FY 2008 Performance and Accountability Report

FY 2008 Performance and Accountability Report    3

Table of Contents

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

Management’s Discussion and Analysis .............................................................................................. 9

Program Performance Overview ....................................................................................................................... 13

Financial Performance Overview....................................................................................................................... 25

Management Assurances .................................................................................................................................. 29

Top Management Challenges and Management’s Response ........................................................................... 30

The President’s Management Agenda .............................................................................................................. 52

Performance Section......................................................................................................................... 57

Strategic Goal 1:  A Prepared Workforce........................................................................................................... 63

Strategic Goal 2:  A Competitive Workforce ...................................................................................................... 85

Strategic Goal 3:  Safe and Secure Workplaces ............................................................................................... 119

Strategic Goal 4:  Strengthened Economic Protections ................................................................................... 141

Financial Section ............................................................................................................................. 169

Message from the Chief Financial Officer ....................................................................................................... 170

Independent Auditors’ Report......................................................................................................................... 171

Annual Financial Statements ........................................................................................................................... 185

Principal Financial Statements and Notes................................................................................................. 187

Required Supplementary Stewardship Information ................................................................................. 247

Required Supplementary Information ...................................................................................................... 254

Other Accompanying Information................................................................................................... 281

Summary of Financial Statement Audit and Management Assurances................................................................282

Improper Payments Information Act Reporting Details..........................................................................................283 

Appendices ..................................................................................................................................... 295

1. Acronyms.. ............................................................................................................................................. ......296

2. Internet Links ............................................................................................................................................... 297

This report can be found on the Internet at http://www.dol.gov/%5Fsec/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

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 this report:

Accounting services − Martin and Yarbrough, Joint Venture

Graphic design – Jill Tanenbaum Graphic Design & Advertising Inc.
4     United States Department of Labor

The seal of the Department of Labor was approved by President Woodrow Wilson on June 21, 1913.  It features

an eagle with outspread wings above a gold shield divided horizontally by a red band.  Gold denotes integrity and

red is for courage and endurance.

At the top of the shield is an anvil and at the bottom is a plough; both represent industry.  On the red band are a

pulley, a lever, and an inclined plane.  They represent the three fundamental principles of mechanics and

humanity’s efforts to understand and harness the forces of nature for productive ends.   
FY 2008 Performance and Accountability Report     5

Secretary’s Message

November 17, 2008

I am pleased to submit the tenth annual Department of Labor (the

Department or DOL) Performance and Accountability Report to Congress

and the American people.  Work in the United States is evolving rapidly

with demographic trends, technological advances, and international

competition.  To help workers succeed in the midst of change and

economic uncertainty, the Department must anticipate new trends and

adopt effective strategies.  With that in mind, we set out to modernize the

Department – to transform DOL into a more effective and efficient

government agency that delivers benefits for its customers and

stakeholders alike.

During my tenure as Secretary of Labor, the Department responded in

many new and innovative ways to the challenges of the 21st Century.  Four

examples of progress stand out.  First, the Department successfully updated

the 50‐year‐old white‐collar overtime regulations under the Fair Labor

Standards Act to provide millions of low‐wage vulnerable workers with

strengthened overtime protections.  Second, DOL achieved the first major update of union financial disclosure

regulations in more than 40 years, giving union members enhanced information on how their hard‐earned dues are

spent.  Third, the Pension Protection Act of 2006 complements the Department’s record enforcement of the

Employee Retirement Income Security Act (ERISA) and achieves the President’s goals of stronger funding and

greater transparency of our pension system, including important reforms to expand retirement security and protect

workers in defined contribution plans.  And fourth, the Department has been privileged to assist our returning

veterans, who have fought so bravely to defend our freedom at home and throughout the world.  Among our

actions, the Department published the first‐ever regulations implementing the Uniformed Services Employment

and Reemployment Rights Act, launched ReaLifelines to provide one‐on‐one services to seriously wounded service

members, initiated the HireVetsFirst campaign, and, this past August, inaugurated America’s Heroes at Work, which

focuses on the challenges of returning service members with Traumatic Brain Injury and Post‐Traumatic Stress

Disorder.   

The Program Performance Overview in the Management’s Discussion and Analysis section of this report includes

many more examples that highlight the impact DOL programs have had on individuals over the last seven years.  

This report documents the latest evidence of the Department’s transformation with program and financial

performance results.  While the Department did not meet all of its 2008 goals, we are continuing to focus on

improving program performance.  Organized by types of workers we serve, the following is a summary of our

performance from the fiscal year (FY) that ended September 30:

For Veterans

√ Entered employment and employment retention rates increased by one and two percentage points,

respectively, for all veterans participating in DOL’s programs.

For Keeping Workers Safe

√ Between 2006 and 2007 – the most recent year for which data are available – the workplace injury and

illness incidence rate declined to its lowest level ever among private employers since the change in OSHA

recordkeeping in 2002, declining by 21 percent over the past six years.  The rate declined in 5 of the 19

private industry sectors and was statistically unchanged in the remaining 14 industry sectors.
Secretary’s Message

6     United States Department of Labor

√ For 2007 – the most recent year for which data are available – worker fatalities declined to 3.7 fatalities per

100,000 workers, the lowest fatality rate in recorded OSHA history.

√ Reduced the number of lost production days per 100 employees for Postal workers by almost a week and

for non‐Postal Federal employees by over a week.

√ Reduced the amount of time to decide claims for Black Lung benefits by an average of 19 days.

For the Unemployed and Other Jobseekers

√ Retention in employment improved for Workforce Investment Act (WIA) Adult, Employment Service, and

Trade Adjustment Assistance (TAA) program participants but fell slightly for the WIA Dislocated Worker

program.  Entered employment rates fell for those served by the WIA Adult and Dislocated Worker, and

TAA programs.

√ Average earnings rose for participants in the WIA Adult and Dislocated Worker, Employment Service, and

TAA programs – in some cases six months’ earnings increased by nearly $1000.   

√ The reemployment rate for unemployment insurance claimants decreased slightly by 0.2 percentage points,

from 65.1 percent in FY 2007 to 64.9 percent in FY 2008 – primarily due to changes in the national

unemployment rate.  However, the agency continues to work with States to improve reemployment

services provided through the One‐Stop Career Centers.

√ Nearly 16 million workers were provided with employment assistance and/or workforce and labor market

information.

For Apprentice Workers

√ Approximately 84 percent of workers in apprenticeship programs remained employed for at least nine

months after registering as an apprentice.

√ While apprenticeship program participants' average hourly wage gain (from $15.27 to $15.87) was below

the target, the gain translates to an annual increase of $1,269 per apprentice.  The decline in construction

associated with a deteriorating housing market had a significant impact on the number of registered

apprentices, exerting downward pressure on the average earnings measure.

For Youth

√ Approximately 67 percent of WIA Youth program participants entered employment, post‐secondary

education, or advanced training after exiting the program, and over 50 percent earned credentials within a

year after exit.  These programs focus on low‐income, out‐of‐school youth who may require specialized

assistance to complete educational programs or secure jobs.

√ The Job Corps program’s placement and credential results dropped for the third consecutive year.  Unlike

the previous two years, basic reading and math skill outcomes dropped below the target.  Therefore, Job

Corps is implementing its New Vision – an approach that focuses on applied academics.  Timing is critical

since recent data indicate the national youth unemployment rates are rising.

For Employees of Federal Contractors

√ Federal contractors maintained a compliance rate above 86 percent for the fifth consecutive year, which

means most audited contractors have affirmative action plans and comply with equal employment

opportunity laws.

√ The discrimination rate among audited Federal contractors rose to 1.6 percent from 1.0 percent in FY 2007.

For Miners        

√ The mine injury and illness rate dropped for the fifth consecutive year, from an incidence of 4.26 per

200,000 hours worked in FY 2003 to an estimated 3.19 in FY 2008.

