerging fatality patterns in order to focus 

 

25 Costs are not shown for OSHA’s two performance goals because the same activities contribute to reductions in fatality and 

injury/illness indicators, i.e., their costs are not separable. 26 For target setting and reporting, OSHA uses a three-year moving average to smooth year-to-year fluctuations. The result 

provided for FY 2006 is calculated using data for July 2004 – June 2006. 
Strategic Goal 3 

FY 2006 Performance and Accountability Report 109 

interventions and implement national and local emphasis programs. Using FY 2000-2002 as a baseline, OSHA set a 

challenging goal to reduce workplace fatality rates by 15 percent by 2008. The FY 2006 target is a nine percent 

reduction from the baseline and the result is an estimate of the average fatality rate for FY 2004-2006 (see table 

below). 

Analysis and Future Plans 

The goal was not achieved. Based on the most recent data, DOL estimates a slight decrease in the workplace fatality 

rate – from 1.75 in FY 2005 to 1.73 in FY 2006 (see following table). However, the estimated three-year average 

rate of 1.73 is an increase over the corresponding FY 2005 average of 1.71and falls short of the target of 1.47. Total 

fatalities and the fatality rate have been increasing slightly. As shown in the table, a substantial and disproportionate 

percentage of deaths are in the construction industry. OSHA is working to enhance fatality analysis and statistical 

modeling capabilities to plan specific interventions to address particular types of fatalities. 

Estimating Year 

(July-June) 

Construction 

Fatalities 

Construction 

Employment 

(thousands) 

Construction 

Fatality Rates 

Total 

Fatalities 

Total Private 

(Nonfarm) 

Employment 

(thousands) 

Total 

Fatality Rates

2000 736 6,704 10.98 1,729 109,989 1.57 

2001 749 6,823 10.98 1,846 111,368 1.66 

2002 744 6,774 10.98 1,773 109,524 1.62 

2003 741 6,694 11.07 1,827 108,528 1.68 

2004 784 6,840 11.46 1,849 108,913 1.70 

2005 808 7,128 11.34 1,940 110,744 1.75 

2006 802 7,419* 10.81 1,943 112,563* 1.73 

2000-2002 

BASELINE 743 6,767 10.98 1,783 110,294 1.62 

2002-2004 

AVERAGE 756 6,769 11.17 1,816 108,988 1.67 

2003-2005 

AVERAGE 778 6,887 11. 30 1,872 109,395 1.71 

2004-2006 

AVERAGE 798 7,129* 11.19 1911 110,740* 1.73 

Data sources are the OSHA Integrated Management Information System (IMIS) for the number of fatalities and Bureau of 

Labor Statistics (BLS) Current Employment Statistics (CES) for the employment data. *Indicates preliminary data.

OSHA has been emphasizing the importance of timely input of fatality data both from OSHA’s field offices as well 

as from State plan partners operating their own OSHA programs. OSHA believes that in addition to the benefit of 

having more accurate and timely fatality data, some of the recent increases to the fatality numbers result from this 

effort, as a greater emphasis of timely inputting of fatality data into the system. The construction fatality rate is more 

than six times the fatality rate for all industries. OSHA is addressing the growth in the construction field of 

immigrant and non-English speaking employees; and employees in hard-to-reach work sites. Fall hazards continue 

to be an occupational safety issue. The expanding population of mobile workers also requires the agency to think of 

safety and prevention in a new way. To achieve the targeted reductions in fatalities, OSHA has identified and 

targeted sectors and hazards that require interventions and has increased its compliance assistance efforts. 

In FY 2006, OSHA unveiled its Voluntary Protection Programs (VPP) Mobile Workforce Demonstration for 

Construction. The initiative aims to provide greater flexibility for eligibility, which will enable all qualified 

employers in the construction industry to apply for VPP without regard for duration of a project or worksite control. 
Performance Section 

110 United States Department of Labor 

By removing some of the barriers found in the traditional VPP, OSHA allows construction companies with mobile 

workforces to develop alternative safety and health management systems that are shown to provide protections equal 

to those found at fixed VPP worksites. At the same time, OSHA will have opportunities to explore and test 

appropriate modifications to VPP that will help bring the benefits of this program to the entire construction industry. 

Other compliance assistance efforts are paying off. In the last three years, OSHA’s trenching initiative, which aims 

to reduce accidents related to excavation, has shown positive results. These results include greater awareness of 

trenching hazards through a concentrated outreach effort. The agency is also undertaking a new residential fall 

protection initiative. Additional efforts include local and special emphasis programs that aim to prevent accidents 

and illnesses by identifying workplaces in selected geographic regions or industries for inspections and compliance 

assistance. Also, OSHA continues to implement its Enhanced Enforcement Program, which focuses on employers 

who repeatedly ignore safety and health obligations. The Enhanced Enforcement Program has been a useful tool to 

continue to help target inspection resources where they can have the greatest impact. 

PART, Program Evaluations and Audits 

OSHA received a rating of Adequate in its Program Assessment Rating Tool (PART) review in 2002. In response to 

a PART recommendation, OSHA developed a new fatality indicator based on internal data sources and data from the 

Bureau of Labor Statistics. OSHA continues to address other PART findings; in addition to evaluating the agency’s 

VPP program, OSHA has implemented peer reviews of scientific and technical data used to support new, significant 

regulations. The agency is also developing efficiency and cost effectiveness measures for a larger percentage of the 

agency’s program activities, with five measures in place and two more proposed for the near future. 

In 2006, OSHA conducted an evaluation to determine the efficacy of the development and implementation of its 

voluntary guidelines (see Evaluation of OSHA Voluntary Guidelines – Study 32 in Appendix 2). Prior to this 

evaluation, employer awareness of specific guidelines was not known, and the extent to which employers used or 

implemented OSHA voluntary guidelines was not well documented. Evaluation findings are being used to determine 

future strategies for OSHA voluntary guidelines development and promotion. 

In a study concluded in April 2006, OSHA Could Improve Federal Agencies’ Safety Programs with a More Strategic 

Approach to its Oversight (Study 31 in Appendix 2), GAO recommended that OSHA implement a more strategic 

approach to its oversight of safety programs at federal agencies. In response, OSHA has initiated a program for 

targeted federal agency inspections and efforts are underway to develop an internal tracking system for appealed 

violations. Also, OSHA is altering its data collection system to ensure regular notification of appeal status. 

Data Quality and Major Management Challenges 

Data quality for this performance goal was rated Excellent. Strengths of the data include accuracy and reliability. 

OSHA estimates achievement for this goal using actual data from July 1st of the previous fiscal year to June 30th of 

the current fiscal year, which is an OMB-approved estimating methodology. The agency relies on its Integrated 

Management Information System (IMIS) for fatality data and BLS Current Employment Statistics for employment 

data because data from the BLS Census of Fatal Occupational Injuries are not as timely. The IMIS and the BLS 

Current Employment Statistics data are complete, reliable, accurate, and verifiable. IMIS, which has numerous 

automated quality control and edit checks, uses a well-defined and tested protocol for counting and is the best 

available data source for an actual fatality count. The agency will continue to expand its capacity to measure the 

impact of its program on occupational fatalities, injuries, and illnesses in the sectors where it intervenes in a timely 

way. OSHA has initiated the development of a revised data system which can be used to evaluate activity and set 

strategic planning goals. In FY 2007 the agency will continue development of this system. 

Collecting complete and comprehensive data on OSHA’s Voluntary Programs is a Major Management Challenge 

(MMC) of the Department (see item I, Improve Accountability for Performance and Financial Data, in the MMC 

section of the Executive Summary). While OSHA’s voluntary compliance programs appear to have yielded many 

positive outcomes, much of the agency’s data have had limitations. GAO recommended that OSHA identify costeffective methods of collecting complete and comparable data on program outcomes. In response, OSHA is working 

to collect more complete and sufficient data on voluntary programs through voluntary program refinements and to 

develop a new OSHA Information System by September of 2009.
Strategic Goal 3 

FY 2006 Performance and Accountability Report 111 

Reduce Workplace Injuries and Illnesses 

Performance Goal 06-3.1D (OSHA) – FY 2006 

Reduce work-related injuries and illnesses. 

Indicators, Targets and Results27 FY 2005 

Result 

FY 2006 

Target 

FY 2006 

Result 

Target 

Reached*

Days away from work cases per 100 workers 1.4 1.4 1.4** Y 

*Indicator target reached (Y), substantially reached (S) or not reached (N) 

**Estimated Goal Achieved

Program Perspective and Logic 

The Occupational Safety and Health Administration aims to promote employee safety and health in the United States 

by working with employers and employees to create safer working environments. As the agency celebrates its 35th 

Anniversary, it is proud of its long-term record of reduced injuries, illnesses, and fatalities. A strong, fair and 

effective enforcement program establishes the foundation for OSHA’s efforts to protect the safety and health of the 

nation’s employees. As a complement to its enforcement program, OSHA seeks to assist employers through 

compliance assistance. The agency strategically focuses its enforcement resources on sites in more hazardous 

industries. Additionally, outreach, education and compliance assistance enable OSHA to reduce occupational 

injuries and illnesses, measured by the days away from work case rate. 

By many measures, logging is one of the most dangerous occupations in 

the United States. The tools and equipment used in logging, such as 

chain saws and logging machines, pose real hazards. As loggers use 

their tools and equipment, they are dealing with massive weights and 

irresistible momentum of falling, rolling, and sliding trees and logs. 

Additionally, employees are exposed to hazards such as falls, being 

struck by moving equipment, hazards associated with wildlife, heat 

stress, and lacerations and amputations from power tools. The hazards 

are even more acute when dangerous environmental conditions are 

factored in, such as uneven, unstable or rough terrain; inclement weather 

including rain, snow, lightning, winds, and extreme cold; and remote 

work sites without health care facilities. The combination of these 

hazards presents a significant risk to loggers, regardless of the type of 

timber or location. The employee pictured is performing a task called 

“bucking” – the cutting of felled trees into logs. He is wearing 

appropriate personal protective equipment for the task, such as cutresistant leg protection, eye and face protection, hearing protection, hand 

protection, and sturdy footwear. 

Photo Credit: DOL/OSHA 

External factors affecting performance include changes in the economy and employment, emerging and new 

technologies, and workforce characteristics. The majority of working men and women in the nation come under the 

jurisdiction of Federal OSHA or Federally approved State plans (with some exceptions such as miners, transportation 

workers, some public employees, and the self-employed). OSHA’s FY 2006 target of 1.4 days away from work case 

rate is part of a long-term goal of reducing the rate by 20 percent between FY 2002 and FY 2008. OSHA is 

committed to working with employers and employees to meet this goal, and is on track to achieve it. OSHA selected 

both the long-term goal and the annual target because they exceeded previous performance for injury and illness rate 

reductions, yet OSHA’s managers believed that it would be attainable if the agency’s injury and illness reduction 

strategies were successful. Strategies for achieving these goals include a balanced use of strong, fair and effective 

enforcement, outreach, education and compliance assistance, free and confidential consultation services in all states 

 

27 Costs are not shown for OSHA’s two performance goals because the same activities contribute to reductions in fatality and 

injury/illness indicators, i.e., their costs are not separable. 
Performance Section 

112 United States Department of Labor 

and cooperative programs. OSHA managers track Federal inspection activity, the number of consultation visits, and 

new participants in cooperative programs, which include Voluntary Protection Programs (VPP), Strategic 

Partnerships and Alliances. 

Analysis and Future Plans

The goal was achieved. OSHA used CY 2005 data, which BLS published in October 2006, as an estimate of this 

year’s injury and illness rate. The days away from 

work case rate has declined over the last three years. 

Contributing to this success are OSHA’s cooperative 

programs, such as the VPP. A new VPP program 

was approved in FY 2006 – the Voluntary 

Protection Program for Mobile Workforce in 

Construction Program referenced under 

Performance Goal 06-3.1C. 

PART, Program Evaluations and Audits 

OSHA received a rating of Adequate in its Program Assessment Rating Tool (PART) review in 2002. This review, 

as well as studies conducted by independent contractors and by the GAO that apply to both OSHA performance goals 

are discussed in this section of the narrative for Performance Goal 06-3.1C. 

Data Quality and Major Management Challenges 

Data quality for this performance goal was rated Fair. While the BLS Annual Survey of Occupational Injuries and 

Illnesses is the most comprehensive and reliable information currently available on national levels of injuries and 

illnesses, there is a nine and a half month lag in the availability of this BLS injury and illness data after the end of the 

survey year or calendar year. The most recently available calendar-year BLS data that OSHA uses for program 

management include the first quarter’s data for OSHA’s just completed fiscal year (October 1 through December 31 

of the BLS survey year). Historically, due to the DOL production schedule for the APAR, data for this performance 

report lagged by two calendar years. This year is the first year that OSHA, working with BLS, is able to report on 

more current data. 

The Survey of Occupational Injuries and Illnesses is a Federal/State program in which employer's reports are 

collected annually (January 1 through December 31 period) from about 176,000 private industry establishments and 

processed by State agencies cooperating with the Bureau of Labor Statistics. Survey estimates are based on a 

scientifically selected sample of establishments. Even though the data that are used for this performance measure 

include some employers over which OSHA has no jurisdiction and others who have not received OSHA 

interventions, the data are the best available for representing the impact of the full OSHA program and its influence 

on increased employer and employee awareness and attention to occupational safety and health issues. 

OSHA will continue to improve the effectiveness of agency use of available data, with improved targeting serving as 

the most reasonable, cost-effective means of reducing injuries and illnesses. The agency will continue to expand its 

capacity to measure the impact of its program on occupational injuries and illnesses in the sectors where it intervenes 

in a timely way. OSHA is working with a contractor to develop a model that will use information on the impacts of 

various establishment-level interventions on injuries and illnesses to estimate their larger impact based on the number 

of interventions. 

Private Industry Injury/Illness rate

(days away from work per 100 workers)

0.0

0.4

0.8

1.2

1.6

2.0

2002 2003 2004 2005

The most recent BLS Annual Survey of Occupational Injuries and 

Illnesses is used to report on performance for this goal. The 2005 data 

is the most recent available. 
Strategic Goal 3 

FY 2006 Performance and Accountability Report 113 

Foster Equal Opportunity Workplaces

Performance Goal 06-3.2A (ESA) – FY 2006 

Federal contractors achieve equal opportunity workplaces. 

Indicators, Targets and Results FY 2005 

Result 

FY 2006 

Target 

FY 2006 

Result 

Target 

Reached*

Incidence of discrimination among Federal contractors 2% 6% 1.7% Y 

Compliance among Federal contractors in all other aspects of 

equal opportunity workplace standards 

86% 64% 87.2% Y 

Cost (millions) $99 – $97 

*Indicator target reached (Y), substantially reached (S) or not reached (N) Goal Achieved

Program Perspective and Logic 

ESA's Office of Federal Contract Compliance Programs (OFCCP) administers and enforces three equal employment 

opportunity laws which prohibit Federal contractors and subcontractors from discriminating on the basis of race, 

color, religion, sex, national origin, disability, and protected veterans' status: Executive Order 11246; Section 503 of 

the Rehabilitation Act of 1973; and the Vietnam Era Veterans' Readjustment Assistance Act of 1974. 

OFCCP seeks to ensure that Federal contractors provide equal employment opportunity to all applicants and 

employees through the fair and effective enforcement of these laws. By continuing to reduce the incidence of 

discrimination among Federal contractors, OFCCP is able to demonstrate a positive correlation between its targeted 

enforcement and compliance assistance activities and its performance goal of achieving equal opportunity in Federal 

contractor workplaces. Budgetary resources are allocated to both enforcement and compliance assistance. Programrelated strategies are shaped by the following external trends and factors: the total number of Federal contractors; 

company acquisitions and mergers; and turnover in the Federal contractor community. Compliance assistance efforts 

focus on raising contractor awareness of equal opportunity obligations and encouraging self-evaluations. The 

Compliance Assistance Program provides one-on-one customer assistance and easy-to-access information, including 

a growing number of resources and tools available online, that teach contractors how to comply with Federal 

employment laws. 

Analysis and Future Plans 

OFCCP’s performance indicators track compliance evaluations of contractors, with a new group of contractors being 

evaluated every year. In FY 2006, OFCCP completed 4,012 compliance evaluations, of which 66 were classified as 

systemic violations. OFCCP exceeded its target of reducing the incidence of discrimination among Federal 

contractors to six percent. The 87.2 percent rate of compliance among Federal contractors in all other aspects of 

Equal Employment Opportunity standards also exceeded significantly the FY 2006 target of 64 percent. OFCCP 

believes its efforts to more effectively target non-compliant Federal contractors and to provide increased compliance 

assistance largely contribute to its continued success in exceeding its annual and long-term goals. Having 

consistently achieved these goals, OFCCP has established new, more ambitious long-term targets in DOL’s FY 

2006–2011 Strategic Plan in order to demonstrate continuous improvement. 

During FY 2006, OFCCP focused on increasing the program’s transparency while reducing the burden on the 

Federal contractor community and other stakeholders. OFCCP continually works to simplify regulations and reduce 

the information burden on Federal contractors. Since FY 2003, OFCCP has published four final rules and two 

notices that clarify its regulations. On September 8, 2006, OFCCP published the final rule rescinding the Equal 

Opportunity (EO) Survey, which failed to demonstrate its value as a tool for selecting contractors for audits. In 

addition, OFFCP continues to develop its performance and cost information using a logic model. OFCCP has 

calculated unit costs for program outputs on national, regional, and individual compliance officer basis. The program 

also identified cost drivers that were most likely to impact the cost of a particular activity. Outputs were selected 

based on the percentage of their contribution to the performance indicators. OFCCP will continue to provide 

compliance assistance in an effective and efficient manner with special emphasis on OFCCP’s new Internet 
Performance Section 

114 United States Department of Labor 

Applicant record-keeping rule. OFCCP is working to increase the number of compliance assistance seminars and 

workshops provided to the Federal contractor community. 

The costs for this performance goal decreased by two percent between FY 2005 and FY 2006; this is considered a 

minor variance. 

PART, Program Evaluations and Audits 

OFCCP was initially assessed through the PART in FY 2002 and was rated Results Not Demonstrated. The PART 

found that OFCCP could not quantify the impact of its civil rights enforcement efforts. OFCCP implemented the 

PART recommendations, which included developing measures to track the incidence of discrimination and level of 

compliance. Based on its new measures and its improved performance, OFCCP was reassessed through the PART in 

FY 2004. Its current rating is Adequate. 

OFCCP continued progress on its PART improvement plan which included recommendations to set more ambitious 

targets, to review program regulations and requirements to identify areas for improvement, and to continue 

evaluating and modernizing agency data collection processes. OFCCP used the Departmental strategic planning 

process as well as completed program evaluations to address each of these recommendations. As noted in the 

performance analysis, OFCCP established more ambitious long-term targets using FY 2005 as a baseline. As 

mentioned in the preceding section, OFCCP recently published a final rule rescinding the ineffective EO Survey. By 

doing so, OFCCP can better direct its resources for the benefit of victims of discrimination, the government, 

contractors, and taxpayers. 

OFCCP expects to improve the targeting of contractors engaged in systemic discrimination through more effective 

mathematical models. In mid-year FY 2006, OFCCP initiated a test to validate recommendations from program 

evaluations completed in FY 2003 and FY 2005 (A Study to Refine the OFCCP Discrimination Prediction Model – 

Study 33 in Appendix 2) that would improve their ability to select contractors more likely to discriminate for 

compliance reviews. These evaluations indicated that the predictive power of the U.S. Equal Employment 

Opportunity Commission’s Employer Information EEO-1 Survey and U.S. Census data was only slightly better than 

selections made at random. In response, OFCCP developed different mathematical models that build upon the 

recommendations of the prior studies. By the end of FY 2007, OFCCP will begin assessing the effectiveness of these 

new modeling procedures. 

OFCCP also implemented a new contractor jurisdiction verification system through the Contracts First initiative, 

designed to target contractors that had not been reviewed previously and to streamline further the contractor selection 

process. The initiative also directs more resources toward compliance. OFCCP will continue to use case history 

information and other databases to enhance the targeting methodology and will explore other statistical methods for 

identifying predictive relationships in the available data. 

Data Quality and Major Management Challenges 

Data for this performance goal was rated Good. Strengths of the data include its timeliness and accuracy. OFCCP’s 

Case Management System captures performance outcome goal related activity data as data entries are made at field 

offices as compliance activities progress. Monthly, quarterly and yearly reports are available on all compliance 

activities. Using different query and categories, the data can be cross-referenced for accuracy. Given OFCCP’s track 

record of consistently exceeding its targets, data is needed on performance areas where increased effectiveness can be 

demonstrated. In addition, OFCCP trend data would be more meaningful with the ability to capture those long-term 

improvements. 
Strategic Goal 3 

FY 2006 Performance and Accountability Report 115 

Assist Veterans’ Return to Jobs After Military Obligations 

Performance Goal 06-3.2B (VETS) – FY 2006 

Reduce employer-employee employment issues originating from service members’ military obligations conflicting 

with their civilian employment. 

Indicators, Targets and Results FY 2005 

Result 

FY 2006 

Target 

FY 2006 

Result 

Target 

Reached*

USERRA Progress Index (measures compliance and assistance 

performance) 

100% 105% 101%** N 

Cost (millions) $16 – $17 

*Indicator target reached (Y), substantially reached (S) or not reached (N) 

**Estimated Goal Not Achieved

Program Perspective and Logic 

The Department’s Veterans’ Employment and Training Service (VETS) is responsible for protecting employment 

and reemployment rights of persons who are current or former members of the uniformed services, and who 

encounter barriers in civilian employment related to their service. Legislative authority for protection of these rights 

is established by the Uniformed Services Employment and Reemployment Rights Act (USERRA). 

Over 50 percent of VETS’ staff provide USERRA services, ranging from compliance assistance to employers and 

protected individuals to investigation of individuals’ complaints alleging their rights have been violated. VETS seeks 

to reduce both employer violations and the filing of meritless complaints by protected individuals. The goal and 

associated indicators focus on resolving filed claims. Most violations and meritless complaints could be avoided 

with greater knowledge of the rights and protections established by USERRA. For this reason VETS has an active 

compliance assistance program directed to employers and members of National Guard and Reserve units to increase 

knowledge and understanding of USERRA’s key provisions. 

The two external factors having the greatest impact on achievement of this goal are the economy and increases in 

military active duty periods. Both of these factors cause more service members to face difficulties associated with 

their civilian employment or reemployment. While the economy remains steady, the U.S. war effort continues to 

increase Guard and Reserve active duty by significant numbers – a trend that will likely increase USERRA activity. 

Goal achievement is measured using a comprehensive Progress Index that demonstrates reduction of violations and 

meritless complaints by consolidating indicators of cases and assistance (non-case-related contacts) using weights for 

each element that are determined by service priorities. It consists of seven compliance indicators and one assistance 

indicator. The compliance indicators are 1) Number of Guard/Reserve de-mobilized per USERRA claim filed by 

Guard/Reserve; 2) Number of Guard/Reserve de-mobilized per USERRA claim filed by Guard/Reserve in primary 

issues; 3) Number of USERRA violations; 4) Number of USERRA violations in primary issues; 5) Number of 

meritless USERRA claims; 6) Number of meritless USERRA claims in primary issues; and 7) Average days cases 

remain in VETS jurisdiction. The assistance indicator is Number of USERRA assistance contacts per Guard/Reserve 

mobilized and de-mobilized. Other Federal agencies that process USERRA claims are outside the scope of VETS' 

Progress Index: the Employer Support of the Guard and Reserve – an agency in the Department of Defense, and the 

U.S. Office of Special Counsel, which is conducting a USERRA demonstration project that is testing an alternate 

way of handling USERRA complaints filed by Federal employees. 

Costs associated with this goal did not change significantly between FY 2005 and FY 2006. 

Analysis and Future Plans 

The goal was not achieved, although the Progress Index did increase from the FY 2005 baseline. After declining in 

FY 2005, claims increased by 10 percent in FY 2006, resuming an upward trend that began following the 9/11 

terrorist attacks. Violations, which rose 14 percent in FY 2006, were another key factor in the Progress Index 

shortfall. Contributing to the increase in claims was introduction of a new electronic form that enabled claimants to 
Performance Section 

116 United States Department of Labor 

file USERRA claims via the Internet. Increasing claims made case resolution the key focus of VETS’ FY 2006 

USERRA efforts, taking priority over other forms of assistance. The extra attention to resolving cases led to a 

reduction of average case processing time from 84 to 72 days. 

Both compliance and assistance efforts will continue to focus on National Guard and Reserve components because 

since FY 1997, they have been the source of 82 percent of all USERRA claims. This has been even more the case in 

recent years; in FY 2005, for example, Guard/Reserve claims accounted for 85 percent of the total. VETS expects 

this trend to continue and possibly increase due to mobilizations/demobilizations relating to the War on Terrorism. 

PART, Program Evaluations and Audits 

GAO’s Federal Management of Servicemember Employment Rights Can Be Further Improved (see Study 34 in 

Appendix 2) found the multiple agencies involved in USERRA services – DOL, Department of Defense (DOD), 

Department of Justice (DOJ), and Office of Special Counsel (OSC) – lack reliable data on complaints and employer 

support, and are hampered by incompatible data systems, reliance on paper files, and a segmented process that lacks 

visibility. GAO recommended the agencies share information covering the entire USERRA complaint resolution 

process and automate complaint files. In FY 2006, DOL enhanced its USERRA Information Management System 

(UIMS), which became the central repository for USERRA case status reporting in October 2006. VETS is studying 

options to further upgrade UIMS to enable electronic case documentation files to be uploaded into UIMS case 

records – the first step toward a fully automated complaint file system tentatively planned for implementation in FY 

2008. 

Two other GAO studies of USERRA initiated during FY 2006 – one examining the USERRA Demonstration Project 

for Federal employer claims under the Veterans’ Benefits Improvement Act of 2004 and another analyzing 

reemployment challenges faced by Guard and Reserve members – are expected to conclude during FY 2007. 

Data Quality and Major Management Challenges 

Data quality for this performance goal was rated Excellent. Strengths of the data include its accuracy, completeness 

and reliability. Validation and verification of UIMS data is accomplished periodically via Quality Assurance 

Reviews at State, regional, and national levels. UIMS data reflects official data documented in the hard-copy case 

records.
Strategic Goal 3 

FY 2006 Performance and Accountability Report 117 

Reduce Child Labor in Developing Countries

Performance Goal 06-3.3A (ILAB) – FY 2006 

Contribute to the elimination of the worst forms of child labor internationally. 

Indicators, Targets and Results FY 2005 

Result 

FY 2006 

Target 

FY 2006 

Result 

Target 

Reached*

Number of children prevented or withdrawn from child labor and 

provided education and/or training opportunities as a result of 

DOL-funded child labor elimination projects 

150,70828 178,000 236,787 Y 

Number of countries with increased capacities to address child 

labor as a result of DOL-funded child labor elimination projects 

39 39 53 Y 

Cost (millions) $74 – $95 

*Indicator target reached (Y), substantially reached (S) or not reached (N) Goal Achieved

Program Perspective and Logic 

The Bureau of International Labor Affairs (ILAB) has worked to reduce exploitive child labor worldwide since 1993, 

conducting research, and funding and overseeing projects that combat exploitive child labor in more than 70 

countries. ILAB’s activities include reporting on various aspects of international child labor, increasing public 

awareness and understanding of the problem, and supporting international projects to eliminate exploitive child labor 

and increase access to quality basic education. ILAB’s international child labor technical assistance programs are 

implemented through two major initiatives. First, ILAB provides support to the International Program on the 

Elimination of Child Labor (IPEC), a worldwide technical assistance program of the International Labor 

Organization (ILO), to progressively eliminate exploitive child labor. Second, ILAB’s Child Labor Education 

Initiative (EI), originating in 2001, provides funds for international projects focusing specifically on access to and 

quality of basic education as a means of reducing exploitive child labor. A wide variety of organizations implement 

EI projects. In recent years, ILAB has increasingly focused its assistance on large-scale national programs to 

eliminate the worst forms of child labor within a specific timeframe. This approach integrates child labor issues into 

national poverty and education plans and policies. 

ILAB measures the progress of all of its technical cooperation projects on two levels: community-based direct 

interventions benefiting individual children and families and country-level activities to build institutional capacity 

and strength. ILAB establishes its annual targets for its indicators through close consultations with grantees and 

analysis of baseline information, individual project targets, past performance and external factors. 

For FY 2006, Congress appropriated $61 million to ILAB’s child labor program. Seventy-eight percent of the funds 

directly contributed to ILAB’s two performance indicators described above. Remaining funds contributed to ILAB’s 

performance goal indirectly through administration and oversight funds, including child labor research and reporting. 

Various external factors influence ILAB’s targeted outcomes, such as the implementing environment of developing 

countries. ILAB-funded projects work in countries with diverse political, social, and economic environments. Civil 

unrest, natural disasters, economic shocks, frequent changes in governments, and poor infrastructure may also impact 

the progress of project implementation. 

Costs for this performance goal increased by 28 percent between FY 2005 and FY 2006, primarily due to lags in 

obligating funds at the project level. Child labor projects are usually four years in length and the obligation of project 

funds generally increases after a one year start up phase. 

 

28 In FY 2005, the indicator only reflected children withdrawn or prevented from the worst forms of child labor for USDOLfunded ILO-IPEC programs only. 
Performance Section 

118 United States Department of Labor 

Analysis and Future Plans 

The goal was achieved. ILAB exceeded targets for both of its performance indicators. In FY 2006, ILAB funded a 

total of 17 projects to combat child labor world-wide and to increase access to basic education. These projects 

support the Administration’s foreign policy objectives of eliminating exploitive child labor and fulfilling the U.S. 

Government’s responsibilities under international trade agreements. More specifically, the focus of projects in 

Africa was on supporting time-bound initiatives to eliminate the worst forms of child labor as a matter of urgency. In 

Latin America, the focus was on children working in urban informal sector work. In Asia, the primary focus was on 

anti-trafficking initiatives, bonded labor and preventing children from exploitive work as a result of the devastating 

earthquake in Pakistan. 

In FY 2006, 236,787 children were removed or prevented from exploitive work through the provision of education or 

training opportunities in ongoing ILO-IPEC and EI programs funded by DOL, exceeding the target of 178,000 

children. Since 1995, DOL-funded ILO-IPEC and EI projects have removed or prevented approximately 860,000 

children from exploitive work and given them meaningful alternatives to child labor. 

Preventing and withdrawing children from the worst forms of child labor in the long-term depends on a country’s 

willingness and ability to address the issue and sustain the efforts even after projects end. In FY 2006, DOL-funded 

ILO-IPEC and EI programs increased the capacity of 53 countries to address child labor, exceeding its target. 

Increasing capacity to address child labor is defined by a country’s legal framework, public policy, and monitoring of 

child labor. One example of a country that increased its capacity to address child labor is Benin, where in 

coordination with DOL funded ILO-IPEC and Catholic Relief Services projects, the government of Benin signed 

anti-trafficking legislation into law on January 30, 2006. Further, with assistance from the same projects, the 

Government of Benin signed a Multilateral Cooperation Agreement to Combat Trafficking in Persons, Especially 

Women and Children in West and Central Africa on July 7, 2006. Another example of a country that has increased 

its capacity to address child labor is Peru, where, the first National Plan for the Prevention and Eradication of Child 

Labor, with emphasis on the worst forms, was approved by the Government in Supreme Decree No. 0800-2005 and 

published on September 30, 2005. 

While ILAB is adding indicators to measure its research, reporting and policy functions, the child labor indicators 

will remain unchanged in FY 2007. 

 

DOL’s International Child Labor Program is 

funding World Education to carry out the 

“OPTIONS: Combating Child Trafficking 

and Commercial Sexual Exploitation 

Through Education” project in Cambodia. 

The project assists children who have been 

trafficked, or who live in areas where they 

are vulnerable to trafficking for commercial 

sexual exploitation or other forms of 

exploitive labor. Children in the project are 

provided various types of educational 

assistance, including “non-formal” or catchup educational programs for those who have 

not had the opportunity to go to formal 

schools. In this photo, young children work 

together on an assignment in a “non-formal” 

education class. 

Photo Credit: Peter Pigott 

PART, Program Evaluations and Audits 

ILAB was assessed through the PART in 2004, receiving a rating of Adequate. A principal finding of the PART was 

the need for more data to assess the impact of ILAB’s programs. The PART assessment also concluded that the child 

labor goals were outcome oriented, meaningful, and relate to the long-term goal. 
Strategic Goal 3 

FY 2006 Performance and Accountability Report 119 

In response to the PART finding and accompanying recommendation, ILAB received funding from the Department 

for a comprehensive study to assess its technical assistance program, effectiveness and sustainability. In FY 2006, 

the external evaluator analyzed project documents from 29 technical assistance projects. 

ILAB, with other U.S. Government agencies, is also currently involved in two GAO studies. The first is a review of 

U.S. agencies’ funding and implementation strategies of international basic education programs, initiated in response 

to a congressional mandate contained in Public Law 109-102, Section 567. At the end of the year, the GAO will 

have visited ILAB’s child labor projects in nine countries. The second study conducted by GAO assessed the efforts 

of U.S. Government agencies to combat trafficking in persons. DOL’s efforts on trafficking, including planning, 

funding, and monitoring of trafficking programs were reviewed. 

At ILAB’s request, the Office of the Inspector General (OIG) audited the Jesus Cares Ministries (JCM) EI project. 

JCM is a first-time Federal government grantee and a local, Zambian faith-based organization working to eliminate 

exploitive child labor. The OIG assessed JCM’s compliance with US and DOL regulations and policies and helped 

the organization to increase its capacity to manage Federal grant funds. 

ILAB is also implementing an efficiency measure to demonstrate its cost effectiveness in withdrawing or preventing 

children from exploitive child labor. ILAB is implementing its efficiency measure within its technical cooperation 

projects by requiring all project proposals for new grants in FY 2006 to meet its efficiency target. For example, 

project proposals of $5 million must provide direct services for the withdrawal or prevention of at least 8,600 

children involved in the worst forms of child labor in order to meet ILAB’s efficiency target. 

Data Quality and Major Management Challenges 

Data quality for this performance goal was rated Excellent. Strengths of the data include its accuracy, relevance, and 

completeness. ILAB grantees are required to submit semiannual project-level financial and technical progress 

reports including data for each ILAB indicator. ILAB also requires that grantees develop Performance Monitoring 

Plans specifying sources of data, method and frequency of data collection, responsible personnel, and costs for 

monitoring project indicators. ILAB corroborates grantee reporting through monitoring visits, project evaluations, 

and project audits. Many of these enhancements to data collection and verification directly respond to a PART 

finding identifying the need to collect more data to assess the impact of its programs. 

To further ensure the quality and accuracy of its performance indicator data, ICLP continues to work in consultation 

with the OIG and an accounting firm to conduct independent audits of its technical assistance projects. These audits 

examine grantees’ financial reporting, compliance with federal and DOL grant rules and regulations, and verify the 

accuracy of project-level performance data. ILAB scheduled 12 project-level audits in FY 2006 and an additional 19 

audits are scheduled for FY 2007. A summary of the audit reports are available on the ILAB Web site at 

http://www.dol.gov/ILAB/grants/main.htm, and copies of the individual reports are available upon request. 
Performance Section 

120 United States Department of Labor 

Improving Life for Workers Around the Globe

Performance Goal 06-3.3B (ILAB) – FY 2006 

Improve living standards and conditions of work internationally. 

Indicators, Targets and Results29 FY 2005 

Result 

FY 2006 

Target 

FY 2006 

Result 

Target 

Reached*

Percent of beneficiaries who consider a DOL-funded project to 

have improved their conditions of work 

83% 85% 80% N 

Percent of targeted individuals whose economic situation has 

benefited from DOL project assistance 

60% 63% – – 

Number of workers benefiting from compliance with national 

labor laws through improved inspections 

3.78 

million 

3.80 

million 

1.48 

million 

N 

Number of targeted workers reporting a reduction in 

HIV/AIDS risk behaviors 

19,500 19,750 – – 

Number of workplaces adopting policies and procedures to 

reduce the level of employment related discrimination against 

persons living with HIV/AIDS 

270 300 459 Y 

Cost (millions) $43 – $30 

*Indicator target reached (Y), substantially reached (S) or not reached (N) Goal Not Achieved 

Program Perspective and Logic 

The Bureau of International Labor Affairs (ILAB) seeks to ensure that the greatest possible number of workers 

benefit from a more open world economy. Expanding trade and investment and improving working conditions 

should be understood as mutually reinforcing objectives, not opposing ones – increased trade helps foster economic 

growth and raise living standards while promoting employment in the United States. The Department believes the 

creation of more open, stable economies that increase employment and standards of living for people will lead to 

increased political stability and security. 

Various external factors influence ILAB’s targeted outcomes, particularly the implementing environment of 

developing countries. ILAB-funded projects work in countries with diverse political, social, and economic 

environments. Civil unrest, natural disasters, economic shocks, frequent changes in governments and poor 

infrastructure may also impact the progress of project implementation. In FY 2006, the achievement of targeted 

results was influenced by political instability in Nepal and the Philippines. The earthquake in Pakistan also 

influenced performance, as it prevented field staff from continuing planned activities. 

The first two indicators for this performance goal support the President’s International Trade Agenda and the final 

indicator gauges performance of projects that support the President’s Emergency Plan for AIDS Relief (PEPFAR) by 

promoting HIV/AIDS prevention education programs in the workplace. These indicators measure the achievement 

of the long term objective to improve the life of workers worldwide through international technical assistance 

projects. The results indicated above derive from activities financed by previously allocated project funds in the past 

five years. ILAB establishes its indicators for this goal through close consultations with grantees, analysis of 

baseline information, and past performance. ILAB will add indicators to measure its research, reporting, and policy 

functions in FY 2007.

 

29 Subsequent to publication of the FY 2006 President’s Budget, two measures were discontinued. Due to shifting priorities and 

premature closing of project activities, it became apparent that ILAB would receive incomplete data to support the performance 

measurement, “percent of targeted individuals whose economic situation has benefited from DOL project assistance.” The 

second measurement, “number of targeted workers reporting a reduction in HIV/AIDS risk behaviors,” was no longer realistic 

given its complexity (estimating risk across generations) and de-emphasis in projects to which the indicator applied. 
Strategic Goal 3 

FY 2006 Performance and Accountability Report 121 

Costs associated with this performance goal decreased by 30 percent between FY 2005 and FY 2006 due to closing 

out of ongoing international technical assistance projects. 

Analysis and Future Plans 

ILAB achieved one of the three targeted results for Performance Goal 3.3B. ILAB projects increased the number of 

workplaces adopting policies and procedures to reduce employment-level discrimination against persons living with 

HIV/AIDS by 189, of which 2.8 million workers benefited. The increasing ability of the implementing organization 

to replicate new HIV/AIDS program and policies in subsidiaries of large partner enterprises accounted for this 

dramatic expansion. 

ILAB did not achieve its target measuring the anticipated percentage of project beneficiaries who considered a DOLfunded project to have improved their conditions of work due to the changing portfolio of ILAB projects. In the past 

year, many ongoing technical assistance projects closed out. The remaining projects primarily support free trade 

initiatives. It is much more difficult for project activities to have an impact on the beneficiaries in their individual 

workplaces when the projects are now primarily working with stakeholders at the ministerial level. 

The number of workers benefiting from improved labor inspections was just 38 percent of the target due to a data 

collection and methodology problem in one of the largest projects. ILAB is working with the project implementer to 

improve the data collection methodology and will adjust the target for this indicator for FY 2007. 

In FY 2006, the Bureau focused on providing oversight, monitoring and closing out remaining non-Child Labor 

technical assistance projects and supporting the President’s Trade Initiative and the PEPFAR. From the US 

Department of State, ILAB received $12 million in additional funding to implement projects and activities in support 

of the Dominican Republic - Central America - United States Free Trade Agreement and $744,050 in support of 

HIV/AIDS Education in the Workplace activities in Haiti and Guyana. The Department of State also provided $1.5 

million in funding to ILAB to continue activities in Ukraine to support the Mine Safety and Health project and 

$500,000 to fund activities in Morocco, Oman, and Bahrain as part of the Middle East Partnership Initiative. 

Funded through the $50 million President’s Initiative 

to Combat Trafficking in Persons, the Combating 

Forced Labor program in Brazil is currently providing 

income generation assistance to 465 workers at risk for 

trafficking for forced labor. Catholic Relief Services, 

the implementing partner, has reached 7,448 

vulnerable workers since it began in 2004. In addition 

to supporting trafficked victims and at-risk Brazilians, 

the project trains community leaders to raise awareness 

about the dangers of trafficking and builds the capacity 

of local organizations to monitor and report trafficking 

violations. Up to 40,000 Brazilians work in conditions 

analogous to slavery in the Amazon region. Given 

promises of a comfortable life for their families, many 

workers are persuaded to climb aboard trucks that 

transport them to jungle farms that are several days’ 

journey from their families and cities. Rarely do the 

promised wages materialize and in a short time, these 

workers find themselves in debt to the farm that 

“employs” them and unable to leave their situation. 

Photo Credit: Caritas 

PART, Program Evaluations and Audits 

ILAB was reviewed in the 2004 PART process and rated Adequate. The review is discussed in this section of the 

narrative for Performance Goal 06-3.3A. 

ILAB is implementing two efficiency measures to demonstrate its cost effectiveness in improving labor law 

compliance in host countries through improved labor inspections and in improving HIV/AIDS policies and programs 

in host countries. In the first 6 months of FY 2006, workers benefited from improved labor inspections for $0.53 per 
Performance Section 

122 United States Department of Labor 

worker and workers benefited from improved HIV/AIDS policies and program in host countries for $2.29 per 

worker. Together with other U.S. Government agencies, ILAB was involved in a GAO study to assess ways of 

enhancing US international efforts to combat the trafficking of persons. As part of the study, ILAB’s efforts to reduce 

trafficking – including planning, funding, and program documents – were reviewed. 

Data Quality and Major Management Challenges 

Data quality for this performance goal was rated Good. Strengths of the data include its relevance and completeness. 

ILAB is working with an implementer to correct deficiencies in their data collection methodology in time for 

reporting deadlines in FY 2007. ILAB grantees are required to submit semi-annual project-level financial and 

technical progress reports including data for each ILAB indicator. ILAB also requires grantees to develop 

Performance Monitoring Plans specifying sources of data, method and frequency of data collection, responsible 

personnel, and costs for monitoring project indicators. ILAB corroborates grantee reporting through monitoring 

visits, project evaluations, and project audits. Areas for improvement are verification, which would require stronger 

quality controls for grantees, and validity, which would require examining the extent to which ILAB is capturing 

outcomes that directly result from their program activities.
FY 2006 Performance and Accountability Report 123 

Strategic Goal 4: A Competitive Workforce 

Maintain Competitiveness in the 21st Century Economy

Of the eight performance goals under A Competitive Workforce, seven are associated with Employment and Training 

Administration (ETA) programs that focus on retooling the national workforce investment system to respond to 

needs for labor skills geared toward technological advancements and global competition. Similarly, the other 

performance goal under A Competitive Workforce, is managed by the Department’s Office of the Assistant Secretary 

for Policy (OASP). This performance goal gauges DOL’s success in retooling regulatory strategies and approaches 

to promote flexibility; employment laws, regulations and regulatory practices are reviewed to ensure they do not 

impose costs on employers without yielding corresponding benefits to the workforce and the economy. 

 

The net cost dedicated to Strategic Goal 4 in FY 2006 was $4.889 billion. The first chart below is based on total 

Departmental costs of $45.328 billion; the second is based on an adjusted net cost of $12.101 billion that excludes 

the major non-discretionary program costs associated with Strategic Goal 2.T

30T Net cost dedicated to Strategic Goal 4 

in FY 2005 (restated to reflect current goal structure) was $4.943 billion.

Strategic Goal 4 - Percent of Net 

Cost

7%

80%

2%

11%

1 - Prepared

2 - Secure

3 - Quality

4 - Competitive

Percent of Net Cost Excluding 

Income Maintenance

28%

22%

9%

41%

1 - Prepared

2 - Secure

3 - Quality

4 - Competitive

This goal consists of two broad objectives – Build a Demand-Driven Workforce System (Outcome Goal 4.1) and 

Promote Workplace Flexibility and Minimize Regulatory Burden (Outcome Goal 4.2). Their results, costs, and future 

challenges are discussed below. 

Outcome Goal 4.1 – Build a Demand-Driven Workforce System 

The nation’s future success will largely depend on a workforce that meets employers’ needs for new and skilled 

workers. DOL is committed to making the workforce investment system responsive to the changing needs of 

business and to linking job seekers with opportunities in high-growth industries. Through partnerships with State 

and local workforce agencies, business and industry, education and training providers, faith-based and community 

organizations, and economic development agencies, DOL seeks to understand the skills demanded by the labor 

market, make strategic investments in job training and increase accessibility and quality of information that helps 

match workers with employers. 

 

 

30 The excluded costs are referred to as Income Maintenance – unemployment benefit payments to individuals who are laid off or 

out of work and seeking employment ($31.322 billion) plus disability benefit payments to individuals who suffered injury or 

illness on the job ($1.905 billion). 
Performance Section 

124 United States Department of Labor 

Cost (millions) 

Goal (Agency) and Statement Performance Summary FY 2005 

PY 2004 

FY 2006 

PY 2005 

05-4.1A (ETA) 

Increase the employment, retention, and earnings of individuals 

registered under the Workforce Investment Act (WIA) Adult program. 

Goal achieved. All three 

targets reached. $906 $912

05-4.1B (ETA) 

Improve outcomes for job seekers and employers who receive OneStop employment and workforce information services. 

Goal achieved. All three 

targets reached. 746 791

05-4.1C (ETA) 

Increase the employment, retention, and earnings replacement of 

individuals registered under the WIA Dislocated Worker program. 

Goal not achieved. One 

target reached and one not 

reached. 

1472 1543

05-4.1D (ETA)31

Assist older workers to participate in a demand-driven economy 

through the Senior Community Service Employment Program. 

Goal not achieved. Three 

targets not reached. 426 432

05-4.1E (ETA) 

Increase accessibility of workforce information through the National 

Electronic Tools. 

Goal achieved. All three 

targets reached. 111 120

06-4.1A (ETA) 

Address worker shortages through the Foreign Labor Certification 

Program. 

Goal not achieved. Three 

targets reached and one not 

reached. 

60 46

06-4.1B (ETA) 

Increase the employment, retention, and earnings replacement of 

workers dislocated in important part because of trade who receive trade 

adjustment assistance benefits. 

Goal not achieved. Two 

targets reached and one not 

reached. 

846 700

Other (Indian and Native American Adult, National Farmworker, and Work Incentive Grants 

programs, Transition Assistance Program, Pilots, Demonstrations, Research and Evaluation, and H1B Technical Skills Training) 

376 345

Total for Outcome Goal 4.1 

Three performance goals 

achieved and four not 

achieved 

$4943 $4889

Results Summary 

Five of the seven performance goals in Outcome Goal 4.1 are for employment and training programs whose results 

are measured by entered employment rate – percent of participants who obtain jobs subsequent to receipt of services 

– and by retention – percent of those who obtained jobs who are still employed six months later. The charts below 

indicate results for the previous year, plus the current year’s targets and results. 32 Earnings are important, too, but 

results are not provided because the programs that have earnings data used different indicators. This will be resolved 

in the next year or so as Federal job training program common measures are fully implemented. Significant 

differences in results between programs are generally explained by differences in types of services offered and 

populations served. 

The Department achieved its performance goal for the WIA Adult program. All three performance indicators 

reached or exceeded targets. However, entered employment and employment retention rates are lower than prior 

year results. The earnings change of $4044 exceeded the target and remains on an upward trajectory, reflecting an 

improved economy and sustained employment. One-Stop employment services entered employment and retention 

rates both exceeded targets for the third year in a row but were slightly below PY 2004 results, and a baseline was 

established for earnings change. The WIA Dislocated Worker goal was not achieved; entered employment reached 

the target, but retention dipped below the target and was three percentage points below the prior year’s performance. 

 

31 In FY 2005, this goal was included in Other programs under Outcome Goal 1.1. 

32 The Senior Community Service Employment Program (Performance Goal 05-4.1D) is omitted because of problems discussed 

in the performance goal narrative. 
Strategic Goal 4 

FY 2006 Performance and Accountability Report 125 

This may to some extent be attributed to the change in the definition for retention, which now requires verification of 

employment in two periods instead of one – a factor in this year’s results for many programs using common 

measures. Earnings change was reported under a new definition and excluded from the goal achievement 

calculation. The Trade Adjustment Assistance program achieved targeted levels for retention and earnings but fell 

just shy of the target for entered employment. 

The Senior Community Service Employment Program (SCSEP) did not achieve its performance goal. None of its 

targets were reached – entered employment and retention due to historically unprecedented targets, and average 

earnings because baseline data were not collected. The Department achieved its performance goal for electronic 

tools, exceeding the target for increased dissemination of O*NET data and setting baselines for Career Voyages and 

America’s Career InfoNet Web site page views. The Foreign Labor Certification goal was not achieved, but three of 

four targets were reached. The H-1B (specialty workers) Program processed all applications within the statutory 

seven-day timeframe. The permanent program significantly exceeded its target of processing 60 percent of 

applications within six months. The program also exceeded its processing target for H-2A (temporary agricultural) 

but not for H-2B (temporary non-agricultural). 

When Jerry was laid off from his machinist position in 

April 2003, he decided to make a career change. In 

search of more reliable employment, Jerry enrolled in 

the Trade Adjustment Assistance (TAA) tuition 

assistance program to receive training in the healthcare 

field. With guidance from a specialist, Jerry 

developed a career plan to reach his goal of becoming 

a health care worker. Using tuition assistance from 

TAA, Jerry enrolled in the Respiratory Therapy 

program at Illinois Central College in August 2003. 

With hard work and commitment to his goal, Jerry 

graduated in May 2005. Soon after graduation, Jerry 

found full-time work as a Respiratory Therapist at St. 

Francis Medical Center. Jerry is now self-sufficient, 

able to support his family and is personally fulfilled in 

his career. 

Photo Credit: Lacy Peyton 

 

Net Cost of Programs 

Total net cost for this goal for FY 2006 was $4.889 billion – one percent less than FY 2005 net cost after restatement 

to include the WIA Adult, One-Stop, Dislocated Worker and several smaller programs (Other) that were moved from 

Outcome Goal 1.1, for comparison.

Entry to Employment

50%

60%

70%

80%

90%

Adults

One-Stop services

Dislocated Workers

Trade Adjustment

DOL Program

Prior Year Target Result

Retention in Employment

70%

75%

80%

85%

90%

95%

Adults

One-Stop services

Dislocated Workers

Trade Adjustment

DOL Program

Prior Year Target Result
Performance Section 

126 United States Department of Labor 

Outcome Goal 4.1

Net Costs ($Billions)

4.9 4.9

0

2

4

6

8

10

2005 2006

Fiscal Year

Future Challenges 

To improve outcomes for WIA participants, the Department is integrating service delivery and providing workers 

with the right skills to get and retain good jobs with good wages. Key strategies include strengthening strategic 

partnerships with business and industry and the education community. The objective of these partnerships is to 

develop workforce solutions customized to State and local economies that use WIA resources and targeted to prepare 

workers for jobs with career pathways in high demand occupations and industries. Other strategies involve assuring 

that every individual, including individuals with disabilities, veterans, new Americans, older workers and others have 

access to the full array of services through the One-Stop delivery system. DOL is also examining workforce 

education strategies and optional arrangements that would provide greater flexibility to States and local workforce 

agencies to tailor services to meet the needs of their regional economies. During FY 2007, the Department will host 

national Rapid Response Summits and Trade Coordinators’ meetings and follow-up forums that will emphasize the 

importance of reliable, accurate performance data in meeting the needs of dislocated workers. In addition, the 

Department has undertaken a multi-State study of the effects on performance of co-enrollment in the WIA Dislocated 

Worker and Trade Adjustment Assistance programs. 

 

Enhancements to the SCSEP that will be pursued in the context of reauthorization of the Older Americans Act 

include strengthening the efforts of the workforce investment system to integrate the full spectrum of services 

available to older workers and increasing the range of training services that can be offered to older workers. The 

reauthorized program should more effectively target those most in need and provide flexibility to grantees to use 

other training options in addition to community service employment. 

Strategies to improve labor certification programs include continuing efforts to eliminate the permanent program’s 

backlog (applications filed and being processed under the regulation in effect prior to March 28, 2005) and to 

reengineer the H-2B temporary program. DOL will continue to seek legislative approval to fund application 

processing activities for the permanent program through an employer-paid application fee. The Department will 

focus on improving overall program integrity by emphasizing fraud detection and prevention and by providing 

employer compliance assistance. 

Outcome Goal 4.2 – Promote Workplace Flexibility and Minimize Regulatory Burden 

A competitive economic environment requires a regulatory structure in which benefits of regulations exceed their 

costs. Many employment laws and regulations were written long ago; the applicable context for them has changed 

considerably, yet the rules themselves have not. DOL is systematically reviewing the regulations it is responsible for 

enforcing, to ensure they do not pose unnecessary barriers. In addition, DOL is conducting reviews pursuant to the 

Regulatory Flexibility Act of 1980 to determine if regulations have or will have a significant economic impact on a 

substantial number of small entities. These reviews also examine the effect on employers' compliance costs and 

whether the regulatory burdens of all employers, both large and small, are reduced. Performance indicators measure 

DOL’s success in creating a more competitive economic environment through promotion and development of a 

regulatory structure that is congruent with the modern workplace. 
Strategic Goal 4 

FY 2006 Performance and Accountability Report 127 

Costs of achieving DOL’s results in maximizing regulatory flexibility are included in the Department’s regulatory 

agencies’ costs of operations. 

Goal (Agency) and Statement Performance Summary 

06-4.2A (OASP) 

Maximize regulatory flexibility and benefits and promote flexible workplace programs. 

Goal achieved. All three targets 

reached. 

Results Summary 

DOL agencies continue to make progress on their regulatory agendas. In the course of promulgating revised 

regulations, agencies conduct cost benefit analyses to help assure that the regulations maximize net benefits. The 

following are examples of these regulatory initiatives. 

• MSHA published a supplemental proposed rule that would establish new mandatory electrical safety 

standards for the installation, use, and maintenance of high-voltage continuous mining equipment used in 

underground coal mines, thereby eliminating the need for mine operators to seek petitions for modifications 

to use high-voltage equipment. 

• OSHA conducted hearings on its intent to update a 30-year old construction standard, to address 

technological advances, and amend the maintenance provisions of the general industry standard. 

• EBSA has proposed rulemaking that would update the regulatory requirements to allow employee benefit 

plan annual reports to be filed electronically. 

The regulatory review and clean-up project implementation continued to update obsolete, non-substantive references 

in the Code of Federal Regulations (CFR) that can be accomplished without notice or comment. In the second and 

third quarters of FY 2006, four direct final rules affecting 51 parts of the CFR and 740 discrete regulatory changes 

were published by DOL to correct or remove obsolete regulatory references. Another direct final rule that will affect 

10 parts of the CFR and make 330 discrete regulatory changes will be published by the end of 2006 or early 2007. 

The Women's Bureau’s Flex-Options for Women project encourages business owners to develop workplace 

flexibility policies and programs in response to the growing demand for such options in the workplace. Seven of ten 

Women's Bureau’s Regional Offices participate – covering 27 states along with Puerto Rico, the Virgin Islands, and 

Guam. FY 2006 has been its most successful year to date, with 92 companies implementing or enhancing significant 

flexible workplace policies and programs. 

Future Challenges 

The Department will promote the greater flexibility desired by workers and employers. This includes examining the 

regulatory environment — employment-related laws, regulations and regulatory practices — in light of nontraditional work arrangements and the need to reduce regulatory burdens. In particular, some regulations written 

decades ago may no longer be applicable or effective; they may impose costs on employers without yielding 

corresponding benefits to the workforce. The shift to knowledge work will also reinforce the ongoing trend of “nontraditional” work arrangements. Over the next several years, OASP and the Department’s regulatory agencies, such 

as the Occupational Safety and Health Administration, Employment Standards Administration and the Employee 

Benefits Security Administration will continue to conduct comprehensive reviews of key laws and regulations to 

determine their effectiveness and applicability to the new workplace. 
Performance Section 

128 United States Department of Labor 

Increase Employment, Retention, and Earnings for Qualified Adults 

Performance Goal 05-4.1A (ETA) – PY 2005 

Increase the employment, retention, and earnings of individuals registered under the Workforce Investment Act Adult 

program. 

Indicators, Targets and Results PY 2004 

Result 

PY 2005 

Target 

PY 2005 

Result 

Target 

Reached*

Percent of participants employed in first quarter after program exit 77% 76% 76% Y 

Percent of those employed in the first quarter after program exit 

still employed in the second and third quarters after program exit 

86% 81% 82% Y 

Average earnings change for those employed in the first quarter 

after program exit and still employed in the third quarter after exit 

$3746 $3400 $4044 Y 

Cost (millions) $906 – $912 

*Indicator target reached (Y), substantially reached (S) or not reached (N) Goal Achieved

Program Perspective and Logic 

The Workforce Investment Act (WIA) Adult program is designed to help adult workers (unemployed and employed) 

acquire the skills and jobs they need to compete in a global economy. WIA Adult program funds are provided by 

formula to States and local areas, which operate statewide networks of One-Stop Career Centers. These centers 

provide a continuum of comprehensive services to workers and employers. Examples of services are assessments of 

skills and service needs, individual employment planning, group counseling and career planning, case management 

and short-term prevocational services. The types of training services available to Adults are occupational skills 

training, on-the-job training, skills upgrading, entrepreneurial training, job readiness training, and adult education and 

literacy activities. States also use the WIA Adult program to leverage additional, non-Federal resources to increase 

the quality and variety of assistance. Through collaboration with program partners, the WIA Adult program seeks to 

assist individuals in their career goals, reduce welfare dependency, and improve the quality, productivity and 

competitiveness of the nation’s workforce. 

On August 26, 2005, Geovanna had a good job working as a medical assistant and a 

nice apartment in Jefferson Parish, Louisiana. A few days later, Hurricane Katrina 

left her unemployed and homeless. Before the storm hit, Geovanna made her way to 

Austin, Texas, where she learned about the employment services offered at 

WorkSource, a WIA-funded organization in Greater Austin that oversees the 

activities of all 28 regional Workforce Boards across Texas. She went to the nearest 

Career Center and was immediately connected to the WIA and National Emergency 

Grant programs. WorkSource staff helped Geovanna register for work using 

WorkInTexas.com and put together a new resume for an upcoming job fair at the 

Career Center. At the job fair, Geovanna was introduced to a representative from a 

local healthcare academy that was looking for someone with her skills. Four days 

later, Geovanna landed a job at the school teaching medical assisting, earning 

approximately $10 more per hour than her previous job in Louisiana. 

Photo Credit: Leanne James 

The Department uses the Federal job training common measures to evaluate 

the success of WIA employment and training services for adults: entered 

employment, employment retention, and earnings change. A high entered 

employment rate indicates that participants have improved financial opportunity. A high retention rate indicates 

stability of participants’ new positions. Increased average earnings indicate that participants are getting better jobs. 

National labor market conditions strongly influence employment program outcomes. Results for the indicators 

associated with this goal showed continuous improvement up until PY 2005 as the unemployment rate decreased. 
Strategic Goal 4 

FY 2006 Performance and Accountability Report 129 

While lower than the previous year’s results, the PY 2005 results did reach or exceed targets. The targets for future 

years build upon the PY 2005 results to drive continuous program improvement.

Analysis and Future Plans 

The Department achieved its performance goal for the WIA Adult program. All three performance indicators 

reached or exceeded targets. However, the entered employment outcome of 76 percent dropped slightly from PY 

2004. The employment retention rate of 82 percent is also lower than prior-year results. This change may be 

attributed to the change in the definition for retention, which now requires verification of employment in two 

consecutive calendar quarters, instead of one. The earnings change of $4044 exceeded the target and remains on an 

upward trajectory, reflecting both an improved economy and sustained employment. 

Costs associated with this goal were virtually flat from PY 2004 to PY 2005. The average cost per participant fell 

from $2025 to $1323 as a result of an increase of 231,000 individuals receiving services – from 447,265 in PY 2004 

to 678,012 in PY 2005. 

 

To improve outcomes for WIA participants, the 

Department is focusing on integrated service delivery and 

new approaches to workforce investment designed to 

ensure workers have the right skills to get and retain good 

jobs with good wages. Key strategies include 

strengthening strategic partnerships with business and 

industry and the education community. These partnerships 

are used to develop workforce solutions customized to 

State and local economies that use WIA resources and 

targeted to prepare workers for jobs with career pathways 

in high demand occupations and industries. Other 

strategies involve assuring that every individual, including 

individuals with disabilities, veterans, new Americans, 

older workers and others have access to the full array of integrated services through the One-Stop delivery system. 

Finally, the Department is leveraging a wide array of non-WIA resources to maximize the impact of WIA 

investments and to train more workers in the skills they need to be successful. 

In PY 2006, the Department will continue to provide direction and technical assistance to state and local workforce 

organizations in support of a flexible, demand-driven, fully integrated workforce investment system focused on 

helping workers develop the skills necessary to succeed in the 21st century innovation economy. The Department 

will encourage and support States and local areas to eliminate duplicative system infrastructures, to develop 

integrated service delivery strategies for the wide array of populations served through the One-Stop delivery system, 

and to focus job training investments on high-demand skills and occupations. In turn, this will enable individuals to 

successfully access career pathways leading to self-sufficiency. 

PART, Program Evaluations and Audits 

In 2005, the WIA Adult program was assessed under the Program Assessment Rating Tool (PART) review, and was 

rated Adequate. The PART improvement plan follow-up actions included conducting the Personal Reemployment 

Entered Employment

60%

65%

70%

75%

80%

85%

2000 2001 2002 2003 2004 2005

Program Year

Result Target

Employment Retention

70%

75%

80%

85%

90%

2000 2001 2002 2003 2004 2005

Program Year

Result Target

Earnings Change

$2,000

$2,500

$3,000

$3,500

$4,000

$4,500

$5,000

2000 2001 2002 2003 2004 2005

Program Year

Result Target
Performance Section 

130 United States Department of Labor 

Account Demonstration to test integrated funding streams and self-directed career accounts, and making revisions to 

performance reporting requirements to implement common measures. In the FY 2007 Budget, the Department 

proposed Career Advancement Accounts to help workers more efficiently access education and training and 

successfully transition to the global market place, and to support workforce investment boards’ efforts to streamline 

the One-Stop service delivery system through the elimination of outdated service delivery processes. This proposal, 

which is contingent on legislative action, would increase the number of workers trained, improve services by 

providing participants individual choice, and increase flexibility in States’ use of Federal funding. 

One study by the OIG (Insufficient Federal Guidance Could Result in Misuse of Incumbent Worker Training 

Program Funds) and another by GAO (Workforce Investment Act: Labor and States Have Taken Actions to Improve 

Data Quality, but Additional Steps Are Needed) apply to several WIA programs and are summarized in the narrative 

for Performance Goal 05-1.1A. More information on these studies is also available in Appendix 2, where they 

appear as Studies 1 and 2. 

Data Quality and Major Management Challenges 

Data quality for this performance goal was rated Very Good. Strengths of the data include its validity, accuracy and 

completeness. In PY 2004, in response to concerns raised by OIG regarding accuracy of data reported by States for 

WIA performance, DOL developed and implemented a data validation methodology for WIA programs (see item I, 

Improve Accountability for Performance and Financial Data, in the Major Management Challenges section of the 

Executive Summary). State workforce agencies used handbooks, user guides, and software developed by DOL to 

validate outcomes reported in PY 2003-04. DOL is in the process of revising the data validation materials and 

software to support accurate and reliable data reporting. In addition to data validation, which includes both report 

and data element validation, implementation of common measures addressed a major management challenge related 

to DOL programs having different definitions, such as “veteran” or timing of retention measurement. Uniform 

definitions for performance indicators aid understanding of system impacts. To facilitate implementation of the 

common measures for PY 2005, DOL revised guidance on data elements definitions. 
Strategic Goal 4 

FY 2006 Performance and Accountability Report 131 

Improve Employment Outcomes for One-Stop System Users

Performance Goal 05-4.1B (ETA) – PY 2005 

Improve outcomes for job seekers and employers who receive One-Stop employment and workforce information 

services. 

Indicators, Targets and Results PY 2004 

Result 

PY 2005 

Target 

PY 2005 

Result 

Target 

Reached* 

Participants employed in the first quarter after program exit 64% 61% 63% Y 

Percent of those employed in the first quarter after program exit 

still employed in the second and third quarters after program 

exit 

81% 78% 80% Y 

Average earnings change for those employed in the first quarter 

after program exit and still employed in the third quarter after 

exit 

– Baseline $1580 Y 

Cost (millions) $746 – $791 

*Indicator target reached (Y), substantially reached (S) or not reached (N) Goal Achieved

Program Perspective and Logic 

A fundamental underpinning of the nation’s One-Stop Career Centers is the delivery of core employment and 

workforce information services to a universal population of both businesses and job seekers. Core services include a 

wide array of workforce and labor market information, career guidance products and tools, assessments, job 

matching and referral, reemployment services for UI claimants, targeted services for veterans and more. Funded 

principally through the Wagner-Peyser Act and programs administered by the Veterans’ Employment and Training 

Service (VETS), as well as the Workforce Investment Act (WIA), these services are designed to help workers 

(employed and unemployed) obtain jobs and give employers access to skilled workers who will help them compete 

in the global economy. Providing effective employment and workforce information services that account for the 

uniqueness of local/regional labor market conditions and the needs of workers is the key to achieving successful 

outcomes for both workers and employers. Such services are provided in collaboration with a wide array of OneStop partners and are fully integrated with other services (training, for example) available through One-Stop Centers. 

Employment services are provided at no charge, with special emphasis on services for Unemployment Insurance (UI) 

claimants, migrant and seasonal farm workers, veterans, and businesses. We are encouraged that PY 2005 is the 

fourth consecutive year in which results for the indicators associated with this goal have exceeded targets. The targets 

for PY 2005 were higher than the targets for PY 2004, reflecting the trend of using ever-more ambitious goals to 

drive continuous program improvement. 

DOL uses the Federal job training program common measures to evaluate its core employment and workforce 

information services: entered employment, employment retention, and earnings change. A high entered employment 

rate indicates that participants have improved financial opportunity. A high retention rate indicates stability of 

participants’ new positions. Increased average earnings indicate that participants are getting better jobs. 

Costs associated with this performance goal increased by six percent between PY 2004 and PY 2005. Budget 

authority increased slightly, but most of the increase likely resulted from States’ expenditure of prior years’ funding 

because the grants provide spending authority for two years. 

Analysis and Future Plans 

Reports submitted by the States for the quarter ending June 30, 2006 contain four quarters of outcome data for entry 

into employment and employment retention for job seekers who registered and received core employment and 

workforce information services.33 The entered employment rate highlights the effectiveness of the workforce system 

 

33 Final data for PY2005 does not include any data for Wyoming. 
Performance Section 

132 United States Department of Labor 

in meeting the employment needs of job seekers, most of whom are unemployed, as well as the workforce system’s 

ability to match employers with high skilled workers in occupations that are in demand. Performance levels were 

first established for Wagner-Peyser Act funded employment services in PY 2002, hence there are four years of 

measured results for entered employment and three years for employment retention, which lags by six months. 

 

Employment Retention

65%

70%

75%

80%

85%

2003 2004 2005

Program Year

Result Target

For the entered employment rate, the illustration above shows that outcomes for employment services have exceeded 

targets in each of the past four Program Years. While the PY 2005 rate of 63 percent exceeded the target, it was one 

percentage point lower than that achieved in PY 2004. The 80 percent result exceeded the target but is slightly lower 

than the prior year outcome. This may be attributed to the change in the definition for retention, which now requires 

verification of employment in two periods instead of one. The earnings change, which in PY 2005 was a new 

indicator for employment services, was $1580. 

For the third year running, the Massachusetts Department of 

Workforce Development sponsored the Annual Jobs First Day to 

help job seekers connect with employers across the 

Commonwealth. This one-day event featured a statewide job 

fair hosted by the 32 One-Stop Career Centers. Job First Day 

resulted in impressive turnouts with 6,500 job seekers and over 

600 employers participating at the 32 Career Center locations. 

Recruiters representing many different industries were on hand 

to share information about a wide variety of available positions 

and interview qualified workers. Throughout the day, 

workshops were hosted for employers to learn about 

employment resources such as the state’s Workforce Training 

Fund, tax incentives for hiring and regional labor market 

information. In addition to meeting prospective employers, job 

seekers were able to attend workshops on job search strategies, 

get their resumes critiqued and talk to a career counselor. 

Photo Credit: Henry Soones 

PART, Program Evaluations and Audits 

In 2004, the Program Assessment Rating Tool (PART) review rated this program Adequate. The review found that 

accountability for performance results by grantees was insufficient, and that services duplicate some services offered 

by the WIA Adult and Dislocated Worker programs. In response, DOL accelerated implementation of the Federal 

job training program common measures. Separate funding streams that fund core employment services through the 

One-Stop system, particularly the WIA Adult and Dislocated Worker funding and the Wagner-Peyser Act funding, 

continue to present challenges to program performance. DOL is proposing to streamline reporting for these 

programs. With WIA reauthorization, DOL proposes to combine these funding streams and WIA Youth into one 

consolidated program to minimize duplication of services and administrative support funds. 

In Two of Illinois’ One-Stop Centers Have Not Fully Implemented the Seamless Service Concept, the OIG reported 

challenges and deficiencies related to One-Stop implementation (see Study 35 in Appendix 2). The State of Illinois 

Entered Employment

50%

55%

60%

65%

70%

2002 2003 2004 2005

Program Year

Result Target
Strategic Goal 4 

FY 2006 Performance and Accountability Report 133 

indicated that it had already identified some of the issues identified in the OIG audit in its own reviews and was 

already implementing improvement strategies. The State also indicated that challenges in these two One-Stops were 

not reflective of overall state conditions. In another study, The State of Texas has Effectively Implemented the OneStop Seamless Service Concept (Study 36 in Appendix 2), the OIG found that the State of Texas had effectively 

implemented a seamless One-Stop service delivery model and operational structure, and made no recommendations. 

Data Quality and Major Management Challenges 

Data for this performance goal was rated Very Good. Strengths of the data include its completeness and validity. In 

response to concerns raised by the Office of the Inspector General regarding the accuracy of performance data 

reported by States, DOL developed and implemented a data validation methodology for WIA programs, including 

employment services (see item I, Improve Accountability for Performance and Financial Data, in the Major 

Management Challenges section of the Executive Summary). State workforce agencies used handbooks, user guides, 

and software developed by DOL to validate outcomes reported in PY 2003 and PY 2004. DOL has updated the data 

validation materials and software to support accurate and reliable data reporting; details regarding the updates are 

available on ETA’s Performance Web site (http://www.doleta.gov/Performance/Reporting/datavalidation.cfm).
Performance Section 

134 United States Department of Labor 

Assist Dislocated Workers

Performance Goal 05-4.1C (ETA) – PY 2005 

Increase the employment, retention, and earnings of individuals registered under the Workforce Investment Act 

Dislocated Worker Program. 