√ The mine fatal injury rate dropped from .020 to an estimated .016 (per 200,000 hours worked).
Secretary’s Message

FY 2008 Performance and Accountability Report    7

√ The percent of noise exposures above the citation levels in coal mines rose from 3.66 percent to an

estimated 4.55 percent from FY 2007 to FY 2008.  DOL increased the number of enforcement personnel and

stepped up mine inspections, which has and will continue to have a positive impact on mine safety and

health.

For Workers with Employer Benefit Programs and Pensions

√ Seventy percent of the closed ERISA civil cases resulted in corrected fiduciary violations.  Monetary results

for enforcement, participant assistance, and compliance assistance activity exceeded $1.2 billion and

criminal investigations led to 101 indictments.

√ Customer satisfaction improved for all Pension Benefit Guaranty Corporation customer categories.  

For Union Workers

√ As it has in the past four years, the percent of unions in compliance with democratic union officer election

procedures remained above 90 percent (91.3 percent).

√ DOL did not meet its targeted goal of 97 percent of union financial reports meeting standards of

acceptability.  The Department continues to expand electronic submission of union reporting to provide

more timely public disclosure of reports and to improve the number of reports meeting reporting

standards.  DOL has also identified barriers to submitting union reports electronically, including specific

recommendations from a cost‐benefit analysis of its electronic reporting and disclosure system.

√ Office of Labor‐Management Standards investigations resulted in 130 indictments, 102 convictions, and

$3.2 million in secured or court‐ordered restitution in FY 2008.  Most of the cases involved the

embezzlement of union funds.

Program Data and Financial Systems

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

improve the quality and cost‐effectiveness of services they provide to the public.  For management and

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

data in this report are complete and reliable, with no material inadequacies as defined in Office of Management

and Budget Circular No. A‐11.

DOL conducts annual performance data quality assessments to ensure transparent reporting and to manage for

results.  These assessments promote continuous improvement in performance goal data by applying criteria such as

accuracy, validity, and timeliness.  Based on such criteria, the Department's data quality is rated Very Good or

Excellent on a five‐point scale for nearly two thirds of its performance goals.  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.

President’s Management Agenda

When President George W. Bush introduced his Management Agenda (PMA) in 2001, the Department seized this

opportunity and quickly demonstrated solid progress in implementing its initiatives.  Sound management has

always been a focus at DOL.  In the third quarter of FY 2005, DOL became the first agency to achieve green status

scores for all five government‐wide initiatives.  At DOL, PMA successes have resulted in a gradual cultural shift that

fosters a closer dialogue among program, performance, budget, and finance staff.  Now, performance is considered

in funding and management decisions and programs are expected to target for continual improvement and achieve

results.  And as highlighted on the September 30, 2008, PMA scorecard, DOL has continued its momentum –

achieving green progress and status scores on all eight government‐wide and agency‐specific PMA initiatives for

which DOL is responsible.
Secretary’s Message

8     United States Department of Labor

Conclusion

DOL’s programs and policies are heavily affected by economic trends and conditions.  In 2008, our country has

faced significant challenges in the housing market, financial market volatility, and rising energy prices.  Technology

has accelerated the pace of change and our country is transitioning to a knowledge‐based economy.  Good jobs are

still being created.  In fact, the majority of employment growth over the past six years has been in occupations with

above‐average compensation.  This trend is likely to continue in the future, and most new jobs projected for the

future are expected to be filled by workers with some kind of post‐secondary education or training.  Over the next

decade, new jobs will be created in high‐growth industries including health care, nanotechnology, geospatial

technology, and the life sciences.  Education to gain the knowledge and skills that are in demand is key to future

success in America’s labor market.  Workers who acquire and maintain competitive knowledge and skills are finding

jobs with good compensation.

The American labor market is dynamic and resilient.  Although 2008 saw the end of a record 52 consecutive months

of job gains (September 2003 through December 2007), this change reflects multiple short‐term challenges facing

our economy.  The prospects for long‐term growth remain good.  Even as our economy grows in the future, there

will be important challenges that affect our long‐term outlook and that must be addressed by the next

Administration.  State and local flexibility is imperative so that training investments are strategically aligned with

the realities of the local and regional economies; but, the Department continues to encourage States to place a

greater focus on providing education and skills training for high‐growth occupations and to ensure the quality of

that training.  Also, DOL recently announced new projects to help workers who have lost their jobs start small

businesses and to raise workers’ education and skill levels.

Two key dynamics will affect the shape of the U.S. labor force in the first half of the 21st Century:  an aging

population and increasing diversity.  At the same time, slower labor force growth increases the importance of

productivity growth to enable the economy to expand output, to support increasing numbers of older, retired

workers, and to facilitate increased living standards.  Innovation, capital investment, and investment in education

and training create a foundation for future economic growth.

The goal of the Department of Labor is to ensure that the workforce has access to the information, training, and

resources that will help them acquire the skills they need to access the growing opportunities in today’s economy.  

Since the beginning of my tenure in January 2001, and through Department‐wide effort, persistence and teamwork,

we have helped prepare the Department to do just that.  The public workforce system has been evolving to meet

the challenges and the needs of the workforce.  The Department has also focused on expanding access to education

and training, upgrading skills to open opportunities in high‐growth industries, and aligning regional resources –

talent, employers and education – to promote job creation and prosperity for America’s workers.

   

Finally, a culture has been instituted that focuses on high performance, program evaluation, and a continuous

search for opportunities to improve programs and deliver key results.  This culture furthers the Department’s

mission to “foster and promote the welfare of job seekers, wage earners, and retirees of the U.S. by improving their

working conditions, advancing their opportunities for profitable employment, protecting their retirement and health

care benefits, helping employers find workers, strengthening collective bargaining, and tracking changes in

employment, prices and other national economic measures.”  We are proud of this record and are confident that

succeeding Administrations can build on it to benefit workers in the years ahead.

Elaine L. Chao

Secretary of Labor
Secretary’s Message

FY 2008 Performance and Accountability Report     9

Management’s Discussion and Analysis
Management’s Discussion and Analysis

10     United States Department of Labor

Office of Inspector

General

Employment

Standards

Administration

Bene fits Review Board

Bureau of

International Labor

Affairs

Office of the                       

Deputy Secretary of Labor

Office of the                       

Secretary of Labor

Office of the Assistant

Secretary for Policy

Occupational Safety and

Health Administration

Of fice of Administrative

Law Judges

Office of

Congressional and

Intergovernmental

Affairs

Office of Job Corps

Administrative Review

Board

Employees' Compensation

Appeals Board

Bureau of Labor Statistics

Office of Public

Affairs

Office of Disability

Employment Policy

Mine Safety and

Health Administration

Women's Bureau

Employment and

Training

Administration

Office of the Chief

Financial Of ficer

Office of the Assistant

Secretary for Administration

and Management

Employee Benefits Security

Administration

Office of the Ombudsman for

the Energy Employe es

Occupational Illness Program

Office of the

Solicitor

Veterans'

Employment and

Training Service

Executive Secretariat

Center for Faith Based and

Community Initiatives

Office of the 21st Century

Workforce

Office of Small Business

Programs

Organization and Program Activities

The Department accomplishes its mission through component agencies and offices that administer various statutes

and programs.  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)1

, and Bureau of Labor Statistics (BLS).  The

following organization chart and table describing major activities include the most significant offices of the

Department.

 

1 PBGC – a Federal corporation created by the Employee Retirement Income Security Act of 1974 – is not included in the DOL

organization chart.  However, in accordance with the requirements of the Government Performance and Results Act (GPRA),

PBGC’s performance reporting is included in this report because PBGC’s performance goals are included in the Department’s

performance budget.
Introduction

FY 2008 Performance and Accountability Report     11   

Employment and Training

Employment and Training

Administration

Provides job training and education, employment, labor market information,

and income maintenance services.

Veterans’ Employment and

Training Service

Helps veterans, reservists, and National Guard members to secure and to

maintain employment and reemployment rights.  

Office of Job Corps

Provides job training and education to disadvantaged youth ages 16 through

24.

Women’s Bureau

Promotes profitable employment opportunities for women.   

Office of Disability Employment

Policy

Increases employment opportunities for people with disabilities.  

Unemployment Insurance

Unemployment Insurance

ETA administers programs that provide unemployment benefits to eligible

workers.  

Workers’ Compensation

Office of Workers’

Compensation Program

Provides wage replacement and other benefits to Federal and certain

other workers injured at work or who acquire an occupational disease.

Workplace Safety and Health

Occupational Safety and Health

Administration

Promotes safe and healthful working conditions for America’s

workers by enforcing compliance with the Occupational Safety and

Health Act.  

Mine Safety and Health

Administration

Promotes the safety and health of the Nation’s 350,000 miners by

enforcing compliance with Federal mine safety and health laws.  

Employment Standards

Administration

Advances and protects the welfare and rights of, and generates equal

employment opportunity for, American workers.

Health Plan and Retirement Benefit Protections

Employee Benefits Security

Administration

Responsible for administering and enforcing provisions of

the Employee Retirement Income Security Act (ERISA).   

Pension Benefit Guaranty

Corporation

Protects retirement‐plan participants’ pension benefits and supports a

healthy retirement plan system.  

Labor Statistics

Bureau of Labor Statistics

Provides economic and employment statistics, including data on

employment, wages, inflation, productivity, and many other relevant topics.

International Policy

Bureau of International Labor

Affairs

Develops policy and programs relating to international labor activities.  
Management’s Discussion and Analysis

12 United States Department of Labor

Report Outline

This report is divided into four sections:

• The Secretary’s Message is a letter from the chief executive that highlights the Department’s achievements

for the year and communicates direction and priorities.   

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

and activities; summarizes program and financial performance, including Program Assessment Rating Tool

reviews and compliance with relevant financial management legislation; addresses top management

challenges such as those identified annually by the Office of Inspector General (OIG); and reports on DOL’s

implementation of the President’s Management Agenda.

• The Performance Section presents program results and costs and includes assessments of progress

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

• The Financial Section demonstrates our commitment to effective stewardship over Federal funds.  It

includes a letter from the Chief Financial Officer, the Independent Auditors’ Report (an independent opinion

on the Consolidated Financial Statements) and the Annual Financial Statements.

Two other sections at the end of the report supplement the performance and financial sections:  Other

Accompanying Information provides additional information on improper payments reduction and Appendices

include a list of acronyms and a list of Web sites featuring labor programs and issues.
FY 2008 Performance and Accountability Report     13   

Program Performance Overview

Fiscal Year (FY) 2008 marks the 10th year that the Department has reported program results under the Government

Performance and Results Act (GPRA).  Most DOL program level goals and indicators for this reporting period are

included in the FY 2009 Performance Budget Overview2

; they provide the basis for assessments of DOL’s

effectiveness.  The Department’s goal structure has three levels:   

Strategic Goals

In its FY 2006‐2011 Strategic Plan3

, the Department identified four goals that serve to focus its various

activities on outcomes associated with a common mission:

Goal 1 – A Prepared Workforce: Develop a prepared workforce by providing effective training and support

services to new and incumbent workers and supplying high quality information on the economy and

labor market.

Goal 2 – A Competitive Workforce:  Meet the competitive labor demands of the worldwide economy by

enhancing the effectiveness and efficiency of the workforce development and regulatory systems that

assist workers and employers in meeting the challenges of global competition.

Goal 3 – Safe and Secure Workplaces:  Promote workplaces that are safe, healthful and fair; guarantee

workers receive the wages due them; foster equal opportunity in employment; and protect veterans’

employment and reemployment rights.

Goal 4 – Strengthened Economic Protections:  Protect and strengthen worker economic security through

effective and efficient provision of unemployment insurance and workers’ compensation; ensuring union

transparency; and securing pension and health benefits.

Performance Goals

Each strategic goal is supported by several performance goals that are aligned with DOL’s

organization and appropriations to provide clarity of purpose and accountability at the

program level.  This report includes 24 performance goals.   

Performance Indicators

Achievement is determined at the performance goal level by one or more

quantitative indicators (83 for this reporting period) that are combined by a

strict, transparent rule.4

DOL Program Performance and Net Costs

The following table indicates FY 2008 program performance goal achievement by strategic goal.  Seven of the 24

performance goals are for forward funded Workforce Investment Act (WIA) programs whose spending and

performance are reported for a Program Year (PY) that lags the Federal fiscal year by nine months.  Hence, these

programs are reporting on a different period (PY 2007 – July 1, 2007 to June 30, 2008).5  The total of 50 percent

achieved or substantially achieved compares with 64 percent last year.  At the indicator level, the percent of targets

reached or results improved was 71 percent, compared to 79 percent last year.  A tally of goals achieved or

indicator targets reached indicates whether DOL is on schedule with its plan; obviously our performance this year

 

2 See http://www.dol.gov/dol/budget/. 3 See http://www.dol.gov/_sec/stratplan/main.htm. 4 Achieved means all indicator targets were reached.  Substantially Achieved means targets are reached or results improved

over the prior year for all indicators if there are four or fewer and for 80 percent if there are five or more. 5 PY 2008 results for these goals (1B‐Job Corps, 1C‐WIA Youth, 1E‐VETS Employment Services, 2A‐WIA Adult, 2B‐WIA Dislocated

Worker, 2C‐One‐Stop Employment and Workforce Information Services, and 2D‐Senior Community Service Employment

Program) will be reported in the FY 2009 Performance and Accountability Report.
Management’s Discussion and Analysis

14     United States Department of Labor

was mixed.  However, there is no single explanation for the successes or the failures.  To understand what was

achieved in terms of benefits to the public, look at how activities impact outcomes and consider significant trends

in the data and their implications.  Narratives in the Performance Section, which are organized by strategic and

performance goal, discuss these matters.

FY 2008/PY 2007 Performance Goal Achievement Summary

Strategic Goals Goals

Achieved

Substantially

Achieved

Not

Achieved Total

Percent Achieved

or Substantially

Achieved

Goal 1 – A Prepared Workforce 2 0 3 5 40%

Goal 2 – A Competitive Workforce 4 2 3 9 67%

Goal 3 – Safe and Secure Workplaces 1 1 3 5 40%

Goal 4 – Strengthened Economic Protections 1 1 3 5 40%

Total 8 4 12 24 50%

Total Net Cost6 of DOL activities for FY 2008 was $58.307 billion.  An allocation based on the Department’s goal

structure indicates that Goal 4 is dominant – accounting for $48.957 billion, or 84 percent of the total (see first

chart below).  Most of these costs are mandatory – unemployment benefit payments to individuals who are laid off

or out of work and seeking employment ($42.281 billion) plus disability benefit payments to individuals who

suffered injury or illness on the job ($3.204 billion).  The second chart illustrates allocation of an adjusted net cost

of $12.822 billion that excludes these Income Maintenance expenditures.  On this basis, Goal 4 accounts for 27

percent of the total.   

Goal 1 required $3.464 billion (six percent and 27 percent of unadjusted and adjusted totals) for employment‐

related services.  Goal 2 accounted for $4.829 billion, eight percent and 36 percent, respectively, which went

toward job training programs and other services focused on maintaining America’s position in a global market for

labor.  Approximately $1.281 billion (two percent and 10 percent of the totals) went toward Goal 3 to fund direct

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

The next table provides a comprehensive view of performance goal achievement and cost information.  It is

important to note that while all net cost information in this report is derived from the same financial accounting

system, DOLAR$, there are significant differences between statements in the Performance Section and in the

Financial Section due to the Department’s numerous forward‐funded programs (i.e., those operating on a Program

 

6 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.

Percent of Net Cost

6% 8%

2%

84%

1 ‐ Prepared

2 ‐ Competitive

3 ‐ Safe and Secure

4 ‐ Economic

Protections

Percent of Net Cost Excluding Income Maintenance

36%

27% 27%

10%

1 ‐ Prepared

2 ‐ Competitive

3 ‐ Safe and Secure

4 ‐ Economic

Protections
Program Performance Overview

FY 2008 Performance and Accountability Report     15   

Year).  Most DOL programs also associate costs with their performance indicators; this information is provided in

the Performance Section.  For many performance goals, charts display four years of net cost data.