Indicators, Targets and Results PY 2004 

Result 

PY 2005 

Target 

PY 2005 

Result 

Target 

Reached*

Percent of participants employed in the first quarter after program 

exit 

84% 83% 83% Y 

Percent of those employed in the first quarter after program exit 

still employed in the third quarter after program exit 

91% 89% 88% N 

Average earnings change for those employed in the first quarter 

after program exit and still employed in the third quarter after exit 

93% 92%** $461 – 

Cost (millions) $1472 – $1543 

*Indicator target reached (Y), substantially reached (S) or not reached (N) 

**Target was established using a different definition – replacement of earnings prior 

to dislocation/layoff. 

Goal Not Achieved

Program Perspective and Logic 

The Workforce Investment Act (WIA) Dislocated Worker program aims to quickly reemploy laid off workers and 

preferably to enhance their employability and earnings by increasing occupational skills. The Department allocates 

80 percent of funds by formula to the States. The Secretary may use the remaining 20 percent for discretionary 

activities specified in the Workforce Investment Act, including assistance to localities that suffer plant closings, mass 

layoffs or job losses due to natural disasters and military base realignment and closures. This program is seamlessly 

integrated with other programs (such as the Wagner-Peyser Act employment services and the WIA Adult program) to 

offer comprehensive assistance to workers and employers at One-Stop Career Centers. The types of training services 

available to Dislocated Workers are occupational skills training, on-the-job training, skills upgrading, entrepreneurial 

training, job readiness training, adult education and literacy activities and customized training for employers who 

commit to hiring. 

Three key indicators – Federal job training program common measures – are used to assess the program’s success. 

The entered employment rate measures the program’s effectiveness at helping participants return to work. The 

retention rate and earnings replacement indicators demonstrate the program’s effectiveness at matching or enhancing 

participants’ skills and abilities to fit employment opportunities. In PY 2006, ETA will measure average earnings in 

lieu of the earnings replacement rate to be consistent with measures for similar programs. 

Analysis and Future Plans 

The Department did not achieve its performance goal for the WIA Dislocated Worker program. Results for the 

entered employment rate have been between 82 and 84 percent for the past several years. Employment retention for 

dislocated workers dipped to a rate of 88 percent, below the target and down from 91 percent in PY 2004. This could 

be attributed in part to the change in the definition for retention, which now requires verification of employment in 

two periods instead of one. DOL previously reported wage replacement as the earnings measure for this population, 

but has recently adopted the common measures definition of earnings change. Consequently, performance against 

the target for this indicator is unknown. 

Cost for this performance goal increased by five percent between FY 2005 and FY 2006 due to increased budget 

authority. Average cost per participant continues to rise, from $3505 in PY 2004 to $4610 in PY 2005, because 

participants served dropped by 30 percent – from 330,566 in PY 2004 to 320,204 in PY 2005. The program is 

projected to serve only 292,460 dislocated workers in PY 2006. To maximize resources, workforce systems are 

introducing innovative methods of worker preparation that are less staff-intensive. Enhancing the systems’ role as 

labor market and career advisor will help workers and businesses make self-directed informed choices in preparing 
Strategic Goal 4 

FY 2006 Performance and Accountability Report 135 

for their future. Integrating system services (such as the array of separately authorized programs for dislocated 

workers), further using and expanding the existing public infrastructure (such as the nationwide network of 

community colleges, vocational and adult education programs, and apprenticeships), as well as reducing duplication 

and achieving economies of scale will maximize resources and minimize duplication of services. 

 

The Department continues to provide direction and technical assistance to state and local workforce organizations in 

support of a flexible, demand-driven, fully integrated workforce investment system focused on helping dislocated 

workers develop and upgrade their skills in order to successfully make employment transitions and obtain 

reemployment that supports economic self-sufficiency. The Department is working to encourage states and local 

areas to eliminate duplicative system infrastructures, to develop integrated service delivery strategies for dislocated 

workers, and to focus education and training investments on skills and occupations in demand. In turn, this will 

enable dislocated workers to successfully access career pathways that provide multiple opportunities for 

advancement. 

The Department is also examining workforce education strategies and developing strategies for a regional approach 

to workforce development, economic development and education. In FY 2007, DOL proposed that Congress pass 

legislation that would consolidate the WIA Dislocated Worker Program, the WIA Adult and Youth Programs, and 

the Employment Service into a single grant to States for Career Advancement Accounts and basic employment 

services. Consolidation of funding streams would provide greater flexibility to states and local workforce areas to 

tailor service delivery to meet the needs of their regional economies. 

Kevin lost his job when his employer announced they were downsizing. Losing 

the sole income for his family of six was very stressful and required many 

adjustments. He enrolled in the Dislocated Worker Program at the Missouri 

Career Center in Washington and entered a 15-month accelerated Registered 

Nursing Program at Barnes School of Nursing. While attending training, his wife 

worked, and his family received assistance through the Family Support Division 

and the Jefferson/Franklin Community Action Agency. Kevin also joined the 

Navy Reserves, which provided extra income. Notwithstanding a multitude of 

family health issues, Kevin graduated in August 2004 and now works at St. John’s 

Medical Center’s Intensive Care Unit, where he has also been accepted into the 

Critical Care Fellowship Program. He is now proudly serving in Iraq, applying his 

skills and defending his country. Kevin’s accomplishments would not have been 

achieved without the support of Missouri’s workforce system. 

Photo Credit: Michael Waltman 

PART, Program Evaluations and Audits 

In the Program Assessment Rating Tool (PART) review conducted in 

2002, the WIA Dislocated Worker program was rated Adequate. The 

review found that States and local communities have insufficient flexibility due to separate Federal funding streams 

and requirements, and that administrative overhead was excessive. In response, DOL issued guidance that outlined 

existing service provisions and funding flexibility in WIA applicable to special layoff and disaster situations. 

Entered Employment

65%

70%

75%

80%

85%

90%

2000 2001 2002 2003 2004 2005

Program Year

Result Target

Employment Retention

75%

80%

85%

90%

95%

2000 2001 2002 2003 2004 2005

Program Year

Result Target
Performance Section 

136 United States Department of Labor 

Additionally, the FY 2007 Budget proposed to consolidate the program with three other State grant programs, and 

use the consolidated State grant to finance Career Advancement Accounts. This proposed program redesign would 

increase the number of workers trained, improve access to quality workforce education services and eliminate 

unnecessary overhead spending. 

One study by the OIG (Insufficient Federal Guidance Could Result in Misuse of Incumbent Worker Training 

Program Funds) and another by GAO (Workforce Investment Act: Labor and States Have Taken Actions to Improve 

Data Quality, but Additional Steps Are Needed) apply to several WIA programs and are summarized in the narrative 

for Performance Goal 05-1.1A. More information on these studies is also available in Appendix 2, where they 

appear as Studies 1 and 2. 

In December 2005, the OIG issued a report, Alleged Violations of WIA Program and Federal Guidelines at One-Stop 

Center Operated by Affiliated Computer Services, Inc., documenting findings regarding its investigation of a 

complaint that a WIA program operator in Kansas mismanaged the Dislocated Worker program and funds (see Study 

37 in Appendix 2). The OIG determined that the allegation was unsupported and made no recommendations. 

The Department is currently conducting a study in which seven State Workforce Agencies (SWAs) are co-enrolling 

all of their TAA participants into the Dislocated Worker program to examine how co-enrollment affects the 

performance outcomes of both populations. Results are expected in 2008. 

Data Quality and Major Management Challenges 

Data quality for this performance goal was rated Very Good. Strengths of the data include its validity, accuracy and 

completeness. In response to concerns raised by the Office of Inspector General regarding accuracy of data reported 

by States for WIA performance, DOL developed and implemented a data validation methodology for WIA programs 

(see item I, Improve Accountability for Performance and Financial Data, in the Major Management Challenges 

section of the Executive Summary). SWAs used handbooks, user guides, and software developed by DOL to 

validate outcomes reported in PY 2003 and PY 2004. In PY 2005, SWAs implemented Federal job training program 

common measures. In PY 2006, the States will report on average earnings, rather than an earnings change measure, 

to look at participant earnings 6 months after program completion.
Strategic Goal 4 

FY 2006 Performance and Accountability Report 137 

Provide Older Americans Service and Employment Opportunities

Performance Goal 05-4.1D (ETA) – PY 2005 

Assist older workers to participate in a demand-driven economy through the Senior Community Service Employment 

Program. 

Indicators, Targets and Results PY 2004 

Result 

PY 2005 

Target 

PY 2005 

Result 

Target 

Reached*

Percent of participants employed in the first quarter after program 

exit 

36% 55% 37% N 

Percent of those employed in the first quarter after program exit 

still employed in the third quarter after program exit 

65% 65% 48% N 

Average earnings gain for those employed in the first quarter after 

exit and still employed in the third quarter after program exit 

– Baseline – N

Cost (millions) $426 – $432 

*Indicator target reached (Y), substantially reached (S) or not reached (N) Goal Not Achieved

Program Perspective and Logic 

Older Americans are often unemployed because they lack up-to-date skills required of workers in our rapidly 

changing economy. The Senior Community Service Employment Program (SCSEP) is designed to serve low income 

workers age 55 and older by providing job training and work experience through community based organizations and 

government agencies. The goal of the program is to promote self-sufficiency for seniors by placing individuals in 

unsubsidized employment. The program, a required partner under the Workforce Investment Act (WIA), coordinates 

delivery of placement and training services through the One-Stop Career Center system. The program has served 

over 100,000 individuals each year for the last 3 years. 

The Department uses the Federal job training common measures to evaluate the success of SCSEP: entered 

employment, employment retention and earnings change. A high entered employment rate indicates that participants 

have improved financial opportunity. A high retention rate indicates stability of participants’ new positions in 

unsubsidized employment. Higher earnings gains reflect effective assistance, especially of training services. 

Effective Program Year 2006, SCSEP will measure average earnings instead of earnings gain. 

Costs associated with this goal did not vary appreciably from FY 2005. 

Analysis and Future Plans

Clearly, targets for PY 2005 were overly ambitious; they were not updated due to delays in funding and technical 

problems in implementing a new data collection instrument. In other words, the PY 2004 baseline results shown in 

the table were not available until late in the year. Moreover, the retention rate result is insufficient to establish a 

target; due to the inherent lag of six to twelve months, it represents incomplete data. No data were collected on 

average earnings; the baseline year has been shifted to PY 2006. 

As noted in the Data Quality and Major Management Challenges discussion below, PY 2005 data are reliable. 

Because this is effectively the baseline year for employment and retention, there is nothing to be said about trends. 

However, as reported performance levels are low in comparison to other employment and training programs, there is 

room for improvement. To increase placement of its participants in unsubsidized jobs, the SCSEP program, through 

its partnership with the One-Stop delivery system, will aggressively expand its network of high growth industries and 

employers. 

In addition to the common measures, SCSEP uses seven program-specific performance indicators that measure 

service level, service to most-in-need, and customer satisfaction of participants, host agencies, and employers. For 

this last indicator, SCSEP achieved an exceptional response rate and very high scores on the American Customer 

Satisfaction Index (ACSI). 
Performance Section 

138 United States Department of Labor 

Emmery’s experience with the Senior Community 

Service and Employment Program (SCSEP) began in 

January 2004 when he turned to Experience Works for 

help after exhausting all other options. Experience 

Works worked with him to determine his work 

experience and thought the Wisconsin Veterans Home 

in King, Wisconsin, a nursing care facility for aging or 

disabled veterans and their spouses, was a natural fit 

for Emmery’s skills and interests. After six months in 

a subsidized position within the activities department 

at the Wisconsin Veterans Home, he became a fullfledged employee, working 20 hours per week and 

earning almost double his training wage. Through 

Experience Works and SCSEP, he was able to benefit 

from this community service placement, gain valuable 

new experience, and work with individuals with a 

similar background. 

Photo Credit: Emmery Perzentka 

PART, Program Evaluations and Audits 

In the 2005 Program Assessment Rating Tool (PART) process, the program was reviewed as the Community Service 

Employment for Older Americans Program and rated Ineffective. The review found that improvements were needed 

in the program’s competitive grant process, performance measures and performance reporting systems. In response, 

DOL has worked with the Congress to modernize and strengthen the grants process; implemented the Federal job 

training program common measures; published a proposed rule to implement the 2000 Older Americans Act (OAA) 

Amendments; and made performance targets more challenging.

The Government Accountability Office (GAO) report, Older Workers: Labor Can Help Employers and Employees 

Plan Better for the Future, issued in November 2005, recommended that DOL design a comprehensive public 

awareness campaign to bridge the gap between employers and older workers (Study 39 in Appendix 2). ETA has 

begun conducting outreach to employers about the benefits of hiring and retaining older workers with the intention of 

providing more employment opportunities. ETA will continue to sponsor an annual week-long event designed to 

raise the awareness of employers about the benefits of utilizing older workers. These activities have resulted in 

improved working relationships between local projects and local employers. 

At the request of the Chairman of the Senate Special Committee on Aging, who expressed concerns regarding the 

effects of the OAA Amendments, the Government Accountability Office (GAO) issued Senior Community Service 

Employment Program: Labor Has Made Progress Implementing Older Americans Act Amendments of 2000, but 

Challenges Remain in April 2006 (Study 38 in Appendix 2). The report raised concerns about the number of 

unresolved issues concerning the coordination between SCSEP and WIA programs in helping older adults obtain 

intensive and training services at One-Stop centers. In response, DOL is taking steps to establish an enhanced 

performance accountability system for SCSEP and modifying some eligibility criteria to target limited program funds 

to individuals it believes are most in need of SCSEP services. 

Data Quality and Major Management Challenges 

Data quality for this performance goal was rated Good. Strengths of the data include its validity and completeness. 

Data are collected quarterly, linked to program purpose, and are reliable and verifiable, but there are difficulties in 

the process of verification. The SCSEP has implemented a new Internet-based data collection system called 

SPARQ2, which will ensure enhanced data quality. In addition, the SCSEP is scheduled to implement a data 

validation system in 2007.
Strategic Goal 4 

FY 2006 Performance and Accountability Report 139 

Better Decision-making Through Workforce Information

Performance Goal 05-4.1E (ETA) – PY 2005 

Increase accessibility of workforce information through the National Electronic Tools. 

Indicators, Targets and Results PY 2004 

Result 

PY 2005 

Target 

PY 2005 

Result 

Target 

Reached*

Increase number of page views on America’s Career InfoNet – Baseline 61.4 

million 

Y 

Increase the dissemination of O*NET data measured by site visits 3.91 

million 

3.87 

million 

7.0 

million 

Y 

Increase the number of page views on Career Voyages – Baseline 7.9 

million 

Y 

Cost (millions) $111 – $120 

*Indicator target reached (Y), substantially reached (S) or not reached (N) Goal Achieved

Program Perspective and Logic 

The State and national workforce information system supports the goal of increased accessibility of workforce 

information through the National Electronic Tools by creating and broadly disseminating current, local information 

on high growth industries and occupations that is critical for planning and delivering demand-driven workforce 

services. Customers include employers, state and local Workforce Investment Boards, Workforce Investment Act 

partner agencies, and job seekers who find these information services useful for business, economic development, 

education, and individual career decision-making. The workforce information system consists of: 

• Occupational Information Network (O*NET) – a database of occupational competency requirements (tasks, 

knowledge, skills, abilities, work activities, and other characteristics); 

• State workforce agency core products and services that describe state and local labor market dynamics, e.g., 

employment, wages, and skills in demand by industry and occupation; 

• CareerOneStop national electronic tools that allow universal distribution and self-service access to workforce 

information, including data on wages, occupations in demand, skills held and needed, and growth industries; 

and 

• Workforce information services provided through state workforce agencies’ One-Stop Career Centers. 

The CareerOneStop electronic tools, Career Voyages, and the O*NET OnLine web sites are designed to improve 

self-service options for customers of the workforce investment system. Resources supporting these systems are used 

for technical assistance and emerging occupation research, to operate the web sites, and to keep the databases current. 

The performance indicators gauge usefulness of the occupational information to the wide-ranging user community—

business, educators, students, parents, and job changers. External factors that could affect performance are changes 

in public demand for workforce information or in public participation in the data collection efforts. 

Costs associated with this performance goal increased by 8 percent between PY 2004 and PY 2005. This increase is 

consistent with normal fluctuations in spending obligated funds. Some of the increase is attributable to the 

development of new electronic tools – for example, tools in support of identifying skills needed for high-growth 

occupations. 

Analysis and Future Plans 

The Department achieved its performance goal for workforce information systems. The result for increased 

dissemination of O*NET data exceeded the target and high baselines have been set for Career Voyages and 

America’s Career InfoNet page views. After vastly exceeding last year’s target, the growth in demand for O*NET 

information slowed this year. It has not yet been determined whether these are the appropriate indicators to measure 

the performance of this activity in PY 2006 and beyond. 
Performance Section 

140 United States Department of Labor 

Baseline data for an efficiency measure for this goal will be gathered in PY 2006. The measure will be the cost per 

page view of the activities that are included as indicators under this goal. 

Workforce system partners, employers, career counselors, and the public have recognized the usefulness and 

accessibility of the national electronic tools, which results in an overall increase in both new and repeat users. The 

list of new and recently redesigned resources that account for an increase in site visits includes tools and technology 

data, skills profiler, job description writer, employer locator, online coaches, and occupational profiler. The use of 

the national electronic tools also has become increasingly popular due to customers ever-growing familiarity with 

and use of Web-based resources. 

When a large manufacturer declared bankruptcy and 

closed plants employing 6,000 workers across eight 

states, the company asked state employment agencies 

to help their workers find new jobs. In California, the 

State Employment Development Department created a 

rapid response toolkit to help frontline local agency 

staff serve the company’s former employees quickly 

and efficiently. This comprehensive “how to” 

instruction kit for case managers, rapid response 

teams, and One-Stop Career Center staff outlined a 

step-by-step process for using information from the 

O*NET OnLine Web site in conjunction with labor 

market information to smooth the transition of these 

dislocated workers by linking them to alternative 

occupations calling for similar skills. In addition, 

California made the toolkit available to other states 

with the firm’s plants to enable them to prepare 

customized “just-in-time” resources and professional 

support for clients. 

Photo Credit: Laurence Seidel 

PART, Program Evaluations and Audits 

The workforce information system was included in the FY 2004 Program Assessment Rating Tool (PART) review of 

the Wagner-Peyser Employment Service grants. None of the PART findings and recommendations addressed 

electronic tools, which were subsequently organized as a separate program. 

Data Quality and Major Management Challenges

Data for this performance goal was rated Very Good. Strengths of the data include its completeness, accuracy, and 

reliability. Data for the O*NET indicators are gathered and validated by internal management information systems, 

which complies with industry standard and norms. However, the validity of Web site hits as a measure of 

performance is limited. While the usability of the Web site may be inferred from increasing use of the Web site, the 

data does not sufficiently link the use of the tools to employment outcomes. 
Strategic Goal 4 

FY 2006 Performance and Accountability Report 141 

Address Worker Shortages 

Performance Goal 06-4.1A (ETA) – FY 2006 

Address worker shortages through the Foreign Labor Certification Program. 

Indicators, Targets and Results FY 2005 

Result 

FY 2006 

Target 

FY 2006 

Result 

Target 

Reached*

Percent of H-1B applications processed within seven days of the 

filing date for which no prevailing wage issues are identified 

100% 100% 100%** Y 

Percent of employer applications for labor certification under the 

streamlined system that are resolved within six months of filing 

57% 60% 86%** Y 

Percent of accepted H-2A applications processed within 30 days of 

the date of need where there are no pending State actions 

– 95% 97.5%** Y 

Percent of the H-2B applications processed within 60 days of 

receipt 

85% 90% 82%** N 

Cost (millions) $60 – $46 

*Indicator target reached (Y), substantially reached (S) or not reached (N) 

**Estimated Goal Not Achieved

Program Perspective and Logic 

The Office of Foreign Labor Certification (FLC) reviews requests for Department of Labor certification from U.S. 

employers seeking to hire foreign workers on a temporary or permanent basis when qualified American workers are 

unavailable. Labor certifications issued by the Department then become part of the documentation supporting 

employers’ respective petitions, filed with the U.S. Citizenship and Immigration Services, to authorize the 

employment of foreign workers under temporary visas like H-2A and H-2B or under permanent, employment-based 

visas leading to lawful permanent residency. 

In the face of growing market-driven demand, the Department has taken steps to improve processing efficiency and 

customer service while maintaining program integrity and deterring fraud. By regulation effective March 28, 2005, 

the Department eliminated the duplicative, staff-intensive State role in the Permanent Labor Certification Program, 

permitted the electronic filing of applications via a new Program Electronic Review Management (or PERM) system, 

and streamlined the process by providing for pre-filing recruitment and employer attestations (rather than lengthy 

post-filing recruitment supervised by State agencies). The Department will continue to evaluate the PERM Program 

and increase outreach efforts to encourage employers to file petitions electronically. 

Performance indicators tie to statutory, regulatory, or internal processing requirements for various applications; 

performance is tracked using quarterly data and often linked to performance standards for individual managers and 

analysts. Indicators for the PERM program (percent of employer applications for labor certification under the 

streamlined system that are resolved within six months of filing) reflect the new, automated system and seek to 

measure improvement in timeliness and cost-effectiveness over pre-PERM processes. 

Cost associated with this performance goal decreased by 20 percent between FY 2005 and FY 2006. Most of the $14 

million drop ($10.5 million) is accounted for by a lag in recovery of H-1B fees. 

Analysis and Future Plans 

The goal was not achieved, but three of the four targets were reached. The H-1B Labor Condition Applications 

Program for highly skilled professionals (specialty workers) continues to perform at a high level; in FY 2006, the 

program processed 100 percent of applications – now almost always filed electronically – within the statutory sevenday timeframe. In fact, virtually all applications filed using the Department’s web-based system are processed within 

a couple of days of receipt. 

 
Performance Section 

142 United States Department of Labor 

The Department continues to place a high priority on improving the overall performance of the PERM program. In 

FY 2006, the program processed 86 percent of applications within six months, exceeding its target of 60 percent. An 

automated process, strong communication between the program’s national office and its processing centers, and 

effective resource allocation and adjustments throughout the year contributed to this strong result. The Department 

expects this trend to continue as the program gains additional experience with the substantive issues and filing cycles 

of applications filed under the reengineered program. 

Similarly, the program exceeded its target for processing H-2A temporary agricultural applications. The target for 

the H-2B temporary non-agricultural program was not reached. Although processing times for processing these 

applications have significantly decreased at both the State and Federal levels, the programs have not kept pace with 

employer demand for H-2B workers, and as a result, some employers seeking to hire H-2B foreign workers continue 

to experience delays. In FY 2007, the Department will provide additional training to staff performing state-level 

activities related to foreign labor certification. These changes, coupled with additional attention to competence and 

efficiency in various parts of the process should streamline and improve overall DOL administration and 

accountability of the H-2B program.

Program managers continually reevaluate the type of data being collected across foreign labor certification programs 

to ensure the best fit between information and needs. To improve performance measurement, program analysis, and 

applications management, the Department will continue to enhance its reporting capabilities to the case management 

systems for both the permanent and temporary programs. New modules and control mechanisms currently being 

added to the PERM system will significantly enhance the program’s ability to analyze and manage individual 

applications and the overall workload. 

Personnel from the Chicago National 

Processing Center (Center) share a light 

hearted moment to celebrate the One Year 

Anniversary of the Center. Opened a year 

ago to process all permanent labor 

certification cases filed under the new 

streamlined program that took effect on 

March 28, 2005, both the Chicago and the 

Atlanta National Processing Centers are 

significantly improving the speed and 

efficiency of foreign labor application 

processing. Specifically, the Centers, which 

also process labor certification requests for 

temporary or non-immigrant programs, have 

greatly improved the number of employer 

applications for labor certification resolved 

within six months of filing with the use of 

new computer software programs and 

streamlined procedures. 

Photo Credit: Raymundo Garcia 

PART, Program Evaluations and Audits 

In 2004, the H-1B and PERM programs were reviewed in the Program Assessment Rating Tool (PART) process, and 

were rated Moderately Effective and Adequate, respectively. Findings included fraud concerns related to both 

programs and a need for measures of application backlogs for the PERM program. In response to H-1B findings, 

DOL implemented a fraud detection module; streamlined the automated process developed for employers to submit 

Labor Certification Applications; and collaborated with the Departments of Homeland Security and State in a multiagency effort to identify, address, and deter H-1B and other visa fraud. In response to PERM findings, DOL 

developed a new data entry and application processing system; dedicated two facilities to the task of processing 

PERM applications; and has begun reporting on new performance and efficiency measures that are directly related to 

the new PERM process. 

In June, 2006, the Government Accountability Office (GAO) issued H1-B Visa Program: Labor Could Improve Its 

Oversight and Increase Information Sharing with Homeland Security, recommending that DOL improve its checks 

of employers’ applications and that Homeland Security’s U.S. Citizenship and Immigration Services include Labor’s 
Strategic Goal 4 

FY 2006 Performance and Accountability Report 143 

application case number in its new information technology system (see Study 40 in Appendix 2). In response, DOL 

has developed 26 new fact sheets to describe employer responsibilities and employee rights that will be made 

available on the Internet, and is working with the Department of State to provide similar information on cards issued 

to H-1B workers and employers. 

Data Quality and Major Management Challenges

Data for this performance goal was rated as Very Good. Strengths of the data include its timeliness and 

completeness. The quality of data collected through the web-based case management systems, as well as the 

collection methods and systems themselves are continually being assessed to ensure that data are reliable, 

appropriate, and that it informs management. In the future, a series of improvements to data management and data 

reporting functions will be implemented. The web-based systems used in combination with programmed and manual 

checks limit the number of errors or inaccuracies in data. 

In its FY 2001 report, the Office of Inspector General (OIG) first listed integrity of the foreign labor certification 

programs among DOL’s top management challenges, and it remains on the list in FY 2006 (see item IV, Maintaining 

the Integrity of the Foreign Labor Certification Program, in the Major Management Challenges section of the 

Executive Summary). Fraud cases involve applications filed on behalf of fictitious companies, the fraudulent use of 

legitimate companies without their knowledge, and the collection of fees from fraudulent applications filed on behalf 

of foreign workers. DOL continues to improve overall program integrity and employer compliance. For example, a 

fraud detection/prevention module is planned for the new PERM system. In FY 2006, FLC contracted an 

independent firm to conduct an evaluation of their website, which is the primary vehicle for communicating 

compliance assistance information to employers and others. The appearance, content, effectiveness, currency and 

maintenance of the FLC website were found to be favorable. Additionally, in 2006, the Department proposed 

changes in regulation to reduce the incentives and opportunities for fraud and abuse related to the permanent 

employment of foreign workers in the United States. The Department is currently evaluating comments; final 

publication is scheduled for April 2007.
Performance Section 

144 United States Department of Labor 

Help Trade-Affected Workers Find New Jobs

Performance Goal 06-4.1B (ETA) – FY 2006 

Increase the employment, retention, and earnings replacement of workers dislocated in important part because of 

trade and who receive trade adjustment assistance benefits. 

Indicators, Targets and Results FY 2005 

Result 

FY 2006 

Target 

FY 2006 

Result 

Target 

Reached*

Percent of participants employed in first quarter after program exit 70% 70% 69%** N 

Percent of participants employed in first quarter after exit who are 

still employed in the third quarter after exit 

91% 85% 90%** Y 

Average percent of pre-separation earnings for those employed in 

the third quarter after program exit 

76% 80% 84%** Y 

Cost (millions) $846 – $700 

*Indicator target reached (Y), substantially reached (S) or not reached (N) 

**Estimated 

Goal Not Achieved

Program Perspective and Logic 

DOL’s Trade Adjustment Assistance (TAA) program provides training, income support, and related assistance to 

workers who lose their jobs due to increased imports or shifts in production to foreign countries. TAA’s goal is to 

return workers to suitable employment. The TAA program is one component of integrated products and services 

available through the nationwide network of One-Stop Career Centers, including those funded under the Workforce 

Investment Act Adult and Dislocated Worker programs and the Wagner-Peyser Act. The comprehensive 

readjustment services and benefits offered by the TAA program include job search and relocation assistance, 

occupational on-the-job and remedial training, income support, and the Health Coverage Tax Credit. The One-Stop 

system provides counseling, assessment, and placement services to TAA participants. 

The TAA program’s success in an expanding, global economy is measured by the extent to which it helps individuals 

to regain economic self-sufficiency by quickly securing and maintaining employment. As we move to a regional 

based workforce system, it appears economic factors such as available labor and the ability to adapt that human 

capital to new uses contribute importantly to reemployment. The three key indicators used to measure the TAA 

program’s success are the Federal job training program common measures. The entered employment indicator tracks 

the program’s progress in quickly returning participants to employment. The retention measure indicates whether 

participants who quickly obtain jobs are able to sustain employment, and average earnings serves as a measure of job 

quality. For FY 2006, however, the TAA program continued using earnings replacement to track the program’s 

success at returning participants to employment at wages close to those earned prior to layoff. 

Costs associated with this performance goal decreased by 17 percent between FY 2005 and FY 2006. The primary 

reason for the decreased cost is a reduction in demand for TAA program training services. 

Analysis and Future Plans 

Based upon data for the first three quarters of FY 2006, the TAA program is on track to achieve targeted levels for 

retention and earnings but appears to fall just shy of the target for entered employment. Retention results continue to 

exceed expectations, implying that trade affected workers who obtain suitable reemployment tend to stay employed. 

Improved earnings outcomes reflect the Department’s efforts to integrate services to meet the needs of all tradeaffected dislocated workers, ensuring that they have access to the full range of reemployment services offered 

through the One-Stop system, and managing funds to reach more customers. Improvements may also have been 

discovered via efforts to more accurately capture program outcomes (see the Data Quality discussion below). 
Strategic Goal 4 

FY 2006 Performance and Accountability Report 145 

During FY 2007, the Department will further integrate 

the workforce investment system by completing 

implementation of common performance measures 

(adding efficiency, or cost per participant) and hosting 

national Rapid Response Summits and Trade 

Coordinators’ meetings. These meetings and a new 

series of follow-up Forums will provide an additional 

opportunity for the Department to emphasize the 

importance of reliable, accurate performance data in 

meeting the needs of dislocated workers. In addition, 

the Department has undertaken a multi-state study on 

co-enrollment to more accurately inform the system of 

the effects of co-enrollment on performance. 

PART, Program Evaluations and Audits 

During the 2003 Program Assessment Rating Tool (PART) process, the TAA program was reviewed and rated 

Ineffective. Findings included limited coordination of services with the WIA Dislocated Workers program and a 

need to improve accountability for results. In response, the Department drafted the revised TAA regulations to 

implement the 2002 Trade Act amendments; conducted six forums on integration of assistance to dislocated workers 

between the TAA program and the WIA Dislocated Worker program; and developed and implemented a new funding 

formula to improve financial management practices with respect to TAA training expenditures. A second round of 

forums is planned for early 2007. 

The Government Accountability Office (GAO) report Trade Adjustment Assistance: Most Workers in Five Layoffs 

Received Services, but Better Outreach Needed on New Benefits, issued in January 2006, recommended that DOL 

provide guidance to State and local officials on how to ensure that potentially eligible workers are made aware of the 

new health insurance and wage insurance benefits (Study 41 in Appendix 2). To provide further guidance to State 

and local officials, DOL has developed a work plan of future activities to assure that workers know what services are 

available, workers have access to the services for which they are eligible, and eligibility determination is done 

consistently throughout the states. 

The GAO report Trade Adjustment Assistance: Labor Should Take Action to Ensure Performance Data Are 

Complete, Accurate, and Accessible, issued April 2006, recommended actions to help improve the completeness and 

accuracy of performance data, to make the performance data more informative, and to increase opportunities for 

states to share lessons learned on issues relevant to TAA data quality (Study 42 in Appendix 2). In response, DOL 

has taken major steps toward improving the quality of its new data validation requirements and has recently 

improved the availability of TAA performance information by posting the information on its Web site. 

In 2004, DOL contracted for a five-year net-impact study of the TAA program in order to obtain a more 

comprehensive understanding of the effects of the TAA program on trade-affected workers’ employment outcomes. 

Interim occasional papers will be prepared on such topics as the role of rapid response in the TAA program and a 

report on TAA linkages within the workforce system. 

Earnings Replacement

70%

80%

90%

100%

2001 2002 2003 2004 2005 2006

Fiscal Year

Result Target

Employment Retention

70%

80%

90%

100%

2001 2002 2003 2004 2005 2006

Fiscal Year

Result Target

Entered Employment

50%

60%

70%

80%

90%

2001 2002 2003 2004 2005 2006

Fiscal Year

Result Target
Performance Section 

146 United States Department of Labor 

Data Quality and Major Management Challenges 

Data quality for this performance goal was rated Fair. Strengths of the data are its accuracy and relevance; however, 

a recent GAO report noted significant areas for improvement (Study 37 in Appendix 2 – summarized above). For 

example, only half the States are including all participants and some data refer to participants who left the program 

30 months earlier. In response, TAA has taken a number of steps to improve data quality. A new performance and 

reporting system is being implemented for this program that emphasizes consistent definitions to provide more 

complete and reliable measurement of results. Program files are validated each year by the States using ETA funded 

validation software. In addition, national and regional staff perform random checks of the validated files to ensure 

accuracy and validity of the annual performance report. A monitoring guide is under development which will stress 

the importance of data quality. These improvements also apply to a Major Management Challenge (MMC) – item I 

in the MMC section of the Executive Summary.
Strategic Goal 4 

FY 2006 Performance and Accountability Report 147 

Promote Flexible Workplace Programs 

Performance Goal 06-4.2A (ASP) – FY 2006 

Maximize regulatory flexibility and benefits and promote flexible workplace programs 

Indicators, Targets and Results34 FY 2005 

Result 

FY 2006 

Target 

FY 2006 

Result 

Target 

Reached*

Percent of identified significant regulations that are reviewed – 90% 92% Y 

Percent of regulations identified for revision or withdrawal – 85% 93% Y 

Best practices for, and models of, flexible workplace practices are 

identified and publicized. – 21 23 Y 

*Indicator target reached (Y), substantially reached (S) or not reached (N) Goal Achieved

Program Perspective and Logic 

The Office of the Assistant Secretary for Policy (OASP) coordinates and tracks DOL’s achievement of this goal in 

part through its role in directing the compilation and publication of the Department’s Annual Regulatory Plan and 

Semi-Annual Regulatory Agenda. With OASP’s assistance, DOL regulatory agencies have established the plans and 

procedures they use to prioritize their regulatory initiatives to ensure they support this strategic goal. It is important 

to note, however, that most of the items on the Agenda are either not discretionary (i.e., they are required to 

implement new statutory requirements or court decisions) or implement policy and program priorities related to the 

Department’s other strategic goals. During the reporting period, the Department had 38 items on its regulatory 

agenda that were relevant for goal 4.2 purposes and took action on 35 of them. Actions included publishing notices 

of proposed rulemaking, final rules, interim final rules, etc. In each case, DOL agencies pursued actions that 

maximized net benefits, promoted regulatory flexibility, and/or replaced obsolete regulatory provisions with ones that 

reflect current technology and market conditions and address current business practices. 

 

Each indicator for this performance goal measures DOL’s progress in promoting flexibility in ways that are crucial to 

a competitive workforce: regulatory flexibility and workplace flexibility. The regulatory flexibility indicators ensure 

that DOL’s regulation review plan emphasizes flexibility, is based on meaningful criteria that, where feasible, reflect 

public input, and corrects current regulatory practices that are duplicative, obsolete or not cost-effective. The 

workplace flexibility indicators ensure that DOL highlights and publicizes best practices of flexible workplaces and 

model flexibility practices. 

External factors impacting performance for this goal include court decisions and new legislation that mandate 

regulatory changes or that require drafting new regulations within certain time frames. These unexpected regulatory 

projects must be given priority and therefore can disrupt the progress on other regulatory projects already underway. 

In FY 2006, two examples of new statutory requirements to complete regulatory actions within tight timeframes are 

The Pension Reform Act of 2006 and the MINER Act. 

 

Analysis and Future Plans 

DOL agencies apply their regulatory review methodologies to make progress on their regulatory agendas. Their 

review processes allow opportunities for public input, where appropriate, on both the selection of regulations for 

review and the outcomes of reviews. In the course of promulgating revised regulations, agencies conduct cost benefit 

analyses to help assure that the regulations maximize net benefits. The following are examples of these regulatory 

initiatives. 

The Mine Safety and Health Administration (MSHA) published a supplemental proposed rule that would establish 

new mandatory electrical safety standards for the installation, use, and maintenance of high-voltage continuous 

mining equipment used in underground coal mines. These standards would eliminate the need for mine operators to 

 

34 Costs of achieving DOL’s results in maximizing regulatory flexibility are distributed throughout the department’s regulatory 

agencies, as it is part of their costs of operations. 
Performance Section 

148 United States Department of Labor 

seek petitions for modifications to use high-voltage equipment. MSHA also published a notice of intent to review 

the Environmental Protection Agency’s (EPA) Nonroad Diesel Engine Standards. The review would determine if 

MSHA’s own product approval regulations for diesel engines used in gassy underground mines are consistent with 

EPA’s standards. 

The Occupational Safety and Health Administration (OSHA) conducted hearings on its intent to update a 30-year old 

construction standard. The update would address technological advances and amend the maintenance provisions of 

the general industry standard. OSHA is continuing its long-term effort to update standards that either reference or 

include language from outdated consensus standards. Both OSHA and EBSA are engaged in reviews of the relative 

benefits and burdens of existing regulations in accordance with Executive Order 12886 and section 610 of the 

Regulatory Flexibility Act. OSHA is currently conducting reviews on standards regulating occupational exposure to 

lead in the construction industry and excavations. 

The Employee Benefits Security Administration (EBSA) is conducting a review of its Plan Assets-Participant 

Contribution Regulation. These reviews allow opportunities for public input, where appropriate, on both the 

selection of regulations for review and the outcomes of reviews. EBSA has proposed rulemaking that would update 

the regulatory requirements to allow employee benefit plan annual reports (i.e., Form 5500) to be filed electronically. 

DOL’s regulatory review and clean-up project implementation continued to update obsolete, non-substantive 

references in the Code of Federal Regulations (CFR). This initiative focuses on identifying routine, non-technical, or 

nomenclature changes to DOL regulatory text that can be accomplished without notice or comment. During the 2nd

and 3rd quarters of FY 2006, four direct final rules affecting 51 parts of the CFR and 740 discrete regulatory changes 

have been published by DOL to correct or remove obsolete regulatory references. Another direct final rule that will 

affect 10 parts of the CFR and make 330 discrete regulatory changes will be published by the end of 2006 or early 

2007. 

The Flex-Options for Women project, sponsored by the Women's Bureau, encourages business owners to develop 

workplace flexibility policies and procedures, such as telecommuting, job sharing and compressed work-week 

schedules. Small businesses learn how to establish workplace flexibility practices for their employees through oneon-one mentoring relationships with corporate executives who have succeeded in establishing these practices in their 

own companies and from others who have years of experience in designing workplace flexibility practices. The 

audience includes all businesses, regardless of gender of ownership. Six of ten Women's Bureau’s Regional Offices 

participate in the Flex-Options for Women project – covering 27 states along with Puerto Rico, the Virgin Islands, 

and Guam. In project year four, a seventh region will be added, upping the total state coverage to 31. The project is 

completing its third year of operation. FY 2006 has been its most successful year to date, with 92 companies 

implementing new and outstanding flexible workplace policies and programs. 

PART, Program Evaluations and Audits 

OASP is not subject to PART reviews. 

Data Quality and Major Management Challenges 

Data quality for this performance goal was rated as good. Data and results are not estimated, but are based on 

reporting from public actions taken as part of the rulemaking process. Strengths of the data include its accuracy and 

relevance. Data used to determine OASP agency indicators and results are taken directly from the Department of 

Labor’s Semi-Annual Regulatory Agenda. Items are added to the Regulatory Agenda through a transparent process 

that begins with the agency identifying those items on which they propose to focus. After a rigorous Departmental 

review and clearance process, the approved items are added to the Department’s Regulatory Agenda, which is 

published in the Federal Register each Spring and Fall. Data used to measure results for the third indicator represent 

reporting from the regions on what programs or policies have been created or enhanced by participant companies. 

Data are cross checked and verified. One area for data quality improvement is to identify data that better represent 

the desired outcomes for the performance goal.
Financial Section 
Financial Section 

150 United States Department of Labor 

Chief Financial Officer’s Letter 

Louis Shumway was an FBI snitch and an accountant whose valuable 

information led to a conviction of “Public Enemy No. 1” in 1931. 

A notorious mobster, Al Capone was suspected and accused of numerous 

crimes throughout the early twentieth century. However, for one reason or 

another, Capone could not be convicted of anything and remained free to 

continue his nefarious enterprises. 

When criminal charges failed to stick, the government turned a suspicious 

eye toward Capone’s financial operations. Shumway, an accountant for 

Capone’s liquor business, became the informant who helped Eliot Ness 

and the “Untouchables” finally obtain a conviction against one of 

America’s most notorious criminals, not for racketeering but for tax 

evasion. Ever since then, being an “accountant with conviction” has been 

an attractive calling for many young men and women in America. 

The fact that it took an accountant to bring down Al Capone highlights how financial management is at the 

foundation of any organization, program, or activity. When properly kept, an organization’s books are a 

transparent window into its successes and failures. If something is incorrect, out of line, or otherwise 

improperly monitored, the entire organization will suffer from poor performance or even a total breakdown. 

This is clear when today’s headlines so often blazon news of yet another indicted, convicted, or imprisoned 

chief executive who took liberties with the financial management of an organization for personal gain, 

leaving stakeholders in ruin. 

In the government, our stakeholders are the American people, which makes it even more important that we 

ensure the soundest financial management possible to ensure that their taxpayer dollars are used for their 

intended purposes in the most efficient and effective manner. The public’s trust is imperative to the success 

of our efforts and one of the principal reasons we have renewed our commitment to effective internal control, 

transparency, and accountability at every level of the organization. At the Department of Labor, this 

commitment starts at the top with Secretary Elaine L. Chao, and is evident in every element of Departmental 

operations. Our efforts have not gone unrecognized, as evidenced by our tenth consecutive clean audit 

opinion this year, our receipt of six consecutive Certificates of Excellence in Accountability Reporting from 

the Association of Government Accountants, and our top ranking in the Mercatus Center’s annual evaluation 

of how well Federal agencies inform the public through their Performance and Accountability Reports. I am 

also pleased that once again the Secretary has reported that the Department complies with the Federal 

Managers’ Financial Integrity Act (FMFIA) and the Federal Financial Management Improvement Act 

(FFMIA), and DOL remains the only Federal agency to have green ratings across the board on the 

President’s Management Agenda. Our diligent efforts to instill the importance of sound financial 

management and internal control throughout the organization have transformed DOL into a financial 

management leader, a fact of which I am extremely proud as I celebrate my fifth anniversary as CFO this 

January, the longest serving CFO ever at DOL. 

Last year, I wrote in this space that “our continuing challenge is the transformation of internal control into an 

integral part of the Department’s entire cycle of planning, budgeting, management, accounting, and 

auditing.” We have made great strides in meeting this challenge over the past year and I am proud to share a 

few examples of our efforts: 

• The Department instituted an Internal Control Board as part of its implementation of the revised 

OMB Circular A-123, ensuring the continued involvement of senior management in developing 

strategies to safeguard resources. This Board complements the quarterly attestations required of 

every agency head on the status of financial management within their purviews. Through these 

vehicles, Departmental executives remain informed and accountable for the financial management of 

their operations. 

• The Department successfully launched E-Gov Travel, an end-to-end integrated travel system. DOL 

is the first Federal agency to deploy fully this type of system. From travel authorization to 
Chief Financial Officer’s Letter 

FY 2006 Performance and Accountability Report 151 

reimbursement, the new system provides fast, accurate information and streamlines the entire travel 

process, resulting in significant savings to the taxpayers through better accountability and operating 

efficiency for the Department. 

• Cost Analysis Manager (CAM) is increasingly used by managers throughout the Department, 

providing improved program performance information that enables more informed decision-making 

by allowing managers to understand the true cost of programs. Additionally, throughout this 

Performance and Accountability Report, CAM data demonstrates exactly how much money was 

spent on each Departmental goal and objective. CAM will soon incorporate more robust predictive 

planning capabilities, providing the forecasting needs that managers need for their programs to better 

prepare for the future. We have come a long way in the last five years; where once the Department’s 

managerial cost accounting efforts consisted of isolated pilot programs, we now have a sustained 

enterprise-wide effort that is improving the results of the Department’s many important programs. 

• The Department is in the process of replacing its core accounting system with a new state-of-the-art 

financial management solution, called Labor Executive Accountability Program (LEAP), that will 

leverage innovative technologies and provide a secure and stable environment for managing the 

Department’s finances. 

Our ongoing success is due to the commitment of the Secretary Chao and the Department’s senior leadership 

to accountability and the discipline and professionalism of our skilled career employees. As we look to the 

coming year, we will continue to transform DOL’s financial management environment away from a singular 

focus on transaction processing. Instead, we seek a new paradigm where financial management practices 

will incorporate greater support and analysis to assist with key management decisions. As part of this effort, 

we are providing new training and professional development opportunities to help our financial professionals 

build upon their skill sets and capabilities while reemphasizing the importance of sound financial 

management at every level of the organization. We are also looking into validation of financial management 

training results through independent skill set certification. Our efforts are creating an environment in which 

integrated financial and performance information is sought and valued in both decision-making and 

evaluation processes, contributing to a legacy of which we can be extremely proud. 

Samuel T. Mok 

Chief Financial Officer 

November 15, 2006 
KPMG LLP 

2001 M Street, NW 

Washington, DC 20036 

Financial Section 

152 United States Department of Labor 

KPMG LLP, a U.S. limited liability partnership, is the U.S. 

member firm of KPMG International, a Swiss cooperative. 

Independent Auditors’ Report 

Secretary and Inspector General 

U.S. Department of Labor: 

We have audited the accompanying consolidated balance sheet of the U.S. Department of Labor (DOL) as of 

September 30, 2006, and the related consolidated statements of net cost, changes in net position, financing, and 

custodial activity, and the combined statement of budgetary resources for the year then ended; and the statement of 

social insurance as of September 30, 2006 (hereinafter referred to as “consolidated financial statements”). The 

objective of our audit was to express an opinion on the fair presentation of these consolidated financial statements. In 

connection with our fiscal year 2006 audit, we also considered DOL’s internal controls over financial reporting, 

Required Supplementary Stewardship Information, and performance measures, and tested DOL’s compliance with 

certain provisions of applicable laws, regulations, contracts, and grant agreements that could have a direct and 

material effect on these consolidated financial statements. The accompanying consolidated financial statements of 

DOL as of September 30, 2005, were audited by other auditors whose report thereon, dated November 10, 2005, 

expressed an unqualified opinion on those consolidated financial statements, except for the statement of social 

insurance which they did not audit. 

We have also examined DOL’s compliance with section 803a of the Federal Financial Management Improvement 

Act of 1996 (FFMIA) during the year ended September 30, 2006. 

SUMMARY 

As stated in our opinion on the consolidated financial statements, we concluded that DOL’s consolidated financial 

statements as of and for the year ended September 30, 2006, are presented fairly, in all material respects, in 

conformity with U.S. generally accepted accounting principles. 

As discussed in our opinion on the consolidated financial statements, in fiscal year 2006, DOL adopted new 

accounting and reporting requirements for earmarked funds and social insurance programs. 

Our consideration of internal controls over financial reporting, Required Supplementary Stewardship Information, 

and performance measures resulted in the following conditions being identified as reportable conditions: 

1. Lack of Strong Application Controls over Access to and Protection of Financial Information 

2. Lack of Strong Logical Security Controls to Secure DOL’s Networks and Information 

3. Weaknesses Noted over Property, Plant, and Equipment 

4. Weaknesses Noted over Grants 

5. Weaknesses Noted in the Change Control Process for a Benefits System 

6. Weaknesses Noted in Federal Employees Compensation Act Accounting and Financial Reporting 

7. Lack of Segregation of Duties over Journal Entries 

8. Weaknesses Noted over Payroll Accounting 

9. Weaknesses Noted over Budgetary Accounting 

10. Weaknesses Noted over Custodial Activities 

However, none of the reportable conditions are believed to be material weaknesses. 
Independent Auditors’ Report 

FY 2006 Performance and Accountability Report 153

The results of our tests of compliance with certain provisions of laws, regulations, contracts, and grant agreements 

disclosed the following instances of noncompliance or other matters that are required to be reported under 

Government Auditing Standards, issued by the Comptroller General of the United States, and Office of Management 

and Budget (OMB) Bulletin No. 06-03, Audit Requirements for Federal Financial Statements. 

1. Federal Information Security Management Act (Electronic Government Act of 2002) 

2. Single Audit Act Amendments of 1996

3. Debt Collection Improvement Act of 1996 

As stated in our opinion on DOL’s compliance with FFMIA, we concluded that DOL did not comply, in all material 

respects, with the Federal financial management systems requirements of FFMIA for the year ended September 30, 

2006, but did comply, in all material respects, with the applicable Federal accounting standards and the United States 

Government Standard General Ledger requirements. 

The following sections discuss our opinion on DOL’s consolidated financial statements; our consideration of DOL’s 

internal controls over financial reporting, Required Supplementary Stewardship Information, and performance 

measures; our tests of DOL’s compliance with certain provisions of applicable laws, regulations, contracts, and grant 

agreements; our opinion on the DOL’s compliance with FFMIA; and management’s and our responsibilities. 

OPINION ON THE CONSOLIDATED FINANCIAL STATEMENTS 

We have audited the accompanying consolidated balance sheet of the U.S. Department of Labor as of September 30, 

2006, and the related consolidated statements of net cost, changes in net position, financing, and custodial activity, 

and the combined statement of budgetary resources for the year then ended; and the statement of social insurance as 

of September 30, 2006. The accompanying statements of social insurance as of September 30, 2002 through 2005 

were not audited by us and, accordingly, we do not express an opinion on them. The accompanying consolidated 

financial statements of the U.S. Department of Labor as of September 30, 2005, were audited by other auditors 

whose report thereon, dated November 10, 2005, expressed an unqualified opinion on those financial statements, 

except for the statement of social insurance, which they did not audit. 

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the 

financial position of the U.S. Department of Labor as of September 30, 2006, and its net costs, changes in net 

position, budgetary resources, reconciliation of net costs to budgetary obligations, and custodial activity for the year 

then ended, and the financial condition of its social insurance program as of September 30, 2006, in conformity with 

U.S. generally accepted accounting principles. 

As discussed in Note 1.A to the consolidated financial statements, DOL changed its method of reporting earmarked 

funds to adopt the provisions of the Federal Accounting Standards Advisory Board’s Statement of Federal Financial 

Accounting Standards (SFFAS) No. 27, Identifying and Reporting Earmarked Funds, effective October 1, 2005. In 

addition, as discussed in Note 1.W to the consolidated financial statements, DOL changed its method of reporting its 

social insurance program to adopt the provisions of SFFAS No. 25, Reclassification of Stewardship Responsibilities 

and Eliminating the Current Services Assessment, and No. 26, Presentation of Significant Assumptions for the 

Statement of Social Insurance: Amending SFFAS 25, effective October 1, 2005. 

As discussed in Note 1.W to the consolidated financial statements, the statements of social insurance present the 

actuarial present value of DOL’s estimated future income to be received from or on behalf of the participants and 

estimated future expenditures to be paid to or on behalf of participants during a projection period sufficient to 

illustrate long-term sustainability of the social insurance program. In preparing the statements of social insurance, 

management considers and selects assumptions and data that it believes provide a reasonable basis for the assertions 

in the statements. However, because of the large number of factors that affect the statements of social insurance and 

the fact that future events and circumstances cannot be known with certainty, there will be differences between the 

estimates in the statements of social insurance and the actual results, and those differences may be material. 
Financial Section 

154 United States Department of Labor 

The information in the Management’s Discussion and Analysis, Required Supplementary Stewardship Information, 

and Required Supplementary Information sections is not a required part of the consolidated financial statements, but 

is supplementary information required by U.S. generally accepted accounting principles and OMB Circular 

No. A-136, Financial Reporting Requirements. We have applied certain limited procedures, which consisted 

principally of inquiries of management regarding the methods of measurement and presentation of this information. 

However, we did not audit this information and, accordingly, we express no opinion on it. As a result of such limited 

procedures, we believe that the Required Supplementary Stewardship Information for Employment and Training 

Administration and Job Corps omits certain output and outcome measures required by U.S. generally accepted 

accounting principles. 

The information in the Secretary’s Message, Performance Section, and Appendices are presented for purposes of 

additional analysis and are not required as part of the consolidated financial statements. This information has not 

been subjected to auditing procedures and, accordingly, we express no opinion on it. 

INTERNAL CONTROL OVER FINANCIAL REPORTING 

Our consideration of internal control over financial reporting would not necessarily disclose all matters in the internal 

control over financial reporting that might be reportable conditions. Under standards issued by the American Institute 

of Certified Public Accountants, reportable conditions are matters coming to our attention relating to significant 

deficiencies in the design or operation of the internal control over financial reporting that, in our judgment, could 

adversely affect DOL’s ability to record, process, summarize, and report financial data consistent with the assertions 

by management in the consolidated financial statements. 

Material weaknesses are reportable conditions in which the design or operation of one or more of the internal control 

components does not reduce to a relatively low level the risk that misstatements caused by error or fraud, in amounts 

that would be material in relation to the consolidated financial statements being audited, may occur and not be 

detected within a timely period by employees in the normal course of performing their assigned functions. Because 

of inherent limitations in internal control, misstatements due to error or fraud may nevertheless occur and not be 

detected. 

In our fiscal year 2006 audit, we noted certain matters, discussed in Exhibit I, involving the internal control over 

financial reporting and its operation that we consider to be reportable conditions. However, none of the reportable 

conditions are believed to be material weaknesses. 

We noted certain additional matters in internal control over financial reporting and its operation that we will report to 

management of DOL in a separate letter. 

INTERNAL CONTROLS OVER REQUIRED SUPPLEMENTARY STEWARDSHIP 

INFORMATION AND PERFORMANCE MEASURES 

Under OMB Bulletin No. 06-03, the definition of material weaknesses is extended to other controls as follows. 

Material weaknesses are reportable conditions in which the design or operation of one or more of the internal control 

components does not reduce to a relatively low level the risk that misstatements caused by error or fraud, in amounts 

that would be material in relation to the Required Supplementary Stewardship Information or material to a 

performance measure or aggregation of related performance measures, may occur and not be detected within a timely 

period by employees in the normal course of performing their assigned functions. Because of inherent limitations in 

internal control, misstatements due to error or fraud may nevertheless occur and not be detected. 

Our consideration of the internal control over the Required Supplementary Stewardship Information and the design 

and operation of internal control over the existence and completeness assertions related to key performance measures 

would not necessarily disclose all matters involving the internal control and its operation related to Required 

Supplementary Stewardship Information or the design and operation of the internal control over the existence and 

completeness assertions related to key performance measures that might be reportable conditions. 

In our fiscal year 2006 audit, we noted no matters involving the internal control and its operation related to Required 

Supplementary Stewardship Information that we considered to be material weaknesses as defined above. 
Independent Auditors’ Report 

FY 2006 Performance and Accountability Report 155

Further, in our fiscal year 2006 audit, we noted no matters involving the design and operation of the internal control 

over the existence and completeness assertions related to key performance measures that we considered to be 

material weaknesses as defined above. 

COMPLIANCE AND OTHER MATTERS 

Our tests of compliance with certain provisions of laws, regulations, contracts, and grant agreements, as described in 

the Responsibilities section of this report, exclusive of those referred to in FFMIA, disclosed three instances of 

noncompliance or other matters that are required to be reported under Government Auditing Standards or OMB 

Bulletin No. 06-03, and are described in Exhibit II. 

The results of our tests of compliance with certain provisions of other laws and regulations, exclusive of those 

referred to in FFMIA, disclosed no instances of noncompliance or other matters that are required to be reported under 

Government Auditing Standards or OMB Bulletin No. 06-03. 

Other Matter. DOL is currently reviewing three incidents regarding potential violations of the Anti-deficiency Act. 

As of the date of this report, no final noncompliance determination has been made for any of the three incidents. 

We noted certain additional matters that we will report to management of DOL in a separate letter. 

OPINION ON COMPLIANCE WITH FFMIA 

The Department represented that in accordance with the provisions and requirements of FFMIA, the Secretary of 

Labor determined that the Department of Labor’s financial management systems are in substantial compliance with 

FFMIA. 

We have examined the U.S. Department of Labor’s compliance with section 803a of the Federal Financial 

Management Improvement Act of 1996 during the fiscal year ended September 30, 2006. Under section 803a of 

FFMIA, DOL’s financial management systems are required to substantially comply with (1) Federal financial 

management systems requirements, (2) applicable Federal accounting standards, and (3) the United States 

Government Standard General Ledger at the transaction level. We used OMB’s Revised Implementation Guidance 

for the Federal Financial Management Improvement Act, dated January 4, 2001, to determine compliance. 

Our examination disclosed the following material noncompliance with FFMIA section 803a applicable to the U.S. 

Department of Labor during the fiscal year ended September 30, 2006. 

DOL’s financial management systems do not comply substantially with Federal financial management system 

requirements because of certain weaknesses in DOL’s general computer access controls, application access controls, 

and related manual controls. These matters are further described in Exhibit II, Finding No. 4. 

In our opinion, except for the material noncompliance described in the preceding paragraph, the U.S. Department of 

Labor complied, in all material respects, with the aforementioned requirements during the fiscal year ended 

September 30, 2006. 

* * * * * 

RESPONSIBILITIES 

Management’s Responsibilities. The United States Code, Title 31, Sections 3515 and 9106 require agencies to 

report annually to Congress on their financial status and any other information needed to fairly present their financial 

position and results of operations. To meet these reporting requirements, DOL prepares and submits financial 

statements in accordance with OMB Circular No. A-136. 

Management is responsible for the consolidated financial statements, including: 

• Preparing the consolidated financial statements in conformity with U.S. generally accepted accounting 

principles; 
Financial Section 

156 United States Department of Labor 

• Preparing the Management’s Discussion and Analysis (including the performance measures), Required 

Supplementary Information, and Required Supplementary Stewardship Information; 

• Establishing and maintaining effective internal control; and 

• Complying with laws, regulations, contracts, and grant agreements applicable to DOL, including FFMIA. 

In fulfilling this responsibility, management is required to make estimates and judgments to assess the expected 

benefits and related costs of internal control policies. 

Auditors’ Responsibilities. Our responsibility is to express an opinion on the fiscal year 2006 consolidated financial 

statements of DOL based on our audit. We conducted our audit in accordance with auditing standards generally 

accepted in the United States of America; the standards applicable to financial audits contained in Government 

Auditing Standards, issued by the Comptroller General of the United States; and OMB Bulletin No. 06-03. Those 

standards and OMB Bulletin No. 06-03 require that we plan and perform the audit to obtain reasonable assurance 

about whether the consolidated financial statements are free of material misstatement. An audit includes 

consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate 

in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of DOL’s internal control 

over financial reporting. Accordingly, we express no such opinion. 

An audit also includes: 

• Examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial 

statements; 

• Assessing the accounting principles used and significant estimates made by management; and 

• Evaluating the overall consolidated financial statement presentation. 

We believe that our audit provides a reasonable basis for our opinion. 

In planning and performing our fiscal year 2006 audit, we considered DOL’s internal control over financial reporting 

by obtaining an understanding of DOL’s internal control, determining whether internal controls had been placed in 

operation, assessing control risk, and performing tests of controls in order to determine our auditing procedures for 

the purpose of expressing our opinion on the consolidated financial statements. We limited our internal control 

testing to those controls necessary to achieve the objectives described in Government Auditing Standards and OMB 

Bulletin No. 06-03. We did not test all internal controls relevant to operating objectives as broadly defined by the 

Federal Managers’ Financial Integrity Act of 1982. The objective of our audit was not to provide an opinion on 

DOL’s internal control over financial reporting. Consequently, we do not provide an opinion thereon. 

As required by OMB Bulletin No. 06-03, in our fiscal year 2006 audit, we considered DOL’s internal control over 

the Required Supplementary Stewardship Information by obtaining an understanding of the DOL’s internal control, 

determining whether these internal controls had been placed in operation, assessing control risk, and performing tests 

of controls. We limited our testing to those controls necessary to test and report on the internal control over Required 

Supplementary Stewardship Information in accordance with OMB Bulletin No. 06-03. However, our procedures 

were not designed to provide an opinion on internal control over the Required Supplementary Stewardship 

Information and, accordingly, we do not provide an opinion thereon. 

As further required by OMB Bulletin No. 06-03, in our fiscal year 2006 audit, with respect to internal control related 

to performance measures determined by management to be key and reported in the Management’s Discussion and 

Analysis and Performance Section, we obtained an understanding of the design of internal controls relating to the 

existence and completeness assertions and determined whether these internal controls had been placed in operation. 

We limited our testing to those controls necessary to test and report on the internal control over key performance 

measures in accordance with OMB Bulletin No. 06-03. However, our procedures were not designed to provide an 

opinion on internal control over reported performance measures and, accordingly, we do not provide an opinion 

thereon. 
Independent Auditors’ Report 

FY 2006 Performance and Accountability Report 157

As part of obtaining reasonable assurance about whether DOL’s fiscal year 2006 consolidated financial statements 

are free of material misstatement, we performed tests of DOL’s compliance with certain provisions of laws, 

regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on 

the determination of the consolidated financial statement amounts, and certain provisions of other laws and 

regulations specified in OMB Bulletin No. 06-03. We limited our tests of compliance to the provisions described in 

the preceding sentence, and we did not test compliance with all laws, regulations, contracts, and grant agreements 

applicable to DOL. However, providing an opinion on compliance with laws, regulations, contracts, and grant 

agreements was not an objective of our audit and, accordingly, we do not express such an opinion. 

Our responsibility also included expressing an opinion on DOL’s fiscal year 2006 compliance with FFMIA section 

803a requirements, based on our examination. Our examination was conducted in accordance with attestation 

standards established by the American Institute of Certified Public Accountants and the standards applicable to 

attestation engagements contained in Government Auditing Standards issued by the Comptroller General of the 

United States and, accordingly, included examining, on a test basis, evidence about DOL’s compliance with the 

requirements of FFMIA section 803a and performing such other procedures as we considered necessary in the 

circumstances. We believe that our examination provides a reasonable basis for our opinion. Our examination does 

not provide a legal determination on DOL’s compliance with specified requirements. 

RESTRICTED USE 

This report is intended solely for the information and use of DOL’s management, DOL’s Office of Inspector General, 

OMB, the U.S. Government Accountability Office, and the U.S. Congress and is not intended to be and should not be 

used by anyone other than these specified parties. 

November 13, 2006 
Financial Section 

158 United States Department of Labor 

1. Lack of Strong Application Controls Over Access to and Protection of Financial Information 

In fiscal years (FY) 2004 and 2005, the Office of Inspector General (OIG) reported consistent weaknesses across 

the Department of Labor’s (DOL) applications tested in the following application control areas: 

• Identification and documentation of supporting environments, such as process flow documentation and 

mapping; 

• Application password settings, such as passwords that do not adhere to complexity requirements; 

• User access, such as incomplete access request and termination forms; 

• Lack of application segregation of duties policies or enforcement of segregation of duties policies; 

• Periodic user account review and reauthorization, including lack of user authorization, or incomplete 

authorization documentation; 

• Audit trails, such as lack of monitoring of sensitive application functions and incomplete audit logs; and 

• Controls over output to other applications, including reconciliation of control totals and record counts. 

The OIG recommended that management: 

• Verify that specific security weaknesses identified during the audits and communicated to DOL agencies 

are included in each individual agency’s Plan of Action and Milestones (POA&M), and that appropriate 

and timely corrective action is taken on the identified weaknesses; and 

• Coordinate efforts among the DOL agencies to develop and/or enforce procedures and controls to 

address systemic application control weaknesses in current financial management systems. 

From current year testing, we found the continued presence of numerous weaknesses in the information 

protection controls over applications. We identified 43 prior year recommendations, 35 from the Office of the 

Chief Financial Officer (OCFO), 6 from the Employment and Training Administration (ETA), and 2 from the 

Employment Standards Administration (ESA), related to application controls that have not been corrected. The 

specific nature of these weaknesses, their causes, and the systems impacted by them have been separately 

communicated to management. 

These findings are a result of a breakdown in the implementation and monitoring of Departmental processes and 

procedures for application controls. These application control weaknesses could lead to users with inappropriate 

access to financial systems; inefficient processes; lack of completeness, accuracy, or integrity of financial data; 

and/or the lack of detection of unusual activity within financial systems. In addition, as a result of these 

weaknesses, DOL is not in full compliance with the Federal Information Security Management Act (FISMA) 

passed as part of the Electronic Government Act of 2002. 

Management believes that it has made substantial progress during FY 2006 to strengthen application security 

controls in response to the OIG’s prior year recommendations. Management also believes that its financial 

system, the Department of Labor Accounting and Related Systems (DOLAR$) has sufficient compensating 

controls to address the deficiencies identified by the OIG. 

2. Lack of Strong Logical Security Controls to Secure DOL’s Networks and Information 

Since FY 2001, the OIG identified and reported continuing weaknesses with DOL’s technical security standards 

and policies; access controls; and segregation of duties. The OIG recommended that management: 

• Verify that specific security weaknesses identified during the audits are communicated to DOL agencies 

and included in each individual agency’s POA&M, and that appropriate and timely corrective action is 

taken on the identified weaknesses; and 

• Coordinate efforts among the DOL agencies to develop and/or enforce procedures and controls to 

address logical security control weaknesses on current financial management systems. 
Independent Auditors’ Report 

Reportable Conditions 

Exhibit I 

FY 2006 Performance and Accountability Report 159

DOL continues to lack strong logical security controls to secure its networks and information. Current year 

testing showed that improvements are still needed in the following areas: 

• Technical security standards and policies need to be updated and implemented to include stronger logical 

security controls. Specifically, patches need to be applied to systems in a timely manner, unnecessary 

services need to be disabled, and access to sensitive files and directories needs to be restricted. 

• Segregation of duties policies need to be created and enforced for general support systems of financial 

applications. 

• Access controls need to be improved concerning account management, passwords, and audit log reviews. 

We identified 55 prior year recommendations (7 related to the OCFO, 12 related to ETA, 23 related to ESA, and 

13 related to the Office of the Assistant Secretary for Administration and Management (OASAM)) addressing 

logical security controls that have not been corrected. Additionally, 24 new recommendations related to logical 

security controls were issued in FY 2006 (8 related to ETA, 6 related to ESA, and 10 related to OASAM). The 

specific nature of these weaknesses, their causes, and the systems impacted by them have been separately 

communicated to management. 

These findings are a result of a breakdown in the implementation and monitoring of Departmental processes and 

procedures for logical security controls. These logical security control weaknesses could lead users to gain 

unauthorized access to the agency applications and data, and allow users to potentially modify or disclose agency 

data. Additionally, individuals who have the ability to perform incompatible job duties could perform fraudulent, 

malicious, or accidental actions that could result in unauthorized access, disclosure, and/or modification of DOL 

data. As a result of these weaknesses, DOL is not in full compliance with FISMA. 

Management believes it has made substantial progress to improve its logical security controls and plans to 

implement additional corrective actions to address remaining recommendations in FY 2007. Management also 

believes compensating controls within DOLAR$ address the weaknesses identified related to logical security 

controls.

3. Weaknesses Noted Over Property, Plant and Equipment 

DOL did not consistently implement or follow policies and procedures designed to ensure that property, plant 

and equipment (PP&E) balances, including construction-in-progress, are stated in accordance with Federal 

accounting standards. 

Internal-Use Software 

In FY 2005, the OIG identified that DOL has not capitalized all project costs, such as (1) direct salary and fringe 

benefit costs of Federal employees involved, and (2) related indirect costs such as overhead, rent, and travel, in 

accordance with Statement of Federal Financial Accounting Standard (SFFAS) No. 10, Accounting for Internal 

Use Software, for all of its internal-use software. The OIG recommended the OCFO again notify DOL agencies 

of their requirements to account for costs related to internal-use software and monitor to ensure they properly 

account for these costs in accordance with Federal and departmental requirements. 

During FY 2006, the OCFO re-issued relevant guidance to the agencies and conducted a meeting with the 

agencies. Although the OCFO has informally been communicating with the agencies to monitor the 

implementation of this guidance, no documentation exists to support this monitoring and the OCFO did not 

maintain a listing of internal use software projects in development. In addition, no one in the OCFO has been 

designated to be responsible for DOL’s internal use software accounting and reporting. 

We also noted that although the guidance issued discusses transaction codes used to record related indirect costs, 

the guidance does not provide detailed enough instructions on how indirect costs related to internal use software 

should be captured, calculated, and documented. Additionally, the OCFO has not developed an analysis to 

support its position that the amount of indirect costs associated with the development of internal-use software is 

not material to the financial statements. 
Financial Section 

160 United States Department of Labor 

In addition to the open prior year recommendation, we recommend that management designate an official to be 

responsible for internal-use software accounting and reporting and to perform certain procedures in this role. 

Management believes it made substantial progress to capitalize internal use software in response to the OIG’s 

previous recommendations. In FY 2006, management provided guidance and assistance, as well as monitored 

DOL agencies to ensure they properly capitalized internal use software. Management does not agree that DOL 

did not capitalize software development costs. For example, costs for the new accounting system have been 

capitalized, which include federal employee’s salaries, travel, rent, and other costs. Management agreed to 

enhance procedures to compare the internal-use software assets recorded in the Capitalized Asset Tracking and 

Reporting System (CATARS) to the amounts reported by the agencies and will perform, document, and maintain 

an analysis of indirect cost associated with software in development to determine whether these costs are 

material.

Job Corps Property 

In the FY 2004 and FY 2005 audits, the OIG reported that ETA did not sufficiently use DOL’s subsidiary ledger, 

the CATARS, as a complete property management system in accordance with the CATARS user guide. The OIG 

also found that ETA did not establish sufficient controls to ensure that Job Corps’ capitalized real property was 

accurately reported in CATARS and in the Department of Labor Accounting and Reporting System (DOLAR$), 

DOL’s general ledger system. The OIG recommended that management record property transactions timely and 

make other improvements over accounting for real property. 

In the FY 2006 audit, we noted the recurrence of many issues identified in prior audits, and we identified several 

new property-related issues including untimely transfer of acquisitions from the CATARS holding account, 

incorrect valuation of land transferred from other Federal agencies, and lack of documented analysis supporting 

the rationale for leased Job Corps facilities not being recorded as capital leases and property. 

We believe that many of these issues stem from the fact that the ETA Capitalized Asset Management Officer 

(CAMO) position remained vacant for much of the fiscal year under audit. Additionally, during FY 2006, the Job 

Corps program was transferred from ETA to the Office of the Secretary.

In addition to the open prior year recommendations, we recommend that management take further actions to 

improve accounting for Job Corps property. 

Management believes it made significant progress towards closing the FY 2004 audit finding by implementing 

procedural changes in the documentation of Job Corps facilities and the recording of substantially completed 

construction projects into CATARS. Management suspended the implementation of many of these changes after 

Hurricane Katrina destroyed the New Orleans and Gulfport Job Corps Centers. Management has initiated a full 

scale review of the Job Corps program policies and procedures, which will result in the implementation of 

corrective action that will bring the recording of Job Corps assets into compliance with Departmental and Federal 

government standards.