Net Costs in $millions

Goal FY 2008/PY 2007

Program Performance FY 2006

PY 2005

FY 20077

PY 2006

FY 2008

PY 2007

Strategic Goal 1:  A Prepared Workforce Two goals achieved and

three not achieved $3,360 $3,267 $3,464

Performance Goal 08‐1A (BLS) Not Achieved 573 574 574

Performance Goal 07‐1B (Job Corps) Not Achieved 1,402 1,485 1,589

Performance Goal 07‐1C (WIA Youth) Achieved 1,017 866 966

Performance Goal 08‐1D (Apprenticeship) Not Achieved 25 24 25

Performance Goal 07‐1E (VETS Employment Services) Achieved 212 211 221

Other (Youth Offender Reintegration, Indian and Native

American Youth Programs, etc.) – 131 107 89

Strategic Goal 2:  A Competitive Workforce

Four goals achieved, two

substantially achieved,

and three not achieved

$5,064 $5,060 $4,829

Performance Goal 07‐2A (WIA Adult) Not Achieved 912 896 844

Performance Goal 07‐2B (WIA Dislocated Worker) Not Achieved 1,543 1,409 1,307

Performance Goal 07‐2C (One‐Stop Employment and

Workforce Information Services) Achieved 884 749 732

Performance Goal 07‐2D (Senior Community Service

Employment Program) Substantially Achieved 432 444 479

Performance Goal 08‐2E (Trade Adjustment Assistance) Not Achieved 700 805 755

Performance Goal 08‐2F (Foreign Labor Certification) Substantially Achieved 46 63 40

Performance Goal 08‐2G (ODEP) Achieved 50 34 27

Performance Goal 08‐2G (OASP)8 Achieved – – –

Performance Goal 08‐2I (ILAB) Achieved 95 101 79

Other (Indian and Native American Adult Programs, National

Farmworker Jobs Program, Work Incentive Grants,

Transition Assistance Program, Pilots, Demonstrations,

Research & Evaluations, Community Based Job Training

Grants, H‐1B Technical Skills Training, National Electronic

Tools and other ILAB programs)

– 402 560 566

 

7 PY 2006 costs were restated since publication of the FY 2007 Performance and Accountability Report to correct improper

inclusion of $198 million in revenue for Job Corps.  The restatement also applied a more accurate means of splitting total

grant costs to the ETA programs.  This change affected net costs for Job Corps, WIA Youth, Goal 1 Other, WIA Adult, WIA

Dislocated Worker, One‐Stop Employment and Workforce Information Services, Senior Community Service Employment

Program, Trade Adjustment Assistance, Goal 2 Other, and Unemployment Insurance.  The most significant changes from the

prior statement were for for Job Corps (+20 percent), Goal 1 Other (‐27 percent), and Goal 2 Other (+32 percent). 8 Costs associated with Performance Goal 07‐2J (OASP) are included in costs allocated to other performance goals.
Management’s Discussion and Analysis

16     United States Department of Labor

Net Costs in $millions

Goal FY 2008/PY 2007

Program Performance FY 2006

PY 2005

FY 20077

PY 2006

FY 2008

PY 2007

Strategic Goal 3:  Safe and Secure Workplaces One goal achieved and

four not achieved $1,189 $1,237 $1,281

Performance Goals 08‐3A (OSHA) Achieved 519 547 554

Performance Goal 08‐3B (MSHA) Substantially  Achieved 348 356 388

Performance Goal 08‐3C (Wage and Hour) Not Achieved 214 221 227

Performance Goal 08‐3D (Federal Contractor Compliance) Not Achieved 97 103 102

Performance Goal 08‐3E (USERRA) Not Achieved 11 10 10

Strategic Goal 4:  Strengthened Economic Protections

Two goals achieved, one

substantially achieved,

and two not achieved

$35,705 $38,445 $48,957

Performance Goal 08‐4A (Unemployment Insurance) Not Achieved 33,340 34,647 45,035

Performance Goal 08‐4B (Workers’ compensation) Substantially Achieved 2,130 3,554 3,693

Performance Goal 08‐4C (Labor‐Management Standards) Not Achieved 56 68 58

Performance Goal 08‐4D (EBSA) Achieved 179 176 170

Performance Goal 08‐4E (PBGC)9 Not Achieved – – –

Costs Not Assigned to Goals $10 $10 $10

Total10 $45,328 $48,019 $58,540

Reconciliation to the Consolidated Statements of Net Costs:

Less costs for programs included above on a program year basis (July 1 to June 30) $6,659 $6,433 $6,490

Plus costs for these same programs on a fiscal year basis (October 1 to September 30) $6,205 $6,704 $6,257

Net Cost of Operations per Consolidated Statements of Net Costs $44,874 $48,291 $58,307

Cost of Regulations Enforced by DOL

The Department enforces a broad range of regulations that provide, as represented in two of its strategic goals,

Safe and Secure Workplaces and Strengthened Economic Protections.

11  Cost data reported in the preceding table –

and in the Financial Section of this report – do not include the costs incurred by non‐DOL entities to comply with

these regulations, most notably the private sector.  To further improve transparency and accountability of our PAR,

this section provides examples of the economic impact of some of DOL’s major rules.12  In the Performance Section,

 

9 Costs for Performance Goal 07‐4E (PBGC) are not referenced because PBGC’s financial statements are not part of the

Department’s consolidated statements.  PBGC’s financial statements can be found in their Annual Management Report at

http://www.pbgc.gov/docs/2008AMR.pdf. 10 This total does 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. 11 Most DOL regulations are issued by the Occupational Safety and Health Administration (OSHA), Mine Safety and Health

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

Employee Benefits Security Administration (EBSA). 12 Major rules include those likely to result in (A) an annual effect on the economy of $100 million or more; (B) a major increase

in costs or prices for consumers, individual industries, Federal, State, or local government agencies, or geographic regions; or

(C) significant adverse effects on competition, employment, investment, productivity, innovation, or on the ability of United

States‐based enterprises to compete with foreign‐based enterprises in domestic and export markets – per the Small Business

Regulatory Enforcement Fairness Act of 1996 – or that may result in the expenditure by State, local, and tribal governments,

in the aggregate, or by the private sector, of $100 million or more (adjusted annually for inflation) in any one year – under the
Program Performance Overview

FY 2008 Performance and Accountability Report     17   

we quantify our results (benefits) via outcome or output indicators that are seldom monetized, or valued in dollars.  

All regulatory agencies are required to produce estimates of the monetary value of both the cost and benefits for

major rules.13   

Last year, we reported on two major rules: Occupational Exposure to Hexavalent Chromium (OSHA) and Emergency

Mine Evacuation (MSHA).14  Listed below are other examples of major final rules completed by DOL in recent

years.15  Headings include the rule name, identifier number, date published in the Federal Register, and related

performance goal.  Summary text describes the purpose and estimated economic impact.   

Annual Reporting and Disclosure; Revision of Annual Information Return/Reports (RIN 1210‐AB06 and 1210‐AB14,

November 16, 2007) – EBSA/Performance Goal 08‐4D

The amendments contained in this rule revise the Form 5500 Series, Annual Return/Report of Employee Benefit

Plan, and related regulations.  The changes are intended to facilitate the transition to an electronic filing system,

reduce and streamline annual reporting burdens, especially for small businesses, and update the annual reporting

forms to reflect current issues, agency priorities and new requirements under the Pension Protection Act of 2006.  

Over the next ten years, the Department anticipates an average annual reduction of $97 million – about 23 percent

– in reporting costs.  

Default Investment Alternatives Under Participant Directed Individual Account Plans (RIN 1210‐AB10, October 24,

2007) – EBSA/Performance Goal 08‐4D

This rule provides a safe harbor for pension plan fiduciaries that select and invest funds on behalf of participants in

defined contribution plans who don’t give instructions on how they want their funds invested.  Fiduciaries investing

funds for participants would be required to select investment options (i.e., default investment alternatives) that

meet specified criteria.  This rule describes the types of investments that qualify as default investments in order to

obtain fiduciary relief. Plan sponsors may incur some administrative costs in order to meet the conditions of the

regulation.  The Department generally expects such costs to be low.  By facilitating the adoption of automatic

enrollment plans and by encouraging investments appropriate for retirement savings, the Department estimates

the rule will result in between $70 billion and $134 billion in retirement savings by 2034.

Defining and Delimiting the Exemptions for Executive, Administrative, Professional, Outside Sales and Computer

Employees (RIN 1215‐AA14, April 23, 2004) – ESA/Performance Goal 08‐3C

This final regulation under the Fair Labor Standards Act implements the exemption from minimum wage and

overtime pay for executive, administrative, professional, outside sales and computer employees (often referred to

as the ‘‘white collar’’ exemptions).  To be considered exempt, employees must meet certain minimum tests related

to their primary job duties and, in most cases, must be paid on a salary basis at not less than minimum amounts as

specified in pertinent sections of these regulations.  Some 19 to 26 million employees are estimated to be within

the scope of these regulations.  Because the rules had not been adjusted in decades, the final rule imposes

additional costs on employers, including up to $375 million in additional annual payroll and $739 million in first‐

year (i.e., 2004) implementation costs.  However, updating and clarifying the rule will reduce Part 541 violations –

 

Unfunded Mandates Reform Act of 1995 – or that may have an annual effect on the economy of $100 million or more or

adversely affect in a material way the economy, a sector of the economy, productivity, competition, jobs, the environment,

public health or safety, or State, local, or tribal governments or communities – per Executive Order 12866. 13 RegInfo.gov, a Web site produced by the Office of Management and Budget (OMB) and the General Services Administration

(GSA), publishes information about the rulemaking process and details of specific actions – proposed and completed – at

http://www.reginfo.gov/public/jsp/Utilities/index.jsp. 14 The OSHA final rule, assigned Regulation Identifier Number (RIN) 1218‐AB45 in the Unified Agenda, was published in the

Federal Register on February 28, 2006 and summarized on page 28 of DOL’s FY 2007 PAR.  MSHA’S final rule (RIN 1219‐AB46)

was published on December 8, 2006 and summarized in a vignette on page 127 of the FY 2007 PAR. 15 Several of the major rules completed by DOL in recent years are also discussed in the Office of Information and Regulatory

Affairs (OIRA) 2008 Report to Congress on the Benefits and Costs of Federal Regulations and Unfunded Mandates on State,

Local and Tribal Entities.
Management’s Discussion and Analysis

18     United States Department of Labor

and liquidated damages – and are estimated to save businesses at least an additional $252.2 million every year that

could be used to create new jobs.

Performance of Functions; Claims for Compensation Under the Energy Employees Occupational Illness

Compensation Program Act of 2000 (RIN 1215‐AB51, December 29, 2006) – ESA/Performance Goal 08‐4B

This rule governs DOL responsibilities under the Energy Employees Occupational Illness Compensation Program Act

of 2000, as amended (EEOICPA or Act).  DOL administers both Part B and Part E of EEOICPA.  Part B provides lump‐

sum payments of $150,000 and medical benefits to covered employees and, where applicable, to survivors of such

employees, of the Department of Energy (DOE), its predecessor agencies and certain DOE vendors, contractors and

subcontractors.  Part B also provides lump‐sum payments of $50,000 and medical benefits to individuals found

eligible by the Department of Justice (DOJ) for $100,000 under section 5 of the Radiation Exposure Compensation

Act (RECA) and, where applicable, to their survivors.  Part E of the Act provides variable lump‐sum payments (based

on a worker's permanent impairment and/or calendar years of qualifying wage‐loss) and medical benefits for

covered DOE contractor employees and, where applicable, provides variable lump‐sum payments to survivors of

such employees.  Part E also provides these same payments and benefits to uranium miners, millers and ore

transporters covered by section 5 of RECA and, where applicable, to survivors of such employees.  DOL estimated

annual administrative expenses of this regulatory action implementing Part B and Part E of EEOICPA would start at

$162 million in FY 2007 and fall to $111 million by FY 2011.  Benefit payments were estimated at $1,123 million in

FY 2007 and projected to drop to $579 million by FY 2011.  OWCP reaps substantial aggregate cost savings that

benefit both OWCP (by strengthening the integrity of the program) and the taxpayers to whom the costs of the

program are eventually charged.

Employer Payment for Personal Protective Equipment (RIN 1218‐AB77, November 15, 2007) – OSHA/Performance

Goal 08‐3A

Many OSHA health, safety, maritime, and construction standards require employers to provide their employees

with protective equipment, including personal protective equipment (PPE), when such equipment is necessary to

protect employees from job‐related hazards that can result in illnesses, injuries, and fatalities.  This rule address

PPE of many kinds: hard hats, gloves, goggles, safety shoes, safety glasses, welding helmets and goggles, face

shields, chemical protective equipment, fall protection equipment, and so forth.  In this rule, OSHA requires

employers to pay for the PPE provided, with exceptions for specific items.  The rule does not require employers to

provide PPE where none has been required before.  Taken in its entirety, this final rule will avert approximate

21,798 injuries annually.  OSHA estimated the total annual benefits of the final rule to be $349 million under a

willingness‐to‐pay methodology and $228.3 under a direct‐cost methodology.  OSHA estimated total employer

compliance costs to be $85.7 million annually for all establishments.
Program Performance Overview

FY 2008 Performance and Accountability Report     19   

Program Assessment Rating Tool Reviews

The Program Assessment Rating Tool (PART)

was developed to assess and improve

programs’ outcomes that matter to the

public.  A review using the PART 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 (0‐100) determine ratings:  

Effective, Moderately Effective, Adequate,

Ineffective, or Results Not Demonstrated.  

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 dedicated to making meaningful information about Federal program

performance more accessible to the public.   

To date, 35 DOL programs have been assessed using the PART.  One is rated Effective, ten Moderately Effective,

sixteen Adequate, three Ineffective, and five 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, goal numbers

are provided.  The list is sorted first by the calendar year in which the review was conducted, then by total score.   

In addition to clearly reporting program strengths and shortcomings, PART assessments are useful because they

lead to improvement plans that enhance accountability and strengthen 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 YouthBuild) and development

and implementation of efficiency measures for each of the DOL programs assessed through the PART.

PART Scores and Ratings

Program/Goal Year

Assessed Score Rating

Federal Employees’ Compensation Act/08‐4B 2008 74 Moderately Effective

Workforce Investment Act – Youth Activities/07‐1C 2008 53 Adequate

Pension Benefit Guaranty Corporation/08‐4E 2007 70 Moderately Effective

Energy Employees Occupational Injury Compensation Program/08‐4B 2007 61 Adequate

Dislocated Worker National Emergency Grants/07‐2B 2007 56 Adequate

Occupational Safety and Health Administration/08‐3A 2007 56 Adequate

Job Corps/07‐1B 2007 55 Adequate

Trade Adjustment Assistance/08‐2E 2007 49 Ineffective

DOL PART Ratings                                      

Rating, Number of Programs and Percent of Total (35)

Results Not

Demonstrated

5

14%

Ineffective

3

9%

Adequate

16

45%

Effective

1

3%

Moderately

Effective

10

29%
Management’s Discussion and Analysis

20     United States Department of Labor

PART Scores and Ratings

Program/Goal Year

Assessed Score Rating

Homeless Veterans’ Reintegration Program/07‐1E 2006 82 Moderately Effective

Wage and Hour Enforcement and Compliance Program/08‐3C 2006 73 Moderately Effective

Office of the Solicitor 2006 71 Moderately Effective

Office of Disability Employment Policy/08‐2G 2006 41 Results Not Demonstrated

YouthBuild 2006 37 Results Not Demonstrated

Veterans' Employment and Training State Grants/07‐1E 2005 76 Moderately Effective