Other Property 

Our FY 2006 audit testing disclosed the following DOL-wide property issues: 

• Abnormal balances (e.g., items which appear to be below the applicable capitalization threshold and 

negative additions on the PP&E rollforward schedule) exist in CATARS that should be researched and 

resolved. 

• Reconciliations between CATARS and the general ledger are not performed timely. 

• Documentation to support certain PP&E-related transactions or balances was not readily available or did 

not exist. 

• For additions other than construction-in-progress, we noted 5 instances where an obligating document 

was signed by an unauthorized person, and 1 instance where the Contracting Officer signed an obligating 

document in excess of the officer’s warrant authority. 

• We identified 12 capitalized PP&E additions for which the unit cost was below the capitalization 

threshold. 
Independent Auditors’ Report 

Reportable Conditions 

Exhibit I 

FY 2006 Performance and Accountability Report 161 

• We noted 6 capitalized items that represented costs incurred after the software was placed in service and 

were not software enhancements. These costs should have been expensed in accordance with U.S. 

generally accepted accounting principles. 

• We identified 5 items related to software that were capitalized based on obligations rather than costs. 

• Physical inventories are not being adequately performed and documented. Of the 1,763 physical 

inventory reports we requested, 1,485 were not provided to us. In addition, 30 of the reports we reviewed 

were not certified by the Accountable Property Officer (APO). 

In addition, we tested a DOL-wide statistical sample of 200 assets to verify the assets existed and were in usable 

condition. For 40 of the 200 items, DOL could not provide timely and adequate evidence of the asset’s existence 

and use. For 5 of the 200 items, the evidence provided indicated the asset had been transferred or disposed of, 

and for 9 of the 200 items, the evidence provided indicated the asset was no longer in usable condition. These 54 

errors noted represented assets with a total cost of $21,315,130 and accumulated depreciation of $14,832,034. 

When projected to the entire population of assets, the projected misstatement is $81,527,396 of cost and 

$66,594,051 of accumulated depreciation. These errors were partially caused by DOL’s inability to readily 

identify an asset based on the inventory number, serial number, or description in CATARS. We noted that the 

inventory numbers and serial numbers on the assets were not consistently recorded in CATARS. In addition, 

some errors resulted from the inventory certification process not adequately identifying assets that no longer exist 

or that are no longer in usable condition. DOL management considered the identified differences to be 

immaterial to the FY 2006 consolidated financial statements, and as such, these differences were included in the 

Summary of Unadjusted Audit Differences attached to management’s FY 2006 representation letter. 

We recommend that management develop and implement policies and procedures, or enhance and enforce 

existing policies and procedures, related to abnormal balances in CATARS, reconciliations between CATARS 

and the general ledger, proper recording of acquired and disposed assets in CATARS, document maintenance 

and retention, obligation approvals, proper capitalization, and physical inventories. 

Management is ensuring that the required reconciliation procedures are now being performed and will strengthen 

procedures to ensure that assets are being recorded with the proper inventory number and proper serial number in 

CATARS, and that records of assets are being maintained such that each asset can be readily identified and 

located. Instructions will be provided so that during physical inventories, assets that are no longer in usable 

condition are identified and properly disposed of in CATARS.

4. Weaknesses Noted Over Grants 

Grant Accrual Preparation and Validation 

The ETA grant accrual process for the fiscal year-end and quarter-end accruals takes a snapshot of general ledger 

data for all ETA grants at the end of the period and calculates, at the individual grant level, the probable costs 

incurred based on the amount of drawdowns recorded at the end of the period. An accuracy analysis is performed 

on an annual basis to compare the actual costs reported by the grantees to the previous year-end’s accrual. During 

our FY 2006 audit work, we identified segregation of duties weaknesses related to the ETA grant accrual and 

validation process, and we determined that procedures for the ETA grant accrual and validation process were not 

documented. 

Per the U.S. Government Accountability Office’s (GAO) Standards for Internal Control in the Federal 

Government, “Key duties and responsibilities need to be divided or segregated among different people to reduce 

the risk of error or fraud. This should include separating the responsibilities for authorizing transactions, 

processing and recording them, reviewing the transactions, and handling any related assets. No one individual 

should control all key aspects of a transaction or event.” Additionally, “The documentation should appear in 

management directives, administrative policies, or operating manuals and may be in paper or electronic form. All 

documentation and records should be properly managed and maintained.” 
Financial Section 

162 United States Department of Labor 

Without a proper management review of the quarterly grant accrual and annual accuracy analysis, the risk 

increases that the grant accrual could be misstated in the consolidated financial statements. Additionally, without 

another employee trained to calculate the quarterly grant accrual using the current accrual methodology, a risk 

exists that the accrual would not be prepared timely and/or accurately in the event that the Financial Systems 

Specialist is absent. 

We recommend that management designate and train additional individuals in the grant accrual and validation 

process to correct this weakness, and that management formally document the grant accrual and validation 

procedures. 

Management agrees that backup procedures and personnel should be in place for calculating the quarterly grant 

accrual and for performing the annual accuracy analysis. The financial systems specialist now performs the 

management review of the accruals. Additional accounting office personnel will be trained to perform the 

accuracy analysis during FY 2007. 

Controls over Compliance with the Single Audit Act Amendments of 1996 

DOL has no monitoring procedures in place to ensure that audits of its grantees are completed and reports are 

received in a timely manner for each grantee that meets the audit threshold in Office of Management and Budget 

(OMB) Circular No. A-133, Audits of States, Local Governments, and Non-Profit Organizations. Therefore, 

DOL cannot be certain that all required audits have been performed in a timely manner. 

In addition, for FY 2006 compliance testing purposes, we selected a sample of DOL grantees that expended 

$500,000 or more of DOL funding through June 30, 2005. As of September 30, 2006, the latest available OMB 

Circular No. A-133 audit reports for 5 of the 32 grantees selected were not obtained by DOL for review to 

determine if any issues related to DOL grants had been reported. According to the Federal Single Audit 

Clearinghouse website, these 5 audit reports had been completed between the dates of May 7, 2002 and March 5, 

2006 and were available on the website. 

According to Section 7504 of the Single Audit Act Amendments of 1996, “Each Federal agency shall, in 

accordance with guidance issued by the Director under section 7505, with regard to Federal awards provided by 

the agency...monitor non-Federal entity use of Federal awards.” According OMB Circular No. A-133, 

non-Federal entities that expend $500,000 or more in a year in Federal awards shall have a single or programspecific audit conducted for that year. In addition, OMB Circular No. A-133, Subpart D, section 400(c) requires 

the Federal awarding agency to “perform the following for the Federal awards it makes: “Ensure that audits are 

completed and reports are received in a timely manner and in accordance with the requirements of this 

part...Issue a management decision on audit findings within six months after receipt of the audit report and 

ensure that the recipient takes appropriate and timely corrective action.” 

DLMS 8 – Audits and Investigations, dated July 7, 2004, paragraph 503 states, “DOL Program Official(s) shall 

promptly evaluate OIG report findings and recommendations and determine appropriate action...The Office of 

Inspector General will directly receive all Single Audit Act reports required to be submitted to DOL.” 

If no procedures are in place to ensure all audit reports that are required to be completed are received by DOL, 

DOL cannot determine if an audit report is missing or overdue. Additionally, DOL is not in full compliance with 

OMB Circular No. A-133, and questioned costs may have been reported for DOL programs of which DOL is not 

aware. 

We recommend that management develop and implement a tracking system to identify each grantee for which an 

OMB Circular No. A-133 audit is required and the date that the audit report is due. DOL should update DLMS to 

specifically identify which agencies are responsible for populating and maintaining this tracking system and for 

following-up with grantees when audit reports become overdue. In addition, we recommend that management 

implement a formal policy or process that defines which agency is responsible to monitor the Federal Single 

Audit Clearinghouse website for completed DOL grantee audit reports and retrieve them from the website for 

subsequent review. 
Independent Auditors’ Report 

Reportable Conditions 

Exhibit I 

FY 2006 Performance and Accountability Report 163 

Management believes that it is in compliance with OMB Circular No. A-133 as it relates to completion of 

required audits or follow-up on any questioned costs. The 5 reports noted by the auditor did not contain any 

findings related to DOL. However, management agrees that the procedures should be strengthened and will 

coordinate with appropriate agencies to develop and implement changes as recommended above, as appropriate. 

5. Weaknesses Noted in the Change Control Process for a Benefits System 

A documented and standard process for requesting, reviewing, developing, testing, and approving changes to an 

ESA benefits system was not in place prior to February 2006. While change control procedures were established 

and documented in February 2006, the procedures were inconsistently followed during the months of February 

and March 2006. We noted various weaknesses in our judgmental sample of 30 changes in the two month period. 

Additionally, procedures have not been established for priority and emergency changes or changes to the system 

test environment. 

Management stated that the system was recently implemented, and management had not finalized change control 

procedures and was informally processing change control requests and approvals. Additionally, since procedures 

were implemented in February 2006, management has not had sufficient time or resources to ensure that the 

policy is being consistently followed. Furthermore, management believed that the procedures were sufficient to 

cover priority and emergency changes at the time the procedures were implemented. 

The DOL Computer Security Handbook, volume 6, System Security Planning for Major Applications”, section 

4.6, page 37, states that controls must be used to “monitor the installation of, and updates to, hardware, operating 

system software, and other software to ensure that the hardware and software function as expected, and that a 

historical record is maintained of application changes.” Additionally, the guidance states: 

These controls may also be used to ensure that only authorized software is installed on the system. Such 

controls may include a hardware and software configuration policy that grants managerial approval (reauthorize processing) to modifications and requires that changes be documented. 

The National Institute of Standards and Technology (NIST) Special Publication (SP) 800-64, Security 

Considerations in the Information System Development Life Cycle, section 2.3.4.1, page 23, states: 

Configuration management and configuration control procedures are critical to establishing an initial 

baseline of hardware, software, and firmware components for the information system and subsequently 

controlling and maintaining an accurate inventory of any changes to the system. 

Without a proper change control process regarding the flow of changes from development to production, 

unauthorized and potentially inaccurate program changes may be implemented into the production environment. 

Without formal acceptance of application changes, program management cannot be assured that the changes 

made meet their needs and are appropriate for the environment. In addition, as a result of these weaknesses, DOL 

is not in full compliance with FISMA. 

As a result of our findings, management researched the 30 changes and determined the changes were 

appropriately performed. 

We recommend that management develop and/or enforce procedures and controls to address identified change 

control weaknesses. 

Management agrees to include in its Plan of Action and Milestones (POA&M) security weaknesses identified in 

the report, together with corrective action to be taken and milestone dates. Management has also developed 

system-specific change control procedures and has updated documentation of approved, tested, and installed 

system changes. Additionally, management has begun enforcing and will continue to enforce requirements for 

documentation of approval, indication of release, and integration and IV & V testing. 
Financial Section 

164 United States Department of Labor 

6. Weaknesses Noted in Federal Employees Compensation Act (FECA) Accounting and Financial 

Reporting 

DOL did not implement or consistently follow its existing management review procedures related to year-end 

activity reconciliations and continuing FECA eligibility. 

FECA Reconciliations 

The OCFO does not adequately reconcile (1) the general ledger to the FECA subsidiary ledgers (FECA history 

databases), and ESA does not adequately reconcile (2) the FECA history databases to the charge-back report that 

is derived from the history databases and used to bill FECA customer agencies. We noted a reconciling 

difference of roughly $76 million in (1) above and a difference of $17 million in (2) above. Although DOL 

management has management review controls in place, they do not sufficiently follow-up on and resolve 

differences through an adequate reconciliation process. 

Per the GAO’s Standards for Internal Control in the Federal Government, “Control activities occur at all levels 

and functions of the entity. They include a wide range of diverse activities such as approvals, authorizations, 

verifications, reconciliations, performance reviews, maintenance of security, and the creation and maintenance of 

related records which provide evidence of execution of these activities as well as appropriate documentation.” 

We recommend that management develop and implement quarterly procedures to reconcile the FECA benefit 

program expenses to the general ledger and quarterly ESA procedures to adequately reconcile the FECA history 

databases to the charge-back reports. 

Management concurs and will develop and implement formal reconciliation procedures to ensure that the FECA 

benefit program expenses are reconciled to the general ledger and that the chargeback reports are reconciled to 

the payment histories. 

Management Review of Year-end Accrual 

DOL prepares a schedule, Liability for Current Federal Employees Compensation Act Benefits, as of September 

30, which is available to other Federal agencies before fiscal year end via the internet. This information is 

necessary for other Federal agencies to record a liability for fourth quarter benefit payments, which is owed to 

DOL. The DOL OCFO uses an estimation process to prepare this schedule. 

Management does not have procedures in place to review the estimate for the fourth quarter. The estimate for the 

FY 2006 fourth quarter DOL receivable based on the Liability for Current Federal Employees Compensation Act 

Benefits schedule differed from the actual DOL receivable by approximately $96 million. This variance primarily 

resulted from an extra payment cycle in the fourth quarter of FY 2006 for which the estimation model did not 

account. Had management performed a detailed review of the OCFO estimate, management may have identified 

that the extra payment cycle was not accounted for in the fourth quarter estimate and requested a correction prior 

to the posting of the estimate information on the internet. 

Per the GAO’s Standards for Internal Control in the Federal Government, “Key duties and responsibilities need 

to be divided or segregated among different people to reduce the risk of error or fraud. This should include 

separating the responsibilities for authorizing transactions, processing and recording them, reviewing the 

transactions, and handling any related assets. No one individual should control all key aspects of a transaction or 

event.” 

We recommend that management develop and implement procedures for management review of the OCFO 

estimates prior to posting of the estimates on the internet and refine the estimation methodology so that it will 

more accurately account for varying payment cycles. 

Management will develop and implement procedures to formally review the amounts to be posted and will 

review and refine the methodology as needed. 
Independent Auditors’ Report 

Reportable Conditions 

Exhibit I 

FY 2006 Performance and Accountability Report 165 

Delinquent Forms CA-1032, Request for Information on Earnings, Dual Benefits, Dependents and Third 

Party Settlement Form 

DOL policy requires FECA claimants to annually certify their earnings information and dependent status on a 

Request for Information on Earnings, Dual Benefits, Dependents and Third Party Settlements Form (CA-1032). 

This information is used to determine if any changes are necessary to a claimant’s benefit amount. 

Our tests of operating effectiveness noted that Claims Examiners (CE) were not consistently following-up with 

claimants to ensure that a CA-1032 was received annually for each claimant, as applicable; however, payments 

continued to be made to non-responsive claimants. ESA management identified the use of the Periodic Eligibility 

Review (PER) screen capabilities in iFECS as a key control to ensure claimant case files are current. The iFECS 

PER screen tracks CA-1032 status and documents CA-1032 receipt and review. However, iFECS does not have 

automated reminders to identify outstanding CA-1032 receipts. For 4 of the 188 disbursements tested, we noted a 

completed CA-1032 was not returned by the claimant and the CE did not follow the FECA Procedure Manual in 

following up on the unreturned CA-1032. Without these completed forms, an increased opportunity exists for 

incorrect payments to be made to claimants in situations where they are either no longer eligible for 

compensation or are eligible for increased or reduced compensation, based on their earnings, marital status, 

and/or dependent status, and have not had their information updated in iFECS. 

We also noted that 2 of the 188 disbursements tested were made for inaccurate amounts because of inadequate 

CE reviews of received CA-1032s. The two claimants had provided sufficient information on the CA-1032, 

noting that they no longer had a spouse or dependents; however, the payments tested identified that they 

continued to be paid at the higher rate that would apply for a claimant with dependents and/or a spouse. 

System controls and reminders should be in place to monitor the status of CA-1032 requests. Once CEs begin to 

use the PER screen consistently, a report could be written that would provide a list of those claimants for which 

CA-1032s have not been received, which would facilitate more timely follow-up by the CEs and supervisory 

staff. 

We have noted that management has taken action on these issues. Specifically, management has made 

enhancements to the PER screen within iFECS and is updating its policies to make the appropriate use of the 

PER screen a mandatory requirement. 

We recommend that management utilize the PER screen within iFECS to track CA-1032 status and document 

their receipt and review using a system configuration or manual control and require supervisory review of CE 

receipt and review of CA-1032 forms. 

Management believes that with the successful implementation of the enhancements to the Periodic Eligibility 

Review (PER) screen within iFECS on March 31, 2006, in fulfillment of the response to a prior year finding, the 

issue was resolved. It is management’s position that use of the PER resolves the findings related to processing 

CA-1032s. A bulletin will be created to outline management’s policy on the use of the PER screen and the 

procedure manual will be updated as it still references claims examiners needing to complete a Form 674. 

7. Lack of Segregation of Duties over Journal Entries 

All DOL agencies are able to enter journal entries into DOLAR$ via transaction codes. Each transaction code 

consists of one or more journal entries. The respective agency staff member responsible for recording the 

particular item accesses DOLAR$ and enters the transaction code and the dollar amount of the item. DOLAR$ 

does not require these entries to be recorded and approved by separate individuals before they are posted to the 

general ledger. Hence, transaction codes and corresponding amounts entered into DOLAR$ are posted without 

any system-controlled review and approval. We noted this condition through procedures performed at the 

Occupational Safety and Health Administration (OSHA), OASAM, and the OCFO; these agencies do not have 

manual compensating review controls to address the related risk. 
Financial Section 

166 United States Department of Labor 

DOLAR$ was not designed to require journal entries to be electronically approved before amounts entered are 

posted to the general ledger, and management has not required Department-wide manual review controls to 

compensate for this condition. By allowing individuals the authority to prepare and approve their own 

transactions in DOLAR$, the risk increases that a material error would not be prevented or detected and 

corrected on a timely basis. 

Per the GAO’s Standards for Internal Control in the Federal Government, “Key duties and responsibilities need 

to be divided or segregated among different people to reduce the risk of error or fraud. This should include 

separating the responsibilities for authorizing transactions, processing and recording them, reviewing the 

transactions, and handling any related assets. No one individual should control all key aspects of a transaction or 

event.” 

We recommend that management ensures the current general ledger system’s configuration is modified so that 

journal entries (via transaction codes) entered into the general ledger are required to be approved electronically 

by an individual other than the preparer before they are posted. This feature should also be incorporated into the 

design of the planned replacement general ledger system. The agencies that do not currently have manual 

compensating review controls should implement such controls to address this risk until the system controls have 

been implemented. 

Management concurs that DOLAR$ does not have a system-controlled approval process and supports the 

concept of building in automated internal controls into the system that will replace DOLAR$ as long as these 

controls are reasonable. However, management does not believe that it is feasible or cost effective to retrofit the 

current system with these controls. Management does not agree with the finding that there are no compensating 

review controls for the current lack of automated journal voucher review. Overall, the Department believes it has 

in place adequate compensating controls and will ensure that these procedures are properly documented and 

improved in FY 2007. 

8. Weakness Noted over Payroll Accounting 

During FY 2006, the U.S. Department of Agriculture’s (USDA) Office of Chief Financial Officer 

(OCFO)/National Finance Center (NFC) processed DOL’s payroll. The Fiscal Year 2006 – Office of the Chief 

Financial Officer/National Finance Center General Control Review dated September 21, 2006 and issued by the 

USDA’s Office of Inspector General (Report No. 11401-24-FM) reported a qualified opinion regarding the 

effectiveness of NFC’s internal controls for the period October 1, 2005 through June 30, 2006. During FY 2006, 

DOL did not have policies and procedures in place to reconcile the payroll information it submitted to the NFC 

to that received and processed by the NFC. 

For each FY 2006 pay period, DOL submitted to the NFC payroll information that included all DOL employees 

for the period, along with their hours worked, leave used, and other payroll related information for the period. 

The NFC processed the payroll for DOL each period and made available for download a Detail Pay and Deduct 

Register report for each DOL Human Resources office. We noted that DOL did not utilize these reports to 

perform reviews or reconciliations of data processed by the NFC, and no other controls were in place during the 

year to ensure that what was submitted to NFC via Time and Attendance records reconciled to what was shown 

as paid in the Detail Pay and Deduct Register. The lack of reconciliation controls around the NFC outputs, 

compounded by the control weaknesses identified at the NFC, increased the risk that payroll-related line items in 

the FY 2006 financial statements could be misstated because of errors in payroll processing by the NFC. 

Additionally, we noted that the Department of Labor Manual Series (DLMS) 6, Financial Management, Chapter 

1000, Payroll Accounting, has not been updated since October 1981. However, payroll policies and procedures 

have changed since 1981, most notably with the change to NFC as DOL’s payroll services provider. 

Federal agencies that use external service providers, such as the NFC, should have controls in place to ensure the 

accuracy of processing outputs. As stated by the USDA OIG in its FY 2006 Report No. 11401-24-FM, “The 

accuracy and reliability of data processed by OCFO/NFC and the resultant reports rests with the customer agency 

and any compensating controls implemented by the agencies.” 
Independent Auditors’ Report 

Reportable Conditions 

Exhibit I 

FY 2006 Performance and Accountability Report 167 

OMB Circular No. 123, Management’s Responsibility for Internal Control, states, “Application control should be 

designed to ensure that transactions are properly authorized and processed accurately and that the data is valid 

and complete. Controls should be established at an application’s interfaces to verify inputs and outputs, such as 

edit checks.” Additionally, per the GAO’s Standards for Internal Control in the Federal Government, “Internal 

control should generally be designed to assure that ongoing monitoring occurs in the course of normal 

operations. It is performed continually and is ingrained in the agency’s operations. It includes regular 

management and supervisory activities, comparisons, reconciliations, and other actions people take in performing 

their duties.” GAO’s Standards for Internal Control in the Federal Government also state, “The documentation 

should appear in management directives, administrative policies, or operating manuals and may be in paper or 

electronic form. All documentation and records should be properly managed and maintained.” 

We recommend that management develop and implement policies and procedures to reconcile payroll 

information provided to the NFC to the payroll information processed by the NFC each pay period. These 

reconciliations should be documented, reviewed and approved by an appropriate supervisor, and maintained. In 

addition, management should update DLMS to reflect current payroll-related policies and procedures, and 

develop and implement a monitoring plan to periodically evaluate and update procedures in the DLMS to ensure 

the information documented is still appropriate. 

Management believes that it currently has available and uses numerous reports for DOL review and analysis of 

payroll information, has in place a time and attendance reconciliation that validates what is transmitted to NFC 

and what is processed, and reviews and reconciles data between DOL Human Resources (HR) and HR data in the 

National Finance Center’s data base. Management believes that the PeoplePower and NFC edits ensure the 

accuracy of the data being processed. DLMS 6 – Chapter 1000 Payroll and Accounting, was updated and 

circulated to DOL agencies for review in July 2006 and will be issued shortly.

9. Weakness Noted over Budgetary Accounting 

During FY 2006, the OCFO did not complete timely reconciliations related to the Apportionment and 

Reapportionment Schedules (SF-132) and the Report on Budget Execution and Budgetary Resources (SF-133). 

During our FY 2006 audit work, we requested reconciliations as of June 30, 2006 of (a) the SF-132 to the 

SF-133, and (b) the SF-133 to the third quarter Statement of Budgetary Resources. However, these 

reconciliations were not completed and provided to us until late September 2006. In addition, these 

reconciliations identified several necessary corrections to amounts posted in the general ledger, and various 

differences remained unresolved. During FY 2006, the OCFO did not have adequate resources and did not 

adequately enforce policies to ensure the reconciliations were completed and any identified reconciling items 

resolved in a timely manner. The lack of timely and complete reconciliations increased the risk that material 

differences in external reports and in the general ledger may not have been detected and corrected in a timely 

manner during the year. 

Additionally, we noted that much of the information referenced in DLMS for the Budget Execution process has 

not been updated since March 2004. OMB Circular No. A-11, Preparation, Submission and Execution of the 

Budget, has been revised since that time. 

Per the GAO’s Standards for Internal Control in the Federal Government, “Control activities occur at all levels 

and functions of the entity. They include a wide range of diverse activities such as approvals, authorizations, 

verifications, reconciliations, performance reviews, maintenance of security, and the creation and maintenance of 

related records which provide evidence of execution of these activities as well as appropriate documentation.” 

Additionally, “The documentation should appear in management directives, administrative policies, or operating 

manuals and may be in paper or electronic form. All documentation and records should be properly managed and 

maintained.” 
Financial Section 

168 United States Department of Labor 

According to OMB’s Circular No. A-136 (July 2006), section II.4.6.11, “... information on the SBR should be 

consistent with the budget execution information reported on the Report on Budget Execution and Budgetary 

Resources (SF 133) and with information reported in the Budget of the United States Government to ensure the 

integrity of the numbers presented...Consistency between budgetary information presented in the financial 

statements and the Budget of the United States Government is critical to ensure the integrity of the numbers 

presented. The FACTS II helps to ensure the consistency of data. The FACTS II data submitted by agencies are 

USSGL-based trial balances, which are used to populate the SF 133 and the actual column of the Program and 

Financing Schedule of the Budget.” In addition, section II.4.62 states “The resources reported on this statement 

shall agree with, and be reconciled to, the total budgetary resources reported for the aggregate of all budget 

accounts on the SF 133...The status of budgetary resources reported on this statement shall agree with, and be 

reconciled to, the total status reported for the aggregate of all budget accounts on the SF 133...The outlays shall 

also agree with, and be reconciled to, the aggregate of outlays reported on the SF 133 for the aggregate of all 

budget accounts.” 

We recommend that management ensure that current policies and procedures over SF-132 and SF-133 

reconciliations are enhanced to require (a) quarterly reconciliations be prepared and documented, (b) the 

completion of documented supervisory reviews over the reconciliations, and (c) the completion of these 

procedures by a certain date (e.g., 15 days after each quarter-end). In addition, management should update 

DLMS to reflect current budget-related policies, procedures, and external requirements, and develop and 

implement a monitoring plan to periodically evaluate and update procedures in the DLMS to ensure the 

information documented is still appropriate. 

Management believes that due to DOL’s submission process of data to Treasury, any deficiencies would be 

identified before the trial balance data is submitted through the edit checks of Treasury. Additionally, the OCFO 

initiated reconciliation of the SF-132 and SF-133 reports on a quarterly basis in FY 2006. Management is 

working to enhance its current policies and procedures to require that the quarterly reconciliation be completed 

15 days after each quarter and will require that the reconciliation be fully documented, and will require it to be 

formally reviewed and approved by management. 

10. Weaknesses Noted over Custodial Activities 

Four DOL agencies are responsible for the assessment and collection of fines and penalties – ESA, OSHA, the 

Employee Benefits Security Administration (EBSA), and the Mine Safety and Health Administration (MSHA). 

During our FY 2006 testing related to the assessment and collection of fines and penalties, we noted the 

following conditions: 

• Controls were not consistently functioning effectively during FY 2006 to notify the employers of debt 

delinquency timely (18 exceptions in 74 cases tested) or to send notification of outstanding debt to the 

U.S. Department of Treasury (Treasury) after 180 days (25 exceptions in 52 cases tested that were 

greater than 180 days outstanding), in accordance with the Debt Collection Improvement Act of 1996. 

These exceptions were noted at MSHA and OSHA. 

• MSHA and ESA do not write-off debt greater than 2 years old in accordance with OMB Circular No. A129, Managing Federal Credit Programs. 

• MSHA does not reconcile its subsidiary ledger to the general ledger on a periodic basis. We requested 

reconciliations of collections between the subsidiary ledger and the general ledger as of June 30, August 

31, and September 30, 2006, and received none of them timely. The September 30 collections 

reconciliation, received on November 3, 2006, contained a $650,930 unexplained variance (2.7% of 

MSHA collections recorded in the general ledger as of September 30, 2006). 

• Since November 2005, one day of interest was omitted from MSHA’s interest calculation each month. 

 

1 Also cited in the August 2005 version of OMB Circular No. A-136, section 6.1. 

2 Also cited in the August 2005 version of OMB Circular No. A-136, sections 6.5 through 6.7. 
Independent Auditors’ Report 

Reportable Conditions 

Exhibit I 

FY 2006 Performance and Accountability Report 169 

• OSHA only records interest receivable when debt letters are sent to employers and when debt is sent to 

Treasury, and does not ensure that its quarter-end interest receivable balances are appropriately accrued 

between the time of the last debt letter and the time the debt is sent to Treasury. 

• OSHA collections are not properly cut-off at year-end. $819,126 of FY 2005 collections were posted to 

DOLAR$ and the SCA in FY 2006, and $1,236,416 of FY 2006 collections were posted to DOLAR$ 

and the SCA in FY 2007. 

DOL management considered the identified differences to be immaterial to the FY 2006 consolidated financial 

statements, and as such, these differences were included in the Summary of Unadjusted Audit Differences 

attached to management’s FY 2006 representation letter. 

We recommend that management develop and implement policies and procedures, or enhance and enforce 

existing policies and procedures and related systems related to the timely notification to employers of debt 

delinquency, the timely notification to Treasury of outstanding debt, write-off of debt greater than 2 years old in 

accordance with OMB Circular No. A-129, Managing Federal Credit Programs reconciliation of the MSHA 

subsidiary ledger to the general ledger on a quarterly basis, accrual of interest receivable on a quarterly basis, and 

recording of collections received near year-end in the general ledger in the proper fiscal year. In addition, 

management should design, test, and implement changes to MSHA’s subsidiary ledger to correct errors in the 

calculation of interest and ensure that controls are in place to detect such system errors in the future. 

In FY 2006, DOL updated its procedures for debt management (DLMS 6, Chapter 900); the Chapter is currently 

in the Departmental clearance process. The revised guidance covers transfers of delinquent or defaulted debts to 

the U.S. Department of the Treasury, Financial Management Service (FMS) for collection and procedures for the 

write-off of debt. Management routinely monitors accounts receivable and reviews the agencies’ quarterly 

reports on receivables due from the public to ensure compliance with OMB Circular No. A-129. Management 

will develop and implement any additional policies and procedures for the management and collection of debts 

and write-offs to ensure compliance with FMS and the OMB Circular No. A-129 requirements, including interest 

accruals, reconciliations, and cut-offs. 
Financial Section 

170 United States Department of Labor 

1. Federal Information Security Management Act (Electronic Government Act of 2002) 

The U.S. Department of Labor (DOL) is required to comply with the Federal Information Security Management 

Act (FISMA), which was enacted as part of the Electronic Government Act of 2002. FISMA requires the head of 

each agency to be responsible for (1) providing information security protections commensurate with the risk and 

magnitude of the harm resulting from unauthorized access, use, disclosure, disruption, modification, or 

destruction of (a) information collected or maintained by or on behalf of the agency; and (b) information systems 

used or operated by an agency or by a contractor of an agency or other organization on behalf of an agency; (2) 

complying with the requirements of this subchapter and related policies, procedures, standards, and guidelines, 

including information security standards promulgated under section 11331 of title 40. This particular section 

requires that Federal agencies provide minimum information security requirements as defined by the National 

Institute of Standards and Technology. We noted instances of non-compliance with FISMA that have been 

reported in Exhibit I as Reportable Condition Nos. 1, 2 and 5. 

We recommend that DOL follow the recommendations provided in Reportable Condition Nos. 1, 2 and 5 in 

Exhibit I, and fully implement the requirements of FISMA in fiscal year (FY) 2007. 

2. Single Audit Act Amendments of 1996 

As a grant-making entity, DOL is required to comply with certain provisions of the Single Audit Act Amendments 

of 1996 and the corresponding Office of Management and Budget (OMB) Circular No. A-133, Audits of States, 

Local Governments, and Non-Profit Organizations. According to Section 7504 of the Single Audit Act 

Amendments of 1996, “Each Federal agency shall, in accordance with guidance issued by the Director under 

section 7505, with regard to Federal awards provided by the agency...monitor non-Federal entity use of Federal 

awards.” According to Section 400(c) of OMB Circular No. A-133, “The Federal awarding agency shall perform 

the following for the Federal awards it makes...Ensure that audits are completed and reports are received in a 

timely manner and in accordance with the requirements of this part...Issue a management decision on audit 

findings within six months after receipt of the audit report and ensure that the recipient takes appropriate and 

timely corrective action.” 

As discussed in Reportable Condition No. 4 in Exhibit I, DOL lacks monitoring procedures to ensure that audits 

of its grantees are completed and reports are received in a timely manner for each grantee that meets the audit 

threshold in OMB Circular No. A-133. Therefore, DOL cannot be certain that all required audits have been 

performed in a timely manner. 

DOL has established policies and procedures requiring the Office of Inspector General (OIG) to receive OMB 

Circular No. A-133 audit reports once they are issued, review these reports for findings relevant to DOL grant 

programs, and distribute any such findings to the applicable DOL agency for response and resolution. However, 

we noted instances in which the latest available OMB Circular No. A-133 audit reports were not obtained for 

review as of September 30, 2006 although they were available on the Federal Single Audit Clearinghouse 

website. 

We recommend that DOL follow the recommendations provided in Reportable Condition No. 4 in Exhibit I in 

FY 2007. 

3. Debt Collection Improvement Act of 1996 

The Debt Collection Improvement Act of 1996 (DCIA) is intended to significantly enhance the Federal 

Government’s ability to service and collect debts. Under the DCIA, the U.S. Department of Treasury (Treasury) 

assumes a significant role for improving government-wide receivables management. According to the DCIA, an 

agency responsible for collecting debts from the public must “ensure that the public is fully informed of the 

Federal Government's debt collection policies and that debtors are cognizant of their financial obligations to 

repay amounts owed to the Federal Government.” Also, according to the DCIA, “any Federal agency that is 

owed by a person a past due, legally enforceable nontax debt that is over 180 days delinquent, including nontax 

debt administered by a third party acting as an agent for the Federal Government, shall notify the Secretary of the 
Independent Auditors’ Report 

Compliance Matters 

Exhibit II 

United States Department of Labor 171 

Treasury of all such nontax debts for purposes of administrative offset.” Our tests of compliance disclosed 

instances where DOL was not in compliance with these provisions of the DCIA. In addition, all DOL agencies do 

not write-off debt greater than two years old in accordance with OMB Circular No. A-129, Managing Federal 

Credit Programs. See Exhibit I, Reportable Condition No. 10 for further information. 

We recommend that DOL follow the recommendations provided in Reportable Condition No. 10 in Exhibit I, 

and develop policies and procedures to ensure full compliance with the DCIA in FY 2007. 

4. Federal Financial Management Improvement Act of 1996 

Under section 803a of FFMIA, DOL’s financial management systems are required to substantially comply with 

(1) Federal financial management systems requirements, (2) applicable Federal accounting standards, and (3) the 

United States Government Standard General Ledger at the transaction level. The Department represented that in 

accordance with the provisions and requirements of FFMIA, the Secretary of Labor determined that the 

Department of Labor’s financial management systems are in substantial compliance with FFMIA. 

As a result of FY 2006 testing, we concluded that DOL’s financial management systems did not substantially 

comply with Federal financial management systems requirements. 

• In the FY 2006 FISMA report, the DOL OIG identified a significant deficiency related to a system 

considered a mixed system under OMB guidelines as it supports financial and non-financial systems 

within DOL, including the Department of Labor Accounting and Reporting System (DOLAR$), DOL’s 

general ledger system. See OIG Report No. 23-06-015-07-001. 

• Several “high” risk change control and segregation of duties weaknesses related to computer security 

were identified at the Employment and Training Administration (ETA) and the Employment Standards 

Administration (ESA) as part of FY 2006 audit work. These weaknesses were identified on systems 

associated with certain DOL benefits and grants programs. See Exhibit I Reportable Condition No. 1 and 

5 for further information. 

• Numerous “high” and “medium” risk information technology (IT) general and application control 

weaknesses related to computer security were identified as part of the IT audit work in FY 2006. These 

weaknesses impact the IT environments and systems in several large DOL agencies, including the Office 

of the Chief Financial Officer (OCFO), ETA, ESA, and the Office of the Assistant Secretary for 

Administration and Management (OASAM). Many of these weaknesses were initially identified in 

previous years’ audits, and DOL has not taken sufficient corrective action to address them. In summary, 

DOL was not effective (less than 30%) in closing such prior year IT recommendations. As a result of the 

number of repeat IT weaknesses still present in the DOL financial control environment, added pressure 

exists on the mitigating manual controls to be operating effectively at all times. See Exhibit I Reportable 

Conditions Nos. 1 and 2 for further information. 

• DOLAR$ does not require journal entries (via transaction codes) to be entered and approved by separate 

individuals before they are posted to the general ledger. Hence, transaction codes and corresponding 

amounts entered into DOLAR$ are posted without any system-controlled approval. See Exhibit I 

Reportable Condition No. 7 for further information. 

• Certain procedures in the Department of Labor Manual Series (DLMS) are outdated or should be more 

comprehensive. See Exhibit I Reportable Condition Nos. 8 and 9 for examples of this condition. 

We recommend that DOL follow the recommendations provided in Reportable Condition Nos. 1, 2, 5, 8 and 9 in 

Exhibit I, and improve its processes to ensure compliance with the Federal financial management systems 

requirements of FFMIA in FY 2007. 
Financial Section 

172 United States Department of Labor 

2006 Top Management Challenges Facing the Department of Labor 

For FY 2006, the Office of Inspector General (OIG) considers the following areas to be the most serious 

management and performance challenges facing the Department of Labor. They involve compliance, 

accountability, and delivery of services and benefits. 

• Improving Procurement Integrity 

• Safeguarding Unemployment Insurance 

• Improving the Federal Employees’ Compensation Act (FECA) Program 

• Maintaining the Integrity of Foreign Labor Certification Programs 

• Improving Financial and Performance Accountability 

• Developing and Securing Information Technology Systems and Protecting Related Information 

Assets 

– Strengthening System Development and Management of High Risk Systems 

– Maintaining Information Technology Security 

– Protecting Information Assets and Securing Sensitive Information 

• Ensuring the Security of Employee Benefit Plan Assets 

• Ensuring the Safety and Health of Miners 

• Ensuring the Effectiveness of the Job Corps Program 

• Preparing for Emergencies 

Improving Procurement Integrity 

In FY 2005, DOL obtained goods and services valued at more than $1.6 billion from external entities through 

more than 8,000 acquisition actions. Ensuring controls are in place to properly award, manage, and 

document procurements is a challenge to the Department. Recent OIG audits have shown that problems arise 

because the procurement functions are not organizationally independent of program functions. This structure 

enables program officials, instead of contracting experts, to drive procurement policy and decisions. As a 

result, procurement decisions may not be in the best operating or financial interests of DOL. 

An audit of a DOL agency found that a lack of segregation of the procurement function allowed program 

staff to exert undue influence over the procurement process. In addition, the agency’s procurements 

exhibited a pattern of disregard for acquisition requirements and did not adhere to the principle of full and 

open competition. An audit of a sole source contract for encryption software awarded by another agency 

disclosed that overall responsibility for the information technology and procurement functions were 

delegated to one executive. Furthermore, a program official from that agency who was involved in the 

procurement action failed to disclose an apparent conflict of interest. The audit also found: the 

noncompetitive award was not adequately justified; the contract was significantly modified in scope and cost 

without proper review and approval; and the agency could not justify its decision not to use the $3.8 million 

of products purchased. 

The Services Acquisition Reform Act of 2003 (SARA) requires DOL and other executive agencies to appoint 

a Chief Acquisition Officer (CAO) whose primary duty is acquisition management. However, DOL’s 

current organization does not comply with that requirement. Instead, the Assistant Secretary for 

Administration and Management serves as the CAO in addition to carrying out the usual responsibilities for 

that position. 

The OIG believes that, until procurement and programmatic responsibilities are properly separated and 

effective controls are put in place, DOL continues to be at risk for wasteful and abusive procurement 

practices. To address the vulnerabilities resulting from a lack of separation of procurement duties, we have 

recommended that a new CAO position should be created within the Office of the Deputy Secretary of Labor 

with acquisition being the CAO’s primary responsibility as required by SARA. Notably, Congress directed 

the Department to report, by August 30, 2006, on the steps necessary to establish a unified chief procurement 

officer with responsibilities for all procurement activities in the Department. 
Top Management Challenges 

FY 2006 Performance and Accountability Report 173 

Safeguarding Unemployment Insurance 

The need for Federal agencies to take action to eliminate overpayments is recognized by the President’s 

Management Agenda (PMA) and the Improper Payments Information Act of 2002. Reducing improper 

payments in the Federal-State Unemployment Insurance (UI) and Disaster Unemployment Assistance (DUA) 

programs remains an ongoing challenge for the Department. Improper payments include those made in the 

wrong amount, to an ineligible recipient, or improperly used by the recipient. According to the Department, 

UI overpayments by the states were estimated at $3 billion for calendar year 2005. 

Ensuring Payment Integrity During Emergencies 

The Department is challenged in having the necessary systems and controls in place and ensuring the same 

for the states and other key partners to be able to quickly respond, while preventing improper payments 

during national emergencies or disasters. This includes utilizing all tools available to ensure that benefits 

only go those who are eligible. The need for effective controls is evidenced by vulnerabilities exposed 

following hurricanes Katrina and Rita. These disasters put an unprecedented stress on the unemployment 

benefits systems of Louisiana and Mississippi, and other states stepped in to process unemployment benefit 

claims for those two states. Due to the need to get benefits to qualified recipients in a timely manner, 

controls were relaxed to the extent that no one who filed an unemployment claim was initially denied 

benefits. Consequently, the situation allowed many individuals to take advantage of weak or non-existent 

controls, which resulted in the exploitation of UI and DUA payouts as well as the proliferation of criminal 

activity including identity theft and fraud. 

Ongoing audit and investigative work indicate that improper payments related to these disasters, particularly 

under the DUA program, may be extensive. To date, the OIG has identified approximately 1,000 cases of 

potential fraud. Because of the special risks related to the DUA program, we are continuing our efforts to 

examine eligibility for the entire DUA claimant population impacted by the hurricanes. In addition, a match 

against the National Directory of New Hires performed by the State of Louisiana of active unemployment 

claims identified approximately 22,000 claimants that may have continued to claim unemployment 

compensation after returning to work. 

Overcharges to the Unemployment Trust Fund 

Overcharges by the Internal Revenue Service (IRS) to the Unemployment Trust Fund (UTF) for costs 

incurred to administer the UTF poses a major challenge for the Department. OIG audits have demonstrated 

that the UTF has been improperly charged for hundreds of millions of dollars over several years. The OIG 

previously recommended that ETA work with the IRS to adopt a method to allocate costs and seek 

reimbursement for overcharges. The IRS subsequently reduced the amount of UTF FY 2002 administrative 

charges. 

In FY 2003, the Treasury Inspector General for Tax Administration (TIGTA) reported that the IRS needed to 

establish an effective process for determining UTF administrative expenses. Based on TIGTA’s 

recommendation, the IRS implemented a new cost methodology in October 2004. Even with this change, the 

administrative charges for UTF totaled $72 million for FY 2005, and currently, $70 million for the first 3 

quarters of FY 2006. ETA has expressed concern about the complexity of the IRS’s new methodology and 

the magnitude of the administrative charges. The OIG has requested that TIGTA audit the new 

methodology’s adequacy for charging UTF administrative expenses. 

Improving the Federal Employees’ Compensation Act (FECA) Program 

FECA provides income and medical cost compensation to covered Federal civilian employees injured on the 

job, employees who have incurred work-related occupational diseases, and beneficiaries of employees whose 

deaths are attributable to job-related injuries or occupational diseases. The DOL-administered FECA 

program impacts employees and budgets of all Federal agencies. FECA benefit expenditures totaled $2.4 
Financial Section 

174 United States Department of Labor 

billion in 2005. The OIG considers the effective design and operation of the program to be both a 

Departmental and government-wide challenge. 

As effective management of the FECA program is the responsibility of all Federal agencies, the Labor and 

Commerce OIGs recently hosted a Symposium for the Inspector General (IG) community. With input from 

the IG community, the DOL OIG developed a more coordinated approach to ensure oversight of the FECA 

program to reduce fraud and overpayments. That approach was incorporated into a protocol document for 

audits, inspections, evaluations, and investigations conducted by the IGs across government. The protocol 

should assist OWCP in more efficiently responding to requests from the various agencies in performing 

oversight of their respective FECA operations. 

The Department is challenged in continuing to provide leadership within the Federal community through the 

pursuit of legislative reforms to improve the efficiency of the FECA program and the reduction of improper 

payments through effective systems and oversight. 

Needed FECA Legislative Reform 

The OIG supports the Department’s efforts to seek legislative reforms to the FECA program which would 

enhance incentives for employees who have recovered to return to work, address retirement equity issues, 

discourage unsubstantiated or otherwise unnecessary claims, and make other benefit and administrative 

improvements. Through the enactment of these proposals, the Department estimates savings to the 

government over ten years to be $592 million. The legislative reform would assist the Department to focus 

on improving case management and to ensure only eligible individuals receive benefits. 

Ensuring Continued Eligibility for FECA Benefits 

In previous years, the OIG reported that the Department needed to obtain and review medical evidence on a 

periodic basis in order to justify continued eligibility for FECA compensation payments. Because the Office 

of Workers’ Compensation Programs (OWCP) had not established effective controls, there was a high risk of 

improper payments. In March 2006, DOL completed the roll-out of its new benefit payment system, 

Integrated Federal Employee Compensation System (iFECS), which tracks the due dates of medical 

evaluations. Additional components include Central Bill Processing and District Office Accountability 

Reviews. It provides the Department further capabilities to use data mining to prevent improper payments, 

boosts claims examiner effectiveness, and improve customer satisfaction. Because iFECS is in its infancy, it 

needs to be closely monitored and adjusted as necessary. 

Maintaining the Integrity of Foreign Labor Certification Programs 

Maintaining the integrity of DOL Foreign Labor Certification (FLC) programs, while effectively processing 

employer requests for foreign labor certifications, remains a challenge for the Department. These programs 

allow employers to meet their need for labor while preventing both the displacement of U.S. workers and the 

decrease of U.S. wages and worker protections of citizens and legal residents. Abuse of the FLC programs 

may cause unlawful admission of foreign nationals and incur economic hardship for American workers. 

Foreign Labor Certification Application Backlogs (

Last year, the OIG had expressed concerns regarding the high number of backlogged applications that were 

transferred to the Backlog Elimination Centers located in Philadelphia and Dallas. In August 2005, there 

were 312,438 applications pending from the predecessor manual system. As of August 2006, the total 

number backlogged applications have been reduced to approximately 200,000. 

 

In 2006, ETA’s processing of permanent labor certifications applications was automated. Since the 

implementation of the automated system, the Department has received 125,500 applications, which are being 

processed at the National Processing Centers located in Atlanta and Chicago. In addition to reducing the 

backlog of applications, DOL is challenged in preventing backlogs at the National Processing Centers while 

ensuring the integrity of the foreign labor certification process. 
Top Management Challenges 

FY 2006 Performance and Accountability Report 175 

Labor Certification Fraud 

The OIG addresses violations of the foreign labor certification process, which can be compromised by 

dishonest attorneys, labor brokers, and employers. In one case, an immigration attorney admitted to 

submitting over 1,400 fraudulent labor certification applications. He and his co-conspirators charged as 

much as $120,000 for a visa application services, amassing more than $4.5 million in revenues from their 

scheme. For his involvement, the attorney was sentenced to 44 months imprisonment and ordered to forfeit 

$3.2 million. The DOL is challenged in identifying fraudulent labor applications during the certification 

process and instituting measures to reduce fraud. The current certification process allows substitutions of 

alien beneficiaries on permanent labor certification applications. Consequently, a program vulnerability has 

developed where approved certifications, often obtained under fraudulent means, are sold and ultimately 

used by foreign nationals other than the beneficiaries indicated on the certification. To this end, the 

Department is challenged in ensuring that a regulation, which restricts the substitution of applicants that have 

already been approved for foreign labor certification, is both finalized and implemented. 

Improving Financial and Performance Accountability 

In order to manage DOL programs for results and to completely integrate budget and performance, the 

Department needs: timely financial data from a managerial cost accounting system that matches cost 

information with program outcomes; quality performance data; useful information from single audits; and 

effective controls over real property. 

Developing a Managerial Cost Accounting System

To fully realize the benefits of cost accounting, the Department must ensure managers integrate the use of 

updated cost information into their day-to-day operations and decision making. The Department developed 

cost models for most of DOL’s major agencies and programs in 2004. In FY 2005, the Department focused 

on expanding and using the cost-model capabilities. Agency program managers began to use cost-model 

information for high-level and recurring task, including budget formulation and justification, resource 

allocation, and the determination of “best practices” across similar programs and/or regions. While the 

Department has made significant progress in implementing managerial cost accounting capabilities, program 

managers still do not make continual use of the available information to manage their programs. The OIG is 

reviewing the Department’s progress in fully utilizing its managerial cost account system capabilities as part 

of the audit of the FY 2006 Consolidated Financial Statements. 

Ensuring Reliable Performance Data

Both the Government Performance and Results Act (GPRA) and the President’s Management Agenda 

initiative on Budget and Performance Integration call for reliable performance data as a basis for good 

decision making. The Department faces unique challenges in assuring the reliability of its performance data, 

because much of the program results data required by DOL to measure attainment of its strategic goals are 

generated by states and other sources below the Federal level. This presents challenges for ensuring data 

quality and evaluating program effectiveness. Three recent OIG reviews identified the need for improvement 

in how DOL measures the completeness and reliability of program results reported under GPRA. Past OIG 

audit work disclosed high error rates in performance data reported by ETA grantees and raised concerns 

about the usefulness of that data for decision making. The OIG plans in FY 2007 to audit the new data 

validation system developed by ETA to improve the reliability of program performance information reported 

by its grantees. 

Reliability of Audits Conducted under the Single Audit Act 

The Department uses audits conducted under the Single Audit Act (SAA) conducted by independent public 

accountants or state auditors to provide oversight of the more than 90% of its expenditures spent by state and 

local governments and other non-DOL organizations. Previous OIG quality control reviews have revealed 

serious deficiencies in SAA audits, including inadequate sampling, which would make them unreliable. The 

OIG is concerned about the adequacy of information that DOL receives from these audits. DOL is 

challenged by the limited value of these audits in determining how well DOL programs are administered at 

the non-Federal level. 
Financial Section 

176 United States Department of Labor 

Developing and Securing Information Technology Systems and Protecting Related 

Information Assets 

Developing effective systems to perform the day-to-day business of DOL has continued to challenge the 

Department. Judicious planning and project management are critical to the implementation of new systems. 

The OIG remains concerned about insufficient planning, tight timeframes, inadequate metrics, and a shortage 

of experienced project managers for DOL information technology (IT) initiatives. Other challenges facing 

the Department include: developing and effectively using emerging technologies; securing and protecting 

personally identifiable and other sensitive information from improper access or disclosures; developing and 

using a standard identification system for employees and contractors; and securing and authenticating 

electronic documents. For these reasons, we continue to recommend creating an independent Chief 

Information Officer (CIO) to provide exclusive oversight of IT issues. 

Strengthening Systems Development and Management of High Risk Systems 

OIG audits have identified that DOL IT system development life-cycle activities need strengthening in the 

areas of effective planning, project management, and decision-making. Using guidance from OMB 

(Memorandum M-05-23: Improving Information Technology Project Planning and Execution) the 

Department identified the following seven high-risk projects: New Core Financial Management System; 

GovBenefits; EFAST II; Technical Information Retrieval System; E-Grants; Enterprise HR Integration; and 

E-Travel. Current system development plans should be structured to include timely reviews of initiatives’ 

progress in relation to planned project activities and key milestones. Plans should be strengthened to include 

budget and cost tracking, project timelines, and resource monitoring. Taking these steps would improve 

DOL’s management of IT systems. 

The Department and its agencies must ensure that all major IT projects are managed by qualified project 

managers in accordance with OMB guidance. In developing these resources, the Department will help to 

ensure the future success of DOL IT initiatives that can be leveraged throughout DOL, as warranted, given 

the importance, size and complexity of an initiative. DOL is challenged to maintain a high degree of project 

management throughout the Department and leverage the Department-wide certified project management 

resources to minimize the risks involved in systems development efforts. 

Maintaining Information Technology Security 

Due to new threats and increased automation, IT security is an ongoing challenge for the Department and 

agencies government-wide. Keeping up with these developments, providing assurances that DOL systems 

will function reliably, and safeguarding information assets require a sustained effort. The security of DOL 

IT systems and data is vital, since they produce key economic indicators and accomplish the payment of 

billions of dollars in benefits and services. 

The CIO has called for priority attention to the outstanding reportable conditions identified by the OIG. This 

demonstrates that, even though the Department received an A+ computer security grade from Congress, the 

Department recognizes the importance of remaining vigilant and of addressing vulnerabilities in this area. In 

addition, OIG audits continue to identify high-and-medium risk control weaknesses across the programs’ 

information systems, including unauthorized access to systems and incomplete certification and accreditation 

of systems. Computer security incidents also highlight the need to provide for more consistent and thorough 

testing of DOL program and system controls. The Department should also become more proactive in 

identifying and mitigating IT security weaknesses. 

Protecting Information Assets and Securing Sensitive Information 

To meet the challenges associated with emerging technologies and new policy requirements, the Department 

should have acquisition and implementation plans that are consistent with protecting DOL’s informational 

assets and confidential and sensitive information. These new technologies will require changes to existing 

policies to maintain a high level of operational effectiveness. The Department also is reviewing new 

technologies to better manage and provide services to the public. DOL is likely to experience further 

security threats and events as the vulnerabilities of the new technologies are exploited. 
Top Management Challenges 

FY 2006 Performance and Accountability Report 177 

On June 23, 2006, the Office of Management and Budget (OMB) issued requirements to protect personally 

identifiable information. The Department will be challenged to timely implement enterprise-wide standards 

for software solutions involving encryption, two-factor authentication, and logging of extracts of personally 

identifiable information. The Department will need to ensure their solutions have been captured in new 

policy and procedures which deal with implementation and oversight. 

Implementing a Public Key Infrastructure (PKI) 

The implementation of PKI enables the authentication of electronic documents. DOL has been challenged to 

implement a public key infrastructure (PKI) system and is currently exploring other avenues to find the best 

fit for the Department’s needs and environment. The Department has procured and tested various methods of 

implementation and still has not implemented a solution. 

Implementing New Smart Card Requirements 

Under Homeland Security Presidential Directive Number 12 (HSPD-12), agencies will need to provide 

identification cards that will be used to validate and monitor federal employees and contractors. The General 

Services Administration is responsible for reviewing and approving third-party solutions available for 

agencies to procure. However, HSPD-12 allows agencies to develop or procure non-approved services. 

DOL will not only be challenged to procure such technology, but will also face challenges managing the 

implementation, distribution, and maintenance of the Smart Cards. 

Ensuring Security of Employee Benefit Plan Assets 

A major challenge confronting the Department is protecting the benefits of American workers, which 

includes pensions and health care. The Employee Benefits Security Administration (EBSA) oversees the 

administration and enforcement of the fiduciary, reporting, and disclosure provisions of Title I of the 

Employee Retirement Income Security Act (ERISA). Continuing failures in corporate financial management 

and reporting and economic distress in specific industries have added to the Department’s challenges in 

providing effective oversight for the American worker. Healthcare laws enacted over the last 10 years have 

increased the regulatory and enforcement workload of the Department. In addition, continuing 

Congressional focus on health care may create new resource challenges for the Department in protecting 

employee benefits. 

Safeguarding Pension Assets 

DOL continues to face a serious challenge to improving the process through which employee benefit plans 

are audited. OIG audits have shown that DOL does not have sufficient authority to effectively ensure that 

employee benefit plan audits provide the level of protection called for in professional standards. While 

EBSA has made major changes in its audit monitoring process and significantly revised the way it 

approaches major auditing firms, EBSA still lacks the basic enforcement tools to improve plan audits. EBSA 

cannot take any direct action against audit firms that do not meet their professional responsibilities to 

American workers to ensure plan assets are adequately protected. EBSA instead must rely on professional 

organizations or state agencies to take action. Without additional authority to direct action against firms that 

do substandard audits, EBSA cannot fully meet its responsibilities to the American worker. 

Investigating Benefit Plan Fraud 

Ensuring the security of employee benefit plans remains a challenge for the Department. Recent OIG labor 

racketeering investigations and the increased activity of EBSA’s criminal enforcement program consistently 

identify the vulnerability of plan assets. Those pension, health, and welfare benefit plans comprise billions 

of dollars in fund assets. OIG investigations have demonstrated that the funds remain vulnerable to corrupt 

individuals, including union officials and trustees, as well as organized crime influence. Benefit plan service 

providers continue to be strong focus of both the OIG’s and EBSA’s investigations. In one recent case 

investigated jointly by EBSA and OIG, the former president of a third-party administration firm that serviced 

health and welfare benefit plans, was sentenced to 15 years in prison and ordered to pay $837,000 in 

restitution to the plan participants whom he had embezzled. 
Financial Section 

178 United States Department of Labor 

Remedying Underpayments from Cash Balance Pension Plans 

The OIG continues to be concerned about DOL’s inaction on Cash Balance Plans. A previous OIG audit 

showed that thousands of American workers were being underpaid millions of dollars in distributions from 

these plans. The primary problem resulted from differing interpretations of IRS guidance in determining 

lump sum distributions from Cash Balance plans. While DOL asked IRS for additional guidance, over four 

years ago, IRS has not responded. As a result, DOL has not taken any action to further investigate the issue 

of lump sum payments identified in the OIG’s audit. We believe that American workers in Cash Balance 

plans have been, and continue to be, significantly underpaid for the pensions they have earned. 

The OIG believes that DOL should no longer allow the lack of response by the IRS to prevent DOL from 

doing as much as it can to protect the hard-earned pensions of Cash Balance plan participants. While DOL’s 

authority may be limited without an IRS response, we believe DOL should explore every avenue in using its 

existing authority to address the issues OIG raised regarding Cash Balance Plans. 

Congress has now addressed some of the cash balance issues in the recently enacted Pension Protection Act 

of 2006 which, among other things, modifies how lump sum distributions are calculated and, depending on 

implementing regulations from IRS, may eliminate or reduce the potential for underpayments to participants. 

However, the Act’s provisions are prospective only from the date of enactment and do not affect distributions 

made in prior years. Therefore, EBSA still needs to take action. 

Addressing Corrupt Multiple Employer Welfare Arrangements (MEWAs) 

MEWAs are typically marketed to small businesses as a means of obtaining inexpensive health coverage for 

their employees. Fraudulent MEWAs, which default on their benefit obligations, are often misrepresented by 

plan promoters as being maintained under a bona-fide collective bargaining agreement. The OIG continues 

to recommend EBSA investigate unscrupulous health insurers who are burdening Americans with an 

increasing number of unpaid medical claims. Therefore, the OIG recommends that the Department continue 

its efforts to decrease the number of fraudulent MEWAs, in particular by seeking legislative changes to 

increase its authority to obtain reliable plan information and assess penalties. 

Ensuring the Safety and Health of Miners

Effective oversight and policy by the government regarding safety and health issues in the mines is a matter 

of life and death. In June 2006, following a number of fatalities, Congress passed the most significant 

mining legislation in almost 30 years. The Mine Improvement and New Emergency Response Act 

established: new emergency response requirements; increased mine rescue standards; a mandate to develop 

improved communication technology; higher penalties for safety and health violations; and scholarship 

programs to train miners and additional MSHA enforcement personnel. In addition, individual coal mining 

states have enacted or are considering legislation to increase health and safety requirements in the mining 

industry. Responding to these new directives will place additional challenges on MSHA and its workforce. 

Planning to Replace Retiring Mine Inspectors 

In 2003, the GAO reported that 44% of MSHA’s underground coal mine inspectors would be eligible to 

retire within the next five years. Further, MSHA has seen an increase in its employee turnover rate in recent 

years. With a considerable lead time to fully train new inspectors, MSHA faces a significant challenge in 

reacting quickly to its changing workload demands. The need to allocate resources to address new 

requirements will be exacerbated by an aging mine inspector workforce. 

Ensuring the Effectiveness of the Job Corps Program 

Job Corps includes operations at 126 center locations throughout the United States and Puerto Rico. The 

program utilizes contracts with private companies to operate 98 centers, and interagency agreements with the 

Department of Interior and Department of Agriculture to operate 28 centers. Job Corps provides 

occupational skills, academic training, social education, job placement services, and other support services, 

such as housing, transportation and family support resources to approximately 60,000 students each year. 
Top Management Challenges 

FY 2006 Performance and Accountability Report 179 

Challenges facing the Department relative to the Job Corps program include student safety and health, 

student success, proper reporting, and ensuring proper procurement, updated agreements, and program 

effectiveness. 

Ensuring Student Safety and Health 

The safety and health of students in Job Corps’ care is paramount to the students’ short-term well-being and 

long-term success. There should be no allowance for any condition that presents a risk to student’s physical, 

emotional, and mental health. Through past and current audits, the OIG has identified several issues that 

have a direct impact on student safety and health. For example, a recent OIG management letter identified 

inoperable fire alarms and unhealthful food handling and storage areas at a center operated by another 

Federal agency. The Department faces challenges to ensure effective regional office monitoring of zero 

tolerance for drugs and violence policies, student background checks, facilities maintenance, and student 

accountability which are key elements toward ensuring that students will have a reasonable opportunity for 

success while involved in center activities. 

Ensuring Student Success 

The OIG has identified challenges facing the Department on how students are being served by the program. 

The conditions identified through OIG audits relate to how contractors and other Federal agencies 

administering program requirements and to National office policy determinations. DOL should hold regional 

offices accountable for utilizing effective monitoring techniques in their oversight of services provided by 

Job Corps contractors. The regional offices should ensure educational and vocational services provided by 

center operators comply with policies, requirements, and contracts or interagency agreements. Additionally, 

the risk that outreach, admissions, and placement service providers are not complying with policies, 

requirements, and contract provisions should be considered a priority in regional office monitoring. Based 

on a recently completed audit, the OIG also believes the Department must identify and address cognitive 

disabilities of current and future students in order to improve their outcomes and long-term success. 

Monitoring and Verifying Performance 

Job Corps operates its centers through performance-based contracts, which tie incentive fees, bonuses, and 

option year awards directly to contractor performance. As a result, there is a risk that contractors will inflate 

their performance reports to receive unwarranted incentive payments. The OIG has recently reported that two 

centers manipulated their reported performance. The challenges to the Department are to ensure that 

regional office monitoring is effective in identifying manipulations of student absences and to be aggressive 

in pursuing remedies against contractors found to be engaging in the practice. The Department should be 

concerned with the financial reporting by contractors and the Federal agencies that operate centers under 

interagency agreements. Through our audits, the OIG has found instances of inadequate financial 

management systems, inadequate documentation for charges to center budgets, unauthorized costs charged to 

center budgets, and inadequate personal property management. These conditions represent challenges to the 

Department to ensure limited Job Corps resources are properly used to support services for youth. 

Ensuring Proper Procurement, Updated Agreements, and Program Effectiveness 

The OIG has classified Job Corps procurement, interagency agreements, and performance measures as 

additional challenges to the Department. Only through effective procurement practices can the Department 

ensure the appropriate companies are used to provide youth the opportunities for success that is envisioned 

for the program. Monitoring of the procurement process at the national level is essential to ensuring 

qualified companies are willing to participate and the best service and value to the government is achieved. 

An issue that should be a continuing concern is DOL’s need to update interagency agreements with the 

Departments of Interior and Agriculture. The interagency agreements should be updated to clearly define 

each agency’s responsibility for ensuring proper utilization of Job Corps funding and effective service to 

those young people served through Civilian Conservation Centers. Further, more direct monitoring of the 

actions and results of the agencies’ Job Corps activities is also needed. A concern among contractors and the 

Federally-operated center personnel is the performance measures system that is used to rate center 

effectiveness. The development of specific rates to measure a successful operation and the emphasis on 

those rates is being seen as more important than the quality of performance. 
Financial Section 

180 United States Department of Labor 

Preparing for Emergencies 

The tragedies of 9/11 and the 2005 hurricanes vividly demonstrated the need for the Department and other 

Federal, state, and local agencies to extensively plan and put in place procedures to address national and local 

emergencies. As previously discussed under Safeguarding Unemployment Insurance, the Department can 

leverage the lessons learned from Hurricane Katrina in working with the states to ensure systems and 

controls are in place. This would allow the continued and effective operation of DOL programs and the 

payment of benefits to eligible individuals despite disasters and disruptions. 

Over the past five years, the Department has made employee safety and emergency preparedness a top 

priority. The OIG recognizes the efforts made by the Department, and considers emergency preparedness to 

be a top management challenge both to the Department and other government agencies. The Department has 

developed a host of measures and plans to deal with a variety of contingencies. These include shelter-inplace strategies, improved evacuation procedures, and full-scale continuity of operations plans (COOP). In 

addition, the Department recently added employee emergency contact and communications and a Pandemic 

Influenza Preparation and Response Plan to its COOP plans. The OIG considers the actions taken to be 

proactive and encourages the Department to continue to develop its preparedness for all types of 

contingencies. 

Changes from Last Year

In identifying the most critical Top Management Challenges faced by the Department each year, the OIG 

recognizes that matters meriting the continued attention of DOL may be omitted from the list. Changes to 

the Top Management Challenges from FY 2005 include a revised management challenge previously entitled 

Improving Systems Planning and Development and renamed Developing and Securing Information 

Technology Systems Security and Protecting Related Information Assets. In addition, we added the 

following as new challenges: Improving the Federal Employees’ Compensation Act (FECA) Program; 

Ensuring the Safety and Health of Miners; Maintaining the Effective Use of Job Corps Resources; and 

Preparing for Emergencies. 

Management Controls 

Management Controls were previously discussed under our FY 2005 management challenge entitled 

Improving Financial and Performance Accountability. In FY 2005, OMB Circular A-123 was amended to 

provide updated internal control standards applicable to all Federal agencies. The amendment also included 

new specific requirements for conducting agency management’s assessment of the effectiveness of internal 

controls over financial reporting. OMB has approved the Department’s plan to assess the effectiveness of its 

internal controls. The Department has also hired a nationally recognized consulting firm to assist in this 

effort. Starting in FY 2006, DOL is required to report the results of this assessment in the Performance and 

Accountability Report. DOL and its agencies must remain diligent in their efforts to complete these 

assessments in time to be included in the Report. Given the above actions, we removed “Management 

Controls” as a discussion item within our management challenges. 

Improving Management of Real Property Assets 

Improving Management of Real Property Assets was previously discussed as a 2005 Major Management 

Challenge. Because ETA has begun to review its existing processes and restructure them to strengthen the 

property management system, we removed “Improving Management of Real Property Assets” as a 

discussion item within our management challenges, and we will revisit the issue once we audit the impact of 

ETA’s efforts on this matter. 

Pursuing Reauthorization of the Workforce Investment Act 

Pursuing Reauthorization of the Workforce Investment Act was previously discussed as a 2005 Major 

Management Challenge. Because the reauthorization of WIA has been pending since the law sunsetted in 

2003, we removed “Pursuing Reauthorization of the Workforce Investment Act” as a discussion item within 

our management challenges, and we will revisit the issue when reauthorization legislation is passed. 
Annual Financial Statements 

Principal Financial Statements and Notes 
Financial Section 

PRINCIPAL FINANCIAL STATEMENTS 

184 United States Department of Labor 

Principal Financial Statements Included in This Report 

The principal financial statements included in this report have been prepared in accordance with the 

requirements of the Chief Financial Officers Act of 1990 (P.L. 101-576), the Government Management 

Reform Act of 1994 and the Office of Management and Budget’s (OMB) Circular No. A-136, “Financial 

Reporting Requirements.” The responsibility for the integrity of the financial information included in these 

statements rests with management of the U.S. Department of Labor (DOL). The audit of DOL’s principal 

financial statements was performed by KPMG LLP. The auditors’ report accompanies the principal 

statements.

The Department’s principal financial statements for fiscal years (FY) 2006 and 2005 consisted of the 

following: 

• The Consolidated Balance Sheets, which present as of September 30, 2006 and 2005 those resources 

owned or managed by DOL that are available to provide future economic benefits (assets); amounts 

owed by DOL that will require payments from those resources or future resources (liabilities); and 

residual amounts retained by DOL, comprising the difference (net position). 

• The Consolidated Statements of Net Cost, which present the net cost of DOL operations for the years 

ended September 30, 2006 and 2005. DOL’s net cost of operations includes the gross costs incurred by 

DOL less any exchange revenue earned from DOL activities. Due to the complexity of DOL’s 

operations, the classification of gross cost and exchange revenues by major program and suborganization 

is presented in Note 14 to the consolidated financial statements. 

• The Consolidated Statements of Changes in Net Position, which present the change in DOL’s net 

position resulting from the net cost of DOL operations, budgetary financing sources other than exchange 

revenues, and other financing sources for the years ended September 30, 2006 and 2005. 

• The Combined Statements of Budgetary Resources, which present the budgetary resources available 

to DOL during FY 2006 and 2005, the status of these resources at September 30, 2006 and 2005, the 

change in obligated balance during FY 2006 and 2005, and outlays of budgetary resources for the years 

ended September 30, 2006 and 2005. 

• The Consolidated Statements of Financing, which reconcile the net cost of operations with the 

obligation of budgetary resources for the years ended September 30, 2006 and 2005. 

• The Consolidated Statements of Custodial Activity, which present the sources and disposition of nonexchange revenues collected or accrued by DOL on behalf of other recipient entities for the years ended 

September 30, 2006 and 2005.

• The Statements of Social Insurance, which present the net present value of projected cash inflows and 

cash outflows of the Black Lung Disability Trust Fund as of September 30, 2006, 2005, 2004, 2003, and 

2002.
Annual Financial Statements 

The accompanying notes are an integral part of these statements. 

 FY 2006 Performance and Accountability Report 185

CONSOLIDATED BALANCE SHEETS 

As of September 30, 2006 and 2005 

(Dollars in Thousands) 

2006 2005

ASSETS

Intra-governmental

Funds with U.S. Treasury (Notes 1-C and 2) 9,717,149 $ 9,219,660 $ 

Investments (Notes 1-D and 3) 66,455,052 54,952,644 

Interest receivable from investments 745,556 637,443 

Accounts receivable (Notes 1-E and 4) 4,046,188 3,991,270 

Advances (Notes 1-F and 5) 4 10,812 

Total intra-governmental 80,963,949 68,811,829 

Accounts receivable, net of allowance (Notes 1-E and 4) 1,055,156 1,043,018 

Advances (Notes 1-F and 5) 555,294 584,139 

Property, plant and equipment, net

 of accumulated depreciation (Notes 1-G and 6) 1,076,810 1,023,422 

Total assets $ 71,462,408 83,651,209 $ 

LIABILITIES AND NET POSITION

Liabilities (Note 1-I)

Intra-governmental

Accounts payable 22,459 $ 16,429 $ 

Advances from U.S. Treasury (Notes 1-J and 8) 9,631,557 9,186,557 

Other liabilities (Note 11) 205,385 206,101 

Total intra-governmental 9,859,401 9,409,087 

Accounts payable 891,828 1,111,031 

Accrued leave (Note 1-K) 97,522 94,852 

Accrued benefits (Notes 1-L and 9) 1,199,648 1,147,658 

Future workers' compensation benefits (Notes 1-M and 10) 548,314 564,305 

Energy employees occupational illness

 compensation benefits (Note 1-N) 6,942,442 7,436,243 

Other liabilities (Note 11) 217,313 263,233 

Total liabilities 20,026,409 19,756,468 

Net position (Note 1-R)

Unexpended appropriations - other funds 8,193,767 8,115,461 

Cumulative results of operations 43,320,538 

Earmarked funds 57,146,431 

Other funds (1,445,457) 

Total net position 51,435,999 63,894,741 

Total liabilities and net position $ 71,462,408 83,651,209 $ 
Financial Section 

The accompanying notes are an integral part of these statements. 

186 United States Department of Labor 

CONSOLIDATED STATEMENTS OF NET COST 

For the Years Ended September 30, 2006 and 2005 

(Dollars in Thousands) 

2006 2005

NET COST OF OPERATIONS (Notes 1-S and 14)

CROSSCUTTING PROGRAMS

Income maintenance

Gross cost 40,661,833 $ 45,380,694 $ 

Less earned revenue (3,712,611) (3,144,410)

Net program cost 36,949,222 42,236,284

Employment and training

Gross cost 5,710,741 6,027,121 

Less earned revenue (22,568) (17,737) 

Net program cost 5,688,173 6,009,384

Labor, employment and pension standards

Gross cost 729,053 724,322 

Less earned revenue (14,082) (9,971) 

Net program cost 714,971 714,351 

Worker safety and health

Gross cost 859,144 798,110 

Less earned revenue (14,465) (3,690) 

Net program cost 844,679 794,420 

OTHER PROGRAMS

Statistics

Gross cost 604,142 531,675 

Less earned revenue (5,332) (6,664) 

Net program cost 598,810 525,011 

COSTS NOT ASSIGNED TO PROGRAMS

Gross cost 85,782 95,244 

Less earned revenue not attributed to programs (7,608) (10,800) 

Net cost not assigned to programs 78,174 84,444 

Net cost of operations $ 44,874,029 $ 50,363,894
Annual Financial Statements 

The accompanying notes are an integral part of these statements. 

 FY 2006 Performance and Accountability Report 187

CONSOLIDATED STATEMENTS OF CHANGES IN NET POSITION 

 For the Years Ended September 30, 2006 and 2005 

(Dollars in Thousands) 

2005

Consolidated Consolidated

Earmarked All Other Consolidated Consolidated

Funds Funds Total Total

Cumulative results of operations, beginning $ (2,032,676) 45,353,214 $ 43,320,538 $ 39,154,009 $ 

Budgetary financing sources (Note 1-T)

Appropriations used - 9,925,600 9,925,600 10,336,749 

Nonexchange revenue (Note 15)

Employer taxes 42,014,032 - 42,014,032 40,571,621 

Interest 2,784,058 7,825 2,791,883 2,593,415 

Assessments - 149,829 149,829 145,315 

Reimbursement of 

 unemployment benefits 1,855,188 - 1,857,193 1,855,188 

Total nonexchange revenue 46,653,278 157,654 46,810,932 45,167,544 

Transfers without reimbursement (Note 16) (3,290,737) 3,684,560 393,823 3,000 

Other financing sources (Note 1-U) 

Imputed financing from costs 

 absorbed by others 238 122,544 122,782 108,742 

Transfers without reimbursement (Note 16) - 1,328 (1,085,612) 1,328 

Total financing sources 43,362,779 13,891,686 57,254,465 54,530,423 

Net cost of operations (31,569,562) (13,304,467) (44,874,029) (50,363,894) 

Net change 11,793,217 587,219 4,166,529 12,380,436 

Cumulative results of operations, ending $ 57,146,431 $ (1,445,457) $ 43,320,538 55,700,974 $ 

Unexpended appropriations, beginning $ 8,115,461 - $ 8,115,461 $ 8,299,897 $ 

Budgetary financing sources (Note 1-T)

Appropriations received (Note 17-F) - 10,703,673 10,703,673 11,100,600 

Appropriations transferred - (600,895) (600,895) (622,286) 

Appropriations not available - (98,872) (98,872) (326,001) 

Appropriations used - (9,925,600) (9,925,600) (10,336,749) 

Subtotal - 78,306 (184,436) 78,306 

Unexpended appropriations, ending - 8,193,767 8,115,461 8,193,767 

Net position $ 57,146,431 $ 6,748,310 $ 51,435,999 63,894,741 $ 

2006
Financial Section 

The accompanying notes are an integral part of these statements. 

188 United States Department of Labor 

COMBINED STATEMENTS OF BUDGETARY RESOURCES 

For the Years Ended September 30, 2006 and 2005 

(Dollars in Thousands) 

2006 2005

BUDGETARY RESOURCES

Unobligated balance, brought forward, October 1 3,872,075 $ 3,577,791 $ 

Recoveries of prior year unpaid obligations 399,780 408,672 

Budget authority

Appropriations received (Note 17-F) 58,971,002 57,248,865 

Borrowing authority 445,000 446,000 

Spending authority from offsetting collections

Earned

Collected 3,106,611 2,545,382 

Change in receivables from Federal sources (47,510) 57,700 

Change in unfilled customer orders

Advance received (1,816) 10,756 

Without advance from Federal sources (825) - 

Expenditure transfers from trust funds 3,683,587 3,873,716

Total budget authority 66,156,049 64,182,419 

Nonexpenditure transfers, net (522,731) (387,330) 

Temporarily not available pursuant to Public Law (11,819,982) (9,296,717) 

Permanently not available (449,404) (496,197)

Total budgetary resources $ 57,635,787 $ 57,988,638

STATUS OF BUDGETARY RESOURCES

Obligations incurred (Note 17-A)

Direct $ 51,333,636 50,344,367 $ 

Reimbursable 3,095,134 2,782,927

Total obligations incurred 53,439,501 54,116,563 

Unobligated balances 

Apportioned 2,528,068 2,548,305 

Exempt from apportionment 212,629 175,310 

Total unobligated balances 2,740,697 2,723,615 

Unobligated balances not available 1,455,589 1,148,460

Total status of budgetary resources $ 57,635,787 $ 57,988,638

CHANGE IN OBLIGATED BALANCE

Obligated balance, net 

Unpaid obligations, brought forward, October 1 9, $ 9,856,452 482,832 $ 

Less uncollected customer payments from Federal sources, 

 brought forward, October 1 (1,473,680) (1,344,626)

Total unpaid obligated balance, net 8,511,826 8,009,152 

Obligations incurred, net 53,439,501 54,116,563 

Less gross outlays (53,502,109) (54,081,511) 

Less recoveries of prior year unpaid obligations, actual (399,780) (408,672) 

Change in uncollected customer payments from Federal sources 236,828 (129,054) 

Obligated balance, net, end of period

Unpaid obligations 9,020,444 9,482,832 

Less uncollected customer payments from Federal sources (1,236,852) (1,473,680)

Total unpaid obligated balance, net, end of period 7,783,592 $ $ 8,009,152

NET OUTLAYS

Gross outlays 53,502,109 $ 54,081,511 $ 

Less offsetting collections (6 (6,358,706) ,985,536) 

Less distributed offsetting receipts (855,746) (829,392)

Net outlays 45,660,827 $ $ 46,893,413
Annual Financial Statements 

The accompanying notes are an integral part of these statements. 

 FY 2006 Performance and Accountability Report 189

CONSOLIDATED STATEMENTS OF FINANCING 

 For the Years Ended September 30, 2006 and 2005 

(Dollars in Thousands) 

2006 2005

RESOURCES USED TO FINANCE ACTIVITIES

Budgetary resources obligated

Obligations incurred 53,439,501 $ 54,116,563 $ 

Less recoveries of prior year obligations (399,780) (408,672) 

Less spending authority from offsetting collections (6,740,047) (6,487,554) 

Obligations, net of offsetting collections and recoveries 46,299,674 47,220,337 

Less offsetting receipts (855,746) (829,392) 

Net obligations 45,443,928 46,390,945 

Other resources

Imputed financing from costs absorbed by others 122,782 108,742 

Transfers, net (1,085,612) 1,328 

Exchange revenue not in budget (110,908) (6,874) 

Trust fund exchange revenue not in the budget 9,216 (10,319) 

Total resources used to finance activities 45,396,882 45,466,346 

RESOURCES USED TO FINANCE ITEMS NOT PART

 OF THE NET COST OF OPERATIONS

Change in budgetary resources obligated for goods, services and

 benefits ordered but not yet received or provided 139,777 536,240 

Resources that fund expenses recognized in prior periods (544,220) (4,823) 

Budgetary offsetting collections and offsetting receipts

 that do not affect the net cost of operations 28,236 56,054 

Resources that finance the acquisition of assets (116,035) (209,012) 

Allocation transfers to other agencies (159,098) (198,524) 

Other resources that do not affect net cost of operations (Note 18-A) 209 1,131,086 

Total resources used to finance items not part of the

 net cost of operations (651,131) 1,311,021 

Total resources used to finance the net cost of operations 46,707,903 44,815,215 

COMPONENTS OF THE NET COST OF OPERATIONS 

 THAT WILL NOT REQUIRE OR GENERATE RESOURCES

 IN THE CURRENT PERIOD

 Components requiring or generating resources in future periods (Note 18-B)

Increase in annual leave liability 386 - 

Increase in employee benefits liabilities - 3,556,208 

Other 2,284 26,183 

Total 3,582,391 2,670 

Components not requiring or generating resources

Depreciation and amortization 55,449 54,645 

Revaluation of assets and liabilities 612,558 403,376 

Benefit overpayments (611,863) (384,421) 

Total 73,600 56,144 

Total components of the net cost of operations that will not

 require or generate resources in the current period 3,655,991 58,814 

Net cost of operations $ 50,363,894 44,874,029 $ 
Financial Section 

The accompanying notes are an integral part of these statements. 

190 United States Department of Labor 

CONSOLIDATED STATEMENTS OF CUSTODIAL ACTIVITY 

For the Years Ended September 30, 2006 and 2005 

(Dollars in Thousands)

2006 2005

CUSTODIAL REVENUE (Notes 1-V and 19)

Cash collection of fines, penalties, assessments

 and related interest 152,880 $ 130,885 $ 

Less refunds (76) (214) 

Net cash collections 152,804 130,671 

Increase (decrease) in amounts to be collected (12,767) 10,951 

Total custodial revenue 141,622 140,037 

DISPOSITION OF CUSTODIAL REVENUE (Note 1-V)

Net transfers to U.S. Treasury general fund 152,804 130,671 

Increase (decrease) in amounts to be transferred (12,767) 10,951 

Total disposition of custodial revenue 141,622 140,037 

Net custodial activity $ - - $ 
Annual Financial Statements 

The accompanying notes are an integral part of these statements. 

 FY 2006 Performance and Accountability Report 191

STATEMENT OF SOCIAL INSURANCE 

 As of September 30, 2006, 2005, 2004, 2003, and 2002 

(Dollars in Thousands) 

2006 2005 2004 2003 2002

BLACK LUNG DISABILITY 

 BENEFIT PROGRAM (NOTE 1-W)

Actuarial present value of future benefit

 payments during the projection

 period to disabled coal miners

 and dependent survivors 2,722,801 $ 2,622,302 $ 2,880,559 $ 2,954,920 $ 3,098,098 $ 

Actuarial present value of future

 administrative costs during 

 the projection period 848,218 845,158 759,282 740,733 695,421 

Actuarial present value of future benefit

 payments and administrative costs

 during the projection period 3,571,019 3,467,460 3,639,841 3,650,341 3,838,831 

Less the actuarial present value of future

 excise tax income during 

 the projection period 7,957,821 8,536,401 7,671,392 7,961,315 7,289,333 

Excess of actuarial present values of future

 excise tax income over the benefit 

 payments and administrative costs for

 the projection period 4,386,802 5,068,941 4,031,551 4,122,484 3,638,992 

Actuarial present value of future interest

 on U. S. Treasury advances during 

 the projection period (Note 8) 20,838,219 21,583,744 19,949,150 17,109,407 18,120,069 

 

Excess of actuarial present values of total

 future payments over the future excise

 tax income for the projection period (16,451,417) (16,514,803) (15,917,599) (14,481,077) (12,986,923)

Trust fund deficit at start 

 of projection period (Note 20) (9,604,743) (9,160,009) (8,711,444) (8,227,010) (7,681,649)

Actuarial present value of total future

 payments and trust fund deficit over

 future excise tax income for 

 the projection period (26,056,160) $ $(25,674,812) $(24,629,043) $(22,708,087) $(20,668,572)

Projection Periods Ending September 30, 2040

Unaudited
Financial Section 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 

For the Years Ended September 30, 2006 and 2005 

192 United States Department of Labor 

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 

A. Reporting Entity 

The U.S. Department of Labor (DOL), a cabinet level agency of the Executive Branch of the United States 

Government, was established in 1913, to promote the welfare of the wage earners of the United States. 

Today the Department’s mission remains the same: to foster and promote the welfare of the job seekers, 

wage earners and retirees of the United States by improving their working conditions, advancing their 

opportunities for profitable employment, protecting their retirement and health care benefits, helping 

employers find workers, strengthening free collective bargaining, and tracking changes in employment, 

prices, and other economic measurements. 

DOL is organized into major program agencies, which administer the various statutes and programs for 

which the Department is responsible. Through the execution of its congressionally approved budget, DOL 

conducts operations in five major Federal program areas, under four major budget functions: education, 

training, employment, and social services; health (occupational health and safety); income security; and 

national defense. DOL’s major program agencies, major programs in which they operate, and the 

relationship of these programs to the Strategic Goals are shown below. 

1. Major program agencies 

• Employment and Training Administration (ETA) 

• Employment Standards Administration (ESA) 

• Occupational Safety and Health Administration (OSHA) 

• Bureau of Labor Statistics (BLS) 

• Mine Safety and Health Administration (MSHA) 

• Employee Benefits Security Administration (EBSA) 

(Formerly Pension and Welfare Benefits Administration) 

• Veterans’ Employment and Training (VETS) 

• Other Departmental Programs 

- Office of the Assistant Secretary for Administration and Management 

- Office of the Solicitor 

- Office of the Chief Financial Officer 

- Office of the Inspector General 

- Bureau of International Labor Affairs 

- Women’s Bureau 

- Office of Disability Employment Policy 

2. Major programs 

• Income maintenance – Strategic Goal 2 

• Employment and training – Strategic Goals 1 and 2 

• Labor, employment, and pension standards – Strategic Goals 2 and 3 

• Worker safety and health – Strategic Goal 3 

• Statistics – Strategic Goal 1 

The Pension Benefit Guaranty Corporation (PBGC), a wholly owned Federal government corporation under 

the chairmanship of the Secretary of Labor, has been designated by the Office of Management and Budget 

(OMB) as a separate reporting entity for financial statement purposes and has been excluded from the DOL 

reporting entity for purposes of these consolidated financial statements.
Annual Financial Statements 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 

For the Years Ended September 30, 2006 and 2005 

FY 2006 Performance and Accountability Report 193

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – Continued 

A. Reporting Entity - Continued 

3. Fund accounting structure 

DOL’s financial activities are accounted for by Federal account symbol, utilizing individual funds 

and fund accounts within distinct fund types used in reporting to Treasury Financial Management 

Services and the Office of Management and Budget. For financial statement purposes, funds are 

classified as earmarked funds and all other funds. Statement of Federal Financial Accounting 

Standards 27, Identifying and Reporting Earmarked Funds, which became effective in FY 2006, 

required separate identification of earmarked funds on the Consolidated Statement of Changes in Net 

Position, Net Position on the Consolidated Balance Sheets, and disclosures of condensed information 

on assets, liabilities, and costs of earmarked funds. The standard precludes this presentation for FY 

2005. 

 Earmarked funds are financed by specifically identified revenues often supplemented by other 

financing sources which remain available over time. These specifically identified revenues and other 

financing sources are required by statute to be used for designated activities, benefits, or purposes 

and must be accounted for separately from the Government’s general revenues. Earmarked funds 

and all other funds are identified as follows: 

Earmarked funds

The Unemployment Trust Fund was established under the authority of Section 904 of the Social 

Security Act of 1935, as amended, to receive, hold, invest, and disburse monies collected under the 

Federal Unemployment Tax Act, as well as state unemployment taxes collected by the states and 

transferred to the Fund, and unemployment taxes collected by the Railroad Retirement Board and 

transferred to the Fund. 

The Black Lung Disability Trust Fund, established under Part C of the Black Lung Benefit Act, 

provides compensation and medical benefits to coal miners who suffer disability due to 

pneumoconiosis, and compensation benefits to their dependent survivors for claims filed subsequent 

to June 30, 1973. 

Gifts and Bequests uses miscellaneous funds received by gift or bequest to support various activities 

of the Secretary of Labor. 

The Panama Canal Commission Compensation Fund was established to pay workers compensation 

obligations of the Panama Canal Commission under the Federal Employees’ Compensation Act from 

funding provided by the Commission. 

H-1B Funds provide demonstration grants to regional and local entities to provide technical skills 

training to unemployed and incumbent workers. The funds are supported by fees paid by employers 

applying for foreign workers under the H-1B temporary alien labor certification program authorized 

by the American Competitiveness and Workforce Improvement Act of 1998. 
Financial Section 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 

For the Years Ended September 30, 2006 and 2005 

194 United States Department of Labor 

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – Continued 

A. Reporting Entity - Continued 

3. Fund accounting structure – continued 

All other funds

• General funds 

Salaries and Expenses include appropriated funds which are used to carry out the missions and 

functions of the Department, except where specifically provided for from other Departmental funds. 

Training and Employment Services provides for a flexible, decentralized system of Federal and local 

programs of training and other services for the economically disadvantaged designed to lead to 

permanent gains in employment, through grants to states and Federal programs such as Job Corps, 

authorized by the Workforce Investment Act and the Job Training Partnership Act. The Departments 

of Labor, Heath and Human Services, Education and Related Agencies Appropriations Act, 2006 

established an Office of Job Corps within the Office of the Secretary of Labor. This Act transferred 

management and administration of Job Corps activities from the Employment and Training 

Administration to an autonomous office under the Secretary during FY 2006. The administrative 

transfer of funds was accomplished under the allotment process. Since there was no actual 

budgetary transfer of funds, Job Corps costs continue to be reported under the Employment and 

Training Administration where funds were originally budgeted and appropriated. 

Welfare to Work Jobs provides funding for the activities of the Welfare-to-Work Grants program 

established by the Balanced Budget Act of 1997. The program provides formula grants to States and 

Federally administered competitive grants to other eligible entities to assist welfare recipients in 

securing lasting unsubsidized employment. 

State Unemployment Insurance and Employment Service Operations includes grants to states for 

administering the Unemployment Compensation and Employment Service programs. 

Unemployment Compensation provides administrative grants to state agencies which pay 

unemployment benefits to eligible individuals and collect state unemployment taxes from employers. 

The Employment Service is a nationwide system providing no-fee employment services to 

individuals seeking employment and to employers seeking workers. Employment Service activities 

are financed by allotments to states distributed under a demographically based funding formula 

established under the Wagner-Peyser Act, as amended. 

Payments to the Unemployment Trust Fund was initiated as a result of amendments to the 

Emergency Unemployment Compensation (EUC) law, which provided general fund financing to the 

Unemployment Trust Fund to pay emergency unemployment benefits and the administrative costs. 

Advances to the Unemployment Trust Fund and Other Funds provides advances to other accounts 

within the Unemployment Trust Fund to pay unemployment compensation whenever the balances in 

these accounts prove insufficient or whenever reimbursements to certain accounts, as allowed by 

law, are to be made. This account also provides repayable advances to the Black Lung Disability 

Trust Fund to make disability payments whenever the fund balance proves insufficient. 

Federal Unemployment Benefits and Allowances provides for payment of benefits, training, job 

search, and relocation allowances as authorized by the Trade Act of 1974. 
Annual Financial Statements 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 

For the Years Ended September 30, 2006 and 2005 

FY 2006 Performance and Accountability Report 195

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – Continued

A. Reporting Entity - Continued 

3. Fund accounting structure - continued 

All other funds - continued

• General funds - continued 

Community Service Employment for Older Americans provides part time work experience in 

community service activities to unemployed, low income persons aged 55 and over. 

The Federal Employees’ Compensation Act Special Benefit Fund provides wage replacement 

benefits and payment for medical services to covered Federal civilian employees injured on the job, 

employees who have incurred a work-related occupational disease, and beneficiaries of employees 

whose death is attributable to a job-related injury. The Fund also provides for rehabilitation of 

injured employees to facilitate their return to work. 

The Energy Employees Occupational Illness Compensation Fund was established to adjudicate, 

administer, and pay claims for benefits under the Energy Employees Occupational Illness 

Compensation Program Act of 2000. The Act authorizes lump sum payments and the reimbursement 

of medical expenses to employees of the Department of Energy (DOE) or of private companies 

under contract with DOE, who suffer from specified diseases as a result of their work in the nuclear 

weapons industry. The Act also authorizes compensation to the survivors of these employees under 

certain circumstances. The Act was amended by the Ronald Reagan National Defense Authorization 

Act of 2005 to provide coverage to additional claimants. 

Special Benefits for Disabled Coal Miners was established under the Federal Mine Safety and Health 

Act to pay benefits to coal miners disabled from pneumoconiosis and to their widows and certain 

other dependents. Part B of the Act assigned processing of claims filed from the origination of the 

program until June 30, 1973 to the Social Security Administration. Part B claims processing and 

payment operations were transferred to DOL effective October 1, 2003. 

• Revolving funds 

The Working Capital Fund maintains and operates a program of centralized services in the national 

office and the field. The Fund is paid in advance by the agencies, bureaus, and offices for which 

centralized services are provided, at rates which return the full cost of operations. 

• Miscellaneous receipt and clearing accounts 

Miscellaneous receipt accounts hold non-entity receipts and accounts receivable from DOL activities 

which by law cannot be deposited into funds under DOL control. The U.S. Department of the 

Treasury automatically transfers all cash balances in these receipt accounts to the general fund of the 

Treasury at the end of each fiscal year. 

Clearing accounts hold monies which belong to DOL, but for which a specific receipt account has 

not been determined. 
Financial Section 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 

For the Years Ended September 30, 2006 and 2005 

196 United States Department of Labor 

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – Continued

A. Reporting Entity - Continued 

3. Fund accounting structure - continued 

• Trust funds 

The Longshore and Harbor Workers’ Compensation Act Trust Fund, established under the authority 

of the Longshore and Harbor Workers’ Compensation Act, provides medical benefits, compensation 

for lost wages, and rehabilitation services for job-related injuries and diseases or death to private 

sector workers in certain maritime and related employment. 

The District of Columbia Workmen’s Compensation Act Trust Fund, established under the authority 

District of Columbia Workmen’s Compensation Act, provides compensation and medical payments 

to District of Columbia employees for work-related injuries or death which occurred prior to July 26, 

1982. 

• Deposit funds 

Deposit funds account for monies held temporarily by DOL until ownership is determined, or monies 

held by DOL as an agent for others. 

4. Inter-departmental relationships 

DOL and the Department of the Treasury (Treasury) are jointly responsible for the operations of the 

Unemployment Trust Fund and the Black Lung Disability Trust Fund. DOL is responsible for the 

administrative oversight and policy direction of the programs financed by these trust funds. Treasury 

acts as custodian over monies deposited into the funds and also invests amounts in excess of 

disbursing requirements in Treasury securities on behalf of DOL. DOL consolidates the financial 

results of the Unemployment Trust Fund and the Black Lung Disability Trust Fund into these 

financial statements. 

B. Basis of Accounting and Presentation 

These consolidated financial statements present the financial position, net cost of operations, changes in net 

position, budgetary resources, financing, and custodial activities of the U.S. Department of Labor, in 

accordance with U.S. generally accepted accounting principles and the form and content requirements of 

OMB Circular No. A-136, “Financial Reporting Requirements.” They have been prepared from the books 

and records of DOL, and include the accounts of all funds under the control of the DOL reporting entity. All 

interfund balances and transactions have been eliminated, except in the Statement of Budgetary Resources. 

OMB Circular No. A-136 requires that the Statement of Budgetary Resources be presented on a combined 

basis. 

OMB Circular No. A-136 requires budget authority and other resources allocated to another agency to be 

reported by the transferor of the appropriation in its financial statements unless the allocation transfer is 

material to the recipient’s financial statements. The activity relating to the allocation should be reported in 

all of the recipient’s financial statements, except the Statement of Budgetary Resources, when the allocation 

transfer is material to the recipient’s financial statements. The transferor should continue to report the 

appropriation and the related budgetary activity in its Statement of Budgetary Resources. 

 
Annual Financial Statements 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 

For the Years Ended September 30, 2006 and 2005 

FY 2006 Performance and Accountability Report 197

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – Continued 

B. Basis of Accounting and Presentation - Continued 

DOL has allocated appropriations to the Department of Agriculture and the Department of Interior in fiscal 

years 2006 and 2005 to provide funds for youth training programs. These Departments consider this activity 

material to their respective financial statements; therefore, DOL reports this activity only in the Combined 

Statement of Budgetary Resources. Appropriations have been allocated to DOL from the Environmental 

Protection Agency, the General Service Administration, and the Agency for International Development, 

which DOL considers to be immaterial. These amounts are not included in the DOL financial statements. 

U.S. generally accepted accounting principles encompass both accrual and budgetary transactions. Under 

accrual accounting, revenues are recognized when earned, and expenses are recognized when liabilities are 

incurred. Budgetary accounting facilitates compliance with legal constraints on, and controls over, the use of 

federal funds. These consolidated financial statements are prepared by DOL pursuant to OMB directives and 

used to monitor DOL’s use of budgetary resources. 

C. Funds with U.S. Treasury 

DOL’s cash receipts and disbursements are processed by the U.S. Treasury. Funds with U.S. Treasury 

represent obligated and unobligated balances available to finance allowable expenditures and restricted 

balances, including amounts related to expired authority and amounts not available for DOL. (See Note 2) 

D. Investments 

The Federal Government does not set aside assets to pay future benefits or other expenditures associated with 

DOL’s earmarked funds. The cash receipts collected from the public for earmarked funds are deposited in 

the U.S. Treasury, which uses the cash for general Government purposes. Interest earning Treasury 

securities are issued to DOL’s earmarked funds as evidence of the receipts. These Treasury securities are 

assets to DOL and liabilities to the U.S. Treasury. Because DOL and the U.S. Treasury are both parts of the 

Government, these assets and liabilities offset each other from the standpoint of the Government as a whole. 

For this reason, they do not represent an asset or a liability in the U.S. Government-wide financial 

statements. Treasury securities provide DOL with authority to draw upon the U.S. Treasury to make future 

benefit payments or other expenditures. When DOL requires redemption of these securities to make 

expenditures, the Government finances those expenditures out of accumulated cash balances, by raising taxes 

or other receipts, by borrowing from the public or repaying less debt, or by curtailing other expenditures. 

This is the same way that the Government finances all other expenditures. 

Balances held in the Unemployment Trust Fund are invested in non-marketable, special issue Treasury 

securities (certificates of indebtedness and bonds) available for purchase exclusively by Federal government 

agencies and trust funds. Special issues are purchased and redeemed at face value (cost), which is equivalent 

to their net carrying value on the Consolidated Balance Sheet. Interest rates and maturity dates vary. 

Balances held in the Panama Canal Commission Compensation Fund are invested in marketable Treasury 

securities. These investments are stated at amortized costs that equal to their net carrying value on the 

Consolidated Balance Sheet. Discounts and premiums are amortized using the effective interest method. 

Interest rates and maturity dates vary. Management expects to hold these marketable securities until 

maturity, therefore no provision is made in the financial statements for unrealized gains or losses. 
Financial Section 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 

For the Years Ended September 30, 2006 and 2005 

198 United States Department of Labor 

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – Continued 

D. Investments – Continued 

Other funds also have investments in Treasury securities. Balances held in the Longshore and Harbor 

Workers’ Compensation Act Trust Fund, the District of Columbia Workmen’s Compensation Act Trust 

Fund, and the Energy Employees Occupational Illness Compensation Fund are invested in Treasury one day 

deposit certificates. Receipts from certain cases deposited in the Backwage Restitution Fund were invested 

in marketable Treasury securities in FY 2005. (See Note 3) 

E. Accounts Receivable, Net of Allowance 

Accounts receivable consists of intra-governmental amounts due to DOL, as well as amounts due from the 

public. 

1. Intra-governmental accounts receivable 

The Federal Employees Compensation (FEC) account within the Unemployment Trust Fund 

provides unemployment insurance to eligible Federal workers (UCFE) and ex-service members 

(UCX). DOL recognizes as accounts receivable amounts due from other Federal agencies for 

unreimbursed UCFE and UCX benefits. 

DOL’s Federal Employees’ Compensation Act (FECA) Special Benefit Fund provides workers’ 

compensation benefits to eligible Federal workers on behalf of other Federal agencies. DOL 

recognizes as accounts receivable amounts due from other Federal agencies to the Special Benefit 

Fund for unreimbursed FECA benefits. 

DOL also has receivables from other Federal agencies for work performed on their behalf under 

various reimbursable agreements. 

2. Accounts receivable due from the public 

DOL recognizes as accounts receivable State unemployment taxes due from covered employers. 

Also recognized as accounts receivable are benefit overpayments made by DOL to individuals not 

entitled to receive the benefit. 

DOL recognizes as accounts receivable amounts due from the public for fines and penalties levied 

against employers by OSHA, MSHA, ESA, and EBSA; for amounts due for backwages assessed 

against employers by ESA; and for amounts due from grantees and contractors for grant and contract 

costs disallowed by ETA. 

3. Allowance for doubtful accounts 

Accounts receivable due from the public are stated net of an allowance for uncollectible accounts. 

The allowance is estimated based on an aging of account balances, past collection experience, and an 

analysis of outstanding accounts at year-end. Contra revenue represents a reduction in revenue when 

realization is not expected. Intra-governmental accounts receivable are considered fully collectible. 

(See Note 4) 
Annual Financial Statements 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 

For the Years Ended September 30, 2006 and 2005 

FY 2006 Performance and Accountability Report 199

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – Continued 

F. Advances 

DOL advances consist primarily of payments made to State employment security agencies (SESAs), and to 

grantees and contractors to provide for future DOL program expenditures. These advance payments are 

recorded by DOL as an asset, which is reduced when actual expenditures or the accrual of unreported 

expenditures are recorded by DOL. (See Note 5) 

G. Property, Plant and Equipment, Net of Accumulated Depreciation 

The majority of DOL’s property, plant and equipment (PP&E) is general purpose PP&E held by Job Corps 

centers owned and operated by DOL through a network of contractors. DOL maintains the Capital Asset 

Tracking and Reporting System (CATARS) to account for Job Corp’s PP&E, as well as other general purpose 

PP&E used by the Department. Internal use software is considered general purpose PP&E. 

Effective October 1, 2002, real property purchases or improvements and leasehold improvements with a cost 

greater than $500,000 and a useful life of 2 or more years, internal use software with a cost greater than 

$300,000 and a useful life of 2 or more years, and equipment with a cost of $50,000 or more and a useful life 

of 2 or more years are capitalized. PP&E acquisitions not meeting these criteria are charged to expense at the 

time of purchase. For fiscal years 1996 through 2001, PP&E (excluding internal use software) with a cost 

greater than $25,000 ($5,000 for the Working Capital Fund) and a useful life of 2 or more years and internal 

use software with a cost greater than $300,000 and a useful life of 2 or more years were capitalized. Prior to 

2001, internally developed software in the Working Capital Fund with a cost greater than $5,000 was 

capitalized, when the cost was intended to be recovered through charges to other DOL users. Prior to 1996, 

PP&E with a cost greater than $5,000 and a useful life of 2 or more years were capitalized. PP&E 

acquisitions not meeting these criteria were charged to expense at the time of purchase. 

Property, plant and equipment purchases and additions are stated at cost. Normal repairs and maintenance 

are charged to expense as incurred. Plant and equipment are depreciated over their estimated useful lives 

using the straight-line method of depreciation. 

Job Corps center construction costs are capitalized as construction-in-progress until completed. Upon 

completion they are reclassified as structures or facilities and depreciated over their estimated useful lives. 

Leasehold improvements made at Job Corps centers and DOL facilities leased from the General Services 

Administration are recorded at cost and amortized over their useful lives, using the straight-line method of 

amortization. (DOL has no operating leases which extend for a period of more than one year.) 

Internal use software development costs are capitalized as software development in progress until the 

development stage has been completed and successfully tested. Upon completion and testing, software 

development-in-progress costs are reclassified as internal use software and amortized over their estimated 

useful lives. 

The table below shows the major classes of DOL’s depreciable plant and equipment, and the depreciation 

periods used for each major classification. (See Note 6) 

 Years 

Structures, facilities and improvements 20 - 50 

Furniture and equipment 2 - 36 

ADP software 2 - 15 
Financial Section 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 

For the Years Ended September 30, 2006 and 2005 

200 United States Department of Labor 

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – Continued 

G. Property, Plant and Equipment, Net of Accumulated Depreciation - Continued 

DOL grantees have acquired real and tangible property with Federal grant funds in which DOL has a 

reversionary interest when the property is disposed of or no longer used for its authorized purpose. DOL is 

entitled to a pro rata share of the proceeds from sale of the property or a pro rata share of the property’s fair 

market value, if the property is retained by the grantee but no longer used for DOL purposes. The value of 

DOL’s reversionary interest in real and tangible property acquired with Federal grant funds can not be 

determined until the grantee’s intention to sell or convert the property is known. 

H. Non-entity Assets 

Assets held by DOL which are not available to DOL for obligation are considered non-entity assets. DOL 

holds non-entity assets for the Railroad Retirement Board and for transfer to the U.S. Treasury. (See Note 7)

I. Liabilities 

Liabilities represent probable amounts to be paid by DOL as a result of past transactions, and are recognized 

when incurred, regardless of whether there are budgetary resources available to pay them. However, the 

liquidation of these liabilities will consume budgetary resources and cannot be made until available resources 

have been obligated. For financial reporting purposes, DOL’s liabilities are classified as covered or not 

covered by budgetary resources. Liabilities are classified as covered by budgetary resources if budgetary 

resources are available. Liabilities are also considered covered by budgetary resources if they are to be 

funded by permanent indefinite appropriations, which have been enacted and signed into law and are 

available for use as of the balance sheet date, provided that the resources may be apportioned by OMB 

without further action by the Congress and without a contingency having to be met first. Liabilities are 

classified as not covered by budgetary resources if budgetary resources are not available. These 

classifications differ from budgetary reporting, which categorizes liabilities as obligated, consuming 

budgetary resources, or unobligated, not consuming budgetary resources. Unobligated liabilities include 

those covered liabilities for which available budgetary resources have not been obligated, as well as 

liabilities not covered for which budgetary resources are not available. (See Notes 11 and 12) 

J. Advances from U.S. Treasury 

The Benefits Revenue Act provides for repayable advances to DOL’s Black Lung Disability Trust Fund when 

fund resources are not adequate to meet fund obligations. Budget authority is derived from the Black Lung 

Disability Trust Fund’s indefinite authority to borrow. Repayable advances are provided through transfers 

from the Advances to the Unemployment Trust Fund and Other Funds appropriation, to the extent of 

borrowings under the authority. Advances are repayable with interest rate equal to the current average 

market yield on outstanding marketable obligations of the United States with remaining periods to maturity 

comparable to the anticipated period during which the advance will be outstanding. Advances made prior to 

1982 carried rates of interest equal to the average rate borne by all marketable interest-bearing obligations of 

the United States then forming a part of the public debt. Outstanding advances bear interest rates ranging 

from 4.500% to 13.875% at September 30, 2006 and 2005. Amounts in the trust fund shall be available, as 

provided by appropriation acts, for the payment of interest on, and the repayment of these repayable 

advances. Interest and principal are paid to the General Fund of the Treasury when the Secretary of the 

Treasury determines that funds are available in the trust fund for such purposes. (See Note 8) 
Annual Financial Statements 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 

For the Years Ended September 30, 2006 and 2005 

FY 2006 Performance and Accountability Report 201

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – Continued 

K. Accrued Leave 

A liability for annual and compensatory leave is accrued as leave is earned and paid when leave is taken. 

The balance of leave earned but not taken will be paid from future funding sources. Sick leave and other 

types of non-vested leave are expensed as taken. 

L. Accrued Benefits 

The financial statements include a liability for unemployment, workers’ compensation, and disability benefits 

due and payable from various DOL funds, as discussed below. (See Note 9) 

1. Unemployment benefits payable 

The Unemployment Trust Fund provides benefits to unemployed workers who meet State and 

Federal eligibility requirements. Regular and extended unemployment benefits are paid from State 

accounts within the Unemployment Trust Fund, financed primarily by a State unemployment tax on 

employer payrolls. Fifty percent of the cost of extended unemployment benefits is paid from the 

Extended Unemployment Compensation Account (EUCA) within the Unemployment Trust Fund, 

financed by a Federal unemployment tax on employer payrolls. Emergency benefits were paid under 

the Temporary Extended Unemployment Compensation Act and the Emergency Unemployment 

Compensation Act. Unemployment benefits to unemployed Federal workers are paid from the 

Federal Employment Compensation Account within the Unemployment Trust Fund. These benefit 

costs are reimbursed by the responsible Federal agency. A liability is recognized for unpaid 

unemployment benefits applicable to the current period and for benefits paid by states that have not 

been reimbursed by the fund. DOL also recognizes a liability for Federal employees’ unemployment 

benefits to the extent of unpaid benefits for existing claims filed during the current period, payable in 

the subsequent period. 

2. Federal employees disability and 10(h) benefits payable 

The Federal Employees’ Compensation Act Special Benefit Fund provides income and medical cost 

protection to covered Federal civilian employees injured on the job, employees who have incurred a 

work-related occupational disease and beneficiaries of employees whose death is attributable to a 

job-related injury or occupational disease. The fund is reimbursed by other Federal agencies for the 

FECA benefit payments made on behalf of their workers. The fund assumes the liability for 

unreimbursed (non-chargeable) FECA benefits. The fund also provides 50% of the annual cost-ofliving adjustments for pre-1972 compensation cases under the authority of Section 10(h) of the 

Longshore and Harbor Workers’ Compensation Act and the District of Columbia Workmen’s 

Compensation Act. A liability for FECA benefits payable by the Special Benefit Fund to the 

employees of DOL and other Federal agencies and for 10(h) benefits is accrued to the extent of 

unpaid benefits applicable to the current period. 

3. Black lung disability benefits payable 

The Black Lung Disability Trust Fund and Special Benefits for Disabled Coal Miners provide 

compensation and medical benefits for eligible coal miners who are disabled due to pneumoconiosis 

(black lung disease). DOL recognizes a liability for disability benefits to the extent of unpaid 

benefits applicable to the current period. 
Financial Section 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 

For the Years Ended September 30, 2006 and 2005 

202 United States Department of Labor 

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – Continued 

L. Accrued Benefits – Continued 

4. Energy employees occupational illness compensation benefits payable 

The Energy Employees Occupational Illness Compensation Fund provides benefits to eligible 

current or former employees of the Department of Energy (DOE) and its contractors suffering from 

designated illnesses incurred as a result of their work with DOE. Benefits are also paid to certain 

survivors of those employees and contractors, as well as to certain beneficiaries of the Radiation 

Exposure Compensation Act (RECA). DOL recognizes a liability for disability benefits to the extent 

of unpaid benefits applicable to the current period.

5. Longshore and harbor workers’ and District of Columbia disability benefits payable 

The Longshore and Harbor Workers’ Compensation Act Trust Fund and the District of Columbia 

Workmen’s Compensation Act Trust Fund provide compensation and medical benefits for workrelated injuries to workers in certain maritime employment and to employees of the District of 

Columbia, respectively. DOL recognizes a liability for disability benefits payable by these funds to 

the extent of unpaid benefits applicable to the current period. 

M. Future Workers’ Compensation Benefits 

The financial statements include a liability for future workers’ compensation benefits payable by DOL to its 

employees, to employees of the Panama Canal Commission and to enrollees of the Job Corps, as well as 

benefits not chargeable to other Federal agencies, which must be paid by DOL’s Federal Employees’ 

Compensation Act Special Benefit Fund. The liability includes the expected payments for death, disability, 

medical, and miscellaneous costs for approved compensation cases, as well as a component for incurred but 

not reported claims. The liability is determined using historical benefit payment patterns related to injury 

years to predict the ultimate payments. 

The methodology provides for the effects of inflation and adjusts historical payments to current year constant 

dollars by applying wage inflation factors (cost of living adjustments or COLAs) and medical inflation 

factors (consumer price index-medical or CPIMs) to the calculation of projected benefits. The COLAs and 

CPIMs used in the projections for FY 2006 and FY 2005 were as follows: 

 COLA CPIM 

 FY 2006 2005 2006 2005

2006 N/A 3.33% N/A 4.09% 

2007 3.50% 2.93% 4.00% 4.01% 

2008 3.13% 2.40% 4.01% 4.01% 

2009 2.40% 2.40% 4.01% 4.01% 

2010 2.40% 2.40% 4.03% 4.01% 

2011+ 2.43% 2.40% 4.09% 4.01% 
Annual Financial Statements 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 

For the Years Ended September 30, 2006 and 2005 

FY 2006 Performance and Accountability Report 203

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – Continued 

M. Future Workers’ Compensation Benefits – Continued 

Projected annual payments were discounted to present value based on OMB’s interest rate assumptions for 

ten year Treasury notes. For 2006, interest rate assumptions were 5.17% in year one and 5.31% in year two 

and thereafter. For 2005, interest rate assumptions were 4.5% in year one and 5.0% in year two and 

thereafter. (See Note 10) 

N. Energy Employees Occupational Illness Compensation Benefits 

The Energy Employees Occupational Illness Compensation Fund, established under the authority of the 

Energy Employees Occupational Illness Compensation Program Act of 2000 (EEOICPA), provides benefits 

to eligible current or former employees of DOE and its contractors, or to certain survivors of those 

employees and contractors, as well as benefits to certain beneficiaries of RECA. DOL is responsible for 

adjudicating and administering claims filed under the EEOICPA. Effective July 31, 2001, compensation of 

$150,000 and payment of medical expenses from the date a claim is filed are available to covered individuals 

suffering from designated illnesses incurred as a result of their work with DOE. Prior to October 2004, 

compensation of $50,000 and payment of medical expenses from the date a claim is filed are available to 

individuals eligible for compensation under RECA. As a result of the October 2004 changes, new RECA 

cases are paid the full $150,000 under EEOICPA. 

The Ronald Reagan National Defense Authorization Act of 2005 amended EEOICPA to include Subtitle E – 

Contractor Employee Compensation. This amendment replaces Part D of the EEOICPA, which provided 

assistance from DOE in obtaining state workers’ compensation benefits. The new program grants workers’ 

compensation benefits to covered employees and their families for illness and death arising from exposure to 

toxic substances at a DOE facility. The amendment also makes it possible for uranium workers as defined 

under Section 5 of RECA to receive compensation under Part E for illnesses due to toxic substance exposure 

at a uranium mine or mill covered under that Act. These claims were formerly administered and paid by the 

Department of Justice (DOJ). 

DOL has recognized a $6.9 billion and $7.4 billion liability for estimated future benefits payable by DOL at 

September 30, 2006 and 2005, respectively, to eligible individuals under the EEOICPA. For fiscal year 

2006, the undiscounted liability is $9.8 billion discounted to a present value liability of $6.9 billion based on 

an interest rate of 5.313% projected over a 49 year period. For fiscal year 2005, the undiscounted liability is 

$10.7 billion discounted to a present value liability of $7.4 billion based on an interest rate 5.02% projected 

over a 49 year period. The estimated liability includes the expected lump sum and estimated medical 

payments for approved compensation cases and cases filed pending approval, as well as claims incurred but 

not yet filed. The actuarial projection methodology provided an estimate of the ultimate number of reported 

cases as a result of estimating future claims from the historical patterns of reported claims and subsequent 

claim approval rates. Medical payments were derived by estimating an average benefit award per living 

employee claimant. 
Financial Section 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 

For the Years Ended September 30, 2006 and 2005 

204 United States Department of Labor 

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – Continued 

O. Employee Health and Life Insurance Benefits 

DOL employees are eligible to participate in the contributory Federal Employees Health Benefit Program 

(FEHBP) and the Federal Employees Group Life Insurance Program (FEGLIP). DOL matches the employee 

contributions to each program to pay for current benefits. During 2006, DOL’s contributions to the FEHBP 

and FEGLIP were $76.2 and $2.0 million, respectively. During 2005, DOL’s contributions to the FEHBP and 

FEGLIP were $73.9 and $1.9 million, respectively. These contributions are recognized as current operating 

expenses. 

P. Other Retirement Benefits 

DOL employees eligible to participate in the FEHBP and the FEGLIP may continue to participate in these 

programs after their retirement. DOL recognizes a current operating expense for the future cost of these 

other retirement benefits (ORB) at the time the employee’s services are rendered. This ORB expense must 

be financed by OPM. Using cost factors supplied by OPM, DOL recorded ORB imputed costs and imputed 

financing sources of $80.6 million in 2006 and $64.8 million in 2005.

Q. Employee Pension Benefits 

DOL employees participate in either the Civil Service Retirement System (CSRS) or the Federal Employees’ 

Retirement System (FERS). For employees participating in CSRS, 7.0% of their gross earnings is withheld 

and transferred to the Civil Service Retirement and Disability Fund. DOL contributes an additional 7.0% of 

the employee gross earnings to the CSRS Retirement and Disability Fund. For employees participating in 

FERS, DOL withholds 0.8% of gross earnings and makes an 11.2% employer contribution. This total is 

transferred to the Federal Employees’ Retirement Fund. The CSRS and FERS retirement funds are 

administered by the OPM. DOL contributions to the CSRS and FERS are recognized as current operating 

expenses. FERS participants are also covered under the Federal Insurance Contribution Act (FICA) and are 

subject to withholdings. DOL makes matching FICA contributions, recognized as operating expenses. 

DOL’s matching contributions were $65.0 million in 2006 and $61.0 million in 2005. 

The Thrift Savings Plan (TSP) is a defined contribution retirement savings and investment plan for 

employees covered by either CSRS or FERS. CSRS participants may contribute up to $15,000 of their gross 

pay to the TSP during calendar year 2006, but there is no departmental matching contribution. FERS 

participants may contribute up to $15,000 of their gross pay to the TSP during calendar year 2006. CSRS 

and FERS participants were limited to 10% and 15% contributions to TSP of their gross pay respectively 

with a $14,000 maximum during calendar year 2005. For employees covered under FERS, DOL contributes 

1% of the employees’ gross pay to the TSP. DOL also matches employees’ contributions dollar-for-dollar on 

the first 3% of pay contributed each pay period and 50 cents on the dollar for the next 2% of pay contributed. 

DOL contributions to the TSP are recognized as current operating expenses. Employee and employer 

contributions to the TSP are transferred to the Federal Retirement Thrift Investment Board. 

DOL recognizes the full cost of providing future CSRS and FERS pension benefits to covered employees at 

the time the employees’ services are rendered. The pension expense recognized in the financial statements 

equals the service cost for covered DOL employees, less amounts contributed by these employees. Service 

cost represents the actuarial present value of benefits attributed to services rendered by covered employees 

during the accounting period. 
Annual Financial Statements 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 

For the Years Ended September 30, 2006 and 2005 

FY 2006 Performance and Accountability Report 205

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – Continued 

Q. Employee Pension Benefits - Continued 

The measurement of service cost requires the use of actuarial cost methods to determine the percentage of the 

employees’ basic compensation sufficient to fund their projected pension benefit. These percentages (cost 

factors) are provided by OPM, and applied by DOL to the basic annual compensation of covered employees 

to arrive at the amount of total pension expense to be recognized in DOL’s financial statements. 

The excess of total pension expense over the amount contributed by the Department and by DOL’s 

employees represents the amount of pension expense which must be financed directly by OPM. DOL 

recognized an imputed cost and an imputed financing source equal to the excess amount. DOL does not 

recognize in its financial statements FERS or CSRS assets, accumulated plan benefits or unfunded liabilities, 

if any, applicable to its employees. (See Note 13) 

R. Net Position 

DOL’s net position consists of the following: 

1. Unexpended appropriations 

Unexpended appropriations include the unobligated balances and undelivered orders of DOL’s 

appropriated funds. Unobligated balances associated with appropriations that expire at the end of the 

fiscal year remain available for obligation adjustments, but not new obligations, until those 

appropriations are closed, five years after the appropriations expire. Multi-year appropriations 

remain available to DOL for obligation in future periods. 

2. Cumulative results of operations 

Cumulative results of operations include the accumulated historical difference between expenses 

consuming budgetary resources and financing sources providing budgetary resources in DOL’s trust, 

revolving and special funds; liabilities not consuming budgetary resources net of assets not providing 

budgetary resources; and DOL’s net investment in capitalized assets. 

S. Net Cost of Operations 

1. Operating costs 

Full operating costs are comprised of all direct costs consumed by the program and those indirect 

costs which can be reasonably assigned or allocated to the program. Intra-governmental costs are 

exchange transactions made between DOL and other entities within the Federal government. Intragovernmental costs relate to the source of goods and services purchased by DOL, and not to the 

classification of related revenue. With the public costs are exchange transactions made between 

DOL and a non-Federal entity. Full costs are reduced by exchange (earned) revenues to arrive at net 

program cost. The full and net operating costs of DOL’s major programs are presented in the 

Consolidated Statements of Net Cost, and are also reported by sub-organization in Note 14 to the 

financial statements. 
Financial Section 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 

For the Years Ended September 30, 2006 and 2005 

206 United States Department of Labor 

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – Continued 

S. Net Cost of Operations - Continued 

2. Earned revenue 

Earned revenues arise from exchange transactions which occur through the provision of goods and 

services for a price, and are deducted from the full cost of DOL’s major programs to arrive at net 

program cost. Earned revenues are recognized by DOL to the extent reimbursements are payable 

from other Federal agencies and from the public, as a result of costs incurred or services performed 

on their behalf. Major sources of DOL’s earned revenue include reimbursements to the Federal 

Employees’ Compensation Act Special Benefit Fund from Federal agencies for the costs of disability 

compensation and medical care provided to or accrued on behalf of their employees, and 

reimbursements to the Unemployment Trust Fund from Federal agencies for the cost of 

unemployment benefits provided to or accrued on behalf of their employees. 

T. Budgetary Financing Sources 

Budgetary financing sources other than earned revenues provide funding for the Department’s net cost of 

operations and are reported on the Consolidated Statement of Changes in Net Position. These financing 

sources include appropriations received, less appropriations transferred and not available, non-exchange 

revenue, and transfers without reimbursement, as discussed below:

1. Appropriations received, appropriations transferred and appropriations not available 

DOL receives financing sources through congressional appropriations to support its operations. A 

financing source is recognized for these appropriated funds received, less appropriations transferred 

or not available through rescission or cancellation. 

2. Non-exchange revenue 

Non-exchange revenues arise from the Federal government’s power to demand payments from the 

public. Non-exchange revenues are recognized by DOL on the Consolidated Statement of Changes 

in Net Position for the transfer of employer and excise taxes from the entities collecting these taxes 

and for interest from investments, as discussed below. (See Note 15) 

• Employer taxes 

Employer tax revenues are recognized on a modified cash basis, to the extent of cash transferred by 

the collecting entity to DOL, plus the change in inter-entity balances between the collecting entity 

and DOL. Inter-entity balances represent revenue received by the collecting entity, net amounts due 

to the collecting entity and adjustments made to previous transactions by the collecting entity which 

have not been transferred to DOL. 
Annual Financial Statements 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 

For the Years Ended September 30, 2006 and 2005 

FY 2006 Performance and Accountability Report 207

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – Continued 

T. Budgetary Financing Sources - Continued 

2. Non-exchange revenue - continued 

• Employer taxes - continued 

Federal and state unemployment taxes represent non-exchange revenues collected from employers 

based on wages paid to employees in covered employment. Federal unemployment taxes are 

collected by the Internal Revenue Service and transferred to designated accounts within the 

Unemployment Trust Fund. State unemployment taxes are collected by each State and deposited in 

separate State accounts within the Unemployment Trust Fund. Federal unemployment taxes are used 

to pay the Federal share of extended unemployment benefits and to provide for Federal and State 

administrative expenses related to the operation of the unemployment insurance program. State 

unemployment taxes are restricted in their use to the payment of unemployment benefits. 

• Interest 

The Unemployment Trust Fund, Longshore and Harbor Workers’ Compensation Act Trust Fund, 

District of Columbia Workmen’s Compensation Act Trust Fund, the Panama Canal Commission 

Compensation Fund, and the Energy Employees Occupational Illness Compensation Fund receive 

interest on fund investments. The Unemployment Trust Fund receives interest from states that had 

accounts with loans payable to the Federal unemployment account at the end of the prior fiscal year. 

Interest is also earned on Federal funds in the possession of non-Federal entities. Interest is 

recognized as non-exchange revenue when earned. 

• Assessments 

The Longshore and Harbor Workers’ Compensation Act Trust Fund and District of Columbia 

Workmen’s Compensation Act Trust Fund receive non-exchange revenues from assessments levied 

on insurance companies and self-insured employers. Assessments are recognized as non-exchange 

revenues when earned. 

• Reimbursement of unemployment benefits 

The Unemployment Trust Fund receives reimbursements from state and local government entities 

and non-profit organizations for the cost of unemployment benefits provided to or accrued on behalf 

of their employees. These reimbursements are recognized as other non-exchange revenue when 

earned. 

3. Transfers without reimbursement 

Transfers recognized as budgetary financing sources by DOL include transfers from the Department 

of Homeland Security H-1B Nonimmigrant Petitioner Account to H-1B Funds in ETA and ESA. 

Also included are transfers from various DOL general fund unexpended appropriation accounts to 

the Working Capital Fund’s cumulative results of operations. (See Note 16) 
Financial Section 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 

For the Years Ended September 30, 2006 and 2005 

208 United States Department of Labor 

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – Continued 

U. Other Financing Sources 

Other financing sources include nonexchange revenue and other items that do not represent budgetary 

resources. 

1. Imputed financing 

A financing source is imputed by DOL to provide for pension and other retirement benefit expenses 

recognized by DOL but financed by OPM. (See Notes 1-P and Q)

2. Transfers without reimbursement 

Transfers recognized as other financing sources by DOL include the transfers of property from the 

General Services Administration, and also in FY 2005 from the Department of Defense, to the 

Employment and Training Administration (ETA) for training programs. Also included in FY 2005 

were transfers of liabilities from the Department of Energy and the Department of Justice to the 

Energy Employees Occupational Illness Compensation Fund. The liabilities were for programs 

established by the EEIOCPA and RECA. These programs were transferred to DOL by amendments 

to the EEIOCPA enacted in FY 2005, which expanded coverage for illness or death arising from 

exposure to toxic substances at the DOE facilities. (See Note 16) 

V. Custodial Activity 

DOL collects and transfers to the general fund of the U.S. Treasury custodial non-exchange revenues for 

penalties levied against employers by OSHA, MSHA, ESA, and EBSA for regulatory violations; for ETA 

disallowed grant costs assessed against canceled appropriations; and for FECA administrative costs assessed 

against government corporations in excess of amounts reserved to finance capital improvements in the 

Federal Employees’ Compensation Act Special Benefit Fund. These collections are not available to the 

agencies for obligation or expenditure. Penalties and other assessments are recognized as custodial revenues 

when collected or subject to collection. The source and disposition of these revenues are reported on the 

Consolidated Statements of Custodial Activity. (See Note 19) 

W. Significant Assumptions Used in the Statement of Social Insurance 

The Black Lung Disability Benefit Program provides for compensation, medical and survivor benefits for 

eligible coal miners who are disabled due to pneumoconiosis (black lung disease) arising out of their coal 

mine employment. The Black Lung Disability Trust Fund (BLDTF) provides benefit payments to eligible 

coal miners disabled by pneumoconiosis when no responsible mine operator can be assigned the liability. 

Black lung disability benefit payments are funded by excise taxes from coal mine operators based on the sale 

of coal, as are the fund’s administrative costs. These taxes are collected by the Internal Revenue Service and 

transferred to the BLDTF, which was established under the authority of the Black Lung Benefits Revenue 

Act, and administered by the U.S. Department of the Treasury. The Black Lung Benefits Revenue Act 

provides for repayable advances to the BLDTF from the General Fund of the Treasury, in the event that 

BLDTF resources are not adequate to meet program obligations. 
Annual Financial Statements 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 

For the Years Ended September 30, 2006 and 2005 

FY 2006 Performance and Accountability Report 209

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – Continued 

W. Significant Assumptions Used in the Statement of Social Insurance - Continued 

The significant assumptions used in the projections for the Statement of Social Insurance are the number of 

beneficiaries, life expectancy, coal excise tax revenue estimates, the tax rate structure, Federal civilian pay 

raises, medical cost inflation, and the interest rate on new repayable advances from Treasury. 

The Office of Tax Analysis of the Department of the Treasury provides estimates of future receipts of the 

black lung excise tax. Its estimates are based on projections of future coal production and sale prices 

prepared by the Energy Information Agency of the Department of Energy. The Department of Treasury’s 

Office of Tax Analysis provides the first eleven years of tax receipt estimates. The remaining years are 

estimated using a growth rate based on both historical tax receipts and the Department of Treasury’s 

estimated tax receipts. The coal excise tax rate structure is $1.10 per ton of underground-mined coal and 

$0.55 per ton of surface-mined coal sold, with a cap of 4.4 percent of sales price, through December 31, 

2013. Starting in 2014, the tax rates revert to $0.50 per ton of underground-mined coal and $0.25 per ton 

surface-mine coal sold, and a limit of two percent of sales price. 

The beneficiary population data is updated from information supplied by the program. The beneficiary 

population is a nearly closed universe in which attrition by death exceeds new entrants by a ratio of more 

than ten to one. Projections for new participants are included in the overall projections and are considered 

immaterial. Social Security Administration life tables are used to project the life expectancies of the 

beneficiary population. The Office of Management and Budget supplies assumptions for future monthly 

benefit rate increases based on increases in the Federal pay scale and future medical cost inflation based on 

increases in the consumer price index-medical, which are used to calculate future benefit costs. During the 

current projection period, future benefit rate increases range from 4.0% to 4.3%, and medical cost increases 

range from 4.0% to 4.1%. Estimates for administrative costs for the first 11 years of the projection are 

supplied by DOL’s Budget Office, while later years are based on the number of projected beneficiaries. 

Estimates for future interest on advances are based on the interest rates on outstanding advances ranging 

from 4.500% to 13.875% and new borrowings ranging from 4.90% to 5.81%. 

The projection period ends September 30, 2040, because the primary purpose of the BLDTF, which was 

established in 1978, is to compensate the victims of coal mine dust exposures which occurred prior to 1970. 

By the end of FY 2040, not only the disabled miners and their widows in that class, but also virtually all of 

their eligible dependent disabled adult children will be deceased. All of the current year projections are 

discounted using an interest rate of 5.0%, which is the last actual rate on advances taken at the end of FY 

2006. 

X. Use of Estimates 

The preparation of financial statements requires management to make certain estimates and assumptions that 

affect the reported amounts of assets and liabilities and the reported amounts of revenue and expenses during 

the reporting period. Actual results could differ from those estimates. 

Y. Reclassifications 

Certain reclassifications have been made to 2005 financial statements to conform to the 2006 presentation. 
Financial Section 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 

For the Years Ended September 30, 2006 and 2005 

210 United States Department of Labor 

NOTE 2 - FUNDS WITH U.S. TREASURY 

Funds with U.S. Treasury at September 30, 2006 consisted of the following: 

Unobligated Unobligated Obligated

Balance Balance Balance Not Total Non-entity

(Dollars in thousands) Available Unavailable Yet Disbursed Entity Assets Assets Total

Revolving funds 3,946 $ - $ 35,694 $ 39,640 $ - $ 39,640 $ 

Trust funds 141,122 - (41,062) 100,060 (159) 99,901 

Appropriated funds 2,446,785 1,371,403 5,696,774 9,514,962 - 9,514,962 

Other - - - - 62,646 62,646 

$ 1,371,403 2,591,853 $ $ 5,691,406 $ 9,654,662 $ 9,717,149 62,487 $ 

Entity Assets

Funds with U.S. Treasury at September 30, 2005 consisted of the following: 

Unobligated Unobligated Obligated

Balance Balance Balance Not Total Non-entity

(Dollars in thousands) Available Unavailable Yet Disbursed Entity Assets Assets Total

Revolving funds 3,900 $ - $ 27,682 $ 31,582 $ - $ 31,582 $ 

Trust funds 107,154 16,921 (338,941) (214,866) (707) (215,573) 

Appropriated funds 2,290,830 1,187,214 5,865,841 9,343,885 - 9,343,885 

Other - - - - 59,766 59,766 

$ 1,204,135 2,401,884 $ $ 5,554,582 $ 9,160,601 $ 9,219,660 59,059 $ 

Entity Assets

The negative fund balances reported as of September 30, 2006 and 2005 relate to the Unemployment Trust 

Fund (UTF) and are the result of the timing of processing the investments and redemptions of UTF. The 

investments and redemptions relating to the last business day of the month are not processed until the first 

day of the next month. This could result in a negative cash position for the preceding business day if the 

disbursements are greater than the receipts to the fund. 

Unobligated Balance Available includes $339 million of funds apportioned for use in the subsequent year. 