Work Incentive Grants 2005 57 Adequate

Office of Labor Management Standards/08‐4C 2005 55 Adequate

Longshore and Harbors Workers’ Compensation Program/08‐4B 2005 54 Adequate

Workforce Investment Act ‐ Adult Employment and Training/07‐2A 2005 53 Adequate

Job Training Apprenticeship/08‐1D 2005 45 Results Not Demonstrated

Women’s Bureau 2005 41 Results Not Demonstrated

H‐1B Work Visa for Specialty Occupations – Labor Condition

Application/08‐2F 2004 78 Moderately Effective

Employee Benefits Security Administration/08‐4D 2004 71 Moderately Effective

Office of Federal Contract Compliance Programs/08‐3D 2004 65 Adequate

Permanent Labor Certification/07‐2F 2004 64 Adequate

Wagner‐Peyser Act – Employment Service/07‐2C 2004 56 Adequate

International Child Labor and Office of Foreign Relations/08‐2I 2004 51 Adequate

Workforce Investment Act – Native American Programs 2004 51 Adequate

Bureau of Labor Statistics/08‐1A 2003 88 Effective

Unemployment Insurance Administration State Grants/08‐4A 2003 74 Moderately Effective

Black Lung Benefits Program/08‐4B 2003 71 Moderately Effective

Mine Safety and Health Administration/08‐3B 2003 55 Adequate

Workforce Investment Act – Dislocated Worker Assistance/07‐2B 2003 50 Adequate

Workforce Investment Act – Migrant and Seasonal Farmworkers 2003 38 Ineffective

Prevailing Wage Determination Program/08‐3C 2003 29 Results Not Demonstrated

Senior Community Service Employment Program/07‐2D 2003 28 Ineffective
Program Performance Overview

FY 2008 Performance and Accountability Report     21   

DOL’s Tradition of Program Performance Improvement: Selected Accomplishments from 2001‐2008   

The Department of Labor has undergone many changes over the past eight years, but each year, DOL furthers its

mission to “foster and promote the welfare of job seekers, wage earners, and retirees of the U.S. by improving their

working conditions, advancing their opportunities for profitable employment, protecting their retirement and health

care benefits, helping employers find workers, strengthening collective bargaining, and tracking changes in

employment, prices and other national economic measures.”  The following highlights of program and management

accomplishments are organized around elements of this mission and DOL’s stewardship of resources.

“Improving working conditions”

√ MSHA.  In 2008, the all‐injury rate (including

fatalities) in the mining industry reached an all‐

time low of 3.19 incidents per 200,000 hours

worked (estimated) – a 33 percent decline over the

last six years.

  

√ OSHA.  Since 2003, the rate of cases involving days

away from work, job restriction, or job transfer has

declined by 19 percent ‐‐ from a rate of 2.6 cases

per 100 fulltime workers to 2.1 cases in 2007,

according to the most recent data available.  

√ Since FY 2001, ILAB has prevented or withdrawn more than 1.2 million children from exploitive child labor in

over 75 countries worldwide through its international technical assistance projects.

MSHA: Improving Protections for Miners through the MINER Act  

The Mine Improvement and New Emergency Response Act of 2006, also known as the MINER Act, signed

into law by President George W. Bush on June 15, 2006, is the most significant mine safety legislation

since the Mine Safety and Health Act of 1977.  In 2006 and 2007, the Department quickly and successfully

implemented key provisions of this Act, including the publication of rules on emergency mine evacuation,

civil penalties for violations and new safety requirements for seal strength criteria and construction – all

of which provide better protections for our nation’s miners.  Photo Credit: DOL./MSHA

“Advancing opportunities for profitable employment”

√ ESA’s Office of Labor Management Standards

increased protection of union members’ rights by

enforcing the laws on union transparency and

democracy through its investigations and compliance

program.  In 2008, the number of indictments reached

130 – an increase of 31 percent from 2001.  The

number of financial compliance audits rose by 232

percent – from 238 in 2001 to 791 in 2007.

√ ESA’s Office of Federal Contractor Compliance

Programs’ efforts to ensure that Federal contractors

achieve equal opportunity workplaces resulted in a

170 percent increase from FY 2001 in the number of

Americans recovering back pay and benefits.  

OFCCP Financial Remedies Obtained

0

10

20

30

40

50

60

70

80

2001 2002 2003 2004 2005 2006 2007 2008

Year

Reported Dollars (millions)

Reported Dollars

MSHA All Injury Rate‐ All Mines

0

1

2

3

4

5

2002 2003 2004 2005 2006 2007 2008

Year
Management’s Discussion and Analysis

22     United States Department of Labor

√ From FY 2001‐08, ESA’s Wage and Hour Division (WHD) recouped more than $1.46 billion for over two million

workers.  In FY 2007, 341,624 workers received back wages of $220,613,703, the highest back wage recovery in

one fiscal year – a 67 percent increase since 2001.

   

ESA/WHD: Protecting Low‐Wage Workers in the Gulf Coast Region

In 2005, Hurricanes Katrina and Rita devastated the Gulf Coast.  Within months,

employees of ESA’s Wage and Hour Division (WHD) began securing wages on

behalf of the men and women who were engaged in the clean up and rebuilding

efforts.  Since then, WHD has opened nearly 800 hurricane‐related cases and

collected over $10 million in back wages for 14,000 workers.  WHD faced

significant challenges in responding to increases in federal contracts in the region, including establishment of employer

accountability related to large government contracts with multiple layers of subcontracting and frequent interstate travel by

small cleanup crews.  WHD responded to these challenges by using innovative compliance outreach, working with faith‐based

organizations, community activists, the federal contracting community, foreign consulates, and local media to provide

information to employers and employees of the region.  WHD detailed investigators to area offices on a temporary rotational

basis, and used virtually every enforcement tool at its disposal: directed cases, complaint cases, conciliations, withholding of

funds on federal contracts, debarments, litigation, and referrals to criminal prosecutors to ensure compliance on behalf of

workers.  In responding to the recent hurricanes, WHD offices along the Gulf Coast have stepped up efforts to reach affected

workers by providing public service announcements over the radio and visiting relocation centers.  WHD is also coordinating

with Federal agencies engaged in clean‐up and reconstruction in the affected areas to promote compliance with Federal

government contracting labor statutes.  Photo Credit: DOL/WHD

  

“Protecting retirement and health care benefits”

√ Between 2001 and 2008, EBSA closed over 32,000 civil

and 1,400 criminal cases.  Since 2001, EBSA has

received over 111,000 filings from plan officials and

administrators who want to self‐correct plan violations

through the agency’s voluntary compliance programs.  

  

√ EBSA’s record‐setting enforcement program has

yielded $12 billion in monetary results and more than

900 criminal indictments since 2001 for retirement

and health benefit plans.  

√ OWCP has paid over $4 billion in compensation benefits to covered employees and survivors since the Energy

Employees Occupational Illness Compensation Program’s inception in 2001.

Black Lung Benefits Act:  30 Years of Results

In August 2008, OWCP paused to reflect on the results of the Black Lung

Benefits Act.  ESA’s Black Lung Offices in Charleston and Parkersburg,

West Virginia, were created as a result of the 1978 enactment of

amendments to the Federal Coal Mine Health and Safety Act of 1969 –

which established the Black Lung program.  The program provides

monthly benefit payments to coal miners totally disabled as a result of

pneumoconiosis, to the widows of coal miners who died as a result of

pneumoconiosis, and to their dependents.  Jim DeMarce, the Director of

OWCP’s Black Lung program, is shown presenting an award to Dr. Donald

L. Rasmussen, a Beckley, West Virginia, doctor who was instrumental in

first securing black lung benefits for miners.   Photo Credit: The Charleston

Gazette, Lawrence Pierce

EBSA Voluntary Compliance Programs

0

5,000

10,000

15,000

20,000

25,000

30,000

2001 2002 2003 2004 2005 2006 2007 2008

Year

Number of Applications
Program Performance Overview

FY 2008 Performance and Accountability Report     23   

“Helping employers find workers”

√ In 2005, the Department started to integrate workforce development with economic development strategies

and to demonstrate that a trained workforce can generate regional economic

development and job creation through the WIRED initiative.  The WIRED initiative

operates in 39 regional economies in 31 States and Puerto Rico.  Through 2008, DOL

has invested $335.7 million in WIRED and leveraged over $596 million in additional

investments from federal agency partners, state

universities, land grant colleges, private sector partners, foundations and states to

support innovate approaches to education and workforce development.