 
Annual Financial Statements 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 

For the Years Ended September 30, 2006 and 2005 

FY 2006 Performance and Accountability Report 211

NOTE 3 - INVESTMENTS 

Investments at September 30, 2006 consisted of the following: 

Face Premium Net Market

(Dollars in thousands) Value (Discount) Value Value

Unemployment Trust Fund

Non-marketable

U.S. Treasury Certificates of Indebtedness

4.875% maturing June 30, 2007 8,662,384 $ - $ 8,662,384 $ 8,662,384 $ 

5.000% maturing June 30, 2007 343,768 - 343,768 343,768 

Special issue U.S. Treasury Bonds

4.625% maturing June 30, 2007 17,927,258 - 17,927,258 17,927,258 

4.625% maturing June 30, 2008 19,299,158 - 19,299,158 19,299,158 

4.875% maturing June 30, 2008 10,000,000 - 10,000,000 10,000,000 

4.875% maturing June 30, 2009 9,980,072 - 9,980,072 9,980,072 

 66,212,640 - 66,212,640 66,212,640 

Panama Canal Commission

 Compensation Fund

Marketable

U.S. Treasury Bill

Maturing November 16, 2006 13,608 (85) 13,523 13,016 

U.S. Treasury Notes

3.625% to 6.625% various maturities 24,460 30 24,490 24,315 

U.S. Treasury Bonds

10.375% to 11.750% various maturities 39,738 2,597 42,233 42,335 

 77,806 2,542 79,564 80,348 

Longshore and Harbor Workers' 

 Compensation Act Trust Fund

Non-marketable

One Day Deposit

5.030% maturing October 2, 2006 73,146 - 73,146 73,146 

District of Columbia Workmen's 

 Compensation Act Trust Fund

Non-marketable

One Day Deposit

5.030% maturing October 2, 2006 5,611 - 5,611 5,611 

Energy Employees Occupational Illness 

 Compensation Fund

Non-marketable

One Day Deposit

5.030% maturing October 2, 2006 83,307 - 83,307 83,307 

$ 66,452,510 $ 2,542 $ 66,454,268 66,455,052 $ 

Entity investments $ 2,542 66,351,966 $ 66,354,508 $ 66,353,724 $ 

Non-entity investments 100,544 - 100,544 100,544 

$ 66,452,510 $ 2,542 $ 66,454,268 66,455,052 $ 
Financial Section 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 

For the Years Ended September 30, 2006 and 2005 

212 United States Department of Labor 

NOTE 3 - INVESTMENTS - Continued 

Investments at September 30, 2005 consisted of the following: 

Face Premium Net Market

(Dollars in thousands) Value (Discount) Value Value

Unemployment Trust Fund

Non-marketable

U.S. Treasury Certificates of Indebtedness

4.625% maturing June 30, 2006 2,285,274 $ - $ 2,285,274 $ 2,285,274 $ 

Special issue U.S. Treasury Bonds

4.625% maturing June 30, 2007 26,000,000 - 26,000,000 26,000,000 

4.625% maturing June 30, 2008 19,299,158 - 19,299,158 19,299,158 

5.500% maturing June 30, 2006 7,221,451 - 7,221,451 7,221,451

 54,805,883 - 54,805,883 54,805,883

Panama Canal Commission

 Compensation Fund

Marketable

U.S. Treasury Notes

3.625% to 6.875% various maturities 32,307 711 33,018 32,784 

U.S. Treasury Bonds

10.375% to 14.000% various maturities 44,232 4,941 49,798 49,173 

 76,539 5,652 82,582 82,191 

Longshore and Harbor Workers' 

 Compensation Act Trust Fund

Non-marketable

One Day Deposit

3.460% maturing October 3, 2005 60,000 - 60,000 60,000 

District of Columbia Workmen's 

 Compensation Act Trust Fund

Non-marketable

One Day Deposit

3.460% maturing October 3, 2005 3,000 - 3,000 3,000 

Backwage Restitution Fund

Marketable

U.S. Treasury Bill

2.920% to 3.160% maturing October 20, 2005 1,625 (55) 1,570 1,570 

$ 54,947,047 $ 5,597 $ 54,952,644 $ 54,953,035

Entity investments $ 5,652 54,850,990 $ 54,856,642 $ 54,857,033 $ 

Non-entity investments 96,057 (55) 96,002 96,002 

$ 54,947,047 $ 5,597 $ 54,952,644 $ 54,953,035
Annual Financial Statements 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 

For the Years Ended September 30, 2006 and 2005 

FY 2006 Performance and Accountability Report 213

NOTE 4 - ACCOUNTS RECEIVABLE, NET OF ALLOWANCE

 

Accounts receivable at September 30, 2006 consisted of the following: 

Gross Net

(Dollars in thousands) Receivables Allowance Receivables

Entity intra-governmental assets

Due for UCFE and UCX benefits 334,738 $ - $ 334,738 $ 

Due for workers' compensation benefits 3,696,581 - 3,696,581 

Other 14,869 14,869 - 

 4,046,188 4,046,188 - 

Entity assets

State unemployment taxes 932,626 (666,082) 266,544 

Due from reimbursable employers 544,016 (32,357) 511,659 

Benefit overpayments 1,949,362 (1,730,343) 219,019 

Other 8,079 5,636 (2,443) 

 3,434,083 1,002,858 (2,431,225) 

Non-entity assets

Fines and penalties 81,309 (36,808) 44,501 

Backwages 23,966 7,797 (16,169) 

 105,275 52,298 (52,977) 

 3,539,358 1,055,156 (2,484,202) 

$ 7,585,546 $ 5,101,344 (2,484,202) $ 

Changes in the allowance for doubtful accounts during 2006 consisted of the following: 

Balance at Balance at

September 30, Contra September 30,

(Dollars in thousands) 2005 Write-offs Revenue Bad Debt 2006

Entity assets

State unemployment taxes (636,367) $ 349,681 $ (379,396) $ - $ (666,082) $ 

Due from reimbursable employers (31,513) 19,936 (20,780) - (32,357) 

Benefit overpayments (1,737,979) 613,131 - (605,495) (1,730,343) 

Other (2,314) 36 - (2,443) (165) 

 (2,408,173) 982,784 (400,176) (2,431,225) (605,660) 

Non-entity assets

Fines and penalties (55,807) 26,410 (7,411) - (36,808) 

Backwages (12,661) - - (16,169) (3,508) 

 (68,468) 26,410 (7,411) (52,977) (3,508) 

$ (2,476,641) $ 1,009,194 $ (407,587) $ (2,484,202) (609,168) $ 

 
Financial Section 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 

For the Years Ended September 30, 2006 and 2005 

214 United States Department of Labor 

NOTE 4 - ACCOUNTS RECEIVABLE, NET OF ALLOWANCE - Continued

 

Accounts receivable at September 30, 2005 consisted of the following: 

Gross Net

(Dollars in thousands) Receivables Allowance Receivables

Entity intra-governmental assets

Due for UCFE and UCX benefits 344,073 $ - $ 344,073 $ 

Due for workers' compensation benefits 3,640,388 - 3,640,388 

Other 6,809 6,809 - 

 3,991,270 3,991,270 - 

Entity assets

State unemployment taxes 871,549 (636,367) 235,182 

Due from reimbursable employers 547,623 (31,513) 516,110 

Benefit overpayments 1,949,359 (1,737,979) 211,380 

Other 10,264 7,950 (2,314) 

 3,378,795 970,622 (2,408,173) 

Non-entity assets

Fines and penalties 113,075 (55,807) 57,268 

Backwages 27,789 15,128 (12,661) 

 140,864 72,396 (68,468) 

 3,519,659 1,043,018 (2,476,641) 

$ 7,510,929 $ 5,034,288 (2,476,641) $ 

Changes in the allowance for doubtful accounts during 2005 consisted of the following: 

Balance at Balance at

September 30, Contra September 30,

(Dollars in thousands) 2004 Write-offs Revenue Bad Debt 2005

Entity assets

State unemployment taxes (556,917) $ 334,716 $ (414,166) $ - $ (636,367) $ 

Due from reimbursable employers (39,404) 27,088 (19,197) - (31,513) 

Benefit overpayments (1,862,710) 524,158 - (399,427) (1,737,979) 

Other (2,121) 234 - (2,314) (427) 

 (2,461,152) 886,196 (433,363) (2,408,173) (399,854) 

Non-entity assets

Fines and penalties (56,326) 20,135 (19,616) - (55,807) 

Backwages (10,389) - - (12,661) (2,272) 

 (66,715) 20,135 (19,616) (68,468) (2,272) 

$ (2,527,867) 906,331 $ $ (452,979) $ (2,476,641) (402,126) $ 
Annual Financial Statements 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 

For the Years Ended September 30, 2006 and 2005 

FY 2006 Performance and Accountability Report 215

NOTE 5 - ADVANCES 

Advances at September 30, 2006 and 2005 consisted of the following: 

(Dollars in thousands) 2006 2005

Intra-governmental

Advances to the Department of Justice 4 $ - $ 

Advances to the Department of Commerce - Bureau of the Census - 10,812 

 10,812 4 

Advances to states for UI benefit payments 474,153 489,177 

Advances to grantees and contractors to finance future DOL program expenditures 78,537 89,520 

Other 5,442 2,604 

 584,139 555,294 

$ 594,951 555,298 $ 

NOTE 6 - PROPERTY, PLANT AND EQUIPMENT, NET OF ACCUMULATED 

DEPRECIATION 

Property, plant and equipment at September 30, 2006 consisted of the following: 

Accumulated

Depreciation/ Net Book

(Dollars in thousands) Cost Amortization Value

Structures, facilities and improvements

Structures and facilities 862,100 $ (378,086) $ 484,014 $ 

Improvements to leased facilities 409,521 187,369 (222,152) 

 1,271,621 671,383 (600,238) 

Furniture and equipment

Equipment held by contractors 159,771 (154,226) 5,545 

Furniture and equipment 62,740 22,767 (39,973) 

 222,511 28,312 (194,199) 

ADP software (68,640) 192,270 123,630 

Construction-in-progress - 162,486 162,486 

Land 90,999 90,999 - 

$ (863,077) 1,939,887 $ 1,076,810 $ 

2006
Financial Section 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 

For the Years Ended September 30, 2006 and 2005 

216 United States Department of Labor 

NOTE 6 - PROPERTY, PLANT AND EQUIPMENT, NET OF ACCUMULATED 

DEPRECIATION - Continued 

Property, plant and equipment at September 30, 2005 consisted of the following: 

Accumulated

Depreciation/ Net Book

(Dollars in thousands) Cost Amortization Value

Structures, facilities and improvements

Structures and facilities 884,117 $ (356,235) $ 527,882 $ 

Improvements to leased facilities 385,067 171,209 (213,858) 

 1,269,184 699,091 (570,093) 

Furniture and equipment

Equipment held by contractors 162,064 (156,852) 5,212 

Furniture and equipment 63,135 25,849 (37,286) 

 225,199 31,061 (194,138) 

ADP software (69,656) 177,463 107,807 

Construction-in-progress - 94,464 94,464 

Land 90,999 90,999 - 

$ (833,887) 1,857,309 $ 1,023,422 $ 

2005

NOTE 7 - NON-ENTITY ASSETS 

Non-entity assets consisted of the following at September 30, 2006 and 2005: 

(Dollars in thousands) 2006 2005

Intra-governmental

Funds with U.S. Treasury 62,487 $ 59,059 $ 

Investments 96,002 100,544 

Interest receivable from investments 1,129 1,095 

 156,156 164,160 

Accounts receivable, net of allowance 52,298 72,396 

$ 228,552 216,458 $ 
Annual Financial Statements 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 

For the Years Ended September 30, 2006 and 2005 

FY 2006 Performance and Accountability Report 217

NOTE 8 - ADVANCES FROM U.S. TREASURY 

Advances from U.S. Treasury to the Black Lung Disability Trust Fund during 2006 consisted of the 

following: 

Balance at Balance at

September 30, Net September 30,

(Dollars in thousands) 2005 Borrowing 2006

Intra-governmental

Borrowing from the Treasury $ 9,186,557 $ 9,631,557 445,000 $ 

$ 9,186,557 $ 9,631,557 445,000 $ 

Advances from U.S. Treasury to the Black Lung Disability Trust Fund during 2005 consisted of the 

following: 

Balance at Balance at

September 30, Net September 30,

(Dollars in thousands) 2004 Borrowing 2005

Intra-governmental

Borrowing from the Treasury $ 8,740,557 $ 9,186,557 446,000 $ 

$ 8,740,557 $ 9,186,557 446,000 $ 

Assuming the continuation of current operating conditions, repayment of these and necessary future 

advances will require a change in the statutory operating structure of the fund. (See Note 20) 

NOTE 9 – ACCRUED BENEFITS 

Accrued benefits at September 30, 2006 and 2005 consisted of the following: 

(Dollars in thousands) 2006 2005

State regular and extended unemployment benefits payable 790,745 $ 646,473 $ 

Federal extended unemployment benefits payable 36,615 36,338 

Federal temporary extended unemployment benefits 24,532 23,620 

Federal emergency unemployment benefits payable 42,649 37,714 

Federal employees' unemployment benefits payable 36,725 41,885 

Federal employees' unemployment benefits for existing

 claims due in the subsequent year 137,161 145,642 

Total unemployment benefits payable 1,068,427 931,672 

Black lung disability benefits payable 46,329 51,995 

Federal employees' disability and 10(h) benefits payable 59,735 156,570 

Energy employees occupational illness compensation benefits payable 21,492 3,812 

Longshore and harbor workers disability benefits payable 3,382 3,234 

District of Columbia disability benefits payable 283 375 

$ 1,147,658 1,199,648 $ 
Financial Section 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 

For the Years Ended September 30, 2006 and 2005 

218 United States Department of Labor 

NOTE 10 - FUTURE WORKERS' COMPENSATION BENEFITS 

DOL’s liability for future workers’ compensation benefits at September 30, 2006 and 2005 consisted of the 

following: 

(Dollars in thousands) 2006 2005

Projected gross liability of the Federal government

 for future FECA benefits $ 25,851,505 $ 26,007,693

Less liabilities attributed to other agencies:

U.S. Postal Service (8,663,963) (8,662,714) 

Department of Navy (2,725,371) (2,698,683) 

Department of Army (1,950,173) (1,973,869) 

Department of Veterans Affairs (1,811,947) (1,776,459) 

Department of Air Force (1,369,905) (1,399,314) 

Department of Transportation (952,969) (1,007,910) 

Department of Homeland Security (1,473,295) (1,519,329) 

Tennessee Valley Authority (580,506) (553,322) 

Department of Treasury (644,620) (600,737) 

Department of Agriculture (807,652) (834,415) 

Department of Justice (926,336) (991,560) 

Department of Interior (689,306) (678,923) 

Department of Defense, Other (844,007) (813,532) 

Department of Health and Human Services (273,374) (270,354) 

Social Security Administration (274,763) (284,589) 

General Services Administration (165,051) (170,113) 

Department of Commerce (170,164) (173,415) 

Department of Energy (98,479) (96,386) 

Department of State (60,288) (62,669) 

Department of Housing & Urban Development (79,873) (81,613) 

Department of Education (16,952) (18,082) 

National Aeronautics and Space Administration (60,217) (62,430) 

Environmental Protection Agency (39,380) (39,408) 

Small Business Administration (27,045) (28,967) 

Office of Personnel Management (20,448) (25,653) 

National Science Foundation (1,287) (1,381) 

Nuclear Regulatory Commission (7,434) (8,417) 

Agency for International Development (23,438) (23,726) 

Other (580,826) (549,540) 

 (25,303,191) (25,443,388)

$ 564,305 548,314 $ 

Projected liability of the Department of Labor for future FECA benefits

FECA benefits not chargeable to other Federal agencies payable by

 DOL's Federal Employees' Compensation Act Special Benefit Fund 250,179 $ 270,255 $ 

FECA benefits due to eligible workers of DOL and Job Corps enrollees 242,525 233,652 

FECA benefits due to eligible workers of the Panama Canal Commission 55,610 60,398 

$ 564,305 548,314 $ 
Annual Financial Statements 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 

For the Years Ended September 30, 2006 and 2005 

FY 2006 Performance and Accountability Report 219

NOTE 11 - OTHER LIABILITIES 

Other liabilities at September 30, 2006 and 2005 consisted of the following current liabilities: 

(Dollars in thousands) 2006 2005

Intra-governmental

Accrued benefits $ 9,666 10,070 $ 

Unearned FECA assessments 48,285 44,347 

Deposit and clearing accounts - 2 

Non-entity receipts due to U.S. Treasury 57,268 44,501 

Amounts held for the Railroad Retirement Board 101,514 94,820 

Advances from other Federal agencies 1,013 - 

Total intra-governmental 206,101 205,385 

Accrued payroll and benefits 45,261 44,968 

Due to Backwage recipients 71,632 71,235 

Unearned assessment revenue 48,910 42,751 

Deposit and clearing accounts 5,503 - 

Readjustment allowances and other Job Corps liabilities 58,359 84,427 

Other advances 7,500 - 

 263,233 217,313 

$ 469,334 422,698 $ 

NOTE 12 - LIABILITIES NOT COVERED BY BUDGETARY RESOURCES 

Liabilities not covered by budgetary resources at September 30, 2006 and 2005 consisted of the following: 

(Dollars in thousands) 2006 2005

Intra-governmental

Advances from U.S. Treasury $ 9,186,557 9,631,557 $ 

Accrued benefits 13,519 - 

Future workers' compensation benefits 242,525 230,721 

Accrued annual leave 90,222 92,506 

Readjustment allowances and other Job Corps liabilities 58,359 84,427 

 418,889 393,390 

$ 9,605,446 10,024,947 $ 
Financial Section 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 

For the Years Ended September 30, 2006 and 2005 

220 United States Department of Labor 

NOTE 13 - PENSION EXPENSE 

Pension expense in 2006 consisted of the following: 

Pension expense in 2005 consisted of the following: 

Accumulated Total

Employer Costs Imputed Pension

(Dollars in thousands) Contributions by OPM Expense

Civil Service Retirement System $ 43,919 27,034 $ 70,953 $ 

Federal Employees' Retirement System - 81,359 81,359 

Thrift Savings Plan 30,824 30,824 - 

$ 139,217 $ 183,136 43,919 $ 

 

Accumulated Total

Employer Costs Imputed Pension

(Dollars in thousands) Contributions by OPM Expense

Civil Service Retirement System $ 42,476 26,506 $ 68,982 $ 

Federal Employees' Retirement System - 86,876 86,876 

Thrift Savings Plan 33,003 33,003 - 

$ 146,385 $ 188,861 42,476 $ 
Annual Financial Statements 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 

For the Years Ended September 30, 2006 and 2005 

FY 2006 Performance and Accountability Report 221

NOTE 14 - PROGRAM COST 

Schedules A, B, and C present detailed cost and revenue information by suborganization (responsibility 

segment) for programs in the Department, the Employment and Training Administration, and the 

Employment Standards Administration in support of the summary information presented in the Consolidated 

Statement of Net Cost for 2006. 
Financial Section 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 

For the Years Ended September 30, 2006 and 2005 

222 United States Department of Labor 

NOTE 14 - PROGRAM COST - Continued 

 

A. Consolidating Statement of Net Cost by Suborganization 

Net cost by suborganization for the year ended September 30, 2006 consisted of the following: 

Employment Employment Occupational Bureau of

and Training Standards Safety and Health Labor

(Dollars in thousands) Administration Administration Administration Statistics

CROSSCUTTING PROGRAMS

 Income maintenance

Intra-governmental 216,300 $ 871,178 $ - $ - $ 

With the public 35,819,765 3,744,938 - - 

 Gross cost 36,036,065 4,616,116 - - 

Intra-governmental earned revenue (1,201,975) (2,528,201) - - 

Public earned revenue (7,955) - - - 

 Less earned revenue (1,209,930) (2,528,201) - - 

Net program cost 34,826,135 2,087,915 - - 

 Employment and training

Intra-governmental 51,551 - - - 

With the public 5,451,793 - - - 

 Gross cost 5,503,344 - - - 

Intra-governmental earned revenue (16,872) - - - 

Public earned revenue (5,696) - - - 

 Less earned revenue (22,568) - - - 

Net program cost 5,480,776 - - - 

 Labor, employment and pension

 standards

Intra-governmental - 115,542 - - 

With the public - 246,205 - - 

 Gross cost - 361,747 - - 

Intra-governmental earned revenue - - - - 

Public earned revenue - (2,800) - - 

 Less earned revenue - (2,800) - - 

Net program cost - 358,947 - - 

 Worker safety and health

Intra-governmental - - 115,929 - 

With the public - - 399,908 - 

 Gross cost - - 515,837 - 

Intra-governmental earned revenue - - (12,466) - 

Public earned revenue - - - (946) 

 Less earned revenue - - - (13,412) 

Net program cost - - 502,425 - 

OTHER PROGRAMS

 Statistics

Intra-governmental - - - 204,572 

With the public - - 369,207 - 

 Gross cost - - 573,779 - 

Intra-governmental earned revenue - - - (4,082) 

Public earned revenue - - (1,250) - 

 Less earned revenue - - (5,332) - 

Net program cost - - 568,447 - 

COSTS NOT ASSIGNED TO PROGRAMS

 Gross cost - - - - 

 Less earned revenue not attributed to programs - - - - 

Net cost not assigned to programs - - - - 

Net cost of operations $ 40,306,911 $ 2,446,862 $ 502,425 $ 568,447
Annual Financial Statements 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 

For the Years Ended September 30, 2006 and 2005 

FY 2006 Performance and Accountability Report 223

Mine Safety Employee Benefits Veterans' Other

and Health Security Employment Departmental

Administration Administration and Training Programs Eliminations Total

$ 10,451 - $ - $ 2,331 $ (40,282) $ 1,059,978 $ 

 20,711 - - 1,679 14,762 39,601,855 

 31,162 - - 4,010 40,661,833 (25,520) 

 - - - - 25,520 (3,704,656) 

 - - - - (7,955) - 

 - - - - 25,520 (3,712,611) 

 31,162 - - 4,010 36,949,222 - 

 - - 10,693 412 (19,675) 42,981 

 - - 195,538 754 19,675 5,667,760 

 - - 206,231 1,166 5,710,741 - 

 - - - - - (16,872) 

 - - - - (5,696) - 

 - - - - (22,568) - 

 - - 206,231 1,166 5,688,173 - 

 42,270 - 1,063 18,139 (52,259) 124,755 

 113,093 - 18,570 174,171 52,259 604,298 

 155,363 - 19,633 192,310 729,053 - 

 (10,830) - - - - (10,830) 

 (452) - - - (3,252) - 

 (11,282) - - - (14,082) - 

 144,081 - 19,633 192,310 714,971 - 

 - 102,437 - 4,086 (51,086) 171,366 

 230,309 - - 6,475 51,086 687,778 

 332,746 - - 10,561 859,144 - 

 - (4) - - - (12,470) 

 - (1,049) - - (1,995) - 

 - (1,053) - - (14,465) - 

 331,693 - - 10,561 844,679 - 

 - - - 11,747 (23,044) 193,275 

 - - - 18,616 23,044 410,867 

 - - - 30,363 604,142 - 

 - - - - - (4,082) 

 - - - - (1,250) - 

 - - - - (5,332) - 

 - - - 30,363 598,810 - 

 - - - 94,814 (9,032) 85,782 

 - - - (16,640) 9,032 (7,608) 

 - - - 78,174 78,174 - 

$ 331,693 175,243 $ 225,864 $ $ 316,584 $ 44,874,029 - $ 
Financial Section 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 

For the Years Ended September 30, 2006 and 2005 

224 United States Department of Labor 

NOTE 14 - PROGRAM COST - Continued

 

B. Consolidating Statement of Net Cost - Employment and Training Administration 

Net cost of the Employment and Training Administration for the year ended September 30, 2006 consisted of 

the following: 

Training and

Employment Employment

(Dollars in thousands) Security Programs Job Corps Eliminations Total

CROSSCUTTING PROGRAMS

 Income maintenance

Benefits 31,032,712 $ 56 $ - $ - $ 31,032,768 $ 

Grants 4,614,537 - - - 4,614,537 

Interest 3,010 - - - 3,010 

Other 387,879 371 - (2,500) 385,750 

 Gross cost 36,038,138 427 - (2,500) 36,036,065 

Less earned revenue (1,212,430) - - (1,209,930) 2,500 

Net program cost 34,825,708 427 - - 34,826,135 

 Employment and training

Benefits - 14,631 2,593 - 17,224 

Grants - 4,029,717 415,031 - 4,444,748 

Other - 137,864 903,508 - 1,041,372 

 Gross cost - 4,182,212 1,321,132 - 5,503,344 

Less earned revenue - (17,188) (5,380) - (22,568) 

Net program cost - 4,165,024 1,315,752 - 5,480,776 

Net cost of operations $ 4,165,451 34,825,708 $ $ 1,315,752 $ - 40,306,911 $ 

 

 
Annual Financial Statements 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 

For the Years Ended September 30, 2006 and 2005 

FY 2006 Performance and Accountability Report 225

NOTE 14 - PROGRAM COST - Continued 

C. Consolidating Statement of Net Cost - Employment Standards Administration 

Net cost of the Employment Standards Administration for the year ended September 30, 2006 consisted of 

the following: 

Office of Office of Office of

Workers' Federal Wage Labor

Compensation Contract and Hour Management

(Dollars in thousands) Programs Compliance Division Standards Eliminations Total

CROSSCUTTING PROGRAMS

 Income maintenance

Benefits 3,571,671 $ - $ - $ - $ (1,707) $ 3,569,964 $ 

Interest 694,964 - - - - 694,964 

Other 351,188 - - - - 351,188 

 Gross cost 4,617,823 - - - (1,707) 4,616,116 

Less earned revenue (2,529,908) - - - 1,707 (2,528,201) 

Net program cost 2,087,915 - - - - 2,087,915 

 Labor, employment and

 pension standards

Benefits - 10,465 23,733 6,266 - 40,464 

Grants - - - - - - 

Other - 84,988 190,051 46,244 - 321,283 

 Gross cost - 95,453 213,784 52,510 - 361,747 

Less earned revenue - - (2,800) - - (2,800) 

Net program cost - 95,453 210,984 52,510 - 358,947 

Net cost of operations $ 95,453 2,087,915 $ $ 210,984 $ 52,510 $ - 2,446,862 $ 

Schedules D, E and F present detailed cost and revenue information by suborganization (responsibility 

segment) for programs in the Department, the Employment and Training Administration, and the 

Employment Standards Administration in support of the summary information presented in the Consolidated 

Statement of Net Cost for 2005. 
Financial Section 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 

For the Years Ended September 30, 2006 and 2005 

226 United States Department of Labor 

NOTE 14 - PROGRAM COST - Continued 

D. Consolidating Statement of Net Cost by Suborganization 

Net cost by suborganization for the year ended September 30, 2005 consisted of the following: 

Employment Employment Occupational Bureau of

and Training Standards Safety and Health Labor

(Dollars in thousands) Administration Administration Administration Statistics

CROSSCUTTING PROGRAMS

 Income maintenance

Intra-governmental 213,372 $ 832,659 $ - $ - $ 

With the public 36,697,266 7,627,930 - - 

 Gross cost 36,910,638 8,460,589 - - 

Intra-governmental earned revenue (808,541) (2,354,837) - - 

Public earned revenue (2,369) - - - 

 Less earned revenue (810,910) (2,354,837) - - 

Net program cost 36,099,728 6,105,752 - - 

 Employment and training

Intra-governmental 61,766 - - - 

With the public 5,753,511 - - - 

 Gross cost 5,815,277 - - - 

Intra-governmental earned revenue (17,315) - - - 

Public earned revenue (422) - - - 

 Less earned revenue (17,737) - - - 

Net program cost 5,797,540 - - - 

 Labor, employment and pension

 standards

Intra-governmental - 114,645 - - 

With the public - 236,239 - - 

 Gross cost - 350,884 - - 

Intra-governmental earned revenue - - - - 

Public earned revenue - - - - 

 Less earned revenue - - - - 

Net program cost - 350,884 - - 

 Worker safety and health

Intra-governmental - - 110,857 - 

With the public - - 388,985 - 

 Gross cost - - 499,842 - 

Intra-governmental earned revenue - - (1,645) - 

Public earned revenue - - - (1,250) 

 Less earned revenue - - - (2,895) 

Net program cost - - 496,947 - 

OTHER PROGRAMS

 Statistics

Intra-governmental - - - 177,019 

With the public - - 354,656 - 

 Gross cost - - 531,675 - 

Intra-governmental earned revenue - - - (4,057) 

Public earned revenue - - (2,607) - 

 Less earned revenue - - (6,664) - 

Net program cost - - 525,011 - 

COSTS NOT ASSIGNED TO PROGRAMS

 Gross cost - - - - 

 Less earned revenue not attributed to programs - - - - 

Net cost not assigned to programs - - - - 

Net cost of operations $ 41,897,268 $ 6,456,636 $ 496,947 $ 525,011
Annual Financial Statements 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 

For the Years Ended September 30, 2006 and 2005 

FY 2006 Performance and Accountability Report 227

Mine Safety Employee Benefits Veterans' Other

and Health Security Employment Departmental

Administration Administration and Training Programs Eliminations Total

$ 8,284 - $ - $ 2,050 $ (31,667) $ 1,024,698 $ 

 17,179 - - 3,291 10,330 44,355,996 

 25,463 - - 5,341 45,380,694 (21,337) 

 - - - - 21,337 (3,142,041) 

 - - - - (2,369) - 

 - - - - 21,337 (3,144,410) 

 25,463 - - 5,341 42,236,284 - 

 - - 10,004 238 (26,411) 45,597 

 - - 201,001 601 26,411 5,981,524 

 - - 211,005 839 6,027,121 - 

 - - - - - (17,315) 

 - - - - (422) - 

 - - - - (17,737) - 

 - - 211,005 839 6,009,384 - 

 39,970 - 629 32,126 (48,276) 139,094 

 94,890 - 12,019 193,804 48,276 585,228 

 134,860 - 12,648 225,930 724,322 - 

 (9,425) - - - - (9,425) 

 (546) - - - (546) - 

 (9,971) - - - (9,971) - 

 124,889 - 12,648 225,930 714,351 - 

 - 94,390 - - (44,792) 160,455 

 203,934 - - - 44,736 637,655 

 298,324 - - - 798,110 (56) 

 - (60) - - 56 (1,649) 

 - (791) - - (2,041) - 

 - (851) - - 56 (3,690) 

 297,473 - - - 794,420 - 

 - - - - (16,423) 160,596 

 - - - - 16,423 371,079 

 - - - - 531,675 - 

 - - - - - (4,057) 

 - - - - (2,607) - 

 - - - - (6,664) - 

 - - - - 525,011 - 

 - - - 98,304 (3,060) 95,244 

 - - - (13,860) 3,060 (10,800) 

 - - - 84,444 84,444 - 

$ 297,473 150,352 $ 223,653 $ $ 316,554 $ 50,363,894 - $ 
Financial Section 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 

For the Years Ended September 30, 2006 and 2005 

228 United States Department of Labor 

NOTE 14 - PROGRAM COST - Continued 

 

E. Consolidating Statement of Net Cost - Employment and Training Administration 

Net cost of the Employment and Training Administration for the year ended September 30, 2005 consisted of 

the following: 

 

Training and

Employment Employment

(Dollars in thousands) Security Programs Eliminations Total

CROSSCUTTING PROGRAMS

 Income maintenance

Benefits 31,988,265 $ 54 $ - $ 31,988,319 $ 

Grants 4,549,457 - - 4,549,457 

Interest - 2,699 - 2,699 

Other 369,876 287 370,163 - 

 Gross cost 341 36,910,297 - 36,910,638 

Less earned revenue (810,910) - (810,910) - 

Net program cost 36,099,387 341 36,099,728 - 

 Employment and training

Benefits - 25,360 - 25,360 

Grants - 5,480,361 - 5,480,361 

Other - 313,966 309,556 (4,410) 

 Gross cost 5,819,687 - (4,410) 5,815,277 

Less earned revenue - (22,147) 4,410 (17,737) 

Net program cost - 5,797,540 5,797,540 - 

Net cost of operations $ 36,099,387 $ 5,797,881 $ 41,897,268 - $ 

Job Corps net cost was reported under Training and Employment Programs for the year ended September 30, 

2005. 
Annual Financial Statements 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 

For the Years Ended September 30, 2006 and 2005 

FY 2006 Performance and Accountability Report 229

NOTE 14 - PROGRAM COST - Continued 

F. Consolidating Statement of Net Cost - Employment Standards Administration 

Net cost of the Employment Standards Administration for the year ended September 30, 2005 consisted of 

the following: 

Office of Office of Office of

Workers' Federal Wage Labor

Compensation Contract and Hour Management

(Dollars in thousands) Programs Compliance Division Standards Eliminations Total

CROSSCUTTING PROGRAMS

 Income maintenance

Benefits 7,493,735 $ - $ - $ - $ (1,702) $ 7,492,033 $ 

Interest 674,894 - - - - 674,894 

Other 293,662 - - - - 293,662 

 Gross cost - 8,462,291 - - (1,702) 8,460,589 

Less earned revenue (2,356,539) - - - 1,702 (2,354,837) 

Net program cost - 6,105,752 - - - 6,105,752 

 Labor, employment and

 pension standards

Benefits - 12,100 26,328 6,456 - 44,884 

Grants - - 13 - - 13 

Other - 82,406 179,750 43,831 - 305,987 

 Gross cost 94,506 - 206,091 50,287 - 350,884 

Less earned revenue - - - - - - 

Net program cost - 94,506 206,091 50,287 - 350,884 

Net cost of operations $ 94,506 6,105,752 $ $ 206,091 $ 50,287 $ - 6,456,636 $ 
Financial Section 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 

For the Years Ended September 30, 2006 and 2005 

230 United States Department of Labor 

NOTE 15 - NON-EXCHANGE REVENUE 

Non-exchange revenues reported on the Consolidated Statement of Changes in Net Position in 2006 and 

2005 consisted of the following: 

(Dollars in thousands) 2006 2005

Employer taxes

Unemployment Trust Fund

Federal unemployment taxes 7,383,523 $ 6,810,122 $ 

State unemployment taxes 34,023,122 33,151,082

 39,961,204 41,406,645 

Black Lung Disability Trust Fund excise taxes 607,387 610,417 

 42,014,032 40,571,621

Interest

Unemployment Trust Fund 2,780,114 2,586,064 

Longshore and Harbor Workers' Compensation Act Trust Fund 2,016 1,007 

District of Columbia Workmen's Compensation Act Trust Fund 155 63 

Panama Canal Commission Compensation Fund 3,647 3,915 

Energy Employees Occupational Illness Compensation Fund 5,654 1,722 

Black Lung Disability Trust Fund 297 644 

 2,593,415 2,791,883 

Assessments

Longshore and Harbor Workers' Compensation Act Trust Fund 138,857 133,566 

District of Columbia Workmen's Compensation Act Trust Fund 10,789 11,216 

Other 533 183 

 145,315 149,829 

Reimbursement of unemployment benefits from state and

 local governments and non-profit organizations

 to the Unemployment Trust Fund 1,855,188 1,857,193 

$ 46,810,932 $ 45,167,544

NOTE 16 - TRANSFERS WITHOUT REIMBURSEMENT 

Transfers from (to) other Federal agencies in 2006 and 2005 consisted of the following: 

(Dollars in thousands) 2006 2005

Budgetary financing sources

From H-1B Nonimmigrant Petitioner Account, Department of Homeland Security $ - 390,823 $ 

From DOL general fund unexpended appropriation

 accounts to the DOL Working Capital Fund 3,000 3,000 

 3,000 393,823 

Other financing sources

Liability for EEOICPA, Part D, from the Department of Energy (810,000) - 

Liability for RECA, Section 5, from the Department of Justice - (316,993) 

From General Services Administration 1,537 3,564 

To General Services Administration (209) (3,943) 

From Department of Defense 41,760 - 

 (1,085,612) 1,328 

$ (1,082,612) 395,151 $ 
Annual Financial Statements 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 

For the Years Ended September 30, 2006 and 2005 

FY 2006 Performance and Accountability Report 231

NOTE 17 - STATUS OF BUDGETARY RESOURCES

 

A. Apportionment Categories of Obligations Incurred

Obligations incurred reported on the Combined Statement of Budgetary Resources in 2006 and 2005 

consisted of the following: 

(Dollars in thousands) 2006 2005

Direct Obligations

Category A $ 4,021,560 4,063,611 $ 

Category B 9,551,655 9,247,270 

Exempt from apportionment 37,033,486 37,760,421 

Total direct obligations 51,333,636 50,344,367 

Reimbursable Obligations

Category A 172,936 188,504 

Category B 2,609,991 2,906,630 

Total reimbursable obligations 3,095,134 2,782,927 

$ 54,116,563 53,439,501 $ 

B. Permanent Indefinite Appropriations

The Department of Labor’s permanent indefinite appropriations include all trust funds, the Federal 

Employees’ Compensation Act Special Benefit Fund, the Panama Canal Commission Compensation Fund, 

the Energy Employees Occupational Illness Compensation Fund, ETA and ESA H-1B funds, and portions of 

State Unemployment Insurance and Employment Service Operations and Federal Unemployment Benefits 

and Allowances. These funds are described in Note 1-A.3. 

C. Legal Arrangements Affecting Use of Unobligated Balances

Unemployment Trust Fund receipts are reported as budget authority in the Combined Statement of Budgetary 

Resources. The portion of UTF receipts collected in the current year in excess of amounts needed to pay 

benefits and other valid obligations are precluded by law from being available for obligation. Therefore, 

these excess receipts are not classified as budgetary resources in the Combined Statement of Budgetary 

Resources. Current year excess receipts are reported as temporarily not available pursuant to Public Law. 

Conversely, when obligations exceed receipts in the current year, amounts are drawn from unavailable 

collections to meet these obligations. Cumulative excess receipts are not included in unobligated balances in 

the status of budgetary resources included in that Statement. All excess receipts are reported as assets of the 

UTF and are included in the Consolidated Balance Sheet. They will become available for obligation as 

needed in the future. 

The cumulative amounts of excess UTF receipts are denoted as unavailable collections in the Budget of the 

United States Government. The cumulative amount of these excess receipts at September 30, 2006 and 2005 

reclassified from unobligated balances to UTF unavailable collections is presented on the following page. 
Financial Section 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 

For the Years Ended September 30, 2006 and 2005 

232 United States Department of Labor 

NOTE 17 - STATUS OF BUDGETARY RESOURCES – Continued 

C. Legal Arrangements Affecting Use of Unobligated Balances - Continued 

(Dollars in millions) 2006 2005

Unemployment Trust Fund unavailable collections, beginning $ 42,964 52,213 $ 

Budget authority from current year appropriations 46,725 45,184 

Less obligations (35,935) (34,943) 

Excess of obligations over budget authority 11,782 9,249 

Unemployment Trust Fund unavailable collections, ending $ 52,213 63,995 $ 

D. Explanation of Differences between the Statement of Budgetary Resources and the Budget 

 of the United States Government

The Budget of the United States Government with actual amounts for the year ended September 30, 2006 has 

not been published as of the issue date of these financial statements. This document will be available in 

February 2007. In addition, the reconciliation of the SF133 and the Statement of Budgetary Resources will 

be performed in Fiscal Year 2007 after the Department receives the final SF133 reports from Trust Funds 

and allocated accounts. 

A reconciliation of budgetary resources, obligations incurred and outlays, as presented in the Combined 

Statement of Budgetary Resources, to amounts included in the Budget of the United States Government for 

the year ended September 30, 2005 is shown below. 

Budgetary Obligations Gross

(Dollars in millions) Resources Incurred Outlays

Combined Statement of Budgetary Resources $ 54,117 57,989 $ 54,082 $ 

Pension Benefit Guaranty Corporation reported separately 3,592 15,936 3,571 

Accruals not reported in the budget 201 201 - 

Amounts in the budget not included in the Consolidated

 Statement of Budgetary Resources 5 5 14 

Amounts in the Consolidated Statement of Budgetary Resources 

 not included in the budget (37) (62) (42) 

Expired accounts (1,177) (111) - 

Other 1 (6) 3 

Budget of the United States Government $ 72,893 $ 57,619 57,770 $ 

E. Undelivered Orders 

Undelivered orders at September 30, 2006 and 2005 were as follows. 

(Dollars in thousands) 2006 2005

Undelivered orders $ 5,773,816 $ 5,879,080
Annual Financial Statements 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 

For the Years Ended September 30, 2006 and 2005 

FY 2006 Performance and Accountability Report 233

NOTE 17 - STATUS OF BUDGETARY RESOURCES – Continued 

F. Appropriations Received 

The Combined Statements of Budgetary Resources discloses appropriations received of $58,971 and $57,249 

million for FY 2006 and 2005, respectively. Appropriations received on the Consolidated Statements of 

Changes in Net Position are $10,704 and $11,101 million for FY 2006 and 2005, respectively. The 

differences of $48,267 and $46,148 million represent certain dedicated and earmarked receipts recognized as 

exchange revenue or non-exchange revenue reported on the Consolidated Statements of Net Cost or the 

Consolidated Statements of Changes in Net Position and amounts of new budget authority permanently 

reduced by enacted legislation. 

NOTE 18 – DISCLOSURES RELATED TO THE STATEMENT OF FINANCING 

A. Other Resources That Do Not Affect the Net Cost of Operations 

Other resources that do not affect net cost of operations for the years ended September 30, 2006 and 2005 

consisted of the following. 

(Dollars in thousands) 2006 2005

Transfer of liability for EEOICPA, Part D,

 from the Department of Energy $ 810,000 - $ 

Transfer of liability for RECA, Section 5,

 from the Department of Justice 316,993 - 

Transfer of property to GSA 3,943 209 

Transfer of expired funds from Veterans' Employment

 and Training to the Unemployment Trust Fund - 150 

$ 1,131,086 209 $ 

B. Relationship between Liabilities Not Covered by Budgetary Resources and Components 

Requiring or Generating Resources in Future Periods

(Dollars in thousands) 2006 2005

Liabilities not covered by budgetary resources, current year (Note 12) 10,024,947 $ 9,605,446 $ 

Less liabilities not covered by budgetary resources, prior year (Note 12) (9,605,446) (9,130,206) 

Current year change in liabilities not covered by budgetary resources 419,501 475,240 

Proceeds from Advances from U.S. Treasury (445,000) (446,000) 

Increase in energy employees occupational illness compensation

 benefits liability funded with permanent and indefinite appropriation - 3,515,426 

Increase in future workers' compensation benefits not covered by budgetary resources (11,804) - 

Increase in future workers' compensation benefits covered by budgetary resources - 42,075 

Decrease in accrued benefits not covered by budgetary resources 13,519 - 

Decrease in accrued benefits covered by budgetary resources - (8,899) 

Decrease in annual leave not covered by budgetary resources - 4,624 

Increase in annual leave covered by budgetary resources 386 - 

Decrease in other liabilities not covered by budgetary resources 26,068 - 

Decrease in other liabilities covered by budgetary resources - (75) 

Components requiring or generating resources in future periods 2,670 $ 3,582,391 $ 
Financial Section 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 

For the Years Ended September 30, 2006 and 2005 

234 United States Department of Labor 

NOTE 19 – SOURCES OF CUSTODIAL REVENUE 

Custodial revenues in 2006 consisted of the following: 

Increase

Net (Decrease) in

Cash Less Cash Amounts to Total

(Dollars in thousands) Collections Refunds Collections be Collected Revenues

Civil monetary penalties

OSHA 80,119 $ (8) $ 80,111 $ (12,396) $ 67,715 $ 

MSHA 24,411 - 24,411 (565) 23,846 

EBSA 15,751 - 15,751 (551) 15,200 

ESA 11,968 (59) 11,909 12,438 529 

 (67) 132,249 132,182 (12,983) 119,199 

ETA disallowed grant costs 19,815 (2) 19,813 216 20,029 

Other (7) 816 809 809 - 

$ (76) 152,880 $ $ 152,804 $ 140,037 (12,767) $ 

Custodial revenues in 2005 consisted of the following: 

Increase

Net (Decrease) in

Cash Less Cash Amounts to Total

(Dollars in thousands) Collections Refunds Collections be Collected Revenues

Civil monetary penalties

OSHA 62,548 $ - $ 62,548 $ 10,005 $ 72,553 $ 

MSHA 18,553 - 18,553 (1,202) 17,351 

EBSA 13,654 - 13,654 2,079 15,733 

ESA 12,577 (3) 12,574 13,083 509 

 (3) 107,332 107,329 11,391 118,720 

ETA disallowed grant costs 4,893 - 4,893 (738) 4,155 

Other (211) 18,660 18,449 18,747 298 

$ (214) 130,885 $ $ 130,671 $ 141,622 10,951 $ 
Annual Financial Statements 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 

For the Years Ended September 30, 2006 and 2005 

FY 2006 Performance and Accountability Report 235

NOTE 20 – EARMARKED FUNDS 

DOL is responsible for the operation of certain earmarked funds. Other earmarked funds include Gifts and 

Bequests, Panama Canal Commission Compensation Fund, and H-1B Funds. The financial position of the 

earmarked funds as of September 30, 2006 is shown below. 

Black Lung

(Dollars in thousands) Unemployment Disability Other Total

Assets

Intra-governmental

Funds with U.S. Treasury $ 39,251 60,257 $ 330,775 $ 430,283 $ 

Investments 66,212,640 - 80,348 66,292,988 

Interest receivable from investments 743,299 - 2,234 745,533 

Accounts receivable, net

Due from other Federal agencies

 for UCX and UCFE benefits 335,023 - - 335,023 

Total intra-governmental 67,351,219 39,251 413,357 67,803,827 

Accounts receivable, net

State unemployment tax 266,544 - - 266,544 

Due from reimbursable employers 511,659 - - 511,659 

Benefit overpayments 183,437 8,800 - 192,237 

Other - - 2 2 

Advances 474,153 - 3,525 477,678 

Other - - 23 23 

Total assets $ 68,787,012 $ 48,051 $ 416,907 69,251,970 $ 

Liabilities

Intra-governmental

Accounts payable to DOL agencies 1,208,229 $ - $ - $ 1,208,229 $ 

Advances from U.S. Treasury 9,631,557 - - 9,631,557 

Amounts held for the Railroad

 Retirement Board 101,514 - - 101,514 

Other - - 7,689 7,689 

Total intra-governmental 1,309,743 9,631,557 7,689 10,948,989 

Accounts payable - - 10,654 10,654 

Accrued benefits 1,068,427 21,237 - 1,089,664 

Future workers' compensation benefits - - 55,610 55,610 

Other - - 622 622 

Total liabilities 2,378,170 9,652,794 74,575 12,105,539 

Net position

Cumulative results of operations 66,408,842 (9,604,743) 342,332 57,146,431 

Total liabilities and net position $ 68,787,012 $ 48,051 $ 416,907 69,251,970 $ 
Financial Section 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 

For the Years Ended September 30, 2006 and 2005 

236 United States Department of Labor 

NOTE 20 – EARMARKED FUNDS – Continued 

The net results of operations of the earmarked funds for the year ended September 30, 2006 is shown below. 

Black Lung

(Dollars in thousands) Unemployment Disability Other Total

Cost, net of earned revenues

Benefits (31,025,168) $ (299,479) $ (2,051) $ (31,326,698) $ 

Grants - - (51,388) (51,388) 

Interest (3,010) (694,964) - (697,974) 

Administrative (295,807) (342) (15,647) (311,796)

 (994,785) (31,323,985) (69,086) (32,387,856) 

Earned revenue 818,294 - - 818,294 

 (30,505,691) (994,785) (69,086) (31,569,562)

Net financing sources

Taxes 41,406,645 607,387 - 42,014,032 

Interest 2,780,114 297 3,647 2,784,058 

Reimbursement of unemployment benefits 1,855,188 - - 1,855,188 

Imputed financing - - 238 238 

Transfers-in

Department of Homeland Security - - 390,823 390,823 

Transfers-out

DOL entities (3,623,927) (57,633) - (3,681,560) 

 42,418,020 550,051 394,708 43,362,779

Net results of operations 11,912,329 (444,734) 325,622 11,793,217 

Net position, beginning of period 54,496,513 (9,160,009) 16,710 45,353,214

Net position, end of period $ 66,408,842 $ (9,604,743) $ 342,332 $ 57,146,431
Annual Financial Statements 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 

For the Years Ended September 30, 2006 and 2005 

FY 2006 Performance and Accountability Report 237

NOTE 21 – DEDICATED COLLECTIONS

The Department administers four trust funds that receive dedicated collections. Statement of Federal 

Financial Accounting Standards 27, Identifying and Reporting Earmarked Funds, became effective in FY 

2006. This standard affected existing standards dealing with dedicated collections, and as a result, the 

Unemployment Trust Fund and the Black Lung Disability Trust Fund are now classified as earmarked funds. 

The financial position of the two remaining trust funds as of September 30, 2006 is shown below. 

Longshore District of

and Harbor Columbia

Workers' Workmen's

Compensation Compensation

(Dollars in thousands) Act Act

Assets

Intra-governmental

Funds with U.S. Treasury $ 76 154 $ 

Investments 5,611 73,146 

Interest receivable from investments 10 1 

Total intra-governmental 5,688 73,310 

Other accounts receivable, net 2,431 412 

Total assets $ 75,741 6,100 $ 

Liabilities

Intra-governmental

Accounts payable to DOL agencies 2,028 $ - $ 

Accrued benefits 283 3,382 

Other 3,379 39,371 

Total liabilities 44,781 3,662 

Net position

Cumulative results of operations 30,960 2,438 

Total liabilities and net position $ 75,741 6,100 $ 
Financial Section 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 

For the Years Ended September 30, 2006 and 2005 

238 United States Department of Labor 

NOTE 21 – DEDICATED COLLECTIONS - Continued 

The net results of operations of each trust fund for the year ended September 30, 2006 is shown below. 

Longshore District of

and Harbor Columbia

Workers' Workmen's

Compensation Compensation

(Dollars in thousands) Act Act

Cost, net of earned revenues

Benefits $ (10,112) (133,694) $ 

Net financing sources

Interest 155 2,016 

Assessments 10,789 138,857 

Transfers-out

DOL entities (2,028) - 

 138,845 10,944

Net results of operations 832 5,151 

Net position, beginning of period 25,809 1,606

Net position, end of period $ 30,960 $ 2,438
Annual Financial Statements 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 

For the Years Ended September 30, 2006 and 2005 

FY 2006 Performance and Accountability Report 239

NOTE 21 – DEDICATED COLLECTIONS - Continued 

DOL is responsible for the operation of four major trust funds. The financial position of each trust fund as of 

September 30, 2005 is shown below. 

Longshore District of

and Harbor Columbia

Workers' Workmen's

Black Lung Compensation Compensation

(Dollars in thousands) Unemployment Disability Act Act

Assets

Intra-governmental

Funds with U.S. Treasury $ 41,906 (273,027) $ 13,310 $ 2,066 $ 

Investments 54,805,883 - 60,000 3,000 

Interest receivable from investments 634,736 - - - 

Accounts receivable, net

Due from other Federal agencies

 for UCX and UCFE benefits 344,238 - - - 

Total intra-governmental 55,511,830 41,906 73,310 5,066 

Accounts receivable, net

State unemployment tax 235,182 - - - 

Due from reimbursable employers 516,110 - - - 

Benefit overpayments 177,640 9,055 - - 

Other - - 1,222 813 

Advances to states 489,177 - - - 

Total assets $ 56,929,939 $ 50,961 $ 74,532 5,879 $ 

Liabilities

Intra-governmental

Accounts payable to DOL agencies 1,406,934 $ - $ 477 $ - $ 

Advances from U.S. Treasury 9,186,557 - - - 

Amounts held for the Railroad

 Retirement Board 94,820 - - - 

Total intra-governmental 1,501,754 9,186,557 477 - 

Accrued benefits 931,672 24,413 3,234 375 

Other - - 45,012 3,898 

Total liabilities 2,433,426 9,210,970 48,723 4,273 

Net position

Cumulative results of operations 54,496,513 (9,160,009) 25,809 1,606 

Total liabilities and net position $ 56,929,939 $ 50,961 $ 74,532 5,879 $ 
Financial Section 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 

For the Years Ended September 30, 2006 and 2005 

240 United States Department of Labor 

NOTE 21 – DEDICATED COLLECTIONS – Continued 

The net results of operations of each trust fund for the year ended September 30, 2005 is shown below. 

Longshore District of

and Harbor Columbia

Workers' Workmen's

Black Lung Compensation Compensation

(Dollars in thousands) Unemployment Disability Act Act

Cost, net of earned revenues

Benefits (31,980,909) $ (327,860) $ (130,883) $ (10,700) $ 

Interest (2,699) (674,894) - - 

Administrative (288,968) (212) - - 

 (1,002,966) (32,272,576) (130,883) (10,700) 

Earned revenue 783,657 - - - 

 (31,488,919) (1,002,966) (130,883) (10,700)

Net financing sources

Taxes 39,961,204 610,417 - - 

Interest 2,586,064 646 1,007 62 

Reimbursement of unemployment benefits 1,857,193 - 133,566 11,217 

Transfers-in

DOL Entities 150 - - - 

Transfers-out

DOL entities (3,815,031) (56,662) (2,023) - 

 40,589,580 554,401 132,550 11,279

Net results of operations 9,100,661 (448,565) 1,667 579 

Net position, beginning of period 45,395,852 (8,711,444) 24,142 1,027

Net position, end of period $ 54,496,513 $ (9,160,009) $ 25,809 $ 1,606
Annual Financial Statements 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 

For the Years Ended September 30, 2006 and 2005 

FY 2006 Performance and Accountability Report 241

NOTE 22 – BALANCE SHEET CLASSIFICATIONS AGGREGATED TO CONFORM 

WITH OMB CIRCULAR NO. A-136 CLASSIFICATIONS 

The Department’s consolidated balance sheet has different classifications of certain assets and liabilities from 

those suggested in OMB Circular No. A-136. The following aggregate Department of Labor classifications 

into OMB Circular No. A-136 classifications. 

(Dollars in thousands) 2006 2005

ASSETS

Intra-governmental

Other

Interest receivable from investments 745,556 $ 637,443 $ 

Advances 10,812 4 

Total other $ 648,255 745,560 $ 

Other

Advances $ 584,139 555,294 $ 

Total other $ 584,139 555,294 $ 

LIABILITIES 

Federal employee and veteran benefits

Future workers' compensation benefits 548,314 $ 564,305 $ 

Total Federal employee and veteran benefits 548,314 $ 564,305 $ 

Other

Energy employees occupational illness

 compensation benefits 6,942,442 $ 7,436,243 $ 

Accrued leave 94,852 97,522 

Other liabilities 217,313 263,233 

Total other $ 7,794,328 7,257,277 $ 
Required Supplementary Stewardship Information 
Annual Financial Statements 

REQUIRED SUPPLEMENTARY STEWARDSHIP INFORMATION 

(Unaudited) 

FY 2006 Performance and Accountability Report 243 

STEWARDSHIP INVESTMENTS IN HUMAN CAPITAL 

Stewardship investments are made by DOL for the nation’s benefit. For accounting purposes, these 

investments are expensed as incurred and reflected in the net cost of DOL’s operations. Stewardship 

investments provide long term benefits that can not be measured in traditional financial reports. 

DOL’s stewardship investments are in human capital, reported as expenses in the net cost of DOL’s 

employment and training programs. These investments are intended to maintain or increase national 

economic productive capacity as demonstrated by program outputs and outcomes. Within DOL, the 

Employment and Training Administration, the Office of Job Corps, and the Veterans’ Employment and 

Training Service administer programs that invest in human capital. The Office of Job Corps was transferred 

from the Employment and Training Administration to the Office of the Secretary during FY 2006. However, 

Job Corps’ costs continue to be reported under the Employment and Training Administration and are 

considered to be a part of the Employment and Training Administration for this presentation. The programs 

are discussed below. 

Employment and Training Administration

The U.S. Department of Labor, Employment and Training Administration’s (ETA) Federal investment in 

human capital comprises expenses incurred for training programs enacted under the Workforce Investment 

Act of 1998 (WIA); Job Training Partnership Act, as amended (JTPA); the Trade Act of 1974, as amended 

(Trade Act); School-To-Work Opportunities Act of 1994, as amended (STW), and Balanced Budget Act of 

1997, as amended. This investment is made for the general public and the expenses incurred are intended to 

increase or maintain national economic productive capacity. Investment in human capital specifically 

excludes expenditures for employment services, apprenticeship program administration and unemployment 

and other benefit payments which make up the bulk of ETA’s services to the public at $34.4 billion and 21.5 

million people served during FY 2006. 

The ETA’s investment in human capital for fiscal years 2002 to 2006, excluding the cost of internal Federal 

education and training, is presented below, along with the number of participants exiting the programs, an 

output measure for these programs for fiscal years 2004 and 2006 (participant data is not available for the 

earlier years). 

 

Investment in Human Capital

5.2

5.4

5.6

5.8

6

6.2

6.4

6.6

6.8

7

2002 2003 2004 2005 2006

Fiscal Year

Dollars (Billions)

0.0

0.5

1.0

1.5

Participants (Millions)

Investment Participants
Financial Section 

REQUIRED SUPPLEMENTARY STEWARDSHIP INFORMATION 

(Unaudited) 

244 United States Department of Labor 

This output measure is the latest data available for the currently operating programs, was collected for 

periods ending in March or June of the fiscal year, and includes some estimates, depending on the program 

involved. Participants could have exited from, and therefore been counted in, more than one program during 

the measurement periods. This participant information specifically excludes participants for employment 

services, apprenticeship and unemployment and other benefit recipients who receive ETA services to the 

public. 

A brief description of the programs under each Act is as follows: 

Workforce Investment Act (Successor legislation to the JTPA)

• Youth Activities - Grants to provide financial assistance to States and U.S. territories to design and 

operate workforce investment activities for eligible youth. 

• Youth Opportunity Grants - Grants to increase the long-term employment of youth who live in 

empowerment zones, enterprise communities, and high-poverty areas. 

• Adult and Dislocated Worker Employment and Training Activities - Grants to provide financial 

assistance to States and U.S. territories to design and operate training programs for low income 

adults and reemployment services and retraining assistance to individuals dislocated from their 

employment. 

• Job Corps - Nationwide program carried out in partnership with States and communities to assist 

eligible youth to become more responsible, employable, and productive citizens. 

• National Programs - Grants to provide financial assistance in support of employment and training 

activities and opportunities for Native American, Migrant and Seasonal Farmworkers, Veterans and 

Disadvantaged Youth. 

• National Emergency Grants - National Emergency Grants are discretionary awards by the 

Secretary of Labor that are intended to temporarily expand service capacity at the state and local 

levels by providing time-limited funding assistance in response to significant dislocation events. 

Job Training Partnership Act (Antecedent legislation to the WIA)

• Adult Employment and Training - Grants to provide financial assistance to States and U.S. 

territories to design and operate training programs for low-income adults. 

• Dislocated Worker Employment and Training - Grants to provide re-employment services and 

retraining assistance to individuals dislocated from their employment. 

• H-1B Technical Skills Training Grants - Financed by fees paid by employers who bring skilled 

foreign workers into the U.S. under H-1B nonimmigrant visas, these grants help address the high 

skill technology shortages of American businesses by developing and operating high skill training 

programs for unemployed and employed American workers. 

• Youth Training - Grants to provide financial assistance to States and U.S. territories to design and 

operate training programs for economically disadvantaged youth. 

• Summer Youth Employment and Training - Grants to operate programs of employment and 

opportunities, as well as academic enrichment for economically disadvantaged youth during the 

summer months. 
Annual Financial Statements 

REQUIRED SUPPLEMENTARY STEWARDSHIP INFORMATION 

(Unaudited) 

FY 2006 Performance and Accountability Report 245 

• Indian and Native Americans - Grants to Indian tribes and other Native American groups to 

provide training, work experience, and other employment-related services to Native Americans. 

• National Farmworker Jobs Program (NFJP) - Grants to public agencies and nonprofit groups to 

provide training and other employability development services to economically disadvantaged 

families whose principal livelihood is gained in migratory and other forms of seasonal farm work. 

• Veterans Employment - Grants or contracts to provide disabled, Vietnam era, and recently 

separated veterans with programs to meet their unique employment and training needs. 

• National Activities - Provides program support for JTPA activities and nationally administered 

programs for segments of the population that have special disadvantages in the labor market. 

Trade Act of 1974 As Amended 

• Trade Adjustment Assistance - Adjustment assistance, including cash weekly benefits, training, 

job search, and relocation allowances provided to workers as authorized by the Trade Act of 1974, as 

amended. 

• North American Free Trade Agreement (NAFTA) - Transition adjustment assistance, including 

weekly cash benefits, training, job search, and relocation allowances provided to workers determined 

to be adversely affected as a result of the NAFTA as authorized by the Trade Act of 1974, as 

amended. 

School-To-Work Opportunities Act 

• School-To-Work Opportunities - Grants to States and localities, jointly administered by the DOL and 

U.S. Department of Education to build systems that provide youth with the knowledge and skills 

necessary to make an effective transition from school to careers through work-based learning, 

school-based education, and connecting activities. 

Balanced Budget Act of 1997 

• Welfare-To-Work Opportunities - Grants to States and localities, jointly administered by the DOL 

and U.S. Department of Health and Human Services to build programs to provide recipients 

receiving assistance under State funded programs with the knowledge and skills necessary to make 

an effective transition to unsubsidized employment opportunities. 

The National Apprenticeship Act 

• Apprenticeship – A combination of learning on the job and related technical instruction in which 

workers learn practical and theoretical aspects of a skilled occupation. Apprenticeship costs and 

participants are not included in the costs and participant numbers in the chart above because 

Apprenticeship funding does not generally pay for the actual training, but supports administrating the 

National Apprenticeship Act, including registration, certification, and monitoring of apprenticeship 

programs. In 2006 there were approximately 427,000 participants in these non-federal 

apprenticeship training programs. 
Financial Section 

REQUIRED SUPPLEMENTARY STEWARDSHIP INFORMATION 

(Unaudited) 

246 United States Department of Labor 

Veterans’ Employment and Training Service 

The mission of Veterans’ Employment and Training Service (VETS) is to provide veterans and transitioning 

service members with the resources and services to succeed in the 21st Century workforce, by maximizing 

their employment opportunities, protecting their employment rights, and meeting labor market demands with 

qualified veterans. The Agency’s vision is embodied in this statement: Veterans Succeeding in the 21st

Century Workforce. 

VETS can be classified into two main areas, Career Counseling and Employment Services, and Transition 

and Reemployment Services. Brief descriptions follow: 

Career Counseling and Employment Services 

Disabled Veterans Outreach Program Specialist (DVOP) - This program is codified at 38 U.S.C. 4103A. 

DVOP grants are made to State Workforce Agencies (SWAs) according to a distribution formula prescribed 

by law. DVOP staff provide counseling, assessment, lifelong learning skills and/or referral to training for 

veterans, particularly those with disabilities or recently separated from the military. 

Local Veterans’ Employment Representative (LVER) - This program is codified at 38 U.S.C. 4104. The 

program provides grants to SWAs for the appointment of LVER staff positions identified in Job Service local 

offices and One-Stop Career Centers to enhance the services provided to veterans through oversight, 

technical support, and direct provision of services. LVER staffs help veterans into productive employment 

through lifelong learning services. 

Homeless Veterans’ Reintegration Project (HVRP) - The HVRP, codified at 38 U.S.C. 2021, provides 

employment assistance to homeless veterans through grants to both urban and other areas. 

Veterans’ Workforce Investment Program (VWIP) - The VWIP, codified at 29 U.S.C. 2913, provides 

targeted veterans training and/or employment opportunities. The program targets service connected disabled 

veterans, recently separated, campaign badge veterans and veterans with significant employment barriers. 

Transition and Reemployment Services 

Transition Assistance Program (TAP) - Authority for TAP is provided in 38 U.S.C. 4215 and 10 U.S.C. 

1144. TAP operates as a partnership between the Departments of Labor, Defense, and Veterans Affairs. 

This partnership also exists at the local level, where memoranda of understanding spell out the 

responsibilities of SWAs, military installations, VETS staff and VA facilities. The program provides 

separating service members and their spouses or individuals retiring from military service with career 

counseling and training on becoming productive members of society through employment. TAP workshops 

are provided throughout the Nation and overseas. 

Uniformed Services Employment and Reemployment Rights and Veteran’s Preference Rights 

(USERRA) - is codified at 38 U.S.C. Chapter 43. The Uniformed Services Employment and Reemployment 

Rights Act of 1994 (USERRA) succeeded Veterans’ Reemployment Rights statutes. USERRA continues to 

protect civilian job rights and benefits for veterans, members of the National Guard and Reserves. Veteran’s 

Preference for Federal employment is codified in 5 U.S.C. 2108. VETS educates both employee and 

employer so they better understand the rights of the individuals and promotes a more productive relationship 

between employer and employee.
Annual Financial Statements 

REQUIRED SUPPLEMENTARY STEWARDSHIP INFORMATION 

(Unaudited) 

FY 2006 Performance and Accountability Report 247 

The full cost of VETS major programs is presented below. Full costs include all direct program costs and 

those indirect costs which can reasonably be assigned or allocated to the program. 

(Dollars in thousands) 2006 2005 2004 2003 2002

Program Expenses

Career Counseling and Employment Services

Disabled Veterans Outreach Program $ 82,913 83,422 $ 84,063 $ 87,013 $ 82,582 $ 

Local Veterans' Employment Representative 77,703 77,369 78,320 82,148 77,977 

Transition and Reemployment Services 30,131 30,419 28,500 25,957 25,635 

$ 190,922 $ 191,035 $ 190,883 $ 195,118 186,194 $ 

A summary of program outputs is presented below. 

Program Outputs 2006 2005 2004 2003 2002

Disabled Veterans Outreach Program

Participants employed 294,252 216,617 281,591 na 120,400 

Disabled veterans 25,486 34,008 32,993 na 15,057 

Special disabled veterans 9,635 14,568 13,929 na 7,107 

Participants assisted 342,828 398,154 507,190 na 584,719 

Local Veterans' Employment Representative

Participants employed 289,624 224,490 286,720 na 128,450 

Disabled veterans 21,709 28,855 29,391 na 13,533 

Special disabled veterans 7,290 11,563 12,015 na 6,233 

Participants assisted 330,041 429,328 529,911 na 639,694 

Transition and Reemployment Services

Participants served 134,288 139,501 130,000 110,055 104,000 

Workshops 4,070 4,185 3,200 3,142 3,151 

Uniformed Services Employment and Reemployment

Briefings, presentations, and technical assistance 10,538 9,613 9,300 10,081 5,436 

Individuals briefed or assisted 99,208 96,159 59,300 66,545 54,050 

na - Data not available.

 
Required Supplementary Information 
Annual Financial Statements 

REQUIRED SUPPLEMENTARY INFORMATION 

(Unaudited) 

FY 2006 Performance and Accountability Report 249 

DEFERRED MAINTENANCE

The U.S. Department of Labor maintains one hundred twenty-three (123) Job Corps centers located 

throughout the United States. While Job Corps does fund safety, health, and environmental projects in the 

year those deficiencies are identified, funding constraints limit the extent of maintenance that the Job Corps 

can undertake each fiscal year. Consequently, maintenance projects are not always performed as scheduled 

and, therefore, must be deferred to a future period. 

Information on deferred maintenance is based on condition assessment surveys that are conducted every year 

for one-third of the inventory. Each center survey determines the current condition of facilities and the 

estimated cost to correct deficiencies. Surveys are based on methods and standards that are applied on a 

consistent basis, including: 

• condition descriptions of facilities, 

• recommended maintenance schedules, 

• estimated costs for maintenance actions, and 

• standardized condition codes. 

These surveys evaluate the facilities at each Job Corps center to identify: 

• rehabilitation projects that are required to provide for health and safety, or upgrade to an acceptable state 

of repair, 

• present utilization, 

• mission dependency, 

• health and safety programs, 

• barrier-free access, 

• maintenance, operations, and security programs, 

• energy usage, 

• natural hazards, 

• long-range planning, and 

• conformance to U.S. Environmental Protection Agency and applicable air and water quality standards. 

The estimated cost of deferred maintenance for fiscal years 2002 to 2006 is presented below: 

Summary of Deferred Maintenance

$101.9

$52.0 $53.9 $53.9

$2.0 $3.3

$8.7 $11.7 $7.9 $12.0 $12.2

$3.2

$48.7

$29.1

$32.9

$20.2 $23.3

$61.8

$6.0 $7.0

- 

20.0

40.0

60.0

80.0

100.0

120.0

2002 2003 2004 2005 2006

Fiscal Year

Dollars (in Millions)

Site utilities

Structural and

mechanical

New construction and

space utilization

Other
Financial Section 

REQUIRED SUPPLEMENTARY INFORMATION 

(Unaudited) 

250 United States Department of Labor 

SOCIAL INSURANCE PROGRAMS

The Federal Accounting Standards Advisory Board (FASAB) has classified certain government income 

transfer programs as social insurance programs. Recognizing that these programs have complex 

characteristics that do not fit traditional accounting models, the FASAB has developed accounting standards 

for social insurance programs which require the presentation of supplementary information to facilitate the 

assessment of the program’s long term sustainability. 

The U.S. Department of Labor operates two programs classified under Federal accounting standards as social 

insurance programs, the Unemployment Insurance Program and the Black Lung Disability Benefits Program. 

Presented below is the supplementary information for the two programs. 

Unemployment Insurance Program 

The Unemployment Insurance (UI) Program was created in 1935 to provide income assistance to 

unemployed workers who lose their jobs through no fault of their own. The program protects workers during 

temporary periods of unemployment through the provision of unemployment compensation benefits. These 

benefits replace part of the unemployed worker’s lost wages and, in so doing, stabilize the economy during 

recessionary periods by increasing the unemployed’s purchasing power. The UI program operates counter 

cyclically, with benefits exceeding tax collections during recessionary periods and UI tax revenues exceeding 

benefit payments during periods of recovery. 

Program Administration and Funding

The UI program is administered through a unique system of Federal-State partnerships, established in 

Federal law but executed through conforming State laws by State officials. The Federal government 

provides broad policy guidance and program direction through the oversight of the U.S. Department of 

Labor, while program details are established through individual State UI statutes, administered through State 

UI agencies. 

Federal and State Unemployment Taxes 

The UI program is financed through the collection of Federal and State unemployment taxes levied on 

subject employers and deposited in the Unemployment Trust Fund (UTF). The UTF was established to 

account for the receipt, investment and disbursement of unemployment taxes. Federal unemployment taxes 

are used to pay for the administrative costs of the UI program, including grants to each State to cover the 

costs of State UI operations and the Federal share of extended UI benefits. Federal unemployment taxes are 

also used to maintain a loan account within the UTF, from which insolvent States may borrow funds to pay 

UI benefits. State UI taxes are used exclusively for the payment of regular UI benefits, as well as the State’s 

share of extended benefits. 

Federal Unemployment Taxes

Under the provisions of the Federal Unemployment Tax Act (FUTA), a Federal tax is levied on 

covered employers, at a current rate of 6.2% of the first $7,000 in annual wages paid to each 

employee. This Federal tax rate is reduced by a credit of up to 5.4%, granted to employers paying 

State UI taxes under conforming State UI statutes. Accordingly, in conforming States, employers 

pay an effective Federal tax of 0.8%. Federal unemployment taxes are collected by the Internal 

Revenue Service. 
Annual Financial Statements 

REQUIRED SUPPLEMENTARY INFORMATION 

(Unaudited) 

FY 2006 Performance and Accountability Report 251 

State Unemployment Taxes

In addition to the Federal tax, individual States finance their UI programs through State tax 

contributions from subject employers based on the wages of covered employees. (Three States also 

collect contributions from employees). Within Federal confines, State tax rates are assigned in 

accordance with an employer’s experience with unemployment. Actual tax rates vary greatly among 

the States and among individual employers within a State. At a minimum, these rates must be 

applied to the Federal tax base of $7,000; however, States may adopt a higher wage base than the 

minimum established by FUTA. State UI agencies are responsible for the collection of State 

unemployment taxes. 

Unemployment Trust Fund 

Federal and State UI taxes are deposited into designated accounts within the Unemployment Trust Fund. 

The UTF was established under the authority of Title IX, Section 904 of the Social Security Act of 1935, as 

amended, to receive, hold, invest, loan and disburse Federal and State UI taxes. The U.S. Department of the 

Treasury acts as custodian over monies deposited into the UTF, investing amounts in excess of disbursing 

requirements in Treasury securities. The UTF is comprised of the following accounts: 

Federal Accounts

The Employment Security Administration Account (ESAA) was established pursuant to Section 901 

of the Act. All tax receipts collected under the Federal Unemployment Tax Act (FUTA) are 

appropriated to the ESAA and used to pay the costs of Federal and State administration of the 

unemployment insurance program and veterans’ employment services, as well as 97 percent of the 

costs of the State employment services. Excess balances in ESAA, as defined under the Act, are 

transferred to other Federal accounts within the Fund, as described below. 

The Federal Unemployment Account (FUA) was established pursuant to Section 904 of the Act. 

FUA is funded by any excesses from the ESAA as determined in accordance with Section 902 of the 

Act. Title XII, Section 1201 of the Act authorizes the FUA to loan Federal monies to State accounts 

that are unable to make benefit payments because the State UI account balance has been exhausted. 

Title XII loans must be repaid with interest. The FUA may borrow from the ESAA or EUCA, 

without interest, or may also receive repayable advances, with interest, from the general fund of the 

U.S. Treasury, when the FUA has a balance insufficient to make advances to the States. 

The Extended Unemployment Compensation Account (EUCA) was established pursuant to Section 

905 of the Act. EUCA provides for the payment of extended unemployment benefits authorized 

under the Federal-State Extended Unemployment Compensation Act of 1970, as amended. Under 

the extended benefits program, extended unemployment benefits are paid to individuals who have 

exhausted their regular unemployment benefits. These extended benefits are financed one-half by 

State unemployment taxes and one-half by FUTA taxes from the EUCA. The EUCA is funded by a 

percentage of the FUTA tax transferred from the ESAA in accordance with Section 905(b)(1) and (2) 

of the Act. The EUCA may borrow from the ESAA or the FUA, without interest, or may also 

receive repayable advances from the general fund of the Treasury when the EUCA has a balance 

insufficient to pay the Federal share of extended benefits. During periods of sustained high 

unemployment, the EUCA may also receive payments and non-repayable advances from the general 

fund of the Treasury to finance emergency unemployment compensation benefits. Emergency 

unemployment benefits require Congressional authorization. 
Financial Section 

REQUIRED SUPPLEMENTARY INFORMATION 

(Unaudited) 

252 United States Department of Labor 

The Federal Employees Compensation Account (FECA) was established pursuant to Section 909 of 

the Act. The FEC account provides funds to States for unemployment compensation benefits paid to 

eligible former Federal civilian personnel and ex-service members. Generally, benefits paid are 

reimbursed to the Federal Employees Compensation Account by the various Federal agencies. Any 

additional resources necessary to assure that the account can make the required payments to States, 

due to the timing of the benefit payments and subsequent reimbursements, will be provided by nonrepayable advances from the general fund of the Treasury. 

 

State Accounts

Separate State Accounts were established for each State and territory depositing monies into the 

Fund, in accordance with Section 904 of the Act. State unemployment taxes are deposited into these 

individual accounts and may be used only to pay State unemployment benefits. States may receive 

repayable advances from the FUA when their balances in the Fund are insufficient to pay benefits. 

Railroad Retirement Accounts

The Railroad UI Account and Railroad UI Administrative Account were established under Section 

904 of the Act to provide for a separate unemployment insurance program for railroad employees. 

This separate unemployment insurance program is administered by the Railroad Retirement Board, 

an agency independent of DOL. DOL is not responsible for the administrative oversight or solvency 

of the railroad unemployment insurance system. Receipts from taxes on railroad payrolls are 

deposited in the Railroad UI Account and the Railroad UI Administrative Account to meet benefit 

payment and related administrative expenses. 

UI Program Benefits 

 

The UI program provides regular and extended benefit payments to eligible unemployed workers. Regular 

UI program benefits are established under State law, payable for a period not to exceed a maximum duration. 

In 1970, Federal law began to require States to extend this maximum period of benefit duration by fifty 

percent during periods of high unemployment. These extended benefit payments are paid equally from 

Federal and State accounts. 

 

Regular UI Benefits

There are no Federal standards regarding eligibility, amount or duration of regular UI benefits. 

Eligibility requirements, as well as benefit amounts and benefit duration are determined under State 

law. Under State laws, worker eligibility for benefits depends on experience in covered employment 

during a past base period, which attempts to measure the workers’ recent attachment to the labor 

force. Three factors are common to State eligibility requirements: (1) a minimum duration of recent 

employment and earnings during a base period prior to unemployment, (2) unemployment not the 

fault of the unemployed, and (3) availability of the unemployed for work. 

Benefit payment amounts under all State laws vary with the worker’s base period wage history. 

Generally, States compute the amount of weekly UI benefits as a percentage of an individual’s 

average weekly base period earnings, within certain minimum and maximum limits. Most States set 

the duration of UI benefits by the amount of earnings an individual has received during the base 

period. Currently, almost all States have established the maximum duration for regular UI benefits at 

26 weeks. Regular UI benefits are paid by the State UI agencies from monies drawn down from the 

State’s account within the Unemployment Trust Fund. 
Annual Financial Statements 

REQUIRED SUPPLEMENTARY INFORMATION 

(Unaudited) 

FY 2006 Performance and Accountability Report 253 

Extended UI Benefits

The Federal/State Extended Unemployment Compensation Act of 1970 provides for the extension of 

the duration of UI benefits during periods of high unemployment. When the insured unemployment 

level within a State, or in some cases total unemployment, reaches certain specified levels, the State 

must extend benefit duration by fifty percent, up to a combined maximum of 39 weeks. Fifty percent 

of the cost of extended unemployment benefits is paid from the Extended Unemployment 

Compensation Account within the UTF, and fifty percent by the State, from the State’s UTF account. 

Emergency UI Benefits

During prolonged periods of high unemployment, Congress may authorize the payment of 

emergency unemployment benefits to supplement extended UI benefit payments. Emergency 

benefits were last authorized in 2002 under the Temporary Extended Unemployment Compensation 

Act. Payments in excess of $23 billion were paid under the program which ended in January, 2005. 

Prior to that, emergency benefits were authorized in 1991 under the Emergency Unemployment 

Compensation Act. Emergency benefit payments in excess of $28 billion were paid over the three 

year period ended in 1994. 

Federal UI Benefits

Unemployment benefits to unemployed Federal workers are paid from the Federal Employment 

Compensation Account within the Unemployment Trust Fund. These benefit costs are reimbursed 

by the responsible Federal agency and are not considered to be social insurance benefits. Federal 

unemployment compensation benefits are not included in this discussion of social insurance 

programs. 

Program Finances and Sustainability

At September 30, 2006, total assets within the UTF exceeded liabilities by $66.4 billion. This fund balance 

approximates the accumulated surplus of tax revenues and earnings on these revenues over benefit payment 

expenses and is available to finance benefit payments in future periods when tax revenues may be 

insufficient. Treasury invests this accumulated surplus in Federal securities. The net value of these 

securities at September 30, 2006 was $66.2 billion. These investments accrue interest, which is distributed to 

eligible State and Federal accounts within the UTF. Interest income from these investments during FY 2006 

was $2.8 billion. Federal and State UI tax and reimbursable revenues of $43.3 billion and regular, extended 

and emergency benefit payment expense of $31.0 billion were recognized for the year ended September 30, 

2006. 

As discussed in Note 1.L.1 to the consolidated financial statements, DOL recognized a liability for regular, 

extended and temporary extended unemployment benefits to the extent of unpaid benefits applicable to the 

current period. Accrued unemployment benefits payable at September 30, 2006 were $1.1 billion. 
Financial Section 

REQUIRED SUPPLEMENTARY INFORMATION 

(Unaudited) 

254 United States Department of Labor 

Effect of Projected Cash Inflows and Outflows on the Accumulated Net Assets of the UTF 

The ability of the UI program to meet a participant’s future benefit payment needs depends on the 

availability of accumulated taxes and earnings within the UTF. The Department measures the effect of 

projected benefit payments on the accumulated net assets of the UTF, under an open group scenario, which 

includes current and future participants in the UI program. Future estimated cash inflows and outflows of the 

UTF are tracked by the Department for budgetary purposes. These projections allow the Department to 

monitor the sensitivity of the UI program to differing economic conditions, and to predict the program’s 

sustainability under varying economic assumptions. The significant assumptions used in the projections 

include total unemployment rates, civilian labor force levels, percent of unemployed receiving benefits, total 

wages, distribution of benefit payments by state, state tax rate structures, state taxable wage bases and 

interest rates on UTF investments. 

Presented on the following pages is the effect of projected economic conditions on the net assets of the UTF, 

excluding the Federal Employees Compensation Account. 
Annual Financial Statements 

REQUIRED SUPPLEMENTARY INFORMATION 

(Unaudited) 

FY 2006 Performance and Accountability Report 255 

Expected Economic Conditions 

Charts I and II graphically depict the effect of expected economic conditions on the UTF over the next ten 

years. 