ETA: Getting Ex‐Offenders to Work  

In 2004, the Department’s Center for Faith‐Based and Community Initiatives (CFBCI), in

partnership with ETA, launched the Prisoner Reentry Initiative designed to strengthen urban

communities by competitively awarding grants to employment‐centered organizations that

provide mentoring, job training and other transitional services for ex‐offenders.  The Prisoner

Reentry Initiative has cumulatively enrolled more than 14,569 participants, helped 9,547 ex‐

prisoners find work, and lowered the participant recidivism rate to 15 percent, which is less

than half the Justice Department’s national benchmark.

“Tracking changes in employment, price and other national measures”

√ BLS has increased the use of electronic data collection methods, such as its Internet Data Collection Facility

(IDCF), which offers a wider range of reporting options as well as greater efficiency.  Use of IDCF has increased

nine‐fold from FY 2004 (100,145) to FY 2008 (972,605), with further increases projected for FY 2009 and 2010.

BLS: Helping students to explore future occupations

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.  The group uses data from

the Occupational Employment Statistics program to determine how much

"income" the students may earn, and data from the Consumer Expenditure

Survey to set 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, had "heard the numbers before, but this really

helped me realize what some things cost – groceries and kids are both expensive!”  Photo Credit: DOL/BLS

“Stewardship over public funds”

√ The Department has always put an emphasis on sound management and it was only fitting that – when

President George W. Bush introduced his Management Agenda (PMA) in 2001 – DOL eagerly began imple‐

menting its initiatives and made solid, demonstrable progress.  In fact, by the third Quarter of FY 2005, DOL

became the first agency to achieve green status scores for all five government‐wide initiatives.  As highlighted

on the September 30, 2008 PMA scorecard, DOL has continued its momentum and has also achieved green

scores in the agency‐specific initiatives of Eliminating Improper Payments, Faith‐Based and Community

Initiative, and Real Property Asset Management.   
Management’s Discussion and Analysis

24     United States Department of Labor

√ DOL received its twelfth consecutive unqualified audit opinion and its eighth consecutive Certificate of

Excellence in Accountability Reporting from the Association of Government Accountants, both of which

demonstrate the effective stewardship of taxpayers’ hard‐earned dollars.

DOL Accolades: 2001‐2008

 President’s Quality Awards for Expanded Electronic Government (2006), Performance in

Integrating Management Systems (2005), Strategic Management of Human Capital (2004),

and Budget and Performance Integration (2004).

 DOL’s Performance and Accountability Report (PAR) has been ranked #1 or #2 in each of the

last six years by the George Mason University Mercatus Center, including four consecutive

#1 rankings for DOL’s 2002‐2005 reports.  In addition, Mercatus cited DOL’s 2007 PAR

Highlights Report as the best in government.

 The Performance Institute’s Top E‐Gov Award (2002).

 Government Executive’s Grace Hopper Government Technology Award for GovBenefits.gov

(2002).
FY 2008 Performance and Accountability Report     25   

Financial Performance Overview

Improving financial management continues to be a cornerstone of the Department’s efforts to deliver services

effectively and efficiently to its constituents.  By providing tools to ensure more informed decision‐making

throughout the organization, focusing on transparency and accountability, and maintaining a strong internal control

system, the Department continues to maximize the value of each taxpayer dollar it receives.

In FY 2008, DOL continued its efforts to provide program managers with timely and reliable cost information for use

in managerial decisions to improve operating economy and efficiency.  DOL’s managerial cost accounting initiative,

Cost Analysis Manager (CAM), allows the Department to determine the full costs of achieving each of its quarterly

performance results.

As one of the first Department‐wide managerial cost accounting initiatives in the federal sector, the CAM Program

has maintained high profile visibility within the DOL, the Office of Management and Budget (OMB), the U.S.

Congress, and the Government Accountability Office (GAO). Since inception, the OCFO CAM Team has worked

closely with 15 agencies to develop 18 models and train over 200 users across the Department’s national and

regional offices. The CAM Program Team maintains constant dialogue with the users and facilitates a quarterly DOL

CAM User Group meeting for agency CAM Team leads as well as representatives from the Office of Inspector

General and the DOL Center for Program Planning and Results (CPPR). These meetings enable agency executives

and program managers to share best practices, review lessons learned, and communicate the status of the CAM

Program.

The CAM Program continues to provide a structured approach that follows a Federal Accounting Standards Advisory

Board (FASAB) endorsed best practice methodology that senior stakeholders, budget directors, and program

managers use to report managerial cost accounting information. DOL’s CAM Program directly supports the section

of the PAR that highlights Program Net Costs and the Statement of Net Costs.  Total Net Costs of DOL activities for

FY 2008 were $58.3 billion.

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

agency for collection of debts owed the Federal government.   Debt management accounts for a relatively small

part of DOL’s financial management activities; however, the majority of debts managed by DOL relate to the

assessment of fines and penalties as a result of its enforcement programs.   Through the third quarter of FY 2008,

DOL referred debt in the amount of $79,558,619 to the Treasury for collection.  This amount represents 65 percent

of delinquent debt required to be referred for collection.  DOL continues to monitor and aggressively pursue

delinquent debt and will continue to refer eligible debt to Treasury for collection.

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

Prompt Payment Act (PPA).  The PPA requires Executive agencies to pay commercial obligations within discrete time

periods and to pay interest penalties when those time constraints are not met.  During FY 2008, approximately $1.3

billion in gross payments were made.  Included in this amount was just over $164,000 in interest penalty fees.  Also

during FY 2008, there were over 111,000 payments made to vendors and travelers.  Of this amount, 3,348 invoices

were paid late resulting in only 3 percent of the total payments incurring interest penalties.   

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

payments through electronic fund transfer (EFT).  The total number of vendors receiving EFT payments in FY 2008

remains the same as in FY 2007 at 99 percent as the fiscal year ended.  Although our Employment Standards

Administration is continuing to promote EFT payments for their benefit and medical programs, their percentage

rates continue to remain below Treasury’s goal of 98 percent.
Management’s Discussion and Analysis

26     United States Department of Labor

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 2008 and FY 2007.  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 decreased from $92.8 billion in FY 2007 to $89.9 billion in

FY 2008. The Department invests in non‐marketable, special issue Treasury securities balances held in the

Unemployment Trust Fund. The decrease in total assets primarily was accounted for in these investments as a

result of increasing unemployment costs.  Liabilities increased from $21.3 billion at the end of FY 2007 to $22.6

billion in FY 2008. This increase was due primarily to increases in liabilities for current and future benefits, as a

result of rising unemployment, and an increase in energy compensation and injuries claims.

Net Cost of Operations  

The Department's total net cost of operations in FY 2008 was $58.3 billion, an increase of $10.0 billion from the

prior year.  This increase was attributable to the following crosscutting programs:

Assets

(in thousands)

$0

$10,000,000

$20,000,000

$30,000,000

$40,000,000

$50,000,000

$60,000,000

$70,000,000

$80,000,000

Funds with

Treasury

Investments Accounts

Receivable

Advances Property, Plant

and Equipment

FY2008 FY2007

Crosscutting Programs

(in millions)

0

10,000

20,000

30,000

40,000

50,000

60,000

Income

Maintenance

Employment and

Training

Standards Safety and Health Statistics

FY 2008 FY 2007
Financial Performance Overview

FY 2008 Performance and Accountability Report     27

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. Income

maintenance increased by $10.5 billion from FY 2007 to FY 2008.  The primary reasons for this increase were the

increase in regular unemployment paid and the additional weeks of emergency unemployment compensation

provided by the enactment of the Supplemental Appropriations Act, 2008 in June.