Projected Cash Inflows and Outflows Under Expected Economic Conditions

Chart I depicts projected cash inflows and outflows of the UTF over the next ten years under 

expected economic conditions. Both cash inflows and cash inflows excluding interest earnings are 

displayed. Current estimates by the Department are based on an expected unemployment rate of 

4.80% during FY 2007, increasing to 4.90% in FY 2009 and thereafter. Total cash inflows exceed 

total cash outflows for all years projected. The net inflow decreases from $10.2 billion in FY 2007 

to $4.3 billion in FY 2011, indicating that many States have replenished their funds to desired levels. 

These projections, excluding interest earnings, indicate decreasing net cash inflows from FY 2007 to 

FY 2010, crossing over to net cash outflow for FY 2011, then back to increasing net cash inflows 

through 2016. 

Chart I

Unemployment Trust Fund 

Cash Inflow and Outflow

30

35

40

45

50

55

60

65

70

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Excludes the Federal Employee Compensation Account

$ - Billions

Total Cash Inflows Cash Inflow Excluding Interest Total Cash Outflow
Financial Section 

REQUIRED SUPPLEMENTARY INFORMATION 

(Unaudited) 

256 United States Department of Labor 

Effect of Expected Cash Flows on UTF Assets

Chart II demonstrates the effect of these expected cash inflows and outflows on the net assets of the 

UTF over the ten year period ended September 30, 2016. Yearly projected total cash inflows, 

including interest earnings, and cash outflows are depicted, as well as the net effect of this cash flow 

on UTF assets. 

Total cash inflows exceed cash outflows for all years projected, with this excess peaking in FY 2016. 

Starting at $76.3 billion in FY 2007, net UTF assets increase by 80% over the next nine years to 

$137.4 billion by the end of FY 2016. 

Chart II 

Unemployment Trust Fund 

Effect of Net Cash Flow on Net Assets

30

50

70

90

110

130

150

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Excludes the Federal Employee Compensation Account

$ - Billions

Total Cash Inflows Total Cash Outflows Net Assets
Annual Financial Statements 

REQUIRED SUPPLEMENTARY INFORMATION 

(Unaudited) 

FY 2006 Performance and Accountability Report 257 

Recessionary Scenarios 

Charts III and IV demonstrate the effect on accumulated UTF assets of projected total cash inflows and cash 

outflows of the UTF over the ten year period ending September 30, 2016, under mild and severe recession 

scenarios. Each scenario uses an open group, which includes current and future participants in the UI 

program. Charts III and IV assume increased rates of unemployment during mild and deep periods of 

recession. 

Effect on UTF Assets of Mild Recession

The Department projects the effect of moderate recession on the cash inflows and outflows of the 

UTF. Under this scenario, which utilizes an unemployment rate peaking at 7.43% in FY 2009, net 

cash outflows are projected in FY 2008 through FY 2010. Net cash inflows are reestablished in FY 

2011 and peak in FY 2015 with a drop in the unemployment rate to 4.90%. Net assets never fall 

below $36.8 billion and are within $33.3 billion of the balance under expected economic conditions 

by 2016. The crossover pattern remains the same when interest earnings are excluded. 

Chart III 

Unemployment Trust Fund 

Effect of Net Cash Flow on Net Assets

0

20

40

60

80

100

120

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Excludes the Federal Employee Compensation Account

$ - Billions

Total Cash Inflows Total Cash Outflows Net Assets
Financial Section 

REQUIRED SUPPLEMENTARY INFORMATION 

(Unaudited) 

258 United States Department of Labor 

Effect on UTF Assets of Deep Recession 

The Department also estimates the effect of severe recession on the cash inflows and outflows of the 

UTF. This scenario assumes a rising unemployment rate peaking at 10.14% in FY 2010. Under this 

scenario, net cash outflows are projected in FY 2008 through FY 2011, with the fund in a deficit 

situation from 2010 to 2014. The net assets of the UTF decrease from $73.0 billion in FY 2007 to 

negative $31.3 billion in 2011, a decline of $104.3 billion. State accounts without sufficient reserve 

balances to absorb negative cash flows would be forced to borrow funds from the FUA to meet 

benefit payment requirements. State borrowing demands could also deplete the FUA, which borrows 

from the ESAA and the EUCA until they are depleted. The FUA would then require advances from 

the general fund of the U.S. Treasury to provide for State borrowings. (See discussion of State 

solvency measures following) 

Net cash inflows are reestablished in FY 2012, with a drop in the unemployment rate to 7.26%. By 

the end of FY 2016, this positive cash flow has replenished UTF account balances to $40.0 billion. 

This example demonstrates the counter cyclical nature of the UI program, which experiences net 

cash outflows during periods of recession to be replenished through net cash inflows during periods 

of recovery. However, at the end of the projection period, net assets are still $97.4 billion less than 

under expected economic conditions. 

Chart IV 

Unemployment Trust Fund 

Effect of Net Cash Flow on Net Assets

(40)

(20)

0

20

40

60

80

100

120

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Excludes the Federal Employee Compensation Account

$ - Billions

Total Cash Inflows Total Cash Outflows Net Assets
FY 2006 Performance and Accountability Report 259

(Dollars in thousands) 2007 2008 2009 2010 2011 2012 2013 2014 Balance, start of year $ 76,270,596 66,107,956 $ $ 83,831,397 $ 89,740,058 $ 94,507,346 $ 98,818,464 $104,247,168 $110,124,752 $1Cash inflow

State unemployment taxes 36,695,000 37,108,000 37,571,000 38,378,000 39,981,000 42,396,000 44,043,000 46,287,000 4

 

Federal unemployment taxes 7,250,000 6,110,000 5,714,000 5,854,000 6,002,000 6,527,000 7,073,000 7,989,000 

 

Interest on loans - - 2,000 23,000 92,000 157,000 207,000 244,000 

 

Deposits by the Railroad Retirement Board 104,300 89,900 118,700 122,000 122,100 124,300 125,900 129,900 

Total cash inflow excluding interest 43,322,300 44,034,900 43,405,700 44,377,000 46,197,100 49,204,300 51,448,900 54,649,900 5

Interest on Federal securities 3,242,501 3,738,632 4,220,867 4,603,546 4,926,501 5,217,250 5,537,229 5,903,781 

Total cash inflow 47,277,401 47,060,932 47,626,567 48,980,546 51,123,601 54,421,550 56,986,129 60,553,681 6

Cash outflow

State unemployment benefits 33,202,000 35,677,000 37,934,000 40,463,000 43,038,000 45,136,000 47,157,000 49,161,000 5

 

State administrative costs 3,597,114 3,504,657 3,457,815 3,416,669 3,433,764 3,507,240 3,593,404 3,679,908 

 

Federal administrative costs 210,142 207,885 209,723 210,530 214,672 220,653 226,634 232,744 

 

Interest on tax refunds 2,511 2,161 2,106 2,218 2,328 2,555 2,785 3,163 

 

Railroad Retirement Board withdrawals 102,994 108,428 114,262 120,841 123,719 126,398 128,722 130,345 

Total cash outflow 37,114,761 39,500,131 41,717,906 44,213,258 46,812,483 48,992,846 51,108,545 53,207,160 5Excess of total cash inflow excluding interest over total cash outflow 6,920,139 3,822,169 1,687,794 163,742 (615,383) 211,454 340,355 1,442,740 Excess of total cash inflow over total cash outflow 10,162,640 7,560,801 5,908,661 4,767,288 4,311,118 5,428,704 5,877,584 7,346,521 

Balance, end of year $ 83,831,397 76,270,596 $ 89,740,058 $ 94,507,346 $ 98,818,464 $ 104,247,168 $ 110,124,752 $ 117,471,273 $ 12

$ 

Total unemployment rate 4.80% 4.83% 4.90% 4.90% 4.90% 4.90% 4.90% 4.90% 

FOR THE TEN YEAR PERIOD ENDING SEPTEMBER 30, 2016

(1) EXPECTED ECONOMIC CONDITIONS

U.S. DEPARTMENT OF LABOR

SUPPLEMENTARY SOCIAL INSURANCE INFORMATION

CASH INFLOW AND OUTFLOW OF THE 

UNEMPLOYMENT TRUST FUND EXCLUDING THE FEDERAL EMPLOYEES COMPENSATION ACCOUNT
260 United States Department of Labor 

(Dollars in thousands) 2007 2008 2009 2010 2011 2012 2013 2014 Balance, start of year $ 72,902,648 66,107,956 $ $ 64,164,613 $ 47,769,276 $ 36,774,380 $ 37,899,526 $ 47,099,368 $ 59,064,490 $ 7Cash inflow

State unemployment taxes 36,727,000 38,003,000 42,455,000 47,005,000 51,099,000 54,284,000 55,445,000 55,293,000 5

 

Federal unemployment taxes 7,213,000 6,009,000 5,557,000 5,698,000 6,712,000 8,204,000 9,610,000 10,539,000 1

 

General revenue appropriation - 44,000 81,000 55,000 - - - - 

Interest on loans - 20,000 329,000 910,000 1,299,000 1,335,000 1,208,000 1,037,000 

 

Deposits by the Railroad Retirement Board 89,900 104,300 118,700 122,000 122,100 125,900 124,300 129,900 

Total cash inflow excluding interest 44,029,900 44,180,300 48,540,700 53,790,000 59,232,100 63,947,300 66,388,900 66,998,900 6

Interest on Federal securities 3,204,939 3,215,958 2,633,097 2,116,118 2,191,083 2,859,393 2,462,001 3,373,332 

Total cash inflow 47,234,839 47,396,258 51,173,797 55,906,118 61,423,183 66,409,301 69,248,293 70,372,232 7

Cash outflow

State unemployment benefits 36,471,000 52,072,000 63,413,000 62,793,000 56,258,000 53,181,000 53,204,000 51,420,000 5

 

State administrative costs 3,653,513 3,743,854 3,830,101 3,774,484 3,699,043 3,678,196 3,720,031 3,746,718 

 

Federal administrative costs 210,142 207,885 209,723 210,530 214,672 220,653 226,634 232,744 

 

Interest on tax refunds 2,498 2,126 2,048 2,159 2,603 3,212 3,784 4,173 

 

Railroad Retirement Board withdrawals 102,994 108,428 114,262 120,841 123,719 128,722 126,398 130,345 

Total cash outflow 40,440,147 56,134,293 67,569,134 66,901,014 60,298,037 57,209,459 57,283,171 55,533,980 5Excess of total cash inflow excluding interest over total cash outflow 3,589,753 (11,953,993) (19,028,434) (13,111,014) (1,065,937) 9,105,729 6,737,841 11,464,920 1Excess of total cash inflow over total cash outflow 6,794,692 (8,738,035) (16,395,337) (10,994,896) 1,125,146 11,965,122 9,199,842 14,838,252 1

Balance, end of year $ 64,164,613 72,902,648 $ 47,769,276 $ 36,774,380 $ 37,899,526 $ 47,099,368 $ 59,064,490 $ 73,902,742 $ 8

$ 

Total unemployment rate 5.10% 6.61% 7.43% 7.09% 6.35% 5.61% 5.47% 5.12% 

FOR THE TEN YEAR PERIOD ENDING SEPTEMBER 30, 2016

(2) MILD RECESSIONARY UNEMPLOYMENT RATE

U.S. DEPARTMENT OF LABOR

SUPPLEMENTARY SOCIAL INSURANCE INFORMATION

CASH INFLOW AND OUTFLOW OF THE 

UNEMPLOYMENT TRUST FUND EXCLUDING THE FEDERAL EMPLOYEES COMPENSATION ACCOUNT
FY 2006 Performance and Accountability Report 261

(Dollars in thousands) 2007 2008 2009 2010 2011 2012 2013 2014 Balance, start of year $ 72,902,648 66,107,956 $ $ 60,090,657 $ 22,889,946 $ (20,289,347) $ (31,262,372) $ (28,809,038) $ (21,547,455) $ Cash inflow

State unemployment taxes 36,727,000 38,062,000 43,373,000 50,592,000 58,245,000 62,858,000 65,216,000 66,234,000 

 

Federal unemployment taxes 7,213,000 5,982,000 5,447,000 5,530,000 6,816,000 8,970,000 11,368,000 13,124,000 

 

General revenue appropriation - 49,000 141,000 181,000 61,000 2,000 - - 

Interest on loans - 28,000 661,000 2,270,000 3,616,000 4,002,000 4,053,000 3,905,000 

 

Deposits by the Railroad Retirement Board 104,300 89,900 118,700 122,000 122,100 125,900 124,300 129,900 

Total cash inflow excluding interest 44,029,900 44,225,300 49,740,700 58,695,000 68,860,100 80,762,900 75,956,300 83,392,900 

Interest on Federal securities 3,204,939 3,120,877 1,999,490 1,391,549 1,145,929 1,462,838 1,234,038 1,758,255 

Total cash inflow 47,234,839 47,346,177 51,740,190 60,086,549 70,006,029 82,225,738 77,190,338 85,151,155 

Cash outflow

State unemployment benefits 36,471,000 56,039,000 84,520,000 98,023,000 74,847,000 68,435,000 68,706,000 64,403,000 

 

State administrative costs 3,653,513 3,800,739 4,094,909 4,209,376 3,991,020 3,951,441 3,998,323 3,988,374 

 

Federal administrative costs 210,142 207,885 209,723 210,530 214,672 220,653 226,634 232,744 

 

Interest on tax refunds 2,498 2,116 2,007 2,095 2,643 3,512 4,476 5,196 

 

Interest on General Fund advances - - - 700,000 1,800,000 2,000,000 1,900,000 1,500,000 

 

Railroad Retirement Board withdrawals 102,994 108,428 114,262 120,841 123,719 128,722 126,398 130,345 

Total cash outflow 40,440,147 60,158,168 88,940,901 103,265,842 80,979,054 74,964,155 74,737,004 70,259,659 Excess of total cash inflow excluding interest over total cash outflow 3,589,753 (15,932,868) (39,200,201) (44,570,842) (12,118,954) 5,798,745 1,219,296 13,133,241 Excess of total cash inflow over total cash outflow 6,794,692 (12,811,991) (37,200,711) (43,179,293) (10,973,025) 7,261,583 2,453,334 14,891,496 

Balance, end of year $ 60,090,657 72,902,648 $ 22,889,946 $ (20,289,347) $ (31,262,372) $ (28,809,038) $ (21,547,455) $ (6,655,959) $ 

$ 

Total unemployment rate 5.10% 6.93% 9.10% 10.14% 7.82% 7.26% 7.05% 6.43% 

FOR THE TEN YEAR PERIOD ENDING SEPTEMBER 30, 2016

(3) DEEP RECESSIONARY UNEMPLOYMENT RATE

U.S. DEPARTMENT OF LABOR

SUPPLEMENTARY SOCIAL INSURANCE INFORMATION

CASH INFLOW AND OUTFLOW OF THE 

UNEMPLOYMENT TRUST FUND EXCLUDING THE FEDERAL EMPLOYEES COMPENSATION ACCOUNT
Financial Section 

REQUIRED SUPPLEMENTARY INFORMATION 

(Unaudited) 

262 United States Department of Labor 

States Minimally Solvent 

Each State’s accumulated UTF net assets or reserve balance should provide a defined level of benefit 

payments over a defined period. To be minimally solvent, a State’s reserve balance should provide for one 

year’s projected benefit payment needs based on the highest levels of benefit payments experienced by the 

State over the last twenty years. A ratio of 1.0 or greater prior to a recession indicates a state is minimally 

solvent. States below this level are vulnerable to exhausting their funds in a recession. States exhausting 

their reserve balance must borrow funds from the Federal Unemployment Account (FUA) to make benefit 

payments. The Missouri state account had loans payable to FUA, and Texas had outstanding debts to other 

sources at the end of FY 2006. During periods of high-sustained unemployment, balances in the FUA may 

be depleted. In these circumstances, FUA is authorized to borrow from the Treasury general fund. 

Chart V presents the State by State results of this analysis at September 30, 2006 in descending order by 

ratio. As the table below illustrates, 27 state funds were below minimal solvency ratio at September 30, 

2006. 

Chart V 

Minimally Solvent Not Minimally Solvent 

State Ratio State Ratio

Mississippi 2.80 Alaska 0.97

New Mexico 2.75 Tennessee 0.97

Montana 2.02 Alabama 0.95

Utah 1.91 West Virginia 0.94

Hawaii 1.85 Virginia 0.89

Maine 1.77 Indiana 0.82

Oklahoma 1.76 Wisconsin 0.76

New Hampshire 1.65 Colorado 0.69

Vermont 1.64 Idaho 0.64

Washington 1.64 Connecticut 0.60

Oregon 1.62 South Carolina 0.60

Wyoming 1.60 Kentucky 0.56

Arizona 1.57 Arkansas 0.54

Iowa 1.56 Rhode Island 0.51

District of Columbia 1.49 Illinois 0.50

Kansas 1.48 Pennsylvania 0.50

Nebraska 1.47 South Dakota 0.46

Louisiana 1.40 Massachusetts 0.42

Georgia 1.36 Minnesota 0.38

Nevada 1.36 Texas 0.37

Puerto Rico 1.25 California 0.36

Virgin Islands 1.25 Ohio 0.36

Delaware 1.20 New Jersey 0.29

Florida 1.19 North Carolina 0.18

Maryland 1.09 Michigan 0.16

North Dakota 1.03 New York 0.10

Missouri 0.00
Annual Financial Statements 

REQUIRED SUPPLEMENTARY INFORMATION 

(Unaudited) 

FY 2006 Performance and Accountability Report 263 

Black Lung Disability Benefit Program 

The Black Lung Disability Benefit Program provides for compensation, medical and survivor benefits for 

eligible coal miners who are disabled due to pneumoconiosis (black lung disease) arising out of their coal 

mine employment. The U.S. Department of Labor operates the Black Lung Disability Benefit Program. The 

Black Lung Disability Trust Fund (BLDTF) provides benefit payments to eligible coal miners disabled by 

pneumoconiosis when no responsible mine operator can be assigned the liability. 

Program Administration and Funding

Black lung disability benefit payments are funded by excise taxes from coal mine operators based on the sale 

of coal, as are the fund’s administrative costs. These taxes are collected by the Internal Revenue Service and 

transferred to the BLDTF, which was established under the authority of the Black Lung Benefits Revenue 

Act, and administered by the U.S. Department of the Treasury. The Black Lung Benefits Revenue Act 

provides for repayable advances to the BLDTF from the general fund of the Treasury, in the event that 

BLDTF resources are not adequate to meet program obligations. 

Program Finances and Sustainability

At September 30, 2006, total liabilities of the Black Lung Disability Trust Fund exceeded assets by $9.6 

billion. This deficit fund balance represented the accumulated shortfall of excise taxes necessary to meet 

benefit payment and interest expenses. This shortfall was funded by repayable advances to the BLDTF, 

which are repayable with interest. Outstanding advances at September 30, 2006 were $9.6 billion, bearing 

interest rates ranging from 4.500 to 13.875 percent. Excise tax revenues of $607.4 million, benefit payment 

expense of $299.5 million and interest expense of $695.0 million were recognized for the year ended 

September 30, 2006. 

As discussed in Note 1.L.3, DOL recognized a liability for disability benefits to the extent of unpaid benefits 

applicable to the current period. Accrued disability benefits payable at September 30, 2006 were $21.2 

million. Although no liability was recognized for future payments to be made to present and future program 

participants beyond the due and payable amounts accrued at year end, future estimated cash inflows and 

outflows of the BLDTF are tracked by the Department for budgetary purposes. The significant assumptions 

used in the projections are coal excise tax revenue estimates, number of beneficiaries, life expectancy, 

medical cost inflation, Federal civilian pay raises, and the interest rate on new repayable advances from 

Treasury. These projections are sensitive to changes in the tax rate and changes in interest rates on repayable 

advances from Treasury. 

These projections, made over the thirty-four year period ending September 30, 2040, indicate that cash 

inflows from excise taxes will exceed cash outflows for benefit payments and administrative expenses for 

each period projected. Cumulative net cash inflows are projected to reach $15.6 billion by the year 2040. 

However, when interest payments required to finance the BLDTF’s repayable advances are applied against 

this surplus cash inflow, the BLDTF’s cash flow turns negative during each of the thirty-four periods 

included in the projections. Net cash outflows after interest payments are projected to reach $60.1 billion by 

the end of the year 2040, increasing the BLDTF’s deficit to $54.1 billion at September 30, 2040. (See Chart 

I on following page) 

The net present value of future projected benefit payments and other cash inflow and outflow activities 

together with the fund’s deficit positions as of September 30, 2006, 2005, 2004, 2003, and 2002 are 

presented in the Statement of Social Insurance. 
Financial Section 

REQUIRED SUPPLEMENTARY INFORMATION 

(Unaudited) 

264 United States Department of Labor 

Chart I 

BLACK LUNG DISABILITY TRUST FUND 

CASH INFLOW AND OUTFLOW

0

500

1,000

1,500

2,000

2,500

3,000

3,500

2007 2011 2015 2019 2023 2027 2031 2035 2039

$ - Millions

Total Cash Outflow Total Cash Inflow Cash Outflow Before Interest

 

The projected decrease in cash inflows in the year 2014 and thereafter is the result of a scheduled reduction 

in the tax rate on the sale of coal. This rate reduction is projected to result in a fifty-two percent decrease in 

the amount of excise taxes collected between the years 2013 and 2015. The cumulative effect of this change 

is estimated to be in excess of $12.2 billion by the year 2040. 

 

Yearly cash inflows and outflows are presented in the table on the following page. 
FY 2004 Performance and Accountability Report 265

(Dollars in thousands) 2007 2008 2009 2010 2011 2012 - 2040 Cash inflow

Excise taxes 630,000 $ $ 649,000 $ 668,000 $ 680,000 $ 686,000 $ 12,316,860 

Total cash inflow 630,000 649,000 668,000 680,000 686,000 12,316,860 

Cash outflow

Disabled coal miners benefits 292,613 279,975 267,092 254,080 241,026 3,218,069 

Administrative costs 60,103 62,418 64,809 67,302 69,903 1,097,108 

Cash outflows before interest payments 352,716 342,393 331,901 321,382 310,929 4,315,177 Cash inflow over cash outflow  before interest payments 277,284 306,607 336,099 358,618 375,071 8,001,683 

Interest on advances 717,072 740,733 765,001 789,791 814,799 50,336,856 

Total cash outflow 1,069,788 1,083,126 1,096,902 1,111,173 1,125,728 54,652,033 Total cash outflow over total cash inflow (439,788) (434,126) (428,902) (431,173) (439,728) (42,335,173

 

Balance, start of year (10,044,530) (9,604,742) (10,478,656) (10,907,558) (11,338,731) (11,778,459

Balance, end of year $ (10,478,656) (10,044,530) $ $ (10,907,558) $ (11,338,731) $ (11,778,459) $ (54,113,632

U.S. DEPARTMENT OF LABOR

SUPPLEMENTARY SOCIAL INSURANCE INFORMATION

CASH INFLOW AND OUTFLOW OF THE BLACK LUNG DISABILITY TRUST FUND

FOR THE THIRTY-FOUR YEAR PERIOD ENDING SEPTEMBER 30, 2040

Annual Financial Statements 

REQUIRED SUPPLEMENTARY INFORMATION 

(Unaudited) 

FY 2006 Performance and Accountability Report 267

STATEMENT OF BUDGETARY RESOURCES

The principal Statement of Budgetary Resources combines the availability, status and outlay of DOL’s 

budgetary resources during FY 2006 and 2005. Presented on the following pages is the disaggregation of 

this combined information for each of the Department’s major budget accounts. 
Financial Section 

REQUIRED SUPPLEMENTARY INFORMATION 

(Unaudited) 

268 United States Department of Labor 

COMBINING STATEMENT OF BUDGETARY RESOURCES 

For the Year Ended September 30, 2006 

Employment Employment Occupational

and Training Standards Safety and Health

(Dollars in thousands) Administration Administration Administration

BUDGETARY RESOURCES

Unobligated balance, brought forward, October 1 2,337,79 $ 1,457,962 0 $ 26,227 $ 

Recoveries of prior year unpaid obligations 360,070 3,252 5,91 0

Budget authority

Appropriations received 54,309,862 2,848,124 477,199 

Borrowing authority - 445,000 - 

Spending authority from offsetting collections

Earned

Collected 420,424 2,482,312 6,285 

Change in receivables from Federal sources (336) (54,713) 8,261 

Change in unfilled customer orders

Advance received (7,500) 3,937 - 

Without advance from Federal sources - - - 

Expenditure transfers from trust funds 3,348,647 - 35,078 

Total budget authority 58,071,097 5,759,738 491,745 

Nonexpenditure transfers, net (550,309) (399) (684) 

Temporarily not available pursuant to Public Law (11,818,837) (1,145) - 

Permanently not available (404,686) (11,029) (6,399) 

Total budgetary resources $ 47,995,125 $ 7,213,009 $ 512,169

STATUS OF BUDGETARY RESOURCES

Obligations incurred

Direct 45,195,012 $ 3,029,425 $ 476,928 $ 

Reimbursable 412,922 2,468,082 13,406

Total obligations incurred 45,607,934 5,497,507 490,334 

Unobligated balances 

Apportioned 1,200,743 1,301,054 27 

Exempt from apportionment - 212,482 - 

Total unobligated balances 1,200,743 1,513,53 27 6 

Unobligated balances not available 1,186,448 201,966 21,808

Total status of budgetary resources $ 47,995,125 $ 7,213,009 $ 512,169

CHANGE IN OBLIGATED BALANCE

Obligated balance, net 

Unpaid obligations, brought forward, October 1 8,350,33 $ 358,151 0 $ 73,694 $ 

Less uncollected customer payments from Federal sources, 

 brought forward, October 1 (1,407,365) (865) (58,780) 

Total unpaid obligated balance, net 6,942,965 299,371 72,829 

Obligations incurred, net 45,607,933 5,497,508 490,334 

Less gross outlays (45,594,065) (5,556,973) (473,003) 

Less recoveries of prior year unpaid obligations, actual (360,070) (3,252) (5,910) 

Change in uncollected customer payments from Federal sources 199,041 (8,261) 53,162 

Obligated balance, net, end of period

Unpaid obligations 8,004,128 295,434 85,115 

Less uncollected customer payments from Federal sources (1,208,324) (9,126) (5,618) 

Total unpaid obligated balance, net, end of period 6,795,804 $ $ 289,816 $ 75,989

NET OUTLAYS

Gross outlays 45,594,065 $ 5,556,973 $ 473,003 $ 

Less offsetting collections (3,960,279) (2,519,775) (6,285) 

Less distributed offsetting receipts (847,937) - (7,809) 

Net outlays 40,785,849 $ $ 3,029,389 $ 466,718
Annual Financial Statements 

REQUIRED SUPPLEMENTARY INFORMATION 

(Unaudited) 

FY 2006 Performance and Accountability Report 269

Bureau of Mine Safety Employee Benefits Veterans' Other

Labor and Health Security Employment Departmental

Statistics Administration Administration and Training Programs Total

$ 3,762 11,171 $ 2,167 $ 3,938 $ 29,058 $ 3,872,075 $ 

 2,754 4,868 3,789 1,499 17,638 399,780 

 306,090 464,678 134,900 29,499 400,650 58,971,002 

 - - - - - 445,000 

 1,292 6,103 11,544 40 178,611 3,106,611 

 (20) - - - (702) (47,510) 

 - - - - 1,747 (1,816) 

 - - - - (825) (825) 

 - 76,533 - 192,886 3,683,587 30,443 

 307,362 547,314 146,444 222,425 609,924 66,156,049 

 (355) (598) (121) - 29,735 (522,731) 

 - - - - - (11,819,982) 

 (4,369) (8,629) (2,353) (1,228) (10,711) (449,404)

$ 309,154 554,126 $ 149,926 $ $ 226,634 $ 675,644 $ 57,635,787

$ 285,352 539,715 $ 136,567 $ 223,786 $ 457,582 $ 50,344,367 $ 

 1,062 5,354 11,282 - 183,026 3,095,134

 286,414 545,069 147,849 223,786 640,608 53,439,501 

 3,851 414 31 19 21,752 6 2,528,068 

 - - - - 212,629 147 

 3,851 414 31 19 21,899 6 2,740,697 

 18,889 8,643 2,046 2,652 1,455,589 13,137 

$ 309,154 554,126 $ 149,926 $ $ 226,634 $ 675,644 $ 57,635,787

$ 30,160 67,729 $ 48,663 $ 59,980 $ 494,125 $ 9,482,832 $ 

 (35) - - - (1,473,680) (6,635) 

 30,125 67,729 48,663 59,980 487,490 8,009,152 

 286,413 545,069 147,849 223,786 640,609 53,439,501 

 (289,752) (533,830) (148,904) (222,156) (683,426) (53,502,109) 

 (2,754) (4,868) (3,789) (1,499) (17,638) (399,780) 

 20 - - - 236,828 (7,134) 

 24,067 74,100 43,819 60,111 433,670 9,020,444 

 (15) - - - (13,769) (1,236,852)

$ 24,052 74,100 $ 43,819 $ $ 60,111 $ 419,901 $ 7,783,592

$ 289,752 533,830 $ 148,904 $ 222,156 $ 683,426 $ 53,502,109 $ 

 (1,292) (82,637) (11,544) (192,925) (210,799) (6,985,536) 

 - - - - (855,746) - 

$ 288,460 451,193 $ 137,360 $ $ 29,231 $ 472,627 $ 45,660,827
Financial Section 

REQUIRED SUPPLEMENTARY INFORMATION 

(Unaudited) 

270 United States Department of Labor 

COMBINING STATEMENT OF BUDGETARY RESOURCES 

For the Year Ended September 30, 2005 

Employment Employment Occupational

and Training Standards Safety and Health

(Dollars in thousands) Administration Administration Administration

BUDGETARY RESOURCES

Unobligated balance, brought forward, October 1 2,079,33 $ 1,428,161 0 $ 22,094 $ 

Recoveries of prior year unpaid obligations 335,591 10,853 11,738 

Budget authority

Appropriations received 52,951,638 2,485,951 468,109 

Borrowing authority - 446,000 - 

Spending authority from offsetting collections

Earned

Collected 51,972 2,299,208 3,731 

Change in receivables from Federal sources 33 57,19 0 39 6 0

Change in unfilled customer orders

Advance received - 5,086 - 

Anticipated for rest of year, without advances - - - 

Expenditure transfers from trust funds 3,538,339 - 34,637 

Total budget authority 56,542,279 5,328,078 472,230 

Nonexpenditure transfers, net (390,219) (418) (952) 

Temporarily not available pursuant to Public Law (9,279,797) (16,920) - 

Permanently not available (462,774) (7,906) (6,247) 

Total budgetary resources $ 48,824,410 $ 6,743,507 $ 497,204

STATUS OF BUDGETARY RESOURCES

Obligations incurred

Direct 46,419,130 $ 2,767,059 $ 468,716 $ 

Reimbursable 67,49 0 2,518,486 2,261

Total obligations incurred 46,486,620 5,285,545 470,977 

Unobligated balances 

Apportioned 1,333,107 1,201,949 25 

Exempt from apportionment - 175,158 - 

Total unobligated balances 1,333,107 1,377,107 25 

Unobligated balances not available 1,004,683 26,202 80,855 

Total status of budgetary resources $ 48,824,410 $ 6,743,507 $ 497,204

CHANGE IN OBLIGATED BALANCE

Obligated balance, net 

Unpaid obligations, brought forward, October 1 8,734,124 $ 330,390 $ 70,688 $ 

Less uncollected customer payments from Federal sources, 

 brought forward, October 1 (1,336,364) (475) (1,107) 

Total unpaid obligated balance, net 7,397,76 329,283 0 70,213 

Obligations incurred, net 46,486,620 5,285,545 470,977 

Less gross outlays (46,534,824) (5,246,930) (456,233) 

Less recoveries of prior year unpaid obligations, actual (335,591) (10,853) (11,738) 

Change in uncollected customer payments from Federal sources (71,208) (390) (57,673) 

Obligated balance, net, end of period

Unpaid obligations 8,350,33 358,151 0 73,694 

Less uncollected customer payments from Federal sources (1,407,571) (865) (58,780) 

Total unpaid obligated balance, net, end of period 6,942,759 $ $ 299,371 $ 72,829

NET OUTLAYS

Gross outlays 46,534,824 $ 5,246,93 $ 456,233 0 $ 

Less offsetting collections (3,519,640) (2,338,455) (3,731) 

Less distributed offsetting receipts (823,232) - (6,160) 

Net outlays 42,191,952 $ $ 2,902,315 $ 452,502
Annual Financial Statements 

REQUIRED SUPPLEMENTARY INFORMATION 

(Unaudited) 

FY 2006 Performance and Accountability Report 271

 

Bureau of Mine Safety Employee Benefits Veterans' Other

Labor and Health Security Employment Departmental

Statistics Administration Administration and Training Programs Total

$ 9,132 12,981 $ 1,810 $ 6,231 $ 18,052 $ 3,577,791 $ 

 3,203 4,819 1,888 2,421 38,159 408,672 

 281,535 455,045 132,345 29,550 444,692 57,248,865 

 - - - - - 446,000 

 1,073 7,693 10,142 468 171,095 2,545,382 

 - - - - (216) 57,700 

 - - - - 5,67 10,756 0 

 - - - - - - 

 - 77,346 - 193,519 29,875 3,873,716

 282,608 540,084 142,487 223,537 651,116 64,182,419 

 (125) (724) (88) (150) 5,34 (387,330) 6 

 - - - - - (9,296,717) 

 (2,973) (7,521) (1,791) (236) (6,749) (496,197)

$ 291,845 549,639 $ 144,306 $ $ 231,803 $ 705,924 $ 57,988,638

$ 287,288 531,801 $ 132,169 $ 227,865 $ 499,608 $ 51,333,63 $ 6

 795 6,667 9,970 - 177,258 2,782,927

 288,083 538,468 142,139 227,865 676,866 54,116,563 

 773 438 16 1,138 10,859 2,548,305 

 - - - - 152 175,310

 773 438 16 1,138 11,011 2,723,615 

 2,989 10,733 2,151 2,800 18,047 1,148,460

$ 291,845 549,639 $ 144,306 $ $ 231,803 $ 705,924 $ 57,988,638

$ 27,118 65,190 $ 39,803 $ 58,249 $ 530,890 $ 9,856,452 $ 

 (35) - - - (6,645) (1,344,626)

 27,083 65,190 39,803 58,249 524,245 8,511,826 

 288,083 538,468 142,139 227,865 676,866 54,116,563 

 (281,837) (531,111) (131,392) (223,714) (675,470) (54,081,511) 

 (3,203) (4,819) (1,888) (2,421) (38,159) (408,672) 

 - - - - 217 (129,054)

 30,160 67,728 48,663 59,981 494,125 9,482,832 

 (35) - - - (6,429) (1,473,680)

$ 30,125 67,728 $ 48,663 $ $ 59,981 $ 487,696 $ 8,009,152

$ 281,837 531,111 $ 131,392 $ 223,714 $ 675,470 $ 54,081,511 $ 

 (1,073) (85,039) (10,142) (193,987) (206,639) (6,358,706) 

 - - - - - (829,392)

$ 280,764 446,072 $ 121,250 $ $ 29,727 $ 468,831 $ 46,893,413

Appendices 
274 United States Department of Labor 1. Performance Goal Details1 Performance Goal 05-1.1A (ETA) Increase placements and educational attainments for youth served through the WIA youth program PY 2001 Goal Achieved PY 2002 Goal Achieved PY 2003 Goal Achieved PY 2004 Goal Not Achi

*Indicator target reached (Y), substantially reached (S) or not reached (N) **Estimated Target Result * Target Result * Target Result * Target Result Percent of youth who are in employment or the military or enrolled in post secondary education and/or advanced training/occupational skills training in the first quarter after exit 

— — — — — — — — — — — 

Percent of students who attain a GED, high school diploma, or certificate by the end of the third quarter after exit 

— — — — — — — — — — — 

PY 2002-04: Percent of the 14-18 year-old youth who enter the program without a diploma or equivalent that attain a secondary school diploma or equivalent by the first quarter after exit PY 2001: Percent of the 14–18 year-old youth either employed, in advanced training, post-secondary education, military service or apprenticeships in the third quarter after program exit 

50% 50% Y 

51% 55% Y 52% 63% Y 53% 65% 

PY 2002-04: Percent of 19–21 year-old youth employed in the first quarter after exit 

— — — 63% 67% Y 65% 71% Y 68% 72% 

PY 2001-04: Percent of 19–21 year-old youth employed in the first quarter after exit still employed in the third quarter after program exit 

75% 75% Y 77% 80% Y 78% 81% Y 79% 82% 

PY 2004: Average cost per participant — — — — — — — — — $2663 $2856 

Data Source(s): Annual State WIA performance reports included in the Enterprise Information Management System (EIMS) and Unemployme

1 New indicators often lack data needed to establish targets. For such indicators, the first year’s target may be to establish a baseline (abbreviate

determined by gathering the data as planned. 
FY 2006 Performance and Accountability Report 275

Performance Goal 05-1.1B (JC) 

Improve educational achievements of Job Corps students, and increase participation of Job Corps graduates in employm

PY 2001 

Goal Substantially 

Achieved 

PY 2002 

Goal Not Achieved 

PY 2003 

Goal Not Achieved 

PY 2004 

Goal Not Achi

*Indicator target reached (Y), substantially 

reached (S) or not reached (N) 

**Estimated 

Target Result * Target Result * Target Result * Target Result 

Percent of Job Corps graduates (within 1 year of program exit) and former enrollees (within 90 days of program exit) who enter employment or enroll in post-secondary education or advanced/occupational skills training PY 2001-02: Percent of graduates who enter employment or enroll in education 

85% 90% Y 90% 87% N 

— — — 85% 84% 

Percent of students earning a GED, high school diploma or certificate while enrolled in the program PY 2002-03: The number of students who attain high school diplomas while enrolled in Job Corps 

— — — 

3912 6381 Y 7658 8003 Y 

64% 64% 

Percent of students who achieve literacy or numeracy gains of one or more Adult Basic Education (ABE) levels 

— — — — — — — — — 45% 47% 

PY 2004: Average cost per participant — — — — — — — — — $22,503 $24,809 PY 2001-03: Percent of graduates who continue to be employed or enrolled in education six months after initial placement date 

70% 64% N 65% 63% N 65% 63% N — — 

PY 2001-03: Average hourly wages of graduates with jobs at six months after initial placement 

$7.25 $7.96 Y $8.20 $8.03 S $8.20 $8.95 Y — — 

Data Source(s): Job Corps Management Information System 
276 United States Department of Labor Performance Goal 05-1.1C (VETS) Improve the employment outcomes for veterans who receive One Stop Career Center services and veterans’ progr

FY 2002 Goal Achieved FY 2003 Goal Not Measured PY 2003 Goal Achieved PY 2004 Goal Achiev

*Indicator target reached (Y), substantially reached (S) or not reached (N) **Estimated Target Result * Target Result * Target Result * Target Result Percent of veteran job seekers employed in the first or second quarter following registration 34% 43% Y — — — 58% 58% Y 58% 60% Percent of veteran job seekers still employed two quarters after initial entry into employment with a new employer 

— — — — — — 72% 79% Y 80% 81% 

Percent of disabled veteran job seekers employed in the first or second quarter following registration 

— — — — — — — — — 54% 56% 

Percent of disabled veteran job seekers still employed two quarters after initial entry into employment with a new employer 

— — — — — — — — — 78% 79% 

Entered employment rate for homeless veterans participating in the Homeless Veterans Reintegration Program (HVRP) 

54% 54.4% Y 54.5% 60.3% Y 54.5% 61% Y 60% 65% 

Employment retention rate after 6 months for homeless veteran HVRP participants 

— — — — — — — — — base 58% 

Data Source(s): State Workforce Agency administrative reports, State UI wage records and homeless veteran grantee reports. Note: In FY 2003, this program transitioned to a new system of measuring and reporting outcomes that is consistent with the common measure

basis. HVRP entered employment rates for periods prior to PY 2004 were reported under another performance goal. 

Performance Goal 06-1.1A (ETA) 

Strengthen the registered apprenticeship system to meet the training needs of business and workers in the 21st 

FY 2002 

Goal Achieved 

FY 2003 

Goal Substantially 

Achieved 

FY 2004 

Goal Achieved 

FY 2005 

Goal Achiev

*Indicator target reached (Y), substantially 

reached (S) or not reached (N) 

**Estimated 

Target Result * Target Result * Target Result * Target Result 

Percent of those employed nine months after registration as an apprentice 

— — — — — — — — — base 78% 
FY 2006 Performance and Accountability Report 277

Average hourly wage gain for tracked entrants employed in the first quarter after registration and still employed nine months later (see note below) 

— — — — — — — — — base $1.26 

FY 2005: Average cost per registered apprentice 

— — — — — — — — — base $109 

FY 2002-04: New programs in new and emerging industries 

293 326 Y 359 359 Y 366 526 Y — — 

FY 2004: New apprentices registered by OATELS staff only FY 2002-03: All registrations 86,647 129,388 Y 133,909 130,615 S 

68,592 69,597 Y — — 

FY 2002: New apprenticeship programs 1854 2952 Y — — — — — — — — FY 2002: New businesses involved in apprenticeship 

3248 5883 Y — — — — — — — — 

Data Source(s): Registered Apprenticeship Information System (RAIS) and Apprenticeship Information Management System (AIMS) 

Note: Twenty-three states are Federally-registered apprenticeship programs and enter data on individuals into the Registered Apprenticeship In

group of “tracked entrants” is defined as the cohort of apprentices registered and entered into RAIS during a given reporting period.

Performance Goal 06-1.1B (ODEP) 

Advance knowledge and inform disability employment policy that affects systems change throughout the workforce dev

FY 2002 

Goal Achieved 

FY 2003 

Goal Not Achieved 

FY 2004 

Goal Achieved 

FY 2005 

Goal Achiev

*Indicator target reached (Y), substantially 

reached (S) or not reached (N) 

**Estimated Target Result * Target Result * Target Result * Target Result Number of policy related documents disseminated 

— — — — — — — — — — — 

Number of formal agreements initiated — — — — — — — — — — — Number of effective practices identified — — — — — — base 10 Y 11 19 FY 2004-05: People with disabilities served through ODEP projects 

— — — — — — 2391 6151 Y 6718 9768 

FY 2004-05: Entered employment rate at pilot sites 

— — — — — — 13.3% 19.0% Y 24% 24.1% 

FY 2004-05: 3-month and 6-month retention rates for people with disabilities served by the pilots 

— — — — — — base 12.3% 

6.9% 

Y 22% 

17% 

46.7% 39.0%
278 United States Department of Labor FY 2003: Implement 30 new Olmstead grant projects, targeted at persons with significant disabilities who are institutionalized — — — 30 16 N — — — — — 

FY 2003: Implement 12 youth grant projects (6 of which are new technology skills projects) to assist youth through the One-Stop Centers and the WIA youth programs — — — 12 21 Y — — — — — FY 2002: Implement 12 demonstration programs, through grants, designed to develop and test strategies and techniques that need to be implemented in order for One-Stop Centers and WIA youth programs to effectively serve persons with significant disabilities. 

12 16 

WIA, 

22 other

Y — — — — — — — — 

Data Source(s): ODEP Division of Program Management and Research & Evaluation Team 

Performance Goal 06-1.2A (BLS) 

Improve information available to decision-makers on labor market conditions, and price and productivity ch

FY 2004 

Goal Not Achieved 

FY 2005 

Goal Substant

Achieved 

*Indicator target reached 

(Y), substantially reached (S) or not reached (N) 

**Estimated 

Target Result * Target Result 

Percent of output, timeliness, accuracy, and long-term improvement targets achieved for labor force statistics 

— — — — — 

Percent of output, timeliness, accuracy, and long-term improvement targets achieved for prices and living conditions 

— — — — — 

Percent of output, timeliness, accuracy, and long-term improvement targets achieved for compensation and working conditions 

— — — — — 

Percent of output, timeliness, accuracy, and long-term improvement targets achieved for productivity and technology 

— — — — — 

Cost per transaction of the Internet Data Collection Facility — — — $3.32 $2.44 Customer satisfaction with BLS products and services per the American Customer Satisfaction Index 

75% 82% Y 75% 74% 

FY 2004-05 (Improve relevancy): 

Cumulative number of series (e.g., Current Employment Statistics, Employment Cost Index, etc.) converted to the North American Industry Classification System (12 series in total) 

8 8 Y 9 9 
FY 2006 Performance and Accountability Report 279

FY 2004-05 (Improve accuracy): 

Increase the percent of domestic output of in-scope services included in the Producer Price Index 

Increase the percent of in-scope industries in the labor productivity measures Improve the response to the Employment Cost Index 

59.2% 58.0% 

78% 

59.2% 58.0% 

78% 

Y Y Y 

75.7% 58.3% 

— 

76.3% 59.2% 

— 

FY 2004-05 (Enhance information technology): 

Lessen the likelihood of major systems failures that could affect the PPI's ability to release data on time, as measured by the percent of the components of the new repricing system completed 

33% 17% N 40% 37% 

Deliver economic data on time (Percent of scheduled releases issued on time) 100% 96% S 100% 100% Percent of accuracy measures met (e.g., revision, response rates, etc.) 100% 83% S 100% 100% 

Data Source(s): Office of Publications and Special Studies report of release dates against OMB release schedule for BLS Principal Federal Eco

for each Principal Federal Economic Indicator; BLS budget submissions and Quarterly Review and Analysis System; ACSI Quarterly E-Gover

Performance Goal 06-2.1A (ESA) 

American workplaces legally employ and compensate workers

FY 2003 

Goal Substantially 

Achieved 

FY 2004 

Goal Achieved 

FY 2005 

Goal Achiev

*Indicator target reached (Y), substantially reached (S) or not reached 

(N) 

**Estimated 

Target Result * Target Result * Target Result 

Ensuring Customer Service

Number of workers for whom there is an agreement to pay or an agreement to remedy per 1,000 enforcement hours FY 2005: Average number of days to conclude a violation complaint FY 2003-04: Average number of days to conclude a complaint 126 108 Y 108 92 Y 

187 178 

Reducing employer recidivismPercent of prior violators who achieved and maintained FLSA compliance following a full FLSA investigation Percent of reinvestigations without any violations Percent of reinvestigations with identical violations 

— 

36% 17% 

— 

37% 17% 

— 

Y Y 

74% 

— — 

71% 

— — 

N 72% 

— — 

72% 

— — 

Increasing compliance in industries with chronic violations

Percent of low-wage workers across identified low-wage industries paid and employed in compliance with FLSA and MSPA FY 2005: for Southern CA garment and NYC garment only 

— — — — — — 

base 54% 

76% 

Ensuring timely and accurate prevailing wage determinations

Number of wage determination forms processed per 1,000 hours Percent of survey-based DBA wage determinations issued within 60 days of receipt of the underlying survey data 

— — 

— — 

— — 

base 

80% 

1491 

87% 

Y Y 

1506 

81% 

1667 

84% 
280 United States Department of Labor FY 2003-04: as indicated in the garment manufacturing industry by Percent of employees paid “on the payroll” in New York City Number of manufacturers in southern California that monitor contractors Percent of employees paid “on the payroll” in southern California New contractors in NYC participating in Compliance Assistance program Number of manufacturers in NYC that monitor contractors base 714 base 72 153 33% 715 91% 73 158 Y Y Y Y Y 34% 729 — — — 39% 729 — — — Y Y — — 

FY 2003-04: as indicated in the long-term health care industry by Percent of nursing homes in compliance with the FLSA. Percent of nursing home employees employed or paid in compliance with the FLSA Percent of nursing home complaint cases concluded in 180 days Percent of employees in residential care paid in compliance with the FLSA overtime requirements 

— — 

42% 85% 

— — 

48% 77% 

— — 

Y N 

45% 91% 

— — 

55% 90% 

— — 

Y N 

— — 

FY 2003-04: as indicated in agricultural commodities by Number of employees affected by compliance assistance programs for agricultural employers subject to the DWHaT provisions of MSPA 

Number of agricultural housing providers who corrected violations following an investigation Number of agricultural housing providers who corrected violations following a first investigation 

— 

170 

98 

— 

256 133 

— 

Y Y 

4743 

259 

— 

911,004

335 

— 

Y Y 

— — 

Data Source(s): Wage and Hour Investigator Support and Reporting Database (WHISARD) data; WH significant activity reports; regional logs 

and statistically valid investigation-based compliance surveys in defined industries 

Performance Goal 06-2.1B (ESA) 

Ensure union financial integrity, democracy and transparency

FY 2003 

Goal Not Achieved 

FY 2004 

Goal Achieved 

FY 2005 

Goal Substant

Achieved 

*Indicator target reached (Y), substantially reached (S) or not reached 

(N) 

**Estimated 

Target Result * Target Result * Target Result 

Percent of unions with fraud FY 2003: Percent of investigative resources applied to criminal investigation that result in convictions 

53% 63% Y 

base 9% Y — — 

Percent of union reports meeting standards of acceptability for public disclosure FY 2003: The timely filing of union annual financial reports by unions with annual receipts over $200,000 

base 

85% 

73% 64% 

Y N 

75% 92% Y 95% 94% 
FY 2006 Performance and Accountability Report 281

Percent of unions complying with standards for democratic union officer elections 

— — — — — — — — 

FY 2005: Union dollars protected per staff day — — — — — — base $136,617 

Data Source(s): OLMS union compliance audit information and e.LORS data system Note: Fraud indicator data are reported every other (even) year. 

Performance Goal 06-2.2A (ETA) 

Make timely and accurate benefit payments to unemployed workers, facilitate the reemployment of Unemployment Insurance claima

tax accounts promptly for new employers

FY 2002 

Goal Not Achieved 

FY 2003 

Goal Not Achieved 

FY 2004 

Goal Achieved 

FY 2005 

Goal Not Achi

*Indicator target reached (Y), substantially 

reached (S) or not reached (N) 

**Estimated Target Result * Target Result * Target Result * Target Result Payment Timeliness: Percent of all intrastate 

first payments made within 14/21 days 

91% 88.7% N 91% 89% N 89.2% 90.3% Y 89.9% 89.3% 

Detect Overpayments: Percent of estimated 

detectable/recoverable overpayments that States establish for recovery 

— — — 59% 54% N 59% 59.5% Y 59.5% 58.7% 

Facilitate Claimant Reemployment: Percent 

of UI claimants who were reemployed by the end of the first quarter after the quarter in which they received their first payment FY 2004: Entered employment rate for UI claimants 

— — — — — — 

base 51.5% Y 

— — 

Establish Tax Accounts Promptly: Percent 

of new employer liability determinations made within 90 days of the end of the first quarter in which liability occurred. 

80% 81.7% Y 80% 83% Y 82.2% 82.5% Y 82.4% 82.4% 

FY 2005 (Efficiency): Quality-weighted 

base initial claims per $1,000 of inflationadjusted base grant funds 

— — — — — — — — — 8.55 8.60 

Data Source(s): Eligibility Determinations Quality: ETA 9056; Payment Timeliness: 9050, 9050p Reports; Payment Accuracy: Benefit Accur

and ETA 227 report; Facilitate Reemployment: Unemployment Insurance wage records; New Status Determinations Timeliness: ETA 581 repNote: This goal was reported as not achieved in the FY 2004 PAR based on estimated data; actual data for the first indicator exceeded the targe

was reported as substantially achieved based on estimates; actual data for the first three indicators were slightly lower, affecting results for two 
282 United States Department of Labor Performance Goal 06-2.2B (ESA) Minimize the impact of work-related injuries FY 2002 Goal Not Achieved FY 2003 Goal Substantially Achieved FY 2004 Goal Substantially Achieved FY 2005 Goal Substant

Achieved 

*Indicator target reached (Y), substantially reached (S) or not reached (N) **Estimated Target Result * Target Result * Target Result * Target Result Lost production days (LPD) per 100 employees for FECA cases of the United States Postal Service (see note below) 115 131 N 130 143 N 146 147 N 148 135 LPD rate for FECA cases of All Other Governmental Agencies (see note below) 

55 54 Y 54.7 55 N 55.4 62.6 N 61 56 

FY 2003-04: FECA Vocational Rehabilitation placements with new employers for injured USPS employees 

— — — 52 56 Y 56 59 Y — — 

Savings in the FECA program through use of Periodic Roll Management 

$19 

million

$26 

million Y $20 million $25 million Y $18 million $24 million Y $17 million $21 million 

Trend in indexed cost per case of FECA cases receiving medical treatment remains below the Milliman Health Cost Index FY 2002: Reduce Inflation-adjusted costs per case in the FECA program 

$2219 $2604 N 

+9.1% -2.8% Y +8.8% +2.4% Y +8.1% +2.8% 

Targets met for key communications performance areas 

— — — base 5 Y 3 4 Y 3 3 

Average days required to resolve disputed issues in Longshore and Harbor Worker’s Compensation Program contested cases 

242 285 N 279 266 Y 274 247 Y 245 254 

Percent of Black Lung benefit claims filed under the revised regulations for which, following an eligibility decision, there are no requests for further action from any party pending one year after receipt of the claim. 

68.5% 89.9% Y 70.5% 86.6% Y 74.5% 82.2% Y 76.5% 80.6% 

Percent of Initial Claims for benefits in the Part B and Part E Energy Programs processed within standard timeframes FY 2002-05: for Part B only 75% 48% N 75% 79% Y 77% 92% Y 80% 80% 
FY 2006 Performance and Accountability Report 283

Percent of Final Decisions in the Part B Energy Program processed within standard timeframes FY 2002: Claims or No-Contest Denials within 75 days of the Recommended Decision. Reviews of the Written Record within 75 days of request Formal Hearings within 250 days of request 

75% 75% 75% 

76% 74% 

100% 

S 

75% 76.9% Y 77% 99% Y 80% 94.7% 

FY 2005: Energy Program Claimants under Part E to whom compensation benefits are paid 

— — — — — — — — — 1200 1525 

Percent of Energy Program Part E claims backlog receiving recommended decisions 

— — — — — — — — — — — 

Data Source(s): 1&2. Federal Employees’ Compensation Act (FECA) data systems, Federal agency payroll offices and Office of Personnel Ma3. Nurse/Rehabilitation Tracking System 4. Periodic Roll Management System and FECA Automated Compensation Payment System; 5. FECA Milliman USA Health Cost Index Report; 6. Telecommunications system standard reports, FECA district office and national MIS reports, custo

and other customer service performance data sources; 7. Longshore Case Management System; 8. Black Lung Automated Support Package; 9-

Management System Note: In FY 2004, OWCP changed the way it measures LPD. The FY 2003 result data for USPS and also for all other government agencies’ Lthe measurement changes. LPD’s are now measured in real-time rather than with accumulated data. 

Performance Goal 06-2.2C (EBSA) 

Secure pension, health and welfare benefits

FY 2003 

Goal Achieved 

FY 2004 

Goal Achieved 

FY 2005 

Goal Achiev

*Indicator target reached (Y), substantially reached (S) or not reached (N) **Estimated Target Result * Target Result * Target Result Enforcement: 

Ratio of closed civil cases with corrected violations to civil closed 

cases. Ratio of criminal cases referred for prosecution to total criminal cases 

50% 25% 

69% 40% 

Y Y 

50% 25% 

69% 45% 

Y Y 

66% 

37.7%

76% 45% 

Participant Assistance: 

Customer Satisfaction Index, or comparable measurement, for participants and beneficiaries who have contacted EBSA for assistance. Additional applications to Voluntary Compliance programs 

59 — 

59 — 

Y 

— 

61 

— 

62 

— 

Y 

— 

63 

8340 

67 

14,082

Data Source(s): Enforcement Management System and The Gallup Organization/Technical Assistance and Inquiry System (TAIS) 
284 United States Department of Labor Performance Goal 06-2.2D (PBGC) Improve pension insurance programsFY 2004 Goal Not Achieved FY 2005 Goal Not Achi

*Indicator target reached (Y), substantially reached (S) or not reached (N) **Estimated Target Result * Target Result Customer Satisfaction score for premium filers 71 69 N 72 68 Customer Satisfaction score for responding to trusteed plan participants' inquiries 77 78 Y 78 79 

Data Source(s): American Customer Satisfaction Index (ACSI) report 

Performance Goal 06-3.1A (MSHA) 

Reduce work-related fatalities and injuries

FY 2002 

Goal Not Achieved 

FY 2003 

Goal Not Achieved 

FY 2004 

Goal Not Achieved 

FY 2005 

Goal Not Achi

*Indicator target reached (Y), substantially 

reached (S) or not reached (N) 

**Estimated Target Result * Target Result * Target Result * Target Result Fatal incidence rate (number of mining fatalities per 200,000 hours worked) FY 2002: Mine fatalities 64 71 N 

.020 .023 N .022 .017 Y .022 .018 

All-injury incidence rate (all injuries, including fatalities, per 200,000 hours worked) FY 2002: Non-fatal injury incidence rate 2.87 3.15 N 

3.79 4.26 N 3.85 4.07 N 3.48 3.90 

Data Source(s): Mine Accident, Injury, and Employment information that mine operators and contractors report to MSHA under Title 30 Code 

Note: In FY 2005, OSHA and MSHA shared performance goals. 

Performance Goal 06-3.1B (MSHA) 

Reduce mining-related illnesses

FY 2002 

Goal Not Achieved 

FY 2003 

Goal Achieved 

FY 2004 

Goal Achieved 

FY 2005 

Goal Not Achi

*Indicator target reached (Y), substantially 

reached (S) or not reached (N) 

**Estimated Target Result * Target Result * Target Result * Target Result Percent of respirable coal dust samples exceeding the applicable standards for designated occupations 

14.2% 15.0% N 14.2% 11.7% Y 11.1% 10.2% Y 10.1% 10.8% 
FY 2006 Performance and Accountability Report 285

Percent of silica dust samples in metal and nonmetal mines with at least 50% of the permissible exposure limit FY 2002-04: Percent of silica dust samples in metal and nonmetal mines exceeding the applicable standards for high risk occupations 

8.8% 6.6% Y 8.6% 6.5% Y 6.2% 5.6% Y 

base 16.3% 

Percent of noise samples in metal and nonmetal mines with at least 50% of the permissible exposure limit 

— — — — — — — — — base 20.9% 

Percent of noise samples above the citation level in coal mines FY 2002-04: Percent of noise exposures above the citation level in all mines 8.6% 5.8% Y 9.3% 4.8% Y 4.6% 4.6% Y 

base 5.3% 

Data Source(s): Dust samples collected by MSHA inspectors. Coal Mine Safety and Health MIS. Metal and Non-Metal Mine Safety and HeaNote: In FY 2005, OSHA and MSHA shared performance goals. Baseline data for silica dust and noise exposure indicators were not available 2005 PAR. 

Performance Goal 06-3.1C (OSHA) 

Reduce work-related fatalities

FY 2003 

Goal Not Achieved 

FY 2004 

Goal Not Achieved 

FY 2005 

Goal Not Achi

*Indicator target reached (Y), substantially reached (S) or not reached 

(N) 

**Estimated Target Result * Target Result * Target Result Fatalities per 100,000 workers 1.59 1.62 N 1.57 1.61 N 1.52 1.61 

Data Source(s): OSHA Integrated Management Information System (IMIS) and Bureau of Labor Statistics (BLS) Current Employment StatistiNote: In FY 2005, OSHA and MSHA shared performance goals. 
286 United States Department of Labor Performance Goal 06-3.1D (OSHA) Reduce work-related injuries and illnesses FY 2002 Goal Not Achieved FY 2003 Goal Achieved FY 2004 Goal Achieved FY 2005 Goal Not Achi

*Indicator target reached (Y), substantially reached (S) or not reached (N) **Estimated Target Result * Target Result * Target Result * Target Result Days away from work case rate per 100 workers FY 2002: Injury and illness incidence rates in industries characterized by high-hazard workplaces 

Shipyard Food processing Meat Products Nursing homes Logging Construction 

6.8 

— 

7.7 6.6 

— 

3.6 

8.1 

— 

7.9 7.6 

— 

3.8 

N 

— 

N N 

— 

N 

1.8 1.5 Y 1.7 1.4 Y 1.7 1.4 

Data Source(s): Bureau of Labor Statistics (BLS) Annual Survey of Occupational Injuries and Illnesses (ASOII). Note: In FY 2005, OSHA and MSHA shared performance goals. 

Performance Goal 06-3.2A (ESA) 

Federal contractors achieve equal opportunity workplaces

FY 2002 

Goal Achieved 

FY 2003 

Goal Achieved 

FY 2004 

Goal Achieved 

FY 2005 

Goal Achiev

*Indicator target reached (Y), substantially 

reached (S) or not reached (N) 

**Estimated Target Result * Target Result * Target Result * Target Result Incidence of discrimination among Federal contractors FY 2002: For contractors participating in specified compliance assistance activities and subsequently evaluated 

Rate of compliance findings for SIC 50 For SIC 87 Rate of findings of severe violations for SIC 50 For SIC 87 Rate of focused and offsite compliance 

evaluations for SIC 50 For SIC 87 

51.9% 48.6% 

6.7% 8.0% 

37.5% 28.8%

58.4% 64.5% 

2.2% 1.6% 

52.8% 50.8%

Y Y Y Y Y Y 

9% 1.2% Y 9% 1% Y 7% 2% 
FY 2006 Performance and Accountability Report 287

Compliance among Federal contractors in all other respects of equal opportunity workplace standards FY 2002: For contractors and subcontractors selected for evaluation, outreach, or compliance assistance activities 

Rate of compliance findings for all supply and service closures Rate of findings of severe violations for contractors and subcontractors that have had prior contact with DOL/OFCCP Rate of focused and offsite compliance 

evaluation 

53.9% 

8.8% 

35.1%

62.9% 

2.7% 

49.8%

Y Y Y 

59% 72.4% Y 61% 91% Y 62% 86% 

Data Source(s): Case Management System (CMS) 

Performance Goal 06-3.2B (VETS) 

Reduce employer-employee employment issues originating from service members’ military obligations conflicting with their 

FY 2004 

Goal Achieved 

FY 2005 

Goal Not Achi

*Indicator target reached (Y), substantially reached (S) or not reached (N) **Estimated 

Target Result * Target Result 

USERRA Progress Index (measures compliance and assistance performance) — — — — — FY 2005: Percent of USERRA cases resolved within 90 days of filing — — — 85% 80.4% FY 2005: Percent of USERRA cases resolved within 120 days of filing — — — 92% 88.4% FY 2005: Percent of USERRA cases resolved within one year of filing — — — 99% 99.8% FY 2004: Establish indicators to target reductions in USERRA compliance problems that are 

most severe and pervasive based on survey of veterans and service members covered by USERRA. 

base 4 Y — — 

Data Source(s): USERRA Information Management System (UIMS) 
288 United States Department of Labor Performance Goal 06-3.3A (ILAB) Contribute to the elimination of the worst forms of child labor internationally FY 2002 Goal Achieved FY 2003 Goal Achieved FY 2004 Goal Achieved FY 2005 Goal Substant

Achieved 

*Indicator target reached (Y), substantially reached (S) or not reached (N) Target Result * Target Result * Target Result * Target Result Number of children prevented or withdrawn from exploitive labor and provided education or training opportunities as a result of DOL-funded projects 50,000 51,927 Y 60,000 69,915 Y 70,000 91,724 Y 116,000 161,821 Number of countries with increased capacity to address child labor as a result of DOLfunded projects FY 2002-03: Action plans, policies or programs established that combat child labor and/or promote access to education for child laborers or children at-risk 

10 15 Y 15 19 Y 

15 26 Y 20 39 

FY 2005: Percent of children completing education programs as a result of ILAB's Child Labor Education Initiative FY 2003-04: Child Labor Education projects that establish targets for education retention and completion rates in project areas 

— — — 6 8 Y 8 16 Y 

50% 38% 

FY 2005: Percent of children retained in education programs as a result of ILAB's Child Labor Education Initiative FY 2004: Child Labor Education Initiative projects that establish baseline for rate of enrollment and drop out for targeted children FY 2002-03: Countries in which new Child Labor Education Initiative projects begin 

8 9 Y 9 10 Y 

7 8 Y 

65% 80% 
FY 2006 Performance and Accountability Report 289

FY 2005: Number of target children enrolled in education programs as a result of ILAB's Child Labor Education Initiative FY2002-03: Children targeted for prevention or removal from child labor, particularly its worst forms, through the provision of education or training opportunities in new DOL-funded programs 

90,000 103,772 Y 40,000 83,682 Y 

— — — 50,000 81,747 

FY 2002: Countries that ratify International Labor Organization (ILO) Convention 182 on Worst Forms of Child Labor. 

15 29 Y — — — — — — — — 

Data Source(s): ILO-IPEC (grantee) through progress reports and project monitoring; Child Labor Education Initiative Grantees Note: For FY 2005, retention result includes all children enrolled in Education Initiative (EI) projects in FY 2001 and FY 2002, but not those w

 Completion results include children who were enrolled in FY 2001 EI projects prior to FY 2005.

Performance Goal 06-3.3B (ILAB) 

Improve living standards and conditions of work internationally

FY 2002 

Goal Achieved 

FY 2003 

Goal Achieved 

FY 2004 

Goal Achieved 

FY 2005 

Goal Achiev

*Indicator target reached (Y), substantially 

reached (S) or not reached (N) 

**Estimated Target Result * Target Result * Target Result * Target Result Percent of USDOL project beneficiaries who consider the project to have improved their conditions of work 

— — — base 63% Y base 62% Y 83% 83% 

Percent of individuals whose economic situation has benefited from USDOL project assistance 

— — — base 39% Y base 39% Y 43% 60% 

Number of workers benefiting from compliance with national labor laws through improved inspections

FY 2003-04: Percent of workplaces exposed to USDOL project assistance that have implemented new measures to prevent workplace accidents and illnesses 

— — — 

base 10% Y base 73% Y 

base 3.78 

million
290 United States Department of Labor Employment-related discrimination against persons living with HIV/AIDS FY 2004: Number of new countries where HIV/AIDS workplace education projects begin — — — — — — 5 7 Y base 270 

HIV/AIDS risk behaviors among targeted workers — — — — — — — — — base 19,500 FY 2003-04: Number of workers participating in pension funds that are government regulated by project partner agencies 

— — — base 3.545 

million

Y base no data — — — 

FY 2002: Countries committed to undertake improvements in assuring compliance and implementation of core labor standards 

7 41 Y — — — — — — — — 

FY 2002: Countries that commit with US/DOL assistance to make substantive improvements in raising income levels of working families 

6 49 Y — — — — — — — — 

Data Source(s): OFR grantees and contractors 

Performance Goal 05-4.1A (ETA) 

Increase employment, retention, and earnings of individuals registered under the Workforce Investment Act Adu

PY 2001 

Goal Achieved 

PY 2002 

Goal Not Achieved 

PY 2003 

Goal Achieved 

PY 2004 

Goal Achiev

*Indicator target reached (Y), substantially 

reached (S) or not reached (N) 

**Estimated Target Result * Target Result * Target Result * Target Result Percent of participants employed in the first quarter after program exit 

— — — 70% 74% Y 71% 74% Y 75% 77% 

Percent of participants employed in the first quarter after program exit still employed in the second and third quarters after program exit 

78% 79% Y 80% 84% Y 82% 85% Y 85% 86% 

Average earnings gain for those who are employed in the first quarter after program exit and still employed in the third quarter after program exit 

$3361 $3555 Y $3423 $2900 N $3100 $3260 Y $3300 $3746 

PY 2004: Average cost per participant — — — — — — — — — $2192 $2025 

Data Source(s): Annual State WIA performance reports included in the Enterprise Information Management System (EIMS) and Unemployme
FY 2006 Performance and Accountability Report 291

Performance Goal 05-4.1B (ETA) 

Improve the outcomes for job seekers and employers who receive One Stop employment and workforce informati

PY 2002 

Goal Not Achieved 

PY 2003 

Goal Achieved 

PY 2004 

Goal Not Achi

*Indicator target reached (Y), substantially reached (S) or not reached 

(N) 

**Estimated Target Result * Target Result * Target Result 

Percent of participants employed in the first quarter after program exit 55% 63% Y 58% 61% Y 58% 64% 

Percent of those employed in the first quarter after exit still employed in the second and third quarters after program exit 

— — — 72% 80% Y 72% 81% 

Average earnings gain for participants employed in the first quarter after program exit and still employed in the second and third quarters 

after program exit 

— — — — — — — — 

PY 2004: Average cost per participant — — — — — — $52 $56 

Data Source(s): Annual State WIA performance reports included in the Enterprise Information Management System (EIMS) and Unemployme

Notes: In PY 2002-03, this goal included three additional indicators now under Performance Goal 05-4.1E. 

Performance Goal 05-4.1C (ETA) 

Increase the employment, retention, and earnings replacement of individuals registered under the Workforce Investment Act Di

PY 2001 

Goal Achieved 

PY 2002 

Goal Not Achieved 

PY 2003 

Goal Not Achieved 

PY 2004 

Goal Not Achi

*Indicator target reached (Y), substantially 

reached (S) or not reached (N) 

**Estimated Target Result * Target Result * Target Result * Target Result Percent of participants employed in the first quarter after program exit 

73% 79% Y 78% 82% Y 78% 82% Y 82% 84% 

Percent of those employed in the first quarter after program exit still employed in the second and third quarters after program exit 

83% 87% Y 88% 90% Y 88% 90% Y 91% 91% 

Average percent of pre-separation earnings for participants employed in the first quarter after program exit and still employed in the third quarter after exit 

91% 101% Y 98% 90% N 93% 91% N 91% 93% 

PY 2004: Average cost per participant — — — — — — — — — $3195 $3505 Data Source(s): Annual State WIA performance reports included in the Enterprise Information Management System (EIMS) and Unemployme
292 United States Department of Labor Performance Goal 05-4.1D (ETA) Assist older workers to participate in a demand-driven economy through the Senior Community Service Employm

*Indicator target reached (Y), substantially reached (S) or not reached (N) **Estimated Percent of participants employed in the first quarter after program exit Percent of participants employed in the first quarter after program exit still employed in the second and third quarters after program exit Average earnings gain for participants employed in the first quarter after exit and still employed in the third quarter after exit Data Source(s): Annual State WIA performance reports included in the Enterprise Information Management System (EIMS) and Unemployme

Performance Goal 05-4.1E (ETA) 

Increase accessibility of workforce information through the National Electronic Tools

PY 2001 

Goal Not Achieved 

PY 2002 

Goal Not Achieved 

PY 2003 

Goal Achieved 

PY 2004 

Goal Substant

Achieved 

*Indicator target reached (Y), substantially 

reached (S) or not reached (N) 

**Estimated 

Target Result * Target Result * Target Result * Target Result 

Page views on America’s Career InfoNet — — — — — — — — — — — Site visits on O*NET — — — — — — — — — 2.77 

million

3.91 

million

Page views on Career Voyages — — — — — — — — — — — PY 2001-04: Job openings listed with the public labor exchange (State Workforce Agencies and America’s Job Bank) 

13.5 

million

11.8 

million

N 11.8 

million

10.2 

million

N 10.3 

million 

12.5 

million

Y 12.994

million

14.675 

million

PY 2003-04: Number of job searches conducted by job seekers using America’s Job Bank 

— — — — — — base 169 

million

Y 170.788

million

138.567 

million

PY 2003-04: Number of resume searches conducted by employers from America’s Job Bank 

— — — — — — base 8 

million

Y 8.090 

million

9.249 

million

PY 2004: Percent of new requirements 

ratings for O*NET-SOC occupations 

— — — — — — — — — 21% 22% 

PY 2004: Percent of O*NET-SOC 

occupations for which updated data are released 

— — — — — — — — — 21% 22% 
FY 2006 Performance and Accountability Report 293

Data Source(s): America’s Job Bank Service Center and quarterly state performance reports included in the Enterprise Information Manageme

Performance Goal 06-4.1A (ETA) 

Address worker shortages through the Foreign Labor Certification Program

FY 2005 

Goal Not Achi

*Indicator target reached (Y), substantially reached (S) or not reached (N) **Estimated 

Target Result 

Percent of H-1B applications processed within seven days of the filing date for which no prevailing wage issues are 

identified 

100% 100% 

Percent of employer applications for labor certification under the streamlined system that are resolved within six months of filing 

base 57% 

Percent of accepted H-2A applications processed within 30 days of the date of need where there are no pending State 

actions 

— — 

Percent of the H-2B applications processed within 60 days of receipt 90% 85% FY 2005: The average cost for processing a new PERM application base $523 

Data Source(s): Automated processing systems and fax/mail processing system 

Performance Goal 06-4.1B (ETA) 

Assist workers impacted by international trade to better compete in the global economy through the Trade Adjustment A

FY 2002 

Goal Not Achieved 

FY 2003 

Goal Not Achieved 

FY 2004 

Goal Not Achieved 

FY 2005 

Goal Not Achi

*Indicator target reached (Y), substantially 

reached (S) or not reached (N) 

**Estimated Target Result * Target Result * Target Result * Target Result Percent of participants employed in the first quarter after program exit 

78% 66% N 78% 62% N 70% 63% N 70% 70% 

Percent of participants employed in first quarter after exit who are still employed in the second and third quarters after exit 

88% 89% Y 90% 86% N 88% 89% Y 89% 91% 

Percent of pre-separation earnings for those still employed in the third quarter after program exit 

90% 80% N 90% 74% N 90% 74% N 80% 76% 

FY 2005: Average cost per training participant 

— — — — — — — — — $16,000 $10,635 

Data Source(s): TAPR (Trade Act Participant Report) included in the Enterprise Information Management System (EIMS) 
294 United States Department of Labor Performance Goal 06-4.2A (OASP) Maximize regulatory flexibility and benefits and promote flexible workplace programs FY 2004 Goal Not Achieved FY 2005 Goal Achiev

*Indicator target reached (Y), substantially reached (S) or not reached (N) **Estimated Target Result * Target Result Percent of identified significant regulations that are reviewed FY 2005: Criteria and timeline established for regulatory reviews FY 2004: Seek input from the public as part of its decision-making process in determining 

which regulations or regulatory programs should be prioritized for review for their effects on small businesses and entities 

Y N N 

Y Y 

FY 2005: Unit cost baseline established, and plan developed to identify practices that are not 

cost-effective FY 2004: Ensure that all new regulatory proposals identify monetary costs, benefits, and net 

benefits, and include a summary of this information in all Regulatory Impact Analyses 

performed by DOL agencies 

17 17 Y 

Develop 

Plan

N 

Percent of regulations identified for revision or withdrawal FY 2005: Develop plan to review all significant regulations for maximum flexibility Y N N Develop Plan Y Percent of small employers with access to health care benefit plans — — — base — Women’s Bureau - Flex-Options for Women Project

Best practices for, and models of, flexible workplace practices are identified and publicized. 

FY 2004: Companies enlisted as corporate mentors Women-owned businesses seeking to establish workplace flexibility policies or programs 

40 80 

41 77 

Y 

S 

Develop 

Studies 

Y 

Data Source(s): DOL's Spring 2004 Regulatory Agenda - Initiatives supplied by DOL agencies to OASP. Women's Bureau: Best Practice inta
FY 2006 Performance and Accountability Report 295 

2. Significant FY 2006 Audits and Evaluations 

The Department of Labor has a department-wide commitment to using audits and evaluations as part of our 

management and planning process. Evaluations are used to validate and measure the effectiveness of our 

goal achievement strategies. Audits and evaluations are also viewed as opportunities to improve the cost 

effectiveness and quality of our programs. 

During the past year, the audits and evaluations summarized below have provided information and 

guidance to the Department’s agencies and bureaus. As each program is examined, the entire Department 

moves one step closer to our common goal of providing America with a prepared, secure, and competitive 

workforce with quality workplaces. 

The audits and evaluations listed below are categorized by the DOL strategic goals they support. 

GOAL 1: A PREPARED WORKFORCE 

1. Issue: Proper spending of WIA incumbent worker funds 

Program Area: ETA WIA

Performance Goal: Goal 05-1.1A – Increase placements and educational 

attainments for youth served through the WIA Youth program. Goal 05-4.1A – 

Increase the employment, retention, and earnings of individuals registered 

under the WIA Adult Program. Goal 05-4.1C – Increase the employment, 

retention, and earnings replacement of individuals registered under the WIA 

Dislocated Worker Program. 

Report Title: Insufficient Federal 

Guidance Could Result in Misuse of 

Incumbent Worker Training Program 

Funds (OIG 06-05-003-03-390) 

Date Completed: September 2005 

Conducted By: OIG

Program Implication: Lack of guidance to States could lead to misuse of incumbent worker funds. This is especially 

important since proposed legislation for WIA reauthorization provides that local boards could spend up to 10 percent of 

their funds for incumbent working training. It is necessary that ETA ensure that these funds are used to pay for upgrading 

current workers skills and not on business start-up or production costs. 

Findings: No Federal definition of “eligible individual” exists for incumbent worker training; each State defines eligibility. 

Recommendations: 

1. ETA should issue guidance to the States that clarifies that incumbent worker training programs are intended to pay for 

skills upgrading, not start-up costs for a new business. Such guidance might say that skills upgrading includes training that:

a. help an employer’s workforce keep up with technology or other job changes to allow employees to keep their jobs, and 

b. help workers acquire skills to allow them to be promoted to higher paying jobs. 

2. ETA should encourage the States to: 

a. establish policies and definitions that set some minimum time period for a company to be in business in a State in order 

to qualify for incumbent worker training funds available under either WIA statewide activities or local board activities, 

and 

b. set some minimum time for a worker to be employed in order to qualify as an incumbent worker. 

3. ETA should seek to incorporate these recommendations into the WIA reauthorization legislation. 

Actions Taken: 

1. ETA has requested additional information from the State of Arkansas to validate that no WIA funds were spent improperly. 

After a thorough review of Arkansas’ questioned WIA incumbent worker expenditures, ETA determined that all of the 

State’s costs were indeed allowable under WIA law and regulations. 

2. ETA issued a final determination letter conveying this finding to the State on November 2, 2005. 

3. On March 6, 2006, ETA issued TEGL No. 18-05, clarifying the ways in which WIA funds may be used for incumbent 

worker training. 

Actions Remaining: ETA will issue policies on incumbent worker training and on 

WIA-funded economic development activities. 

Expected Completion: September 2006 

Additional Information: A copy of the complete report can be obtained at http://www.oig.dol.gov/public/reports/oa/2005/06-

05-003-03-390.pdf. 
Appendices 

296 United States Department of Labor 

2. Issue: Data quality issues affecting States’ efforts to collection and report WIA performance data 

Program Area: ETA WIA

Performance Goal: Goal 05-1.1A – Increase placements and educational 

attainments for youth served through the WIA Youth program. Goal 05-4.1A – 

Increase the employment, retention, and earnings of individuals registered under 

the WIA Adult Program. Goal 05-4.1C – Increase the employment, retention, 

and earnings replacement of individuals registered under the WIA Dislocated 

Worker Program. 

Report Title: Workforce Investment 

Act: Labor and States Have Taken 

Actions to Improve Data Quality, 

but Additional Steps Are Needed 

(GAO-06-82) 

Date Completed: November 2005 

Conducted By: GAO 

Program Implication: WIA has significantly changed the way that performance outcomes are measured by States and 

localities. Consequently, it was necessary to review the impact that such changes have had on (1) the data quality issues 

previously identified as affecting States’ efforts to collect and report WIA performance data, (2) States’ actions to address 

them, and (3) the actions DOL is taking to address remaining issues. 

Findings: 

1. Almost all States have made efforts to improve the quality of WIA performance data. At least 40 States have controls in 

their IT systems that capture WIA performance data, such as edit checks or exception reports to help screen for errors or 

missing data. 

2. Forty-three States have taken actions to clarify DOL guidance and help local areas determine who should be tracked in the 

performance measures. 

3. Most States said they monitor local areas by assessing local procedures and policies. 

4. DOL addressed some data quality concerns by requiring States to validate their data and ensure the accuracy of their 

performance outcomes. 

5. Most States reported that DOL requirements have increased awareness of data quality at the State/local level. 

6. DOL does not have methods in place to review States’ validation efforts or hold States accountable for complying with its 

requirements. 

7. DOL issues guidance requiring States to implement common performance measures on July 1, 2005, which clarified some 

key data elements, but does not address all the issues. 

8. The Department has Federal monitoring processes in place but lacks a standard monitoring guide to address data quality. 

Recommendations: 

1. DOL should determine a standard point of registration and monitor its implementation. 

2. The Department should conduct a review of WIA participant files and take steps to hold States accountable for meeting 

data validation requirements. 

3. DOL should develop a standard monitoring tool for WIA performance data. 

Actions Taken: 

1. Training and Employment Guidance Letter (TEGL) 17-05, Common Measures Policy, issued February 17, 2006, provided 

 States with a single, unified document on performance and reporting requirements for common measures and WIA Section 

 136 performance accountability purposes. It includes clarification regarding the point of participation (registration) and exit. 

Actions Remaining: 

1. DOL plans to modify the current data validation procedures to begin reviewing 

a sample of States’ validation files and plans to hold States accountable for data 

validation results. 

2. DOL is taking steps to develop a comprehensive monitoring guide for 

performance data and plans; will provide training on the new guide to improve 

the completeness and consistency of oversight. 

Expected Completion:

1. February 2007 

2. December 2006 

Additional Information: A copy of the complete report can be obtained at http://www.gao.gov/new.items/ d0682.pdf. 

3. Issue: Helping students with cognitive disabilities to become employable 

Program Area: Job Corps

Performance Goal: Goal 05-1.1B – Improve 

educational achievements of Job Corps students, and 

increase participation of Job Corps graduates in 

employment and education. 

Report Title: Strengthening Efforts to Assess and Account for 

Students with Cognitive Disabilities Would Help Job Corps 

Achieve its Mission (OIG 09-06-001-03-370) 

Date Completed: November 2005 

Conducted By: OIG 
Significant Audits and Evaluations 

FY 2006 Performance and Accountability Report 297 

Program Implication: Improving efforts to assess and account for students with unknown or undisclosed cognitive 

disabilities would help Job Corps achieve its mission to teach eligible young adults the skills they need to become 

employable and independent. 

Findings: 

1. Assessing all Job Corps students for cognitive disabilities would improve student outcomes, but increase program costs. 

2. Federal law requires assessment under specific circumstances, and Job Corps had not ensured compliance. 

3. Job Corps cognitive disability data were not reliable. 

Recommendations: 

1. Require Job Corps to identify students with unknown or undisclosed cognitive disabilities. 

2. Conduct a pilot program to develop appropriate screening and formal evaluation methodology. 

3. Assess the impact on performance and costs. 

4. Implement national policies and procedures as appropriate. 

5. Ensure that center schools subject to legislation requiring cognitive disability assessment comply with such requirements. 

6. Ensure that data submitted by centers on cognitively disabled student are accurate and complete. 

Actions Taken: 

1. Job Corps will follow its established process, comparable to that used in most public school systems, for identification of 

cognitive disabilities in accordance with the Rehabilitation Act of 1973. 

2. A Policy and Requirements Handbook Change Notice has been developed and approved by the Department’s Office of 

Civil Rights. It will provide additional information for identifying students with cognitive disabilities. 

3. New Policy and Requirements Handbook requirements have been developed for approval and release that: 

a. describe the entities required under IDEA and Section 504 to assess students for cognitive disabilities; 

b. require centers that meet any of the criteria to contact the appropriate State or Federal agencies for guidance; and 

c. require centers subject to IDEA or Section 504 requirements to document their processes for providing student 

assessments and special education for students in their center training plans. 

4. Job Corps has incorporated improvements to its annual survey of centers regarding high school programs to better identify 

centers that might be subject to IDEA and Section 504 requirements. 

5. Job Corps will continue to research, confer with national experts in the field, and convene expert and practitioner panels to 

study new models and strategies to assist students with cognitive disabilities. 

6. Job Corps has established Regional Disabilities Specialists to provide ongoing, targeted technical assistance and training for 

center staff on the implementation of instructional strategies shown scientifically to work with cognitively disabled students 

and other low achieving students. The specialists will also help centers leverage community-based and other resources in 

serving students. 

7. Through a designated contract, Job Corps conducted targeted assessments at a sample of 12 Job Corps centers to examine 

disabilities data collection practices and identified specific areas for improvement. 

8. Job Corps has established a formal audit system and requires centers/contractors to be more accountable for the accuracy of 

data. This system enables the national office to routinely check on the accuracy of centers’ entry of disabilities data into the 

electronic data collection system. 

9. Job Corps continues to monitor and upgrade its current system for communicating to centers its policies and procedures 

related to identifying, assessing and meeting the needs of students with cognitive disabilities. 

Actions Remaining: Job Corps is developing tools and training materials for 

Regional, operator, and center staff to help determine and maintain compliance. 

Expected Completion:

December 2006 

Additional Information: A copy of the complete report can be obtained a ww.oig.dol.gov/public/reports/oa/2006/ 09-06-

00103-370.pdf. 

4. Issue: The accuracy of Job Corps’ “On-Board-Strength” performance measure 

Program Area: Job Corps

Performance Goal: Goal 05-1.1B – Improve educational 

achievements of Job Corps students, and increase 

participation of Job Corps graduates in employment and 

education. 

Report Title: San Diego Job Corps Center: Student 

Attendance and Training Data Overstated (OIG 09-05-

004-03-370) 

Date Completed: September 2005 

Conducted By: OIG

Program Implication: Job Corps will continue to take steps to ensure the reliability of performance outcomes reported by all 

center operators. 

Findings: 

1. San Diego staff obtained undated resignation forms from students so they could make up a separation date later. 

2. The practice of prolonging student stays after separation or completion of a vocation was widespread. 

3. San Diego extended the stay of about half of 717 students who left the center in Program Year 2003, thereby overstating the 
Appendices 

298 United States Department of Labor 

“On-Board-Strength” performance measure. 

4. Liquidated damages of a maximum of $618,369 could be due to Job Corps. 

5. The “60-Day Commitment Rate” and “GED/High School Diploma Attainment Rate” performance measures were reliable. 

6. The number of vocational completions was overstated by over 50 percent. Training records did not support that students 

had in fact completed all the vocation’s tasks with an appropriate level of proficiency. 

Recommendations: 

1. DOL should ensure that Job Corps management takes corrective action. 

2. Controls and monitoring at the San Diego Job Corps Center should be strengthened to ensure compliance with Job Corps’ 

requirements for the student accountability and vocational completion. 

Actions Taken: 

1. DOL obtained a Corrective Action Plan for San Diego and corrective actions began. 

2. DOL is reviewing the center’s response in regard to policies in effect for the timeframe of data reviewed. 

Actions Remaining: Final determination of liquidated damages. Expected Completion: December 2006 

Additional Information: A copy of the complete report can be obtained at 

http://www.oig.dol.gov/public/reports/oa/2005/0905-004-03-370.pdf. 

5. Issue: DOL’s leadership in the implementation of the Jobs for Veterans Act (JVA)

Program Area: VETS

Performance Goal: Goal 05-1.1C – Improve the 

employment outcomes for veterans who 

receive One Stop Career Center services and 

veterans’ program services. 

Report Title: Labor Actions Needed to Improve Accountability and Help 

States Implement Reforms to Veterans’ Employment Services (GAO-06-

176) and related testimony (GAO-06-357T) 

Date Report Completed: December 2005 

Date Testimony Presented: February 2006

Conducted By: GAO 

Program Implication: The ability of veterans to quickly obtain quality services leading to employment is becoming 

increasingly important as the number of service members leaving active duty is likely to increase by 200,000 annually. 

DOL’s ability to assist veterans will be improved by better integrating veterans’ representatives within the One-Stop Career 

Center delivery system and improving the performance accountability system for veterans. 

Findings: 

1. Most provisions of the Jobs for Veterans Act (JVA) were implemented within the first two years of enactment. 

2. However, some are still not fully implemented. 

3. About one-third of the States did not establish incentive award programs because their laws, policies, or agreements conflict 

with this JVA provision. 

4. New legislation has improved the quality of services to veterans and their employment outcomes. Greater availability of 

case management services under JVA is credited for this outcome. 

5. About half of State Directors of Veterans’ Employment and Training reporting their new monitoring role had strengthened 

local program accountability. 

6. About a third of Directors reported that accountability had lessened or not improved. This is attributed to (a) the absence of

local performance data, (b) fewer annual visits to One-Stop centers, and (c) a lack of coordination among Labor’s agencies 

responsible for JVA provisions. 

7. While Labor has developed a system to monitor program performance, it lacks a strategy for using the information it gathers 

to make improvements and to help States. 

Recommendations: 

1. DOL should provide clear guidance that would integrate veterans’ staff into the one-stops; ensure priority of service for 

veterans among all programs; and foster State use of incentives. 

2. DOL should monitor results to develop program improvements. 

3. DOL’s program offices should coordinate their oversight regarding JVA provisions. 

4. The Department should establish effective methods for enforcing Federal contractor requirements. 

Actions Taken: 

1. Began new evaluation of the integration of veterans’ staff into One-Stop Career Centers (August 2006). 

2. Convened work group to revise and update program policy guidance on provision of priority of service. 

3. Convened work group to revise and update monitoring guidance to include priority of service. 

4. Conducted joint monitoring targeting program improvement in selected States. 

5. Published a Notice of Proposed Rulemaking governing the VETS-100 Report in August 2006. 

Actions Remaining: 

1. Complete evaluation and disseminate results. 

2. Issue revised program policy guidance on priority of service. 

3. Disseminate best practices in State incentive award programs. 

Expected Completion:

1. September 2007 

2. March 2007 

3. September 2007 
Significant Audits and Evaluations 

FY 2006 Performance and Accountability Report 299 

4. Apply monitoring guidance, including priority of service, on a nationwide basis. 

5. Coordinate ETA-VETS monitoring on a nationwide basis. 

6. Publish Final Rules governing VETS-100 Reports. 

4. September 2007 

5. September 2007 

6. June 2007 

Additional Information: A copy of the complete report can be obtained at www.gao.gov/cgi-bin/getrpt?GAO-06-176. A 

complete copy of the related testimony can be obtained at http://www.gao.gov/new.items/d06357t.pdf. 

6. Issue: Employment Rates for Disabled Veterans

Program Area: VETS

Performance Goal: Goal 05-1.1C – Improve the employment 

outcomes for veterans who receive One Stop Career Center 

services and veterans’ program services. 

Report Title: Employment Rates for Disabled Veterans 

Date Completed: September 2006 

Conducted By: SRA International, Inc. 

Program Implication: The Department of Veterans Affairs (VA) makes substantial resource investments in providing 

vocational rehabilitation to disabled veterans who qualify for this program. In addition, Congress has consistently stressed 

the need for collaboration between VA and DOL to achieve the program’s employment and earnings goals for participants. 

Findings: 

1. There is high correspondence between the area in which training is provided and the area in which employment is secured. 

2. There is considerable variation in employment retention. 

3. Higher average earnings for those participants who do not appear to have received services from State Workforce Agencies. 

4. Complex patterns for attributing credit for employment placement to DVOP specialists, to Federal personnel with the 

 Department of Veterans Affairs (VA), to personnel operating under VA contracts, or in some cases, among these three. 

Recommendations: 

1. Involve DVOP specialists in the development of employment and training development plans for VR&E participants. 

2. Encourage DVOP specialists to become certified as Career Development Facilitators. 

3. Resolve differences between VA and DOL in the methods applied to measure outcomes. 

Actions Taken: The final report was received late September 29 so no actions have been taken yet. 

Actions Remaining: DOL and VETS have a Memorandum of Agreement (MOA) to work closer 

together in the referral process of VA clients to the DVOPs. The MOA establishes three work 

groups and many of the issues identified in this report are appropriate for follow up by the three 

work groups. There are overarching issues that all three will be interested in and some that are 

work group specific. VA and DOL will continue meeting at the national level to develop 

actions as well as coordinate the work of the three work groups. 

Expected Completion:

September 2006 

Additional Information: A copy of the complete report can be obtained by contacting Ronald Drach at (202) 693-4749 or at 

 Drach.Ronald@dol.gov 

7. Issue: Customer Satisfaction with the BLS Occupational Outlook Handbook (OOH) Website

Program Area: BLS 

Performance Goal: Goal 06-1.2A – Improve information 

available to decision-makers on labor market conditions, and 

price and productivity changes.

Report Title: Customer Satisfaction with the BLS 

Occupational Outlook Handbook (OOH) Website 

Date Completed: September 2006 

Conducted By: Federal Consulting Group

Program Implication: As BLS continues to provide more information to customers on its Web site, it is important to know how 

satisfied customers are with the delivery of BLS products and services. Improvements to the Occupational Outlook 

Handbook (OOH) portion of the BLS Web site in areas such as search or navigation can increase the usefulness of the Web 

site to BLS customers.

Findings: BLS achieved a customer satisfaction score of 79 for FY 2006. Quarterly results indicated that Web site changes, 

such as improving the search component of the BLS OOH website, can improve overall customer satisfaction with the Web 

site. 

Recommendations: None made 

Actions Taken: BLS began using a replacement search engine for the entire BLS public website in July 2006. 

Actions Remaining: None Expected Completion: Not applicable 

Additional Information: A copy of the quarterly news release can be obtained at http://www. foreseeresults.com/Form_ 

ACSISept2006.html. 

8. Issue: Principal Federal Economic Indicator (PFEI) Performance Evaluations 

Program Area: BLS

Performance Goal: Goal 06-1.2A – Improve information 

available to decision-makers on labor market conditions, 

Report Title: U.S. Import and Export Price Index and 

Consumer Price Index Performance Evaluations 

Date Completed: March 2006
Appendices 

300 United States Department of Labor 

and price and productivity changes. Conducted By: BLS 

Program Implication: For all Principal Federal Economic Indicators, the goal of the performance evaluations is to ensure that 

the Federal data and estimates used to assess current economic conditions meet high standards of accuracy and reliability, 

and are released to the public in a timely manner while avoiding disclosure prior to scheduled release. These evaluations are 

carried out in accordance with OMB Statistical Policy Directive No. 3. 

Findings: None

Recommendations: Not Applicable

Actions Taken: None

Actions Remaining: None Expected Completion: Not Applicable 

Additional Information: None 

GOAL 2: A SECURE WORKFORCE 

 9. Issue: WHD’s Directed Enforcement Program

Program Area: ESA WHD

Performance Goal: Goal 2.1A – American 

workplaces legally employ and compensate 

workers.

Report Title: Low-Wage Industry Operational Models for Compliance

Date Completed: June 2006

Conducted By: Mathematica Policy Research Inc./Boston U. 

Program Implication: This evaluation will augment and expand upon prior evaluation efforts designed to develop and validate 

specific performance indicators. Additional analysis related to the integration of WHD’s directed enforcement and 

complaint programs will aid WHD’s resource allocation efforts. 

Findings: 

1. Incidence and severity of violations can be measured across industries in terms of percent of employers in compliance, 

percent of employees employed in compliance, and average back wages due affected employees. 

2. Data suggest 33 industries that have high potential for minimum wage and overtime violations. 

3. In the health care industry, full FLSA investigations are more efficient than randomly selected survey cases, reflecting 

WHD’s success in focusing its resources on establishments with substantial violations. 

4. Within the health care industry, full FLSA investigations are slightly more efficient for identifying “employers in violation” 

in nursing home cases, than residential care cases. Residential care investigations are slightly more efficient in terms of 

“back wages agreed to pay.” 

5. Given resource constraints and the continuing need to focus on performance results, decisions regarding complaint and 

directed inspection activity in regional and district offices should better focus investigation resources on those low-wage 

industries of highest priority. 

6. To ensure maximum performance, complaint and directed activity should be integrated with one another. 

7. Overlaying information on complaint rates and underlying measures of compliance provides a way of setting priorities 

across different industries. 

Recommendations: 

1. At least in the health care industry, where complaints appear to identify many violations, WHD might consider increasing 

the rate at which it pursues complaints as full rather than limited investigations or exploring ways to elicit more complaints.

2. Conducting more full investigations in larger health care establishments may somewhat increase efficiency in identifying 

employees in violation. 

3. Future policies must provide strategic approaches for responding to complaints and targeting directed investigations, as well 

as for taking greater advantage of the overlap between them. 

Actions Taken: 

1. WHD disseminated a list of the identified industries for use in local and regional planning efforts. 

2. WHD conducted a national investigation-based survey of low-wage industries, identified in the list, to determine compliance

with the FLSA. 

3. WHD integrated a strategic approach to complaint and directed investigations into its FY 2007 initiative planning process. 

4. WHD secured funding for additional evaluations to further research recommendations related to strategic enforcement and 

enforcement in the low-wage industry. 

Actions Remaining: None Expected Completion: Not applicable 

Additional Information: A copy of the report is available from the Wage and Hour Division, Office of External Affairs, 200 

Constitution Avenue, NW, Washington, DC 20210 or by calling (202) 693-0051. 

 10. Issue: The effectiveness of WHD’s Web site 

Program Area: ESA WHD 

Performance Goal: Goal 2.1A – American workplaces 

legally employ and compensate workers. 

Report Title: Evaluating the WHD Web Site 

Date Completed: March 2006

Conducted By: Gallup 
Significant Audits and Evaluations 

FY 2006 Performance and Accountability Report 301 

Program Implications: Compliance assistance is a key component of the WHD’s efforts to secure voluntary compliance among 

the nation’s businesses. 

Findings: 

1. The primary reason visitors accessed the WHD Web site was for minimum wage information. 

2. Most respondents came from the private sector. 

3. The majority of respondents were first time users: there are distinctions between first-time users and repeat visitors. 

4. Among those who came to the Web site and answered the survey, one half came through a search engine. 

5. The Web site was rated “very good” or “excellent” at providing information by 56% of respondents; fewer than 50% of 

respondents did not rate the Web site as very high in providing the information they needed. 

6. Sixty-four percent of respondents reported that the information they were looking for was easy to find. 

7. Over half of survey respondents said they would take some action as a result of their visit to the Web site. 

Recommendations: 

1. The Web site should provide more general information for users. 

2. The Web site should be more user friendly for first timer users. 

3. More specific information on overtime laws is needed and should be added to the web site. 

4. With over half of those coming to the Web site coming from a generic search browser, WHD may need a clearer 

introductory page that would let visitors know exactly where they are and give some general information about WHD. 

5. More research should be conducted to assess additional information to add to the Web site. 

Actions Taken: WHD has begun making modifications to its Web site, incorporating recommendations of the study. 

Actions Remaining: Completion of the Web redesign. Expected Completion: FY 2007 

Additional Information: A copy of the complete report can be obtained from Wage and Hour Division, Employment Standards 

Administration, U.S. Department of Labor, FPB S-3502, 200 Constitution Ave., N.W., Washington, D.C. 20210, or by 

calling (202) 693-0051.

11. Issue: WHD’s process of developing, negotiating, and awarding settlement agreements 

Program Area: ESA WHD 

Performance Goal: Goal 2.1A – American 

workplaces legally employ and compensate 

workers.

Report Title: Agreement With Wal-Mart Indicates Need for Stronger 

 Guidance and Procedures Regarding Settlement Agreements (OIG 

 04-06-001-04-420) 

Date Completed: October 2005

Conducted By: OIG 

Program Implications: WHD needed to strengthen procedures for settlement agreements with employers. 

Findings: 

1. Wal-Mart agreement did not violate Federal laws or regulations. 

2. Breakdowns existed in WHD’s process for negotiating, developing, and approving such agreements. 

3. WHD did not consult with the Office of the Solicitor (SOL) in developing and approving the agreement. 

Recommendations:

1. WHD should develop and implement written procedures for negotiating, developing, and approving agreements with 

employers. 

2. Future WHD settlement agreements should be developed in coordination with SOL. 

Actions Taken: WHD instituted a new settlement agreement policy in June 2006 that resolved OIG recommendations. 

Actions Remaining: None Expected Completion: Not applicable 

Additional Information: A copy of the complete report can be obtained at http://www.oig.dol.gov/public/reports/ oa/2006/04-

06-001-04-420b.pdf.

12. Issue: Worker classifications and FLSA protection

Program Area: ESA WHD 

Performance Goal: Goal 2.1A–American workplaces 

legally employ and compensate workers.

Report Title: Employment Arrangements: Improved Outreach Could 

Help Ensure Proper Worker Classification (GAO-06-656) 

Date Completed: July 2006

Conducted By: GAO 

Program Implications: Workers classified as “contingent” may be subject to FLSA protection and affected by WHD’s efforts 

in low-wage industries. 

Findings: 

1. DOL detects and addresses misclassification of employees as independent contractors by investigating complaints, but does 

not always forward misclassification cases to other Federal and State agencies. 

2. The FLSA poster is a principal means of communicating FLSA protections, but does not contain any information on 

employment relationship, or provide a telephone number for individuals to register complaints. 
Appendices 

302 United States Department of Labor 

Recommendations: 

1. DOL should revise its FLSA workplace poster to include additional contact information to facilitate the reporting of 

potential employee misclassification complaints. 

2. DOL should evaluate the extent to which misclassification cases found through FLSA investigations are referred to other 

agencies, and take action to make improvements as needed. 

Actions Taken: 

1. WHD is reviewing its internal processes to determine the extent and appropriateness of referring employee misclassification 

cases to other Federal or State agencies. 

2. WHD has begun redesign of the FLSA poster. 

Actions Remaining: 

1. WHD will continue to review its internal process to determine the extent and appropriateness 

of referring employee misclassification cases to other Federal or State agencies. 

2. WHD will complete the redesign of the FLSA poster. 

Expected Completion: 

1. FY 2007 

2. FY 2007 

Additional Information: A copy of the complete report can be obtained at http://www.gao.gov/new.items/ d06656.pdf.

 13. Issue: The transparency of the Service Contract Act (SCA) wage determinations 

Program Area: ESA WHD 

Performance Goal: Goal 2.1A – American 

workplaces legally employ and compensate 

workers.

Report Title: Service Contract Act: Wage Determination Process 

Could Benefit From Greater Transparency, and Better Use of 

Violation Data Could Improve Enforcement (GAO-06-27) 

Date Completed: December 2005

Conducted By: GAO 

Program Implications: Report highlights potential improvements to the administration of the Service Contract Act (SCA). 

Findings: 

1. When making a wage determination, WHD analysts consult several sources of information for wage data on occupations. 

2. The wage determination process produces a wealth of nationwide wage data for service occupations that WHD makes 

available online and strives to update annually. 

3. Some stakeholders contend that the wage determination process is not transparent and that the resulting wages do not 

necessarily reflect local wage conditions. 

4. WHD enforces SCA by conducting investigations, ensuring contractor payments and providing compliance assistance to 

stakeholders. 

Recommendations: 

1. Develop a procedure for updating the SCA directory of occupations at regular intervals and include criteria for listing and 

removing occupations as the need emerges. 

2. Analyze the historical SCA contractor violation data in the Wage and Hour Investigator Support and Reporting Database 

(WHISARD), as well as Department information not included in WHISARD. To the extent appropriate, use this information 

to plan compliance assistance and investigative efforts and to develop enforcement goals for additional industries, similar to 

those WHD currently uses for repeat violators and industries with chronic violations. 

3. Update and revise the 1996 Service Contract Act/Walsh-Healey work site poster to include national and regional office 

telephone numbers and a Web site address for complaints. 

Actions Taken: 

1. Issued the 5th edition of the SCA Directory of Occupations in April 2006. 

2. Included an analysis of SCA enforcement data when establishing WHD’s annual priorities at the national level and for 

specific local and regional initiatives. 

3. Began revising the SCA poster. 

Actions Remaining: Completion of the SCA poster revision. Expected Completion: FY 

2007 

Additional Information: A copy of the complete report can be obtained at http://www.gao.gov/new.items/ d0627.pdf. 

14. Issue: User’s opinion of the OLMS Web site 

Program Area: ESA OLMS 

Performance Goal: Goal 06-2.1B – Ensure union financial 

integrity, democracy, and transparency.

Report Title: Evaluating the OLMS Web site 

Date Completed: December 2005 

Conducted By: Federal Consulting Group 

Program Implication: Customers use the OLMS Web site to obtain forms, compliance assistance materials, and public 

disclosure data from reports filed under the Labor-Management Reporting and Disclosure Act. It is important that the Web 

site provides accurate information and ease of navigation in order to fulfill its function. Any improvement to the Web site 

increases its usefulness to the OLMS customers.
Significant Audits and Evaluations 

FY 2006 Performance and Accountability Report 303 

Findings: 

1. Survey results showed a fairly low customer satisfaction rating. 

2. Respondents gave the lowest ratings to the navigation and search functionality areas. 

Recommendations: Improve the navigation and search functions. 

Actions Taken: 

1. OLMS redesigned the disclosure Web site. 

2. OLMS released the new Web site to the public in January 2006. 

3. OLMS renewed the contract and began a new round of data collection. 

Actions Remaining: None Expected Completion: Not applicable 

Additional Information: Information about this study can be obtained on-line at http://www.dol.gov/esa/olms_org.htm.

15. Issue: The prevalence of offshoring in Federal human services programs 

Program Area: ETA UI

Performance Goal: Goal 06-2.2A – Make timely and accurate benefit 

payments to unemployed workers, facilitate the reemployment of 

unemployment insurance beneficiaries, and set up unemployment 

tax accounts promptly for new employers. 

Report Title: Offshoring Occurs in Most States, 

 Primarily in Customer Service and Software 

 Development (GAO-06-342) 

Date Completed: March 2006 

Conducted By: GAO 

Program Implication: The State administered Unemployment Insurance Program is partially being performed offshore. 

Federal human service programs need to be aware of the (1) occurrence and nature of offshoring, (2) benefits achieved and 

problems encountered, and (3) actions that have been taken to limit offshoring and why. 

Findings: 

1. Some work is performed offshore in the majority of States for the four State-administered programs reviewed (Food Stamps, 

TANF, Child Support Enforcement, and Unemployment Insurance). No work is performed offshore for the Federallyadministered student aid programs (Pell Grant and Federal Family Education Loan).

2. Offshoring occurred in one or more programs in 43 of 50 States and the District of Columbia, most frequently in the Food 

Stamp and TANF programs. 

3. The services most frequently reported as being performed offshore were functions related to customer service, such as call 

centers. Functions in the Unemployment Insurance and Child Support Enforcement programs were related to software 

development. 

4. India was the most prevalent offshore location, followed by Mexico. 

5. Lower costs are a benefit of having services performed offshore and few officials identified problems with offshore service 

providers in their contracts. On average, cost comparisons showed a savings between 0.3 and 24 percent if some services 

are performed offshore. 

6. The few State officials that reported any problems with the quality of services provided by offshore contractors said that 

they involved difficulties in understanding the English of software programmers or customer service representatives. 

7. New Jersey and Arizona have prohibited offshoring in state contracts. Some States have taken other actions, such as 

requiring State agencies to disclose when State-contracted work is performed offshore or to report implications of 

offshoring. The Federal government does not have regulations specifically related to offshoring of services in the six 

programs reviewed. 

Recommendations: None made 

Actions Taken: Not applicable 

Actions Remaining: None Expected Completion: Not applicable 

Additional Information: A copy of the complete report can be obtained at http://www.gao.gov/cqi-in/getrpt?GAO06-342. 

16. Issue: Fraudulent claims relating to Hurricane Katrina 

Program Area: ETA UI

Performance Goal: Goal 06-2.2A – Make timely and accurate benefit 

payments to unemployed workers, facilitate the reemployment of 

unemployment insurance beneficiaries, and set up unemployment 

tax accounts promptly for new employers. 

Report Title: Claimants with Unemployment Claims 

 in Both Mississippi and Louisiana Related to 

 Hurricane Katrina (OIG 06-06-004-03-315)

Date Completed: December 2005 

Conducted By: OIG 

Program Implication: After Hurricane Katrina, both the States of Louisiana and Mississippi were inundated with 

Unemployment Insurance (UI) and Disaster Unemployment Assistance (DUA) claims. ETA Regional and National Office 

staff will need to work with State staff to identify potentially fraudulent claims. 

Findings: 

1. OIG identified 238 claims where the same Social Security Number was used to file claims in both States and benefits were 

paid in both States for the same week-ending dates. 
Appendices 

304 United States Department of Labor 

2. When UI and DUA claims are paid to the same claimant, it is likely that the DUA claim is fraudulent because State wages 

are required for a UI claim. Where DUA is being paid to a claimant in both States, it is likely that one claim is fraudulent. 

Consequently, Federal FEMA dollars for DUA are more likely to be at risk than State UI funds. 

Recommendations: Because of the susceptibility for Federally-funded DUA claims to be fraudulent, the Regional ETA offices 

should assist the States in their case reviews to expedite the identification of fraudulent claims. 

Actions Taken: 

1. A claims review was conducted and non-monetary issues were established as appropriate. The States have begun recovery 

efforts for improper payments, as appropriate. 

2. ETA’s Regional Offices worked with the States to implement a crossmatch of DUA claims against claims in bordering 

States to identify potentially fraudulent claims. 

3. ETA Dallas Regional Office assisted the Louisiana Department of Labor in initiating ongoing data matching with the 

National Directory of New Hires to detect unreported earnings by UI claimants. Through the use of this data matching 

system, it is possible to detect those claimants who are working in any State as well as those working with any Federal 

agency including the military. 

4. ETA’s Dallas Regional Office is working with the Office of Inspector General to identify fraudulent DUA and UI claims in 

cases where claimants were employed in jobs funded by a National Emergency Grant. The OIG will provide the results of 

investigations along with recommendations to the Department of Justice for prosecution. 

Actions Remaining: Work with the OIG to complete investigations. Expected Completion: August 2007 

Additional Information: A copy of the complete report can be obtained at 

http://www.oig.dol.gov/public/reports/oa/2006/0606-004-03-315.pdf. 

17. Issue: Assisting State Workforce Agencies in the use of IRS Form 1099 data for accurate employee classification 

Program Area: ETA UI

Performance Goal: Goal 06-2.2A – Make timely and accurate 

benefit payments to unemployed workers, facilitate the 

reemployment of unemployment insurance beneficiaries, and set 

up unemployment tax accounts promptly for new employers. 

Report Title: State Workforce Agencies Use of IRS 

Form 1099 Data to Identify Misclassified Workers 

(OIG 03-05-005-03-315) 

Date Completed: September 2005 

Conducted By: OIG

Program Implication: When employers misclassify employees as independent contractors, this reduces their tax liability 

because they do not pay State and Federal Unemployment Insurance, Social Security, and Medicare taxes. By using IRS 

data, State Workforce Agencies (SWAs) increase the possibility of identifying and correcting these misclassifications. 

ETA can provide guidance and help SWAs overcome obstacles in obtaining and using the data. 

Findings: 

1. Only nine SWAs used IRS Form 1099 data to identify potential employers misclassifying employees as independent 

contractors. 

2. Communication with the IRS was the key to successfully obtaining and using the 1099 data. SWAs already receiving other 

IRS tax information may be further ahead in meeting the IRS application and safeguard requirements. 

3. Representatives from SWAs using the 1099 data identified several extract criteria to make the 1099 data useful. 

4. The age of the 1099 data was a perceived obstacle, but the age of the data does not affect its usefulness in identifying 

potential employers who may be misclassifying employees. 

5. As of December 2004, seven of the nine SWAs reported that they identified 7,118 misclassified employees, recovered 

$1,492,521 in underreported UI tax contributions and adjusted $328,634 for overreported UI tax contributions associated 

with these workers. 

Recommendations: 

1. Provide assistance and guidance to the SWAs applying for the 1099 data to increase the possibility that they are successful 

in obtaining and using the data. 

2. Communicate to these SWAs how to overcome obstacles in obtaining and using the data. 

3. Encourage SWAs before the start of the 2006 IRS enrollment period to apply for and use the 1099 data in their UI field tax 

audit program. 

Actions Taken: 

1. For 2006, the number of SWAs using the 1099 data increased to 27, resulting in part from several conference calls that 

were convened with the SWAs. 

2. In February 2006, DOL sent the OIG Report to all SWA tax chiefs and reminded them of the enrollment period for 2007 

(August through November 2006). 

3. DOL is an active participant in an IRS workgroup to address Questionable Employer Tax Practices (QETP). 

4. The work group also includes some State Workforce Agency staff. This work group was established to foster further 

coordination between the IRS and the SWAs, particularly in their discovery and audit of employers exercising questionable 

tax practices in their business operations. 
Significant Audits and Evaluations 

FY 2006 Performance and Accountability Report 305 

Actions Remaining: Use the 2007 Unemployment Insurance National Tax Conference to further 

promote and foster participation in both the 1099 program and the QETP coordination initiative. 

Expected Completion: 

August 2007

Additional Information: A copy of the complete report can be obtained at http://www.oig.dol.gov/public/reports/ 

oa/2005/0305-005-03-315.pdf. 

18. Issue: Understanding the factors that lead UI-eligible workers to receive benefits 

Program Area: ETA UI

Performance Goal: Goal 06-2.2A – Make timely and accurate benefit 

payments to unemployed workers, facilitate the reemployment of 

unemployment insurance beneficiaries, and set up unemployment tax 

accounts promptly for new employers. 

Report Title: Unemployment Insurance. 

 Factors Associated with Benefit 

 Receipt (GAO-06-341) 

Date Completed: March 2006 

Conducted By: GAO 

Program Implication: Using information on the extent to which an individual worker’s characteristics, including past UI 

benefit receipt or industry, are associated with the likelihood of UI benefit receipt or unemployment duration can help the 

Unemployment Insurance program better meet the needs of unemployed workers. 

Findings: 

1. UI-eligible workers that GAO studied are more likely to receive UI benefits if they have higher earnings prior to becoming 

unemployed, are younger, have more years of education, or if they have a history of past UI benefit receipt when compared 

with otherwise similar workers. Past experience with the UI program has a particularly strong effect on the future likelihood 

of receiving UI benefits. 

2. UI-eligible workers who receive UI benefits have longer unemployment durations than those who do not receive benefits. 

Other characteristics of UI-eligible workers associated with longer unemployment duration include lower earnings before 

becoming unemployed; fewer years of education; being African-American or female; and not belonging to a union. 

3. Simulations show that the likelihood of receiving UI benefits during a first period of unemployment is highest among 

workers from the mining and manufacturing industries. The likelihood of receiving UI benefits when unemployed increases 

with each previous period of UI receipt across all industries, and the most notable increase occurs in public administration. 

4. First-time unemployed workers from construction and manufacturing experience significantly shorter unemployment 

duration than workers from other industries. 

Recommendations: None made 

Actions Taken: Not applicable 

Actions Remaining: None Expected Completion: Not applicable 

Additional Information: A copy of the complete report can be obtained at http://www.gao.gov/new.items/d06341.pdf. 

19. Issue: Improper payment of UI benefits 

Program Area: ETA UI

Performance Goal: Goal 06-2.2A – Make timely and accurate 

benefit payments to unemployed workers, facilitate the 

reemployment of unemployment insurance beneficiaries, and 

set up unemployment tax accounts promptly for new 

employers.

Report Title: Unemployment Insurance: Enhancing 

Program Performance by Focusing on Improper 

Payments and Reemployment Services (GAO-06-696T) 

Date Completed: May 2006 

Conducted By: GAO 

Program Implication: The Department of Labor and States have a shared responsibility to enhance UI program performance 

by ensuring that only eligible individuals receive benefits while on the UI rolls and fostering reemployment. DOL’s Office 

of Inspector General and others have found that aspects of UI may be vulnerable to fraud and improper payments, and 

despite the size and scope of UI, there has been little national information to fully assess States’ efforts to foster 

reemployment.

Findings: 

1. DOL has introduced a number of initiatives to help States improve their ability to detect and prevent overpayments, 

including new computer matches with Federal databases, a new core performance measure intended to provide States with 

added incentives for detecting and preventing overpayments, and additional funding for States’ overpayment detection 

efforts. 

2. States most often made use of Federal UI program requirements to help connect claimants with reemployment. 

3. States provide targeted reemployment services to particular groups of UI claimants, most often through Federally required 

claimant profiling. 

4. Despite States’ efforts to design systems that link UI claimants to reemployment services, few data are available to gauge 

whether or not their efforts are having the intended result. 

5. DOL has initiatives that may begin to shed light on claimant outcomes, but they fall short of providing a comprehensive 

understanding of services and outcomes for UI claimants. 

6. DOL’s FY 2007 budget request does not include funding for additional evaluations on Federally required efforts to target 
Appendices 

306 United States Department of Labor 

reemployment services. 

Recommendations: None made 

Actions Taken: Not applicable 

Actions Remaining: None Expected Completion: Not applicable 

Additional Information: A copy of the complete report can be obtained at http://www.gao.gov/cgibin/getrpt?GAO-06-696T. 

20. Issue: Determine the completeness and reliability of the CY 2003 data 

Program Area: ESA OWCP 

Performance Goal: Goal 2.2B – 

Minimize the impact of work-related 

injuries. 

Report Title: GPRA Data Validation Review – Federal Employees’ Compensation 

Act (OIG 22-05-008-04-431) 

Date Completed: September 2005

Conducted By: OIG 

Program Implications: DOL relies on data submitted by the district offices to assess whether or not the program is achieving 

its yearly goals and if changes are needed to make it more effective. 

Findings: Reductions in payments of Periodic Roll Management (PRM) benefits, due to the death of a claimant, are 

included in the FECA Program’s computation of savings generated in the first year. 

Recommendations: DOL should ensure the FECA Program excludes cases resolved due to claimants’ death from the 

calculation of savings generated through use of Periodic Roll Management. 

Actions Taken: ESA concurs with the finding that the methodology for calculating PRM savings should be modified to 

exclude savings from benefit payment reductions due to claimant deaths that occurred during the given time period. The 

Division of Federal Employees’ Compensation completed appropriate action to modify the methodology it applies to this 

calculation for PRM savings on October 1, 2005. 

Actions Remaining: None Expected Completion: Not applicable 

Additional Information: A copy of the complete report can be obtained at http://www.oig.dol.gov/publicreports/oa/2005/2205-

008-04-431.pdf.

21. Issue: ESA’s compliance with Federal and departmental security standards in selected control areas for three ESA 

systems 

Program Area: ESA OWCP 

Performance Goal: Goal 2.2B – Minimize 

the impact of work-related injuries. 

Report Title: Compliance with Federal and Departmental Security Standards in 

Selected Control Areas for Three Employment Standards Administration 

Systems (OIG 23-05-015-04-001) 

Date Completed: October 2005

Conducted By: OIG 

Program Implications: Evaluate the agency’s compliance with Federal and Departmental requirements in security control 

areas that are emphasized by the Office of Management and Budget (OMB) in its annual Federal Information Security 

Management Act (FISMA) reporting requirements. 

Findings: 

1. The Certification and Accreditation (C&A) packages for Energy Case Management System (ECMS), Longshore Case 

Management System (LCMS), and Automated Support Package (ASP) were not reevaluated and updated to comply with the 

April 2004 issue of the Department of Labor Computer Security Handbook and National Institute of Standards and 

Technology Special Publication 800-37, Guide for the Security Certification and Accreditation of Federal Information 

Systems. 

2. There was a security control finding related to the ECMS, LCMS, and ASP Plan of Action and Milestone (POA&M) 

reports. However, ESA management took timely action to correct one of the four conditions of the medium-risk security 

control finding prior to the issuance of this report. The OIG considers this one condition of the medium-risk finding to be 

closed. 

3. The ESA System Inventory process related to ECMS, LCMS, and ASP was in compliance with Departmental requirements. 

The Incident and Response tools and procedures were in compliance with Federal and Departmental requirements. 

Recommendations: 

1. Perform a security control assessment of ECMS, LCMS, and ASP to verify whether they are operating as designed. 

2. Incorporate the results of the assessments into ECMS, LCMS, and ASP Certification and Accreditation (C&A) packages. 

3. Update reports to indicate that technical testing is ongoing until corrective action has been taken.

Actions Taken: 

1. During fourth quarter FY 2005, ESA performed logical access control testing of ECMS and LCMS applications. 

2. Computer Sciences Corporation performed the same testing for the ASP. Records documenting the test results are on file 

with the Division of Information Technology Management and Services (DITMS). 
Significant Audits and Evaluations 

FY 2006 Performance and Accountability Report 307 

Actions Remaining: 

1. The ECMS, LCMS and ASP systems are scheduled for recertification; the Security Test and 

Evaluation for the recertification will include technical testing. 

2. The results of the security control assessments from recent testing, as well as testing scheduled for 

the 2006 C&A, will be incorporated into the ECMS, LCMS, and ASP C&A packages. 

3. ESA is currently in the process of renewing all system certifications. As part of this effort ESA 

will perform security control assessments of ECMS, LCMS, and ASP security control that include 

technical testing of the key management, operational, and technical controls, as defined in the 

ECMS, LCMS, and ASP System Security Plans, to verify whether they are operating as designed. 

Expected Completion:

1. November 2006 

2. October 2006 

3. December 2006 

Additional Information: A copy of the complete report can be obtained from the Office of the Inspector General, U.S. 

Department of Labor, FPB S-5502, 200 Constitution Ave., NW, Washington, DC 20210, or by calling 202-693-5100.

22. Issue: The mission, design, and costs for four Federal benefits programs 

Program Area: ESA OWCP 

Performance Goal: Goal 2.2B – 

Minimize the impact of work-related 

injuries. 

Report Title: Federal Compensation Programs: Perspectives on Four Programs 

(GAO-06-230) 

Date Completed: November 2005 

Conducted By: GAO 

Program Implication: Federal benefit programs, such as DOL’s Black Lung Program and the Energy Employees Occupational 

Illness Compensation Program should be alert to the impact of legislative amendments on program costs and the timeliness 

of benefit payments.

Findings: 

1. Looking at the Black Lung Program, the Vaccine Injury Compensation Program (VICP), the Radiation Exposure 

Compensation Program (RECP), and the Energy Employees Occupational Illness Compensation Program (EEOICP), GAO 

found that all four programs were designed to compensate individuals injured by exposure to harmful substances. However, 

their design, the agencies that administer them, their financing mechanisms, benefits paid, and eligibility criteria, including

their standards of proof differ significantly. 

2. All four programs were established within two years of their enacting legislation, and for some programs, benefits paid have 

exceeded the initial estimates. 

3. The total benefits paid for the Black Lung Program have far exceeded initial estimates because the program was initially set 

up to end in 1976 when State workers’ compensation programs were to have provided these benefits and the program has 

been expanded several times since 1969, including several amendments that have increased benefits and added categories of 

claimants. 

4. EEOICP costs are expected to rise substantially because of recent changes that move payments from State programs to 

DOL. 

5. For all four programs, it has taken the agencies years to finalize some claims and compensate eligible claimants. 

6. The Federal role in all four programs has expanded significantly over time. All four have expanded to provide eligibility to 

additional categories of claimants, cover more medical conditions, or provide additional benefits. 

7. Program design, including the extent to which programs allow claimants and payers to appeal claims decisions in the courts 

and the standards of proof for each program, can affect claims-processing time. 

Recommendations: None made 

Actions Taken: Not applicable 

Actions Remaining: None Expected Completion: Not applicable 

Additional Information: A copy of the complete report can be obtained at www.gao.gov/cgi-bin/getrpt?GAO-06-230. 

23. Issue: The Longshore program cannot compare its results with those of similar programs 

Program Area: ESA OWCP 

Performance Goal: Goal 2.2B – Minimize the 

impact of work-related injuries. 

Report Title: Measuring the Comparability of the Longshore Program 

Date Completed: January 2006

Conducted By: SRA International 

Program Implications: The Longshore Case Management System (LCMS) is insufficient in supporting the program’s 

objectives for performance measurement and comparability analysis with other State workers’ compensation programs. 

Findings: 

1. The current LCMS database does not thoroughly support the intended benchmarking goals because the database does not 

store certain key data elements that are essential to evaluate performance measures associated with these system goals. 

Medical, injury, rehabilitation, carrier, and attorney data elements that are needed for related types of performance measures 

are not captured. 

2. The current data stored in the LCMS database is not based on specific national standards that can support any meaningful 

comparison of Longshore program performance measures to similar indicators from other State and national workers’ 

programs. 
Appendices 

308 United States Department of Labor 

3. The LCMS system does not classify injuries by occupation and industry classification codes. This largely impedes the 

ability to easily perform direct comparisons with external workers’ compensation programs. 

4. The current LCMS database structure is optimized to store transactional data and hence lacks any extensive reporting 

capabilities. This limits the ability to effectively query the database and produce results that can be used for any 

standardized statistical analysis. This structure also makes it difficult to perform comparisons with data from other similar 

State-sponsored programs. 

Recommendations: The recommended alternative consists of two major project phases – a short-term approach for enhancing 

the existing LCMS system and a long-term approach for developing a claims management system that will address 

significant deficiencies with the existing LCMS system by upgrading the entire technology platform and extending 

functionality such that major functional requirements for performance measurement and benchmarking are satisfied. 

Actions Taken: The Longshore Program is exploring budgetary options to secure necessary additional funding to implement 

the two recommended project phases. In the absence of this funding, the Program is exploring what can be done within 

existing resources to develop short-term enhancements.

Actions Remaining: Develop plans to implement the recommended alternative consisting of two 

major project phases – a short-term approach for enhancing the existing LCMS system and a longterm approach for developing a custom solution for a claims management system that will address 

significant deficiencies with the existing LCMS system by upgrading the entire technology 

platform and extending functionality such that all major functional requirements for performance 

measurement and bench-marking are satisfied. 

Expected Completion:

September 2011 

Additional Information: A copy of the complete report can be obtained from the Office of Workers’ Compensation Programs, 

Employment Standards Administration, U.S. Department of Labor, FPB S-3522, 200 Constitution Ave., NW, Washington, 

DC 20210, or by calling 202-693-0534.

24. Issue: Disability benefits for military personnel and civilian public safety officers vary 

Program Area: ESA OWCP 

Performance Goal: Goal 2.2B – 

Minimize the impact of workrelated injuries. 

Report Title: Disability Benefits – Benefit Amounts for Military Personnel and Civilian 

Public Safety Officers Vary by Program Provisions and Individual Circumstances 

(GAO-06-4) 

Date Completed: April 2006

Conducted By: GAO 

Program Implications: Congress mandated that GAO study the disability benefits available to Federal, State, and local 

government employees who serve the public in high-risk occupations and are injured in the line of duty. 

Findings: 

1. Neither military personnel, nor any of the civilian Public Safety Officers (PSOs) included in this study, consistently have 

more line-of-duty disability benefits available to them in all situations. 

2. During the initial period of treatment, recovery, and evaluation, program provisions governing the availability of 

continuation of pay and temporary disability benefits offer certain advantages for military service members compared with 

the selected civilian PSOs. 

3. When disabilities are permanent, however, the amount of benefits provided over a lifetime for permanent partial or totally 

incapacitating disabilities are sometimes greater for military veterans, and sometimes greater for the selected civilian PSOs, 

depending on such variables as the type and degree of impairment and the individual’s pre-injury salary level. 

Recommendations: None made 

Actions Taken: Not applicable

Actions Remaining: None Expected Completion: Not applicable 

Additional Information: A copy of the complete report can be obtained at http://www.gao.gov/new.items/ d064.pdf.

25. Issue: The Actuarial Liability, Net Intra-Governmental Accounts Receivable and Benefit Expenses of the FECA 

Special Benefit Fund for the year ending September 2005 

Program Area: ESA OWCP 

Performance Goal: Goal 2.2B – Minimize 

 the impact of work-related injuries. 

Report Title: Special Report Relating to the Federal Employees’ Compensation 

Act Special Benefit Fund – FY 2005 (OIG 22-06-006-04-431) 

Date Completed: October 2005 

Conducted By: OIG 

Program Implication: DOL is charged with the responsibility of operating the Employees’ Compensation Fund to provide 

income and medical cost protection to covered Federal civilian employees injured on the job, employees who have incurred 

a work-related occupational disease and beneficiaries of employees whose death is attributable to job-related injury or 

occupational disease. This schedule has been prepared to report the actuarial liability, net intra-governmental accounts 

receivable and benefit expense of the Fund. 
Significant Audits and Evaluations 

FY 2006 Performance and Accountability Report 309 

Findings: 

1. The benefit expense for the year ending September 30, 2005 was comprised of the following (dollars in thousands): 

a. Benefits paid for compensation = $1,692,469 

b. Benefits paid for medical benefits = $681,038 

c. Change in accrued benefits = $854 

d. Change in actuarial liability = $436,968 

e. Total benefit expense = $2,811,329. 

2. Aggregate liability increased approximately 1.6%. Two agencies had liabilities that changed by more than 10%: OPM 

(96.17%) and DOJ (11.70%). 

3. The Liabilities to Benefits Paid ratio was 11. 

4. Actual payments were about 16.7% lower than predicted by model. Four agencies’ actual payments varied from the 

prediction by more than 20%: Treasury (-22.1%), DHS ($-36.9%), DOL (-20.9%), and USPS (-21.8%). 

5. The calculated liability amounts were within 10% of amounts derived by DOL models for all agencies except for the 

Nuclear Regulatory Commission (16%) and U.S. Agency for International Development (-19.2%). 

6. A non-statistical sample of at least 50 claimant accounts receivable showed 12 instances in which the establishment, 

recording, or processing of the receivable or related recoveries was not done in accordance with established policy and 

related standards. 

7. The 4th quarter estimation was -0.77% from the actual. 

8. The 2005 benefits decreased by 0.24% over 2004. 

9. Comparison of the Summary Chargeback Billing Report to the total benefit payments for the fiscal year ending September 

2005 resulted in a 3.7% variance. 

10. Benefit payments for the fiscal year ending September 2005 decreased by 1.96% overall from September 2004. 

Recommendations: None made 

Actions Taken: Not applicable 

Actions Remaining: None Expected Completion: Not applicable 

Additional Information: A copy of the complete report can be obtained at http://www.oig.dol.gov/public/reports/oa/2006/22-

06-001-13-001.pdf. 

26. Issue: Customer Satisfaction with EBSA 

Program Area: EBSA

Performance Goal: Goal 2.2C – Secure pension, 

health and welfare benefits. 

Report Title: Office of Participant Assistance Program Evaluation Studies 

Date Completed: December 2005 

Conducted By: The Gallup Organization 

Program Impacts: EBSA employees most engaged with their customers are better able to identify situations requiring the 

attention of enforcement staff. Being able to provide feedback to employees on the strengths and weaknesses of their 

customer interactions is instrumental in continued program improvement. 

Findings: 

Participant Assistance Customer Satisfaction Surveys: 

1. EBSA achieved a customer satisfaction score of 67 percent (customers rating 4 or 5 on a 5-point scale). 

2. With few office exceptions, EBSA improved its overall customer satisfaction score each year since 2001. 

3. Individual employee performance drives the customer service experience. 

4. Poor service delivery has greater impact than just on the immediate customer; unhappy customers tell more people about 

their experience than those who were pleased. 

5. Despite improvement, EBSA should still focus on the perception that EBSA is willing to work with its constituents to 

ensure their needs are met. 

6. There was strong improvement in employees following up on commitments to their customers. 

Outreach Surveys: 

1. Approximately 85 percent of seminar attendees rate overall satisfaction and usefulness favorably. 

2. As in FY04, EBSA presenters are rated favorably for being knowledgeable and well informed, but they rate lower on being 

able to connect with the audience. 

3. Ratings vary widely by office. 

4. 90 percent of attendees would recommend the seminar and have a better understanding of the regulations. 

Public Disclosure Room: 

1. The Public Disclosure Room satisfies 73 percent of its customers. 

2. Clerks need to improve their ability to help customers identify what records will best meet their needs. 

3. Accessibility and timeliness of the material in the Public Disclosure Room are issues that need to be addressed. 

Recommendations: 

Participant Assistance Customer Satisfaction Surveys: 

1. Examine barriers to providing excellent customer service in offices that have failed to improve. 

2. Continue to share individual results and provide training in customer service and customer engagement. 
Appendices 

310 United States Department of Labor 

3. Examine staff fitness for customer service role. Customer service training has had an impact but managers need to ensure 

customer service skills are present in new hires 

4. Focus on developing the best talents of each Benefits Advisor. 

5. Set clear expectations and hold Benefits Advisors and Supervisors accountable for their service delivery. 

6. Recognize and compensate for greatness. 

Outreach Surveys: 

1. Closely examine presentation skills of the presenters. 

2. Consider reorganization of seminars to incorporate attendees’ comments. 

Public Disclosure Room: 

1. Review results with new Disclosure Room contractor and develop an action plan for addressing performance. 

2. Develop specific action plan for training program for clerks. 

Actions Taken: 

Participant Assistance Program: 

1. The Gallup Organization analyzed one of the offices that had been struggling with customer service and identified several 

areas for the office to focus on to improve customer service. 

2. The Benefits Advisors in each office meet to refine and update plans for improving their office’s scores. 

3. Certain offices conduct morale building events as part of their action plans to improve service. 

4. Regional Directors are now rated on whether or not they meet the current year goal for customer satisfaction. 

Outreach Surveys: EBSA continues to evaluate this service and relate updated findings for conducting outreach. 

Training: Public speaking training was made available to those conducting outreach events to improve outreach performance. 

Public Disclosure Room: Results have been communicated to the Supervisor of the Public Disclosure Room for development 

of an action plan to address the issues identified in the study. 

Actions Remaining: Public Disclosure Room personnel have met to devise methods for improving 

service in the areas identified by the report and will continue to work toward improving 

performance. 

Expected Completion:

Ongoing 

Additional Information: A copy of the complete reports can be obtained from the Employee Benefits Security Administration, 

200 Constitution Avenue, NW, Room N-5625 Washington, DC 20210, or by calling 202-693-8655.

27. Issue: The transparency of PBGC financial reporting

Program Area: PBGC

Performance Goal: Goal 06-2.2D – Improve 

pension insurance program. 

Report Title: Private Pensions. Opportunities Exist to Further Improve the 

Transparency of PBGC’s Financial Disclosures (GAO-06-429) 

Date Completed: March 2006 

Conducted By: GAO 

Program Implication: The PBGC single-employer insurance program insures the pension benefits of over 34 million 

participants in almost 29,000 private sector defined benefit pension plans. The increase in PBGC’s probable claims has 

raised question PBGC’s monitoring and financial disclosure practices, including whether the information that PBGC 

discloses is sufficient for interested parties to understand the effect on PBGC’s financial condition. 

Findings: 

1. PBGC takes steps to monitor and ensure the accuracy of its single-employer probable claims forecasts by (a) contacting plan 

sponsors to obtain financial information, (b) reviewing filings submitted by probable plans to conduct a risk analysis, and (c)

performing valuations to determine the present value of net probable claims and expected date of probable plan termination. 

2. To ensure the accuracy of its probable claims, PBGC reported that it uses an automated system and available plan financial 

data to calculate the assets and liabilities for probable plans. 

3. While PBGC and public companies follow the same accounting standards for recording probable losses in their annual 

financial statements, they each follow different policies and requirements when reporting information throughout the fiscal 

year. PBGC, which is not subject to Security and Exchange Commission’s (SEC) requirements, follows its own set of 

policies and procedures. 

4. PBGC has made efforts to improve the transparency of the information it discloses about its financial condition, but pension 

experts, financial analysts, and others believe that additional improvements are still needed. Many stated that the press 

releases PBGC issues that announce newly terminated plans do not provide the public with enough information to determine 

the financial impact of such plans on PBGC’s published deficit. 

5. Experts also expressed concern about the lack of transparency regarding the methodology PBGC uses to determine the 

interest rate it uses to calculate liabilities. 

Recommendations: 

1. PBGC should disclose whether a newly terminated plan was already included in its published deficit. 

2. PBGC should make its interest rate methodology more widely available to the public. 

Actions Taken: 

1. Decision made that in future media releases, PBGC will release whether or not reserves have previously been made relating 

to the termination of the subject company’s defined benefit plans. 
Significant Audits and Evaluations 

FY 2006 Performance and Accountability Report 311 

2. Additional details regard the interest methodology were added to the Web site, http://www.pbgc.gov. 

Actions Remaining: None Expected Completion: Not applicable 

Additional Information: A copy of the complete report can be obtained at http://www.gao.gov/new.items/d06429.pdf. 

GOAL 3: QUALITY WORKPLACES 

28. Issue: Ensuring the safety and health of underground coal miners 

Program Area: MSHA

Performance Goal: Goal 06-3.1A – Reduce 

mining-related fatalities and injuries. Goal 06-

3.1B – Reduce mining-related illnesses. 

Report Title: MSHA’s Programs for Ensuring the Safety and Health of 

Coal Miners Could be Strengthened (GAO-06-370T) 

Date Completed: January 2006 

Conducted By: GAO

Program Implication: GAO was asked to submit a statement for the record highlighting findings from a 2003 report on how 

well MSHA oversees its process for reviewing and approving critical types of mine plans and the extent to which MSHA’s 

inspections and accident investigations processes help ensure the safety and health of underground coal miners. MSHA 

has a new opportunity to report additional progress toward implementing the recommendations from that report. 

Findings: 

1. MSHA could improve its oversight, guidance, and human-capital-planning efforts. 

2. MSHA headquarters did not ensure that 6-month inspections of ventilation and roof support plans were being completed on 

a timely basis. 

3. Officials did not always ensure that hazards found during inspections were corrected promptly. 

4. Gaps were found in the information that MSHA used to monitor fatal and nonfatal injuries, limiting trend analysis and 

agency oversight. Specifically, the agency did not collect information on hours worked by independent contractors staff 

needed to compute fatality and nonfatal injury rates for specific mines, and it was difficult to link information on accidents 

at underground coal mines with MSHA’s investigations. 

5. Guidance provided by MSHA management to agency employees could be strengthened. Some inspections procedures 

were unclear and were contained in many sources, leading to differing interpretations by mine inspectors. The guidance on 

coordinating inspections conducted by specialists and regular inspectors was also unclear, resulting in some duplication of 

effort. 

6. As of 2003, although about 44 percent of MSHA’s underground coal mine inspectors were going to be eligible to retire 

within five years, the agency had no plan for replacing them or using other human capital flexibilities available to retain its

highly qualified and trained inspectors. 

Recommendations: 

1. Monitor the timeliness of inspections conducted as part of the six-month review of certain mine plans. 

2. Ensure that mine operators are correcting hazards identified during inspections in a timely manner. 

3. Develop a plan for addressing anticipated shortages in the number of qualified inspectors due to retirements. 

4. Revise the systems used to collect information on accidents and investigations. 

Actions Taken: 

1. MSHA has developed and continues to refine a Mine Plan approval database to facilitate headquarters monitoring timely 

ventilation and roof control plan approvals. Operator abatements are being monitored by Headquarters through data 

reviews and through field audits pursuant to MSHA’s revised Accountability Program. 

2. MSHA Headquarters has implemented a process to monitor abatement times in each District, and reviews this information 

as part of its ongoing oversight responsibilities. 

3. In response to retirements in an aging mine inspector workforce, DOL launched a Career Intern Program to fill the demand 

for qualified mine safety inspectors. This effort has included recruitment and screening sessions at mining locations 

nationwide. The result has been a wider field of qualified applicants and a recruitment process that now takes 45, 

compared to the 180 days it took in FY 2004. 

4. MSHA effectively linked accident, investigations and other Part 50 data and databases in FY 2004. These are fully 

accessible via MSHA’s current data model and are part of the migration to MSHA new standardized information system. 

5. In January 2006, MSHA revised its Handbook of General Coal Mine Inspection Procedures which strengthens and 

clarifies guidance provided to enforcement personnel. This is in addition to policy memorandums designed to make 

inspection procedures more clear and straightforward, including guidance on coordinating inspections conducted by 

specialists and regular inspectors.

Actions Remaining: Regarding recommendation 2, when the OIG audit is completed, MSHA will 

respond to the report and prepare corrective actions and action plans as applicable. 

Expected Completion: 

2007 

Additional Information: A copy of the complete report can be obtained at http://www.gao.gov/cgi-bin/getrpt?GAO-06-370T. 
Appendices 

312 United States Department of Labor 

29. Issue: MSHA’s Process for Handling of Miner’s Complaints of Unsafe Working Conditions 

Program Area: MSHA

Performance Goal: Goal 06-3.1A – Reduce miningrelated fatalities and injuries. Goal 06-3.1B – 

Reduce mining-related illnesses. 

Report Title: Coal Mine Hazardous Condition Complaint Process 

Should Be Strengthened (OIG-05-06-006-06-001) 

Date Completed: September 2006 

Conducted By: OIG 

Program Implication: The Mine Safety and Health Act of 1977 (Mine Act) gives miners and miner representatives the right to 

confidentially obtain an immediate inspection when there are reasonable grounds to believe that an imminent danger, or a 

violation of the Mine Act or a mandatory safety or health standard exists. 

Findings: 

1. MSHA should ensure that the hazard complaint process is promoted consistently. 

2. MSHA should ensure that complaints are evaluated and inspected timely, consistently, and in accordance with applicable 

requirements. 

3. MSHA should ensure that information used for headquarters oversight and management of the hazard complaint process is 

complete. 

Recommendations: 

1. Develop a written strategy to plan, monitor, and evaluate the effectiveness of efforts to promote MSHA’s hazardous 

condition complaint process to coal miners, coal miner representatives, and other stakeholders. Additionally, MSHA should 

ensure personnel receiving and documenting hazardous condition complaints are properly trained and knowledgeable about 

coal mining terminology. 

2. Establish management controls to ensure that the expectation for evaluation timeliness is quantified and that the timeliness is

monitored and systemic reasons for delays are identified and addressed. Additionally, management should ensure evaluation 

of the seriousness of complaints is documented, training and oversight is provided for appropriate determination of 

imminent danger complaints, and copies of complaints provided to mine operators are consistent with MSHA’s guidelines to 

remove detailed information that could compromise a complainant’s identity. 

3. Establish management controls to ensure that inspections for complaints filed with both headquarters and the districts are 

timely and that inspection timeliness is monitored and systemic reasons for delays are identified and addressed. 

4. Additionally, management should ensure expectation of timeliness for starting inspections of imminent danger allegations is 

quantified and that inspector notes receive appropriate supervisory review. 

5. Establish management controls to ensure complaints made directly to CMS&H’s eleven districts are included in 

management reports used to direct oversight and enforcement. Additionally, management should ensure hazardous 

condition complaint data reported to the public are complete. 

Actions Taken: During the audit, MSHA initiated action to monitor the quality of services provided by the contractor receiving 

complaints filed through MSHA headquarters, track the timeliness of hazardous condition complaint evaluations and 

inspections, and use the MSHA Standard Information System (MSIS) to record, track, and report headquarters and districtgenerated condition complaints. 

Actions Remaining: None Expected Completion: Not applicable 

Additional Information: A copy of the complete report can be obtained http://www.oig.dol.gov/public/reports/oa/2006/05-06-

006-06-001.pdf. 

30. Issue: MSHA’s Enforcement Accountability Program 

Program Area: MSHA

Performance Goal: Goal 06-3.1A – Reduce miningrelated fatalities and injuries. Goal 06-3.1B – Reduce 

mining-related illnesses. 

Report Title: MSHA Accountability Program Coal Mine Safety and 

Health Management Letter (OIG 05-06-007-06-001) 

Date Completed: September 2006 

Conducted By: OIG 

Program Implication: MSHA’s Accountability Program was established to evaluate the quality of MSHA enforcement 

activities by conducting peer reviews of District activities, and to provide reasonable assurance that policies and procedures 

are being complied with consistently. 

Findings: 

1. The Accountability Program does not require a standard process for selecting mines to be reviewed during District Peer 

Reviews and Head Quarter’s (HQ) Reviews of Districts. 

2. The Accountability Program does not require that a review team member visit those mines selected for review during 

District Peer Reviews and HQ Reviews of Districts. 

3. The Accountability Program does not require that a review team member interview appropriate district and/or field office 

personnel during District Peer Reviews and HQ Reviews of Districts. 

4. The Accountability Program does not require a standard format for District Peer Review reports and corrective action plans. 

5. The Accountability Program does not require a centralized system for HQ to record and track the deficiencies and corrective 

actions identified during District Peer Reviews and HQ Reviews of Districts. 
Significant Audits and Evaluations 

FY 2006 Performance and Accountability Report 313 

Recommendations: 

1. MSHA should develop and require a standard process for the selection of a mine(s) to be reviewed during both District Peer 

Reviews and HQ Reviews of Districts. The process should assure that (a) any entity could be selected and (b) the selection 

is not within the control of any individual. In addition, to the mine(s) selected through this process, MSHA could, if desired,

select an additional mine(s) for review based on criteria of its choosing (e.g., fatalities, accidents, enforcement history, size).

2. MSHA should require that one or more review team members observe selected portions of the mine(s) chosen for review. 

The scope of these observations should be sufficient to form an overall perspective of the mine’s condition and operation in 

comparison to that reflected by the related mine plans and records (e.g., inspector notes, citations, etc.). 

3. MSHA should require that review team members interview appropriate individuals during District Peer Reviews and HQ 

Reviews of Districts. The scope of these interviews should address overall office operations as well as the information 

contained in any specific records (e.g., inspector notes, citations, etc.) reviewed. 

4. MSHA should require the use of a standard report format, in both presentation and content, for District Peer Review Reports 

and corrective action plans. This would help MSHA to assess the consistent application of policies and procedures 

nationwide as well as facilitate the identification of systemic weaknesses and the implementation of potential best practices. 

5. MSHA should develop a system to record and track the results of District Peer Reviews and HQ Reviews of Districts, e.g., 

identified deficiencies, planned corrective actions, potential best practices, etc. This tracking system will facilitate review 

and analysis of systemic weaknesses and trends, help to ensure that corrective actions are completed in a timely manner, and 

that potential best practices are shared nationwide. 

Actions Taken: Based on MSHA’s written response to the OIG’s recommendations, OIG stated that they considered 

recommendations 1, 3, 4, and 5 resolved. 

Actions Remaining: MSHA will include visits to a percentage of mines selected for District Peer 

Reviews. The OIG will take the action into account as they continue their ongoing audit and issue 

recommendations from that audit.

Expected Completion:

2007 

Additional Information: A copy of the complete report can be obtained at http://www.oig.dol.gov/cgibin/oa_rpts.cgi?s=&y=fy92005n&a=all. 

31. Issue: Concerns for the safety of Federal workers and the costs associated with unsafe Federal workplaces

Program Area: OSHA

Performance Goal: Goal 06-3.1C – Reduce workrelated fatalities. Goal 06-3.1D – Reduce 

work-related injuries and illnesses. 

Report Title: OSHA Could Improve Federal Agencies’ Safety Programs 

with a More Strategic Approach to its Oversight (GAO-06-379) 

Date Completed: April 2006 

Conducted By: GAO 

Program Implication: OSHA oversees and assists Federal agencies’ efforts to develop and administer their safety programs. 

Because Federal workers’ compensation costs exceeded $1.5 billion in 2004, with approximately 148,000 new claims files 

that year, OSHA could provide a more strategic approach to its oversight. 

Findings: 

1. OSHA’s oversight of Federal agencies’ safety programs is not as effective as it could be because the agency does not use its 

enforcement and compliance assistance resources in a strategic manner. 

2. Inspections are one of OSHA’s primary enforcement tools, but it does not conduct many inspections of Federal work sites 

or have a national strategy for targeting worksites with high injury and illness rates for inspections. 

3. Although OSHA is responsible for tracking disputed violations and reporting any unresolved disputes to the President, 

OSHA does not do so. 

4. Although OSHA is required to review agencies’ safety programs annually and submit a report on them to the President 

each year, as of January 2006, the last report submitted was for FY 2000. 

5. While OSHA has a range of compliance assistance programs designed to help agencies comply with its regulations and 

improve safety, these programs are not being fully utilized. 

Recommendations: 

1. OSHA should conduct targeted inspections of Federal facilities. 

2. OSHA should track disputed violations to their resolution. 

3. OSHA should report unresolved disputes to the President. 

4. OSHA should conduct evaluations of the largest and most hazardous agencies as required. 

5. OSHA’s annual report to the President should include an assessment of each agency’s safety program and 

recommendations for improvements. 

Actions Taken: 

1. OSHA began developing an inspection targeting program and expects to have it in place by FY 2007. 

2. OSHA continues to work with OWCP and others to devise a methodology to combine site–specific injury data with Federal 

agency employment numbers. 

3. A process was implemented whereby each agency’s annual report is reviewed and analyzed. Information from inspection 
Appendices 

314 United States Department of Labor 

and evaluation activity will be incorporated into this process as these efforts begin to provide significant information. 

Actions Remaining: 

1. Develop an internal tracking system for appealed violations. 

2. Redesign reporting instructions that are sent out to Federal agencies each year. 

Expected Completion:

1. March 2007 

2. March 2007

Additional Information: A copy of the complete report can be obtained at http://www/gao.gov/cgi-bin/getrpt?GAO-06-379.

32. Issue: Improving implementation of OSHA’s voluntary guidelines

Program Area: OSHA

Performance Goal: Goal 06-3.1C – Reduce work-related 

fatalities. Goal 06-3.1D – Reduce work-related injuries and 

illnesses. 

Report Title: Evaluation of OSHA Voluntary Guidelines 

Date Completed: June 2006 

Conducted By: Eastern Research Group (ERG) 

Program Implication: Promotion of voluntary OSHA guidelines begins with the development process. Involving stakeholders 

early in the process and using market information on the target population are particularly important. Obtaining feedback 

on the use of voluntary guidelines once issues would enable OSHA to better evaluate the interventions that incorporate the 

voluntary guidelines. 

Findings: 

1. Of the three guidelines studied, the Nursing Home Ergonomics Guidelines had the highest percent of employers aware of 

the OSHA guidelines. Employers are also aware of guidelines issued by other Federal agencies. 

2. The OSHA Web site was identified as a source of information on ergonomics for 74 percent of the survey respondents, but 

only 21% of respondents to the Late-Night Retail survey cited the OSHA Web site for information on violence prevention. 

3. A higher percentage of respondents in the Nursing Home Ergonomics Survey and the Health Care Violence Prevention 

Guidelines Survey implemented program features addressed in the respective OSHA guidelines vs. Late-Night Retail. 

4. A greater percent of respondents indicated lack of information as an obstacle for program features they had not implanted. 

5. Over half of all respondents reported using OSHA guidelines to implement ergonomic or violence prevention programs. 

6. To the extent that employers were aware of the OSHA Guidelines and used the OSHA guidelines in their programs, the 

OSHA voluntary guidelines contributed to the benefits employers reported. 

7. Establishments that had both OSHA inspections and awareness of the guidelines had larger and more frequent reductions in 

lost work days rates and the number of days away from work, restriction or transfer due to injury or illness. 

8. Establishments that implemented ergonomics programs with more features did better, as did those establishments that 

implemented all the specific features of their ergonomics program earlier than those who implemented more recently. 

Recommendations: 

1. Better define voluntary guidelines and their role for OSHA. 

2. Pursue wider recognition of OSHA voluntary guidelines. 

3. Adopt the protocol that worked well for the Nursing Home Ergonomics Guidelines for the development and promotion of 

all voluntary guidelines. 

4. Expand awareness of OSHA voluntary guidelines through refinement of marketing efforts. 

5. Monitor continued relevance of specific OSHA voluntary guidelines.

Actions Taken: None 

Actions Remaining: 

1. Better define voluntary guidelines and their role for OSHA. 

2. Pursue wider recognition of OSHA voluntary guidelines. 

3. Adopt the protocol that worked well for the Nursing Home Ergonomics Guidelines for the 

development and promotion of all voluntary guidelines. 

4. Expand awareness of OSHA voluntary guidelines through refinement of marketing efforts. 

5. Monitor continued relevance of specific OSHA voluntary guidelines. 

Expected Completion: 

1. September 2008 

2. September 2008 

3. September 2008 

4. September 2008 

5. September 2008

Additional Information: A copy of the complete report can be obtained by calling John Smith at (202) 693-2244. 

33. Issue: Finding ways to improve the efficiency of resource allocation for compliance reviews 

Program Area: OFCCP

Performance Goal: Goal 06-3.2A – Federal 

contractors achieve equal opportunity 

workplaces.

Report Title: A Study to Refine the OFCCP Discrimination Prediction 

Model 

Date Completed: October 2005 

Conducted By: Eastern Research Group (ERG)

Program Implication: By understanding the indicators of discrimination, OFCCP can concentrate its resources on fostering 

equal opportunity in employment. 
Significant Audits and Evaluations 

FY 2006 Performance and Accountability Report 315 

Findings: 

1. The use of county-based models appear to provide a more valid means of measuring local market conditions than 

Metropolitan Statistical Area data. 

2. A county-based model has more significant coefficients and appears to do a better job of predicting discrimination findings. 

Recommendations: 

1. Use county-based models when predicting discrimination findings. 

2. Additional analyses may further refine and improve OFCCP’s ability to identify patterns of discrimination. 

Actions Taken: Initiation of a test to validate the findings presented in the report. The test is based on a set of audits selected 

by (a) random selection and (b) targeted selection using prediction models. 

Actions Remaining: Complete case reviews to gauge the benefits of the modeling procedures. Expected Completion: 

September 2007 

Additional Information: Information on the study can be obtained from the Office of Federal Contract Compliance Programs, 

Employment Standards Administration, Department of Labor, FPB N-3402, 200 Constitution Avenue, NW, Washington, 

DC 20210, or by calling Michael D. Sinclair at 693-1153. 

34. Issue: The extent to which USERRA has been supported and enforced by the Departments of Defense, Labor, 

Justice and the Office of Special Counsel 

Program Area: VETS USERRA 

Performance Goal: Goal 06-3.2B – Reduce employeremployee employment issues originating from service 

members’ military obligations conflicting with their 

civilian employments. 

Report Title: Federal Management of Servicemember 

Employment Rights Can Be Further Improved (GAO-06-60) 

Date Completed: October 2005

Conducted By: GAO 

Program Implication: Hundreds of thousands of employers and service members have been educated about USERRA, but the 

efficiency and effectiveness of this outreach is hindered by a lack of employer information. DOL also relies on paper files 

when transferring or reviewing complaints, slowing effective and timely oversight. The program could be improved by 

focusing on results, rather than outputs. 

Findings: 

1. Whether overall USERRA compliance or employer support has increased, decreased, or remained steady is difficult to 

firmly establish. Limited insights into USERRA compliance is provided by formal and informal complaint data and 

employer support figures. 

2. DOL numbers show that formal complaints rose in FY 1991 and 1992. 

3. Despite many general outreach efforts, agencies lack essential employer information needed to efficiently and effectively 

target outreach to employers who actually have service member employees. Without complete information about the full 

expanse of service member employers, the Federal agencies conducting outreach have no assurance that they have informed 

all service member employers about USERRA rights and obligations. 

4. Agency abilities to address service member complaints, as intended by USERRA, are hampered by incompatible data 

systems, reliance on paper files, and a segmented process that lacks visibility. 

5. Analysis revealed substantial differences between the recorded processing times and the actual elapsed times for those 

complaints. The recorded processing times averaged 103 days, although it took much longer because the service members 

actually waited an average of 619 days from the time they filed their initial formal complaints with DOL until the time they 

complaints were fully addressed. 

Recommendations: 

1. DOD should include USERRA questions in its periodic surveys of servicemembers. 

2. DOD should take steps to enforce the requirement for servicemembers to report their civilian employment information, 

maintain the database on this civilian employment information, and share applicable employer information with other 

agencies. 

3. The Departments of Defense, Labor, and Justice, along with Office of the Special Counsel (OSC) should explore methods 

of electronically transferring information between agencies. 

4. The Secretary of Labor should develop a plan to reduce agency reliance on paper files and fully adopt the agency’s 

automated complaint file system. 

5. Congress should consider designating a single office to maintain visibility over the entire complaint resolution process. 

Actions Taken: 

1. In September 2005, DOL made efforts to promote the agencies’ goal of early resolution of USERRA employment and 

reemployment issues a longstanding cooperative relationship with the DOD Employer Support of the Guard and Reserve. 

2. DOL’s Office of the Solicitor and VETS have begun to discuss ways in which the two offices can use one electronic case 

management system, interfaced as appropriate with DOD, DOJ, and OSC. 
Appendices 

316 United States Department of Labor 

3. DOL has discussed with the other agencies ways to improve inter-agency information exchange and data-sharing 

capabilities. Based on agreements reached among all USERRA agencies, an upgraded version of VETS’ 

4. USERRA Information Management System (UIMS) will be used by all USERRA agencies for case status reporting, 

effective October 2, 2006. 

Actions Remaining: VETS’ UIMS will be further upgraded to enable electronic versions 

of case documentation to be uploaded into case records. This functionality will be the 

first step toward a fully automated complaint file system 

Expected Completion: February 

2007 

Additional Information: A copy of the complete report can be obtained at www.gao.gov/cgi-bin/getrpt?GAO-06-60. 

GOAL 4: A COMPETITIVE WORKFORCE 

35. Issue : Implementation of the seamless One-Stop vision 

P8ogram Area: ETA One-Stop

Performance Goal: Goal 05-4.1B – Improve the outcomes 

for job searchers and employers who receive One-Stop 

employment and workforce information services. 

Report Title: Two of Illinois’ One-Stop Centers Have Not Fully 

Implemented the Seamless Service Concept (OIG 06-05-011-

03-390 

Date Completed: September 2005 

Conducted By: OIG

Program Implication: ETA views the One-Stop system as the cornerstone of the new workforce investment system, which 

unifies numerous training, education, and employment programs into a single, customer-friendly system in each 

community. ETA envisions one overall service system where One-Stop truly means one stop. 

Findings: 

1. There are issues in two of the State of Illinois’ One-Stops implementation of the seamless One-Stop vision. 

2. The One-Stop organizational structures provide shared administration of the One-Stop centers, but better collaboration and 

coordination will enhance service delivery. 

3. One-Stop partners did not share a statewide common intake system for the One-Stop service delivery system. 

4. Local boards established MOUs, but greater detail would enhance the One-Stop concept. 

Recommendations: None made 

Actions Taken: Not applicable 

Actions Remaining: None Expected Completion: Not applicable 

Additional Information: A copy of the complete report can be obtained at http://www.oig.dol.gov/public/reports/oa/ 2005/ 

0605-011-03-390.pdf. 

36. Issue: Implementation of the One-Stop Seamless Service Concept in Texas 

Program Area: ETA One-Stop

Performance Goal: Goal 05-4.1B – Improve the outcomes for 

job searchers and employers who receive One-Stop 

employment and workforce information services. 

Report Title: The State of Texas has Effectively Implemented 

the One-Stop Seamless Service Concept (OIG 06-05-007-

03-390) 

Date Completed: September 2005 

Conducted By: OIG 

Program Implication: The State of Texas could serve as a model for successful implementation of the seamless One-Stop 

vision. 

Findings: 

1. The State of Texas was an early implementer of the One-Stop system, and they established an organizational structure that 

supports the seamless service concept. 

2. The Texas Workforce Commission (TWC) effectively coordinates a cohesive workforce system. The TWC coordinates the 

oversight and administration of the One-Stop system. 

3. The State has developed a statewide common intake system for One-Stop service delivery; the TWC provides guidance 

through statewide polices and procedures. 

4. One-Stop system partners established memoranda of understanding (MOUs) and contracts to support the One-Stop concept.

Recommendations: None made 

Actions Taken: Not applicable 

Actions Remaining: None Expected Completion: Not applicable 

Additional Information: A copy of the complete report can be obtained at http://www.oig.dol.gov/public/reports/oa/2005/06-

05-007-03-390.pdf. 
Significant Audits and Evaluations 

FY 2006 Performance and Accountability Report 317 

37. Issue: An alleged mismanagement of WIA Dislocated Worker Program and funds

Program Area: ETA Dislocated Worker

Performance Goal: Goal 05-4.1C – Increase the 

employment, retention, and earnings 

replacement of individuals registered under the 

WIA Dislocated Worker Program. 

Report Title: Alleged Violations of WIA Program and Federal Guidelines 

at One-Stop Center Operated by Affiliated Computer Services, Inc. 

(OIG 05-06-002-03-390) 

Date Completed: December 2005 

Conducted By: OIG

Program Implication: Local Workforce Investment Boards are authorized to continue setting program policies and regulations 

consistent with the WIA Act within their local areas. 

Findings: 

1. The alleged mismanagement of the WIA Dislocated Worker Program and funds was unsupported. 

2. The Local Workforce Investment Board (LWIB) IV WIA program policy was consistent with the WIA Act and regulations. 

WIA, Section 117 authorizes the LWIB to set policy for the workforce investment system within the local area. The LWIB 

decided and adopted a policy to give priority for training services for adult participants to recipients of public assistance and 

other individuals with low income in accordance with WIA, Section 134(d) (4) (E). 

Recommendations: None made 

Actions Taken: Not applicable 

Actions Remaining: None Expected Completion: Not applicable 

Additional Information: A copy of the complete report can be obtained at http://www.oig.dol.gov/public/reports/oa/2006/05-

06-002-03-390.pdf. 

38. Issue: The effect of recent amendments to the Older Americans Act 

Program Area: ETA SCSEP

Performance Goal: Goal 05-4.1D – Assist older 

workers to participate in a demand-driven 

economy through the Senior Community 

Employment Service Program. 

Report Title: Senior Community Service Employment Program: Labor 

Has Made Progress Implementing Older Americans Act Amendments of 

2000, but Challenges Remain (GAO-06-549T) 

Date Completed: April 2006 

Conducted By: GAO 

Program Implication: The aging of the baby boom generation presents serious challenges for the nation’s workforce 

investment system. The expected increase in the number of low-income older adults means that, more and more, older 

Americans will have to continue working in order to have sufficient income. Given the problems that older adults often 

experience in obtaining in-depth services, such as training, it is unclear whether the existing workforce system is able to 

provide the type and level of services this population may need. 

Findings: 

1. The 2000 Older Americans Act (OAA) Amendments have had little impact on the distribution of funds between national and 

State grantees. National grantees continue to receive approximately 78 percent of the funding and States about 22 percent. 

2. Distribution of funding among national grantees changed substantially after DOL’s 2002 open competition for the national 

grants portion of Senior Community Service Employment Program (SCSEP) funding. 

3. DOL has taken steps to establish an enhanced performance accountability system for the SCSEP, but has yet to implement 

some features. 

4. DOL has implemented an early version of a data collection system to track grantee performance, but the final Internet-based

version is not yet available. 

5. Changes to SCSEP eligibility criteria and difficulties coordinating with the WIA one-stop system have posed challenges to 

grantees. DOL modified some SCSEP eligibility criteria to target limited program funds to individuals it believes are most 

in need of services. However, grantees expressed concern that these changes had made it more difficult for them to meet 

their enrollment goals. 

6. Despite provisions in the OAA Amendments to strengthen connections between SCSEP and WIA, problems persist in 

coordinating with WIA providers and obtaining intensive and training services for older workers at one-stop centers. 

Recommendations: None made 

Actions Taken: 

1. Beginning in PY 2005 and continuing into PY 2006, ETA has been implementing the Internet-based Senior Community 

 Service Employment Program Performance Accountability Quarterly Progress Report (SPARQ2) data collection system to 

collect program information and data on the common performance measures and SCSEP-specific performance measures. 

2. States will begin reporting using SPARQ2 during PY 2006. 

Actions Remaining: None Expected Completion: Not applicable 

Additional Information: A copy of the complete report can be obtained at http://www.gao.gov/new.items/ d06549t.pdf. 
Appendices 

318 United States Department of Labor 

39. Issue: The aging of the American workforce

Program Area: ETA SCSEP

Performance Goal: Goal 05-4.1D – Assist older workers to 

participate in a demand-driven economy through the Senior 

Community Employment Service Program. 

Report Title: Older Workers: Labor Can Help Employers 

and Employees Plan Better for the Future (GAO-06-80) 

Date Completed: December 2005 

Conducted By: GAO 

Program Implication: There is a need for a Federal interagency taskforce to work collectively to address the workforce 

challenges posed by an aging workforce. 

Findings: 

1. Employers in every occupation face the likelihood that a greater percentage of their workforce will be nearing retirement 

age, resulting in the loss of a significant number of experienced workers in a short period of time. 

2. Almost 80 percent of between the ages of 55 and 74 are employed in professional, management, service, office and 

administrative support, and sales occupations. These occupations make up about 75 percent of the total workforce aged 25 

to 74. 

3. Given the potential skill gaps and slowdown in the growth of the labor supply, older workers may become a resource of 

growing importance to employers. 

4. Some employers are making an effort to hire and retain older workers, but most have not made targeting older workers a 

priority. 

5. Just over 60 percent of full-time workers aged 55 or older have expressed a desire to gradually reduce their hours at their

current jobs, but few employers have implemented policies of phased or partial retirement. 

Recommendations: 

1. The Secretary of Labor should design a comprehensive and highly visible public awareness campaign as a way to help 

employers and employees plan better for the future and by so doing, bridge the gap between employer and employee needs. 

2. The campaign should involve other relevant agencies and target employer organizations and groups that interact with 

employees and, ultimately, encourage employers to find ways to retain and recruit older workers, and assist older workers in 

finding opportunities for continued work. 

Actions Taken: 

1. DOL has convened an intra-agency taskforce on older workers and is working with business leaders on issues concerning the 

aging workforce. 

2. ETA has initiated an outreach campaign to inform employers about the benefits of hiring and retaining older workers. The 

message of the campaign is “Strength in Numbers,” in recognition of the important role that the baby boom generation will 

play in the U.S. workforce over the next 25 years. 

3. ETA is also targeting older workers to encourage them to remain in or re-enter the workforce. 

4. ETA has developed campaign materials, including an employer outreach kit, a Public Service Announcement, posters, and 

brochures, for all workforce investment system professionals, employers, and the public-at-large. 

5. ETA released a Protocol for Serving Older Workers to the workforce investment system to enhance the services provided to 

older workers. 

6. ETA’s Workforce Innovations conference (July 2006) placed special emphasis on older worker issues. 

7. Workshops focused on solutions to the challenges employers face in recruiting and retaining older workers; effective 

strategies for providing employment and training services to older individuals; and skill assessment/training techniques for 

this population. 

8. ETA’s Business Relations Group has sponsored educational forums intended to inform employers about the benefits of 

employing older workers. 

Actions Remaining: 

1. DOL is participating in the Taskforce on the Aging of the American Workforce, an inter-agency 

effort. The Taskforce will make recommendations to increase awareness of and outreach to older 

workers relating to: 1) individual opportunities for employment; 2) legal and regulatory issues 

regarding work and retirement and 3) employer response to the aging workforce. 

2. ETA will support National Employ Older Worker Week in September 2006 with outreach materials, 

posters, news releases and will post grantee commemorative events on the SCSEP Web site calendar 

to encourage exchange of peer best practices and heighten awareness. 

Expected 

Completion:

1. April 2007 

2. September 2006 

Additional Information: A copy of the complete report can be obtained at http://www.gao.gov/cgi-bin/getrpt?GAO-06-80. 

40. Issue: Worker classifications through the H-1B program

Program Area: ETA FLC 

Performance Goal: Goal 06-4.1A – Address worker 

shortages through the Foreign Labor Certification 

Program 

Report Title: Labor Could Improve Its Oversight and Increase 

Information Sharing with Homeland Security (GAO-06-720) 

Date Completed: June 2006 

Conducted By: GAO 

Program Implication: The H-1B visa program assists U.S. employers in temporarily filling certain occupations with highly-
Significant Audits and Evaluations 

FY 2006 Performance and Accountability Report 319 

skilled foreign workers. There is considerable interest regarding how DOL, along with the Departments of Homeland 

Security and Justice, is enforcing the requirements of the program. 

Findings: 

1. DOL could improve its oversight of employers’ compliance with requirements of the H-1B program. 

2. DOL review of employers’ applications to hire H-1B workers is timely, but lacks quality assurance controls and may 

overlook some inaccuracies. 

3. From January 2002 through September 2005, DOL electronically reviewed more than 960,000 applications and certified 

almost all of them. About one-third of the applications were for workers in computer systems analysis and programming 

occupations. 

4. Analysis of DOL data found certified applications that could have been identified by more stringent checks: 3229 

applications were certified even though the wage rate on the application was lower than the prevailing wage for that 

occupation, and 1000 certified applications contained erroneous employer identification numbers. 

Recommendations: 

1. Congress should consider eliminating the restriction on DOL using information from Homeland Security to initiate an 

investigation and directing Homeland Security and DOL to share information on employers that may not be fulfilling 

program requirements. 

2. DOL should improve its checks of employers’ applications. 

3. Homeland Security should include DOL’s application case number in its new information technology system. 

Actions Taken: 

1. DOL developed 26 new fact sheets to describe employer responsibilities and employee rights that will be made available on 

the web in 2006. 

2. DOL is working with the Department of State to provide information cards to H-1B workers and employers about their 

employment rights and responsibilities. 

Actions Remaining: DOL is conducting a thorough review of the FEIN and prevailing wage issues 

raised in the GAO report. 

Expected 

Completion: January 

2007 

Additional Information: A copy of the complete report can be obtained at http://www.gao.gov/cgi-bin/getrpt?GAO-06-720. 

41. Issue: Reemployment services available to workers laid off as a result of international trade

Program Area: ETA TAA

Performance Goal: Goal 06-4.1B – Assist workers impacted by 

international trade to better compete in the global economy 

through the Trade Adjustment Assistance Program.

Report Title: Most Workers in Five Layoffs Received 

Services, but Better Outreach Needed on New Benefits 

(GAO-06-43) 

Date Completed: January 2006 

Conducted By: GAO 

Program Implication: Little is known nationally about the extent to which workers laid off as a result of international trade use 

the variety of Federally funded reemployment services available to them. Programs need to understand the extent to which 

workers access their services, the factors affecting participation, and the outcomes achieved by the services. 

Findings: 

1. At all five trade-related plant closures that GAO studied, about three-quarters or more of the workers received 

reemployment assistance through a One-Stop center. 

2. Workers at the sites most often received one-on-one services such as job search assistance. 

3. About a third or less of the workers at most sites received training and long-term income support, with workers over age 55 

less likely to enter training than younger workers. 

4. Workers who did not visit a center most often said they needed to find a job right away and did not think they had time to 

visit a center, or did not think they needed help finding a new job. 

5. At the time GAO conducted its survey, most of the workers had either found a new job or retired. At three sites, over 60 

percent were reemployed. At another site only about 40 percent were reemployed, but another third had retired. At the final 

site, about a third were reemployed, but this site had the highest proportion of workers in training and most were likely to 

still be in training. 

6. The majority of reemployed workers earned less than they had previously, replacing about 80 percent or more of their prior 

wages. At one site, over half the reemployed workers matched their prior wages. 

7. Few workers at each site received either the health insurance benefit or the wage insurance benefit available to some older 

workers. No more than 12 percent of workers at each site received the health insurance benefit; many were unaware of it. 

8. No more than one in five of the older workers at each site received the wage insurance benefit; many were unaware of it. 

Recommendations: Provide guidance to State and local officials on how to promote awareness of the new health insurance and 

wage insurance benefits to potentially eligible workers. 

Actions Taken: 

1. A national Rapid Response Summit was held in St. Louis, Missouri, from May 23 through 25, 2006. This summit, attended 
Appendices 

320 United States Department of Labor 

by over 500 Workforce system practitioners at the State and local level, included workshops on both health insurance and 

wage insurance benefits which were designed to ensure that potentially eligible workers were made aware of these options. 

2. In conjunction with the Rapid Response Summit, a national State Trade Coordinator’s meeting was held on May 23, 2006. 

Specifically, the agenda featured a discussion of the recommendations of this report and the importance of ensuring that 

potentially eligible workers were made aware of all available programs. 

Actions Remaining: None Expected Completion: Not applicable 

Additional Information: A copy of the complete report can be obtained at http://www.gao.gov/cgi-bin/getrpt?GAO-06-43. 

42. Issue: The accuracy of program performance data 

Program Area: ETA TAA

Performance Goal: Goal 06-4.1B – Assist workers impacted by 

international trade to better compete in the global economy 

through the Trade Adjustment Assistance Program. 

Report Title: Labor Should Take Action to Ensure 

Performance Data Are Complete, Accurate, and 

Accessible (GAO-060496) 

Date Completed: April 2006 

Conducted By: GAO 

Program Implication: In the current tight budgetary environment, program performance is likely to be an increasingly 

significant factor to help policymakers assess programs and determine funding levels. Given concerns over the quality of 

performance data for the TAA program, it is important to provide a credible picture of the program’s performance by 

improving the quality of data submitted by the States. 

Findings: 

1. The performance information that Labor makes available on the TAA program does not provide a complete and credible 

picture of the program’s performance. 

2. Only half the States are including all participants, as required, in the performance data they submit to DOL. 

3. Many States are not using all available data sources to determine participants’ employment outcomes, resulting in lower 

reported outcomes. 

4. Some States compile their performance data using manual processes or automated systems that lack key capabilities to help 

minimize errors, but many States have plans to improve their systems’ capabilities. 

5. Performance data reported by DOL represents participants who left the program up to 30 months earlier and is not useful for 

gauging the TAA program’s current performance. 

6. Performance information reported by DOL is not displayed using categories that would be informative to policymakers, 

such as the type of service received and industry of dislocation. 

7. Most States find performance information from Labor to be at least moderately useful, but many want more information. 

8. DOL has taken steps to improve the quality of TAA performance data, but issues remain. In 2003, Labor began requiring 

States to validate data, but the process does not address the problem of excluding participants from the performance data. 

9. In FY06, DOL instituted a set of common measures and many States reported delays implementing all required changes. 

Recommendations: 

1. Clarify through guidance and other communications with States that all participants who exit the program should be 

included in the Trade Act Participant Report (TAPR), along with the documentation needed to verify the training 

completion date. 

2. Ensure the core monitoring guide currently under development for regional office site visits includes guidance for assessing 

whether States’ data collection processes for performance reporting capture all participants. 

3. Provide States with opportunities to share lessons learned with other States on issues that may affect data quality. 

4. DOL should provide data by the type of services received by TAA participants. 

Actions Taken: 

1. Issued Training and Guidance Letter No. 3-03, Changes 2 and 3 which implemented the data validation system for the 

TAPR and required documentation from the training institution for three elements related to a participant’s training, 

including completion. These records are now required to be contained in each participant’s file. 

2. A national State Trade Coordinators’ meeting was held in conjunction with the Rapid Response Summit in St. Louis on May 

23, 2006. This meeting provided an opportunity for staff to clarify State issues, dispel misunderstandings, and share lessons 

learned with other States on issues that may affect data quality. 

3. As part of the implementation of Common Measures, three rounds of training sessions were held nationwide, providing 

States an opportunity to share lessons learned and approaches to properly managing program data. 

Actions Remaining: 

1. Finalize a Core Monitoring Guide for ETA Regional Office staff to include guidance for review of 

data and reporting requirements, data quality, and performance of the TAA Program in all States. 

2. Updating its TAPR reporting system for Trade Adjustment Assistance. Once completed, States will 

be able to access data more quickly, easily and in a variety of ways that may prove useful to them. 

Expected 

Completion: 

December 2007 

Additional Information: A copy of the complete report can be obtained at http://www.gao.gov/cgi-bin/getrpt?GAO-06-496. 
FY 2006 Performance and Accountability Report 321 

3. Improper Payments Information Act Reporting Details 

I. Risk Assessment 

The Department’s risk assessment for FY 2006 was developed by establishing criteria for determining levels of risk 

and evaluating all major programs against these criteria. Different methodologies were necessary for assessing the 

risks of improper payments for benefit and grant programs because of the differences in their administration and the 

availability of data. 

Benefit Programs

The Department performed the risk assessment for all benefit programs according to the criteria defined below: 

1. Programs with outlays less than $200 million 

The Department assumed a low risk of improper payments unless a known weakness existed in program 

management, based on reports issued by oversight agencies such as the Department’s Office of Inspector General 

and/or the Government Accountability Office. Unless such weaknesses were identified, the Department made an 

assumption that the improper payment rate for these programs would not exceed the IPIA defined threshold of 2.5 

percent. As a result of this review, no programs with outlays less than $200 million were deemed to be susceptible to 

risk of improper payments. 

2. Programs with outlays greater than $200 million 

The Department sampled FY 2006 data in order to determine an improper payment rate. The sampling details, 

including sampling methodology and sampling selection, are provided in the next section. The Department sampled 

Federal Employees Compensation Act (FECA), Unemployment Insurance (UI), Black Lung Disability Trust Fund, 

and Energy Employees Occupational Illness Compensation Program. The Department applied the improper payment 

rate determined through sampling to the program outlays for FY 2006 in order to determine whether the amount of 

potential improper payments for these programs exceeded the $10 million threshold. UI was the only program 

deemed to be susceptible to risk as a result of this approach. Per the Office of Management and Budget’s (OMB) 

guidelines, the Department is reporting FECA’s improper payment rate. 

Grant Programs 

The Department used a separate methodology to assess the risk of improper payments in grant programs because 

these are administered differently than benefit programs. 

Since the Department provides grants to states, cities, counties, private non-profits, and other organizations to operate 

programs, it relies significantly on single audits (as required by the Single Audit Act of 1996) to monitor funding to 

all grant recipients. Therefore, the Department analyzed these single audit reports2

 in order to determine the improper 

payment rate for all grant programs. 

The Department reviewed all FY 2004 single audit reports with Department of Labor-related findings from the 

Federal Audit Clearinghouse and identified all questioned costs. FY 2004 reports were the most recent single audit 

reports available for review. Based on a review of the definition of questioned costs in OMB Circular A-133 and 

OMB’s IPIA implementation guidance, we determined that questioned costs can be used as a proxy for improper 

payments. 

 

2 The Single Audit Act of 1996 provides for consolidated financial and single audits of state, local, non-profit entities, and Indian 

tribes administering programs with Federal funds. Since 1997, all non-Federal entities that expend over $300,000 ($500,000 

for fiscal years after December 31, 2003) or more of Federal awards in a year are subject to a consolidated financial single 

audit; any non-Federal entities that do not meet this threshold are not required to have a single audit. All non-Federal entities 

are required to submit all single audit reports to a Federal Audit Clearinghouse (Clearinghouse) that is administered by the 

Census Bureau.
Appendices 

322 United States Department of Labor 

To determine an approximate rate of improper payments for the WIA program, the Department divided the projection 

of questioned costs from the FY 2004 single audit reports by the FY 2004 program outlays identified in the Federal 

Audit Clearinghouse. The Department applied this improper payment rate to the program outlays for FY 2004 in 

order to determine whether the amount of potential improper payment for these programs exceeded the $10 million 

threshold. 

For the other non-WIA grant programs, the Department determined an overall improper payment rate by dividing the 

projection of the non-WIA questioned costs by the total non-WIA outlays.3

 No grant programs were determined to 

be susceptible to risk as a result of this approach. However, like FECA, the Department is reporting on WIA’s 

improper payment rate as required by OMB guidelines, although its improper payment rate is well below the 2.5 

percent threshold. 

Results

Based on the risk assessment methods applied to benefit programs and grant programs, only one program, UI, was 

determined to be high risk. Two other programs, FECA and WIA, were classified as high risk because each of the 

program’s payments exceeds $2 billion, although their risk assessments do not support such a high risk designation. 

The Department plans to continue to identify corrective actions to reduce improper payments in these programs and 

has established improper payment reduction and overpayment recovery targets in accordance with IPIA and 

associated OMB guidance. 

Table 2: Department of Labor’s High Risk Programs 

DOL Program/Activity Risk Reason for High Risk Classification Type of Program 

Unemployment Insurance (UI) High Exceeds OMB Threshold; also Section 57 Benefit 

Federal Employees Compensation Act (FECA) High Section 57 Benefit 

Workforce Investment Act (WIA) High Section 57 Grant 

The Department also sampled the following programs in FY 2006 despite their low risk status in FY 2004 and FY 

2005. A listing of programs that were sampled is presented below in Table 3. 

Table 3: Additional programs that were sampled 

DOL Program/Activity Type of Program Risk 

Black Lung Benefit Payments Benefit Low Risk 

Energy Employees Occupational Illness Compensation Program (EEOICP) Benefit Low Risk 

DOL Salaries Other Low Risk 

DOL Expenses Other Low Risk 

II. Statistical Sampling 

The Department’s risk assessment identified only the UI program as being risk susceptible based on the OMB guidance 

threshold. However, as noted, two additional programs, WIA and FECA, were added to this list as required by OMB 

guidelines. In addition, the Department sampled several other programs that did not qualify as risk-susceptible programs. 

Unemployment Insurance (UI)

Sampling Methodology: Improper payment rates are obtained from the Benefit Accuracy Measurement (BAM) 

program. It is designed to determine the accuracy of paid and denied claims in the three largest permanently 

authorized unemployment compensation (UC) programs: State Unemployment Insurance (State UI), Unemployment 

Compensation for Federal Employees (UCFE), and Unemployment Compensation for Ex-Service Members (UCX). 

 

3

 A review of the FY 2003 single audit reports revealed questioned costs for only some of the grant programs. Even for those 

programs that had questioned costs, there were not enough samples to make a valid projection. Therefore, an aggregate 

projection of questioned costs was made for all non-WIA grant programs and an overall estimated improper payment rate was 

calculated by dividing this projection by the total non-WIA outlays identified in the Clearinghouse. This estimated improper 

payment rate was then applied to the specific grant program outlay to calculate the estimated amount of improper payments. 
Improper Payments Information Act Reporting Details 

FY 2006 Performance and Accountability Report 323 

BAM provides two rates of improper payments. The first, the Annual Report Overpayment Rate, includes estimates 

of nearly every divergence from what state law and policy dictate the payment should have been. The second rate, 

the Operational Overpayment Rate, includes only recoverable overpayments states are most likely to detect through 

ordinary overpayment detection and recovery procedures, known as Benefit Payment Control (BPC) procedures. 

Operational overpayments are the most likely to be detected and established for eventual recovery and return to the 

Trust Fund. 

BAM reconstructs the UI claims process for randomly selected weekly samples of payments and denied claims using 

data verified by trained investigators. For claims that were overpaid, underpaid, or improperly denied, BAM 

determines the amount of benefits the claimant should have received, the cause of and the party responsible for the 

error, the point in the UI claims process at which the error was detected, and actions taken by the agency and 

employer prior to the error. 

In reconstructing each sampled payment, the BAM program retroactively investigates the accuracy of the UI claim’s 

monetary and separation determination as well as all information relevant to determining weekly eligibility for the 

sampled payment, including the claimant’s efforts to find suitable work, ability and availability for work, and 

earnings from casual employment or other income sources, such as pensions. By 2008, all BAM investigations will 

incorporate a crossmatch with New Hire data to improve the ability to detect overpayments due to beneficiaries who 

claim benefits after returning to work, the largest single cause of UI overpayments. 

Using the same methodology applied to paid claims, the Denied Claim Accuracy module of BAM assesses the 

accuracy of denial decisions made at the monetary, separation, and continuing eligibility levels of eligibility 

determination. 

Sample Selection: The universe (population) is the payments and denials under the State UI, UCFE, and UCX 

programs. State UI, UCFE and UCX account for approximately 95% of UC programs activity in an average year. 

Data on overpayment and underpayment rates for FY 2006 shown in the Improper Payment Reduction Outlook Table 

are for the period July 1, 2005, to June 30, 2006. Data are shown for this period rather than the Fiscal Year because 

they are more complete and thus more precise. Based on historical data, those BAM cases requiring the most time to 

complete are more likely to have payment errors. The BAM program standard is to complete 95% of the cases 

within 90 days. Over 99.5% of the BAM cases for the period shown are complete, versus about 92% of the cases for 

the fiscal year. The paid claim accuracy completed sample consisted of 23,711 payments. For Denied Claims 

Accuracy (DCA), states sample 150 cases for each of the monetary, separation, and non-separation denials; the 

allocated sample for each type is 7,800 cases per test per year. A total of 46,379 items were selected and investigated 

for both the BAM and DCA samples for the period July 1, 2005, to June 30, 2006. 

Federal Employees’ Compensation Act (FECA)

Sampling Methodology: A stratified sampling approach was applied to estimate improper payments for both medical 

bill payments and compensation payments. For medical bill payments, sampling was designed to test payment 

issues, such as duplicate payments, appropriate receipts, and billing consistent with regional allowances, payment 

made for appropriate procedures, and eligibility at date of service. The compensation payment sampling was 

designed to test issues such as compensation payments consistent with identified injury, current medical evidence 

supporting continued compensation payments, eligibility requirements, and calculations of compensation amounts. 

Sample Selection: The universe of the population is for both the compensation and medical payments paid out of the 

FECA program in the testing period, October 1, 2005, to June 30, 2006. The population was stratified in 

compensation payments and medical payments from thirteen district offices. Samples of 102 items from 

compensation payments and of 108 items from medical payments were selected. A total of 210 items were selected 

and tested for the FY 2006 FECA sample. 

Black Lung Disability Fund

Sampling Methodology: A stratified sampling approach was applied to estimate improper payments for both medical 

bill payments and benefit payments. The population was stratified into medical payments and benefit payments. The 

medical bill payment sampling was designed to test payment issues such as duplicate payments, eligibility at date of 
Appendices 

324 United States Department of Labor 

service, procedure covered by program, and appropriate receipts and paperwork. The compensation payment 

sampling was designed to test issues such as eligibility requirements, calculations of compensation amounts, and 

calculations of compensation offsets due to dependants. 

Sample Selection: The universe of the population is for medical payments made at Computer Sciences Corporation 

(CSC) and for all benefit payments paid out of the Black Lung program in the testing period, October 1, 2005, to 

June 30, 2006. The universe of the population is also medical payments made at Affiliated Computer Services 

(ACS) in the testing period, October 1, 2005, to June 30, 2006. The sample consisted of 45 benefit payments and 45 

medical bill payments. A total of 90 items were selected and tested for the FY 2006 Black Lung sample. 

Energy Employees Occupational Illness Fund

Sampling Methodology: The sampling approach for Energy’s compensation and medical bill payments consisted of 

Monetary Unit Sampling (MUS) to estimate improper payments. The payment sampling was designed to determine 

that the benefits paid were in accordance with specified policies and procedures, that eligibility requirements were 

followed, and that payments were made in the correct amount. 

Sample Selection: The universe of the population consisted of compensation payments and medical bill payments 

made under EEOICP in the testing period, October 1, 2005, to June 30, 2006. The sample consisted of 45 

compensation payments and 46 medical bill payments. 

Department of Labor Salaries

Sampling Methodology: DOL Salaries consist of the department payrolls of the national office and three regional 

offices: Atlanta, Philadelphia, and San Francisco. To accomplish the sampling for the payroll, a stratified approach 

was applied. The testing criteria consisted of testing items such as employee’s eligibility, earnings and leave tracked 

correctly, time card consistent with payment, and pay rate calculated correctly.

Sample Selection: The universe of the population of Department salaries is comprised of the payroll transactions in 

the testing period, October 1, 2005, to June 30, 2006. A sample of 66 items from the Department’s payroll 

transactions was selected for testing. 

Department of Labor Expenses

Sampling Methodology: DOL expenses consist of department expenses related to the operation and administration of 

programs’ and headquarters’ activities. Expense transactions were stratified into seven groups and samples were 

then statistically drawn from each stratum. For non-payroll costs, sample testing focused on testing criteria such as: 

(1) appropriate contracts used, (2) payments supported with invoices, (3) invoices correct, and (4) whether or not the 

purchase was allowable under program costs. 

Sample Selection: The universe of the population of expenses is comprised of DOL expense payments in the testing 

period, October 1, 2005, to June 30, 2005. A total of 50 items were selected and tested. 

III. Corrective Actions 

Unemployment Insurance

Despite implementing new initiatives that will reduce its improper payments, the UI program’s estimated improper 

payment error rate increased to 10.0%. The underpayment rate—the percentage of dollars paid made that was 

smaller than they should have been—was 0.67%, a rate that has remained steady for several years. 

Two factors appear to account for most of the increase in the overpayment rate from 9.3% a year earlier as the table 

below shows: 
Improper Payments Information Act Reporting Details 

FY 2006 Performance and Accountability Report 325 

• Several major hurricanes in 2005 had a devastating impact on Louisiana and Mississippi, and less severe impacts 

on Alabama, Florida, and Texas. Overpayments in these states increased significantly during the year, largely 

because of confusion about reinstated eligibility requirements that had been temporarily suspended due to 

disruption of the economy. We estimate that the increases in the Gulf States raised the aggregate Annual Report 

rate by a third of a percentage point and the operational rate by 0.13 percentage points. 

• In its aggressive emphasis on payment integrity over the past few years, the Department has developed a new 

core performance measure for overpayment detection and has begun to improve the Benefit Accuracy 

Measurement (BAM) program’s ability to detect individuals who are working and claiming UI benefits 

concurrently, the single largest cause of overpayment errors. This increased attention has heightened states’ 

overall awareness of the problem of UI benefit overpayments and led to improved--and higher--BAM estimates. 

For the year ending 06/30/06, eighteen states voluntarily crossmatched BAM cases with the State Directory of 

New Hires (SDNH) or National Directory of New Hires (NDNH). We estimate that this voluntary use of the 

new hire directories raised the measured overpayment rates by nearly a fifth of a point during FY 2006. 

Total Rate Operational Rate* 

Year Ending 6/30/2005 Rates 9.32%** 4.98%** 

FY 2006 Targets 9.3% 4.75% 

Unadjusted YE 6/30/2006 Estimates 10.0% 5.63% 

New Hire Cross match -0.18% -0.18% 

Hurricane - affected States -0.35% -0.13% 

Adjusted Rates 9.47% 5.32% 

The Department has obtained authority to require states to use the NDNH to improve their BAM estimates of 

overpayments due to workers who return to work but continue claiming benefits. When this NDNH crossmatch 

requirement becomes mandatory in January 2008, we estimate that it will raise the measured BAM annual report and 

operational rates by 0.5 to 0.75 percentage points. 

Without the effects of these two elements, we estimate that the Annual Report rate would have been about 9.5% 

instead of 10.0%, and the operational rate 5.3% instead of 5.6%. Because both estimates are sample-based, they are 

subject to the usual sampling variation. The 95% confidence intervals are 10.0% +/- 0.54 percentage points for the 

Annual Report rate and 5.63% +/- 0.44 percentage points for the operational rate. 

 

The Department’s analytical studies indicate that earlier detection of recoverable overpayments is the most costeffective way to address improper payments. Early detection allows agencies to stop payments before a claimant 

who has returned to work can exhaust benefits and to recover these overpayments more readily. The Department 

estimates that the forty-five states that crossmatch UI beneficiaries with the SNDH or the NDNH instead of UI wage 

records prevented approximately $75 million of overpayments in each of the past two fiscal years. Last year, three 

states participated in a pilot study initiated by the Office of the Chief Financial Officer and the UI program to 

determine whether a cross-match using the NDNH is more effective than the SDNH in identifying individuals no 

longer eligible to receive UI benefits. The results of this pilot showed that because the NDNH includes records for 

out-of-state employers, Federal agencies, and multi-state employers that report all of their new hires to a single state, 

it detects improper payments more effectively than the SDNH. The Department has provided states with funds to 

implement these NDNH cross-matches; as of 10/30/06, twenty-two states have implemented the NDNH crossmatch, 

twelve states have signed the computer-matching agreement with HHS that is the prelude to connecting with the 

NDNH, and seventeen are in the planning process. Seven States were awarded special FY 2006 supplemental funds 

to implement NDNH. 

 

In FY 2005, the Department began providing States funds to conduct Reemployment and Eligibility Assessment 

(REAs) with UI beneficiaries. These assessments reduce improper payments both by speeding claimants’ return to 

work and by detecting and preventing eligibility violations. Twenty states received funds to continue REAs during 

FY 2006; these REAs are estimated to return about $66 million to the UI trust fund. An impact evaluation of nine 

states’ REA programs is scheduled for March 2007. 
Appendices 

326 United States Department of Labor 

Federal Employees’ Compensation Act

The FECA program continues its progress in improving medical bill processing using an outsourced bill processing 

service. Significant attributes of the service include the ability to better match treatments to work related injury or 

illness and more sophisticated bill editing techniques. The bill processing service uses automated front-end editing 

operations to check for provider and claimant eligibility, accepted condition and treatment type, billing form and 

content, and duplications. The service uses proprietary software to screen professional medical and outpatient 

hospital bills to check for certain improper billing practices. Furthermore, on-site process audits resulted in clearer 

instructions and corrective action plans. This year’s implementation of in-house audits of bill samples will provide 

the program with additional information about bill processing performance and will also identify weaknesses. 

Additional causes of improper payments for FECA include: (1) incorrect or incomplete information submitted for the 

claims record (such as pay rate, night differential rate, retirement plan, etc.); (2) Office of Workers’ Compensation 

Programs (OWCP)4

 errors including mistakes in judgment or interpretation in making decisions; (3) miscalculations 

in making payments; and (4) claimant fraud or misrepresentation. OWCP’s integrity initiatives to address these 

issues are as follows: 

• Medical bill processing performance is reviewed as a routine function of FECA National Office oversight of the 

central bill processing contract and is used to score against performance requirements specified in the contract. 

• Samples of medical payments are audited monthly by FECA district office staff for both financial and procedural 

errors. 

• Compensation payment performance is reviewed by FECA district office managers, line supervisors, and fiscal 

operations staff; frequency of review varies according to need (e.g., supervisors and fiscal staff look at 

performance almost on a per-transaction basis; whereas, summary performance is reviewed daily, weekly, or 

quarterly by supervisors and managers). Results are monitored in the National Office and used to design 

procedural revisions or corrective action plans for the District Offices. The National Office also conducts formal 

biennial accountability reviews to rate each District Office for quality and accuracy. System reports used to 

analyze payment information include the Report on Receivables Due from the Public (Schedule 9), Accounts 

Receivable Aging Schedule and Performance reports. Regular matching of death records is done to reduce 

improper payments. 

• Case management techniques are used to monitor ongoing entitlement to benefits and payment accuracy. For 

example, FECA’s Periodic Roll Management (PRM) units monitor cases receiving long-term disability benefits. 

Changes in medical condition or ability to return to work are identified by regular ongoing PRM review of the 

cases, and compensation benefits may be reduced or terminated. Benefit reductions also result from new 

information reported about changes in status, such as the death of a claimant. The key outcome measure for 

PRM is the annual amount of benefit savings generated from these case actions. Benefits savings can also be 

compared directly to PRM administrative costs. 

• Improvements continue in documentation quality and faster transmission of notice of injury and claims for 

compensation from the agencies to OWCP. Progress in submitting these forms more quickly yields faster and 

more accurate adjudication and payment and fewer customer service problems. More than a quarter of new 

claims are now received via Electronic Data Interchange from the Departments of Labor, Defense, Treasury, 

Transportation, Veterans Affairs, and Homeland Security. That percentage is expected to grow in the future. 

Workforce Investment Act

Ensuring proper fund stewardship is of primary importance to the WIA program. ETA currently uses a multi-step 

approach to ensure proper administration and effective program performance of WIA grants. First, ETA starts its 

review/oversight process by conducting a structured risk assessment of all new grants and grantees. Risk assessments are 

periodically revised as new information about a grant and grantee becomes available through desk reviews, onsite reviews 

or other sources of information. Second, ETA Federal Project Officers (FPOs) conduct quarterly desk reviews of the 

financial and program performance of each grant. The results of these activities are contained in the Grants e-Management 

Solution (GEMS), an electronic tracking and grant management system. This serves as an early warning system to detect 

 

4

 OWCP oversees the administration of four federal employee compensation programs. These programs are the Energy 

Employees Occupational Illness Compensation program, the Federal Employees’ Compensation program, the Longshore and 

Harbor Workers’ Compensation program, and the Coal Mine Workers’ Compensation program. 
Improper Payments Information Act Reporting Details 

FY 2006 Performance and Accountability Report 327 

potential financial management and/or programmatic performance issues and allows ETA to target technical assistance 

more effectively. Finally, ETA staff (FPOs, financial management and others) conduct periodic onsite reviews of 

grantees. ETA attempts to conduct an onsite review of each grantee at least once every two years, but actual review 

schedules are based on the results of the risk assessments and desk reviews. Onsite reviews are conducted using ETA’s 

Core Monitoring Guide as well as program specific and technical guide supplements designed to provide a more detailed 

review of program requirements and financial activities. Results of the onsite monitoring activites are also cataloged in the 

GEMS system. For grantees with large numbers of sub-recipients (e.g., WIA formula grantees), the onsite review 

conducted using the formula program supplement to the Core Guide includes an assessment of the grantee’s sub-recipient 

monitoring activities. In addition, ETA conducts onsite review of local areas as part of its review of the state grantee. The

results of the onsite monitoring are also catalogued in the GEMS system. ETA now has the capability to review trends or 

issues that arise in a more comprehensive manner. Whenever deficiencies or problems are identified as a result of a desk 

review, onsite review, or an independent audit, ETA immediately begins working with the grantee to obtain appropriate 

corrective actions. Corrective actions undertaken by the grantee are tracked by ETA and follow-up technical assistance 

and reviews are scheduled as needed. 
328 United States Department of Labor 

IV. Improper Payment Reduction Outlook FY 2004 – FY 2008 (in $ millions)

Program FY 04 

Outlays 

FY 04 % FY 04 IP $ FY 05 

Outlays 

FY 05 % 

FY 05 IP $ 

FY 06 Outlays 

FY 06 % 

FY 06 IP $ 

FY 07 Est. Outlays 

FY 07 % 

FIP 

Unemployment Insurance (Operational Rate) 

$37,823 5.07% $1,918 

overpayment 

$32,248 4.98% $1,606 $30,976 5.63% $1,744 $33,020 4.5% $

Unemployment Insurance (Annual Report Rate) 

$37,823 9.70% $3,669 

overpayment 

$32,248 9.46% $3,051 $30,976 10.00% $3,168 $33,020 9.0% $

Unemployment Insurance Underpayment Rate 

$37,823 0.64% $242 

underpayment 

$32,248 0.67% $216 $30,976 0.67% $208 $33,020 0.64% $

Workforce Investment Act 

Not Available5

Not Available 

Not Available $3,738 0.21% $7.8 $3,763 0.17% $6.4 $3,606 0.19% $

Federal Employees’ Compensation Act 

$2,471 0.25% $6.2 $2,519 0.13% $3.3 $2,555 0.03% $0.322 $2,646 0.244% $

Note: the UI overpayment and underpayment rates are from the Benefit Accuracy Measurement program for the period 7/1/2005 – 2006 actual.5 WIA’s baseline rate was established in FY 2005. 
Improper Payments Information Act Reporting Details 

FY 2006 Performance and Accountability Report 329 

V. Recovery Auditing 

DOL expense transactions consist of all non-payroll program operation and administration costs. These transactions 

were stratified into seven groups and samples were then statistically drawn from each stratum. Sample testing 

focused on testing criteria such as: (1) appropriate contracts used; (2) payments supported with invoices; (3) invoices 

correct; and (4) the purchase was allowable under program costs. The universe of the population of expenses is 

comprised of DOL expense payments in the testing period, October 1, 2005, to June 30, 2006. A total of 50 items 

were selected and tested, and no improper payments were noted; as such, recovery audit efforts for FY 2006 were not 

necessary.

The Department will continue to sample and estimate the level of improper payments for all non-payroll expenses to 

determine if there are costs that must be set up for recovery. In the event that such recoverable costs are identified, 

the Department will work to institute an effective recovery audit system to ensure that all contract overpayments are 

recovered and/or resolved. The Department will also make sure that all recovery audit actions, costs, and amounts 

recovered are clearly documented and reported to OMB on an annual basis. 

VI. Management Accountability 

Existing control processes and the implementation of the revised OMB Circular A-123 requirements continue to 

ensure that the Department’s internal controls over financial reporting and systems are well documented, sufficiently 

tested, and properly assessed. In turn, improved internal controls enhance safeguards against improper payments, 

fraud, waste, and abuse and better ensure that the Department’s resources continue to be used effectively and 

efficiently to meet the intended program objectives. Furthermore, this Department-wide effort will support the 

Secretary of Labor’s annual certification of internal controls in the PAR. The OCFO continues with the quarterly 

financial management certifications and reviews with each agency in the Department. These controls began in fiscal 

year 2003. The primary objectives of this oversight are to obtain assurances of DOL compliance with the Federal 

Managers’ Financial Integrity Act of 1982 (FMFIA), the Federal Financial Management Improvement Act of 1996 

(FFMIA), and IPIA, to enhance the Department’s internal financial controls, and to resolve financial management 

issues in a more efficient and timely manner. The quarterly certification process allows for an open discussion of 

each agency’s progress in resolving internal control issues, audit findings, and improper payments, as well as 

establishing a formal, early warning process to identify and address other potential problem areas. 

VII. Information Systems and Infrastructure 

Unemployment Insurance

ETA believes that in most cases the states have the information systems and infrastructure they need for improper 

payment reduction. States are implementing systems to exchange data with the Social Security Administration 

(SSA) and interface with their SDNH. Four fifths of the states are now using the SDNH and 18 began using the 

NDNH during FY 2006. Fourteen additional states have signed the computer-matching agreement with HHS that is 

the prelude to connecting with the NDNH, and nineteen others are in the planning stage for NDNH. More states plan 

to access the SDNH during FY 2007. 

Federal Employees’ Compensation Act

The Office of Worker’s Compensation Programs (OWCP) has deployed an integrated management information and 

compensation benefit system that will enhance both compensation payment accuracy and medical bill processing 

accuracy. Resources are included in the FY 2007 budget request for this system.
Appendices 

330 United States Department of Labor 

Workforce Investment Act

ETA currently has multiple technology projects underway in an effort to improve grants management. The WIA 

program utilizes these tools to execute the risk management process to assess and monitor grantees. They include the 

web-based EBSS (Enterprise Business Support System), with its GEMS (Grants e-Management Solution) and 

EMILE (ETA Management Information and Longitudinal Evaluation) modules. EBSS is the Enterprise Business 

Support System, a web-based solution used to track and manage grants. A component of the EBSS is the automated 

grant cost reporting system that captures grant costs and obligations, which improves fiscal integrity. This system 

will feed data into GEMS. The combination of the two will be part of the cradle-to-grave E-grants solution for the 

entire Department. Roll out is expected to begin in October of 2006. The GEMS system, mentioned also in Section 

III of this appendix is an online grants management tool meant to provide web accessible, customizable, role based 

context access to grant related information from multiple sources. The utilization of the GEMS system by the Federal 

Project Officers and program management and financial staff allows ETA a more coordinated and comprehensive 

repository of grant specific information. A GEMS technology project has recently been undertaken to provide for a 

report writing module and the cataloging of the Core Monitoring Guide and supplements. This will allow ETA staff 

to customize and target their oversight efforts. 

VIII. Statutory or Regulatory Barriers 

Unemployment Insurance

The UI program has several statutory barriers to reducing improper payments. First, States administer the UI 

program and set operational priorities. The Department has limited authority to ensure they pursue improper 

payment reduction activities. Second, the “immediate deposit” requirement (Sec. 3304(a)(3), Federal Unemployment 

Tax Act (FUTA) and Sec 303(a)(4), Social Security Act (SSA)) and the “withdrawal standard” (Sec. 3304(a)(4), 

FUTA and Sec 303(a)(5), SSA) preclude the use of recovery auditing techniques and affect recovery efforts. 

The “immediate deposit” requirement dictates that all employer contributions (unemployment taxes) must be paid 

immediately into the trust fund and the “withdrawal standard” says that money in the trust fund can only be used for 

UI benefits. There are certain exceptions to the “immediate deposit” requirement, but they do not apply to recouped 

benefit overpayments. These requirements preclude State UI agencies from using funds recovered from 

overpayments to be used for administrative or operational efforts to improve prevention, detection, and recovery 

efforts. In addition, Title IV-D of the SSA, which established the state and national directories of new hires for the 

purposes of locating individuals who were delinquent in paying child support, does not require employers to report 

the date of hire. Having this date greatly increases the efficiency of using crossmatches with the SDNH or NDNH to 

detect UI beneficiaries who continue to claim benefits despite having returned to work. 

Elements of the Unemployment Compensation Integrity Act, transmitted to Congress in May 2006, would relax the 

barriers posed by the “immediate deposit” requirement and the “withdrawal standard” to provide additional funding 

for recovery and other integrity activities. It would permit states (a) to use up to 5% of all recovered overpayments to 

augment Benefit Payment Control (BPC) activities (b) to use up to 25% of fraud overpayments recovered or 

delinquent contributions collected by a collection agency to be retained by that agency, and (c) to use up to 5% of 

certain tax collections to implement provisions of the law relating to employer fraud or tax evasion, such as the 

SUTA Dumping Prevention Act of 2004. It would also amend the SSA to require states to impose a penalty of at 

least 15% on fraudulent overpayments, and use the penalties to fund BPC activities. The Integrity Act would also 

prohibit states from non-charging employer accounts if the agency determined the employer’s “fault”—e.g., a late or 

missing response--caused an overpayment, and would allow the recovery of benefit overpayments, delinquent taxes, 

and unpaid penalties and interest by intercept of Federal income tax refunds. Finally, it would mandate that states 

require all employers to report the date of first earnings or “start work” date to the SDNH, and that the state transmit 

this information to the NDNH. 
Improper Payments Information Act Reporting Details 

FY 2006 Performance and Accountability Report 331 

Federal Employees’ Compensation Act

With regard to the FECA program, legislation does not currently permit FECA to verify employment earnings with 

the SSA without the claimant’s written permission. Compensation benefits may be overpaid if an employee has 

unreported earnings and does not grant permission for the program to verify earnings with SSA. 

Workforce Investment Act

No statutory or regulatory barriers exist that limit WIA’s ability to address and reduce improper payments. The WIA 

program has the legal authority to establish receivables and implement actions to collect those receivables. 

IX. Additional Comments 

The Department continues to consider the most appropriate ways to define reportable UI overpayments. The 

Operational Overpayment rate, in use since 2002, was defined to measure recoverable overpayments readily detected 

by normal agency operations for establishment and recovery. Although the total or “Annual Report,” rate used in 

this report, has the virtue of measuring the value of all payments that exceed what State law and policy prescribe, it 

may be excessively broad. It includes many “technical” overpayments (e.g., that may not involve any conscious act 

or omission on the part of claimants or employers), or whose causes may have a weak, if any, relationship to 

achievement of other goals of the UI program such as swift return to suitable work. Overpayments due to failure to 

register with the Employment Service (approximately 1 percent of UI payments and 10 percent of all overpayments 

in YE 6/30/06) are a good example. About one-fourth of all UI overpayments are also not subject to recovery, a 

typical criterion in other public programs. Two other integrity rates that the Department regularly monitors is total 

fraud and nonfraud recoverable overpayments (7.59% of UI benefits paid in YE 6/30/06), and the fraud rate (2.71% 

of UI benefits paid in YE 6/30/06). 
332 United States Department of Labor 

4. Acronyms 

ACSI American Customer Satisfaction 

Index 

BLS Bureau of Labor Statistics 

CAM Cost Analysis Manager 

CATARS Capital Asset Tracking and 

Reporting System 

CFO Chief Financial Officer 

CY Calendar Year 

DBA Davis-Bacon Act 

DOD U.S. Department of Defense 

DOL U.S. Department of Labor 

DOLAR$ Department of Labor Accounting 

and Related Systems 

DVOP Disabled Veterans’ Outreach 

Program 

EBSA Employee Benefits Security 

Administration

EEO Equal Employment Opportunity 

EIMS Enterprise Information Management 

System 

ERISA Employee Retirement Income 

Security Act 

ESA Employment Standards 

Administration 

ETA Employment and Training 

Administration 

 

FASAB Federal Accounting Standards 

Advisory Board 

FBCO Faith-Based and Community 

Organizations 

FECA Federal Employees’ Compensation 

Act 

FFMIA Federal Financial Management 

Improvement Act 

FMFIA Federal Managers’ Financial 

Integrity Act 

FLSA Fair Labor Standards Act 

FMLA Family Medical Leave Act 

FTE Full Time Equivalent 

FUTA Federal Unemployment Tax Act 

FY Fiscal Year 

GAO U.S. Government Accountability 

Office 

GPRA Government Performance and 

Results Act 

GSA General Services Administration 

HVRP Homeless Veterans’ Reintegration 

Project 

ILAB Bureau of International Labor 

Affairs 

ILO International Labor Organization 

IMIS Integrated Management Information 

System 

IPEC International Program for the 

Elimination of Child Labor 

IPIA Improper Payments Information Act 

IRS Internal Revenue Service 

IT Information Technology 

JFMIP Joint Financial Management 

Improvement Program 

LMRDA Labor-Management Reporting and 

Disclosure Act 

LPD Lost Production Days 

LVER Local Veterans’ Employment 

Representative 

MSHA Mine Safety and Health 

Administration 

NAICS North American Industry 

Classification System 

 

OASAM Office of the Assistant Secretary for 

Administration and Management 

OASP Office of the Assistant Secretary for 

Policy 

OATELS Office of Apprenticeship Training, 

Employer and Labor Services 

OCFO Office of the Chief Financial Officer 

OCIA Office of Congressional and 

Intergovernmental Affairs 

ODEP Office of Disability Employment 

Policy 

OFCCP Office of Federal Contract 

Compliance Programs 

OIG Office of Inspector General 

OLMS Office of Labor-Management 

Standards 

OMB Office of Management and Budget 

O*NET Occupational Information Network 

OPA Office of Public Affairs 

OSHA Occupational Safety and Health 

Administration 

OWCP Office of Workers’ Compensation 

Programs 

PART Program Assessment Rating Tool
Acronyms 

FY 2006 Performance and Accountability Report 333 

PBGC Pension Benefit Guaranty 

Corporation 

PMA President’s Management Agenda 

PPI Producer Price Index 

PY Program Year 

SOL Office of the Solicitor 

SSA Social Security Administration 

SWA State Workforce Agencies 

TAA Trade Adjustment Assistance 

TAP Transition Assistance Program 

UI Unemployment Insurance 

USPS U.S. Postal Service 

UTF Unemployment Trust Fund 

VA U.S. Department of Veterans Affairs 

VETS Veterans’ Employment and Training 

Service 

 

WB Women’s Bureau 

WHD Wage and Hour Division 

WIA Workforce Investment Act
334 United States Department of Labor 

5. Internet Links 

Employment Information (For Workers and Employers) 

America’s Career InfoNet http://www.acinet.org/acinet/ 

America’s Job Bank http://www.ajb.dni.us/ 

Occupational Outlook Handbook http://www.bls.gov/oco/ 

Job Corps http://jobcorps.doleta.gov/ 

DOL Jobs http://www.dol.gov/oasam/doljobs/main.htm 

DisabilityInfo.gov http://www.disabilityinfo.gov 

Job Accommodation Network (JAN) http://www.jan.wvu.edu/

Small Business and Self Employment Service (SBSES) http://janweb.icdi.wvu.edu/sbses/

Employer Assistance & Recruiting Network (EARN) http://www.earnworks.com 

Women’s Bureau GEM-Nursing Project http://www.gem-nursing.org

Workplace Laws and Related Information 

DOL Compliance Assistance http://www.dol.gov/compliance

Employment Laws Assistance for Workers and Small Businesses http://www.dol.gov/elaws/ 

State Labor Laws and Offices http://www.dol.gov/esa/programs/whd/state/state.htm 

Minimum Wage Q&A http://www.dol.gov/esa/minwage/q-a.htm 

Fair Labor Standards Act http://www.dol.gov/esa/regs/statutes/whd/allfair.htm 

Family & Medical Leave Act http://www.dol.gov/esa/whd/fmla/ 

Small Business Compliance Assistance http://www.dol.gov/osbp/sbrefa/ 

Union Reporting and Public Disclosure http://www.dol.gov/esa/regs/compliance/olms/rrlo/lmrda.htm

Statistical Information 

Consumer Price Indexes http://www.bls.gov/cpi/ 

Bureau of Labor Statistics Most Requested Data http://www.bls.gov/data/ 

Current Population Survey http://www.bls.gov/cps/ 

Workplace Injury, Illness & Fatality Statistics http://www.osha.gov/oshstats/work.html 

Employment Projections http://www.bls.gov/emp

International comparisons http://www.bls.gov/fls/ 

Employment, Hours, and Earnings http://www.bls.gov/ces/

Safety and Health Information 

OSHA’s Partnership Page http://www.osha.gov/dcsp/partnerships/index.html 

The Workers’ Page http://www.osha.gov/as/opa/worker/index.html 

OSHA Regulations and Compliance Links http://www.osha.gov/comp-links.html 

OSHA Standard Industrial Classification Search http://www.osha.gov/oshstats/sicser.html 

OSHA Reading Room http://www.osha.gov/readingroom.html 

MSHA’s Accident Prevention Program http://www.msha.gov/Accident_Prevention/appmain.htm 

Health Hazard Information (MSHA) http://www.msha.gov/hhicm.htm 

To report a safety or health hazard to MSHA http://www.msha.gov/codeaphone/codeaphonenew.htm 

Labor Department History 

History at the Dept of Labor http://www.dol.gov/asp/programs/history/main.htm 

Annals of the Dept of Labor http://www.dol.gov/asp/programs/history/webannalspage.htm 

Labor Agencies 

Bureau of International Labor Affairs http://www.dol.gov/ILAB/

Bureau of Labor Statistics http://www.bls.gov/ 

Employee Benefits Security Administration http://www.dol.gov/ebsa/

Employment Standards Administration http://www.dol.gov/esa/ 

Employment and Training Administration http://www.doleta.gov 

Mine Safety and Health Administration http://www.msha.gov 

Occupational Safety and Health Administration http://www.osha.gov/index.html 

Office of Disability Employment Policy (ODEP) http://www.dol.gov/odep/

Veterans’ Employment and Training Service http://www.dol.gov/vets/ 

Women’s Bureau – A Voice for Working Women http://www.dol.gov/wb/ 

336 United States Department of Labor