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

2008 and FY 2007 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 $62.5 billion in FY 2008, an increase of $10.4

billion from FY 2007.  

Limitations on the Principal Financial Statements. As required by the Government Management Reform Act of

1994 (31 USC 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.  

Financial Management Systems and Strategy

During FY 2008, DOL continued to pursue its financial management system strategy to improve reporting,

accountability, and decision‐making, while furthering implementation of key provisions of the President’s

Management Agenda, e‐Gov requirements, and other regulatory mandates.  The Department seeks to maintain

financial management systems, processes, and controls that ensure financial accountability, provide useful

information to management, and satisfy Federal laws, regulations, and guidance.  

Currently, the DOL’s financial management functions, processes, and activities are distributed across multiple

information systems and financial applications, all centered on the Department of Labor Accounting and Related

Systems (DOLAR$) mainframe accounting system.  DOLAR$ has been in service since 1989 and has been both

enhanced and extended to meet Departmental and external requirements.  While DOLAR$ has served DOL well

over its history and continues to exceed its intended useful life, the DOLAR$ technology is antiquated and no longer

able to efficiently and effectively meet DOL’s financial management requirements.  DOLAR$ was implemented prior

to all of the modern day laws and regulations that drive Federal accounting, financial management systems,

financial management reporting and security, such as: the Chief Financial Officers Act of 1990, the Government

Performance and Results Act of 1993, the Federal Financial Management Improvement Act of 1996, the Reports

Consolidation Act of 2000, and the Federal Information Security Management Act (FISMA) of 2002.

DOL released on January 15, 2008, Request for Proposal (RFP) on Federal Business Opportunities (FBO) for the

purpose of obtaining the services of a Financial Management Line of Business (FMLoB) Shared Service Provider

(SSP) to modernize DOL’s core financial functions from the current 19 year old mainframe system to the New Core

Financial Management System (NCFMS).   
Management’s Discussion and Analysis

28     United States Department of Labor

DOL sought the services of a federal or commercial FMLoB SSP in the following areas:

• Technology Hosting and Administration Services – involves providing the IT infrastructure (facilities and

infrastructure software) that serves as the foundation for running business software applications and the

services to maintain that infrastructure.   

• Application Management Services – involves providing the software and services for running and managing

access to business software applications, in this case, financial management software and the feeder

systems that provide data to the financial management software.   

• System Implementation Services – includes services to help an agency through a migration of their current

financial management operations to the FMLoB SSP environment.  

After detailed evaluation of the responses received, DOL selected and issued an award to Global Computer

Enterprises (GCE) on June 26, 2008.  GCE began work on July 1, 2008 to have the system fully implemented and

operational by October 2009.

Reducing Improper Payments

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

management focus of the Federal government.  At DOL, 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.

In accordance with the Improper Payments Information Act (IPIA) of 2002, as implemented by the OMB Circular A‐

123, Appendix C, Requirements for Effective Measurement and Remediation of Improper Payments, the Department

reviews its programs and activities annually, identifies programs that may be susceptible to significant improper

payments, performs testing of programs considered high risk, establishes improper payment reduction targets in

accordance with OMB guidance and develops and implements corrective actions for high risk programs.   

The Department has 3 programs that are classified to be at risk of significant improper payments in accordance

with OMB criteria or classification‐‐the Unemployment Insurance (UI) benefit program, the Federal Employees’

Compensation Act (FECA) benefit program and the Workforce Investment Act (WIA) grant program.  The

Department performed detailed testing of these three programs to identify improper payments and their major

causes. Additionally, in FY 2008 a recovery audit was performed to identify FY 2007 improper contractor payments.

The Department met its improper payments reduction targets.  The table below shows the estimated improper

payments error rates for the last three fiscal years for the three programs designated as high risk.  

DOL Program FY 2006 FY 2007 FY 2008

Unemployment Insurance 10.7% 10.3% 10.0%

Federal Employees’ Compensation Act .03% .01% 0.02%

Workforce Investment Act .17% .08% .07%

The Department has implemented various corrective actions to address the causes and reduce improper payments

in each of these programs.  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.  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.

See Other Accompanying Information section of this report for additional information on improper payments.
FY 2008 Performance and Accountability Report     29

Management Assurances

Federal Managers’ Financial Integrity Act of 1982 (FMFIA)

FMFIA requires that agencies establish internal control and financial systems that provide reasonable assurance

that the integrity of Federal programs and operations is protected. It requires that the head of the agency provide

an annual assurance statement whether the agency has met this requirement.

Appendix A of OMB Circular A‐123 provides specific requirements for conducting management’s assessment of

internal control over financial reporting, and also requires the agency head to provide an assurance statement on

the effectiveness of internal controls over financial reporting.

Federal Financial Management Improvement Act of 1996 (FFMIA)

FFMIA requires that agencies implement and maintain financial management systems that comply substantially

with the Federal financial management system requirements, applicable Federal accounting standards, and the

United States Government Standard General Ledger at the transaction level. The agency head is to make an annual

determination whether the financial systems substantially comply with FFMIA.

  

  
30     United States Department of Labor

Top Management Challenges and Management’s Response

The Top Management Challenges identified by the Office of the Inspector General (OIG) for the Department of

Labor are discussed below.  This year the Department’s response and presentation of its progress on the Top

Management Challenges is integrated with the OIG’s statement of these challenges.  The OIG’s Top Management

Challenges are below.

The Department’s presentations of its actions and planned actions to address each challenge are displayed in a

table below each OIG challenge, and include information from Government Accountability Office (GAO) audits and

planned actions identified for FY 2008 from the FY 2007 PAR.  At the top of the tables are the Department’s own

progress assessments for FY 2008 using a stoplight system:  ●Green – Actively Implementing All Remedial Actions;

●Yellow – Actively Implementing Most Remedial Actions; and, ●Red – Not Implementing Most Remedial Actions.  

The narrative in the heading of the table indicates the strategic and performance goals affected by the challenge

and when the challenge was first identified.  Each table’s three columns break out the Management Challenges into

specific issues (left column), actions taken in FY 2008 (center column), and actions remaining/expected completion

date (right column).  Throughout the past year, the Department closely tracked its progress in addressing the Top

Management Challenges, with agencies reporting quarterly on their corrective actions.  Additional information on

many of these management challenges and their specific issues is in the performance goal narratives.  The

Department aggressively pursues corrective action for all significant challenges, whether identified by the OIG,

GAO, the Office of the Chief Financial Officer (OCFO) or other sources within the Department.   

2008 Top Management Challenges Facing the Department of Labor

The Department’s FY 2008 Top Management Challenges identified by the Office of Inspector General (OIG) are

below.  For 2008, the OIG considers workplace protection, accountability, integrity of benefit programs, and the

delivery of goods and services as the most serious management and performance challenges facing the

Department.  The OIG assessed the Department’s progress in these areas and continues to review and monitor how

these complex issues are addressed.

For each challenge, the OIG presents an overview of the challenge, a description of the challenge, and the OIG’s

assessment of the Department’s progress in addressing the challenge.  The stoplight rating and the assessment

contained in the tables represent the Department’s view of its progress in addressing each management challenge.  

• Protecting the Safety and Health of Workers

• Improving Performance Accountability of Grants

• Ensuring the Effectiveness of the Job Corps Program  

• Safeguarding Unemployment Insurance  

• Improving the Federal Employees’ Compensation Act Program

• Improving Procurement Integrity  

• Maintaining the Integrity of Foreign Labor Certification Programs

• Securing Information Technology Systems and Protecting Related Information Assets   

• Ensuring the Security of Employee Benefit Plan Assets

• Preserving Departmental Records  
Management Challenges

FY 2008 Performance and Accountability Report     31

CHALLENGE:  Protecting the Safety and Health of Workers

OVERVIEW:  The Department of Labor administers the Federal Mine Safety and Health Act of 1977 (Mine Act), as

amended by the Mine Improvement Emergency Response Act of 2006, and the Occupational Safety and Health Act

of 1970.  The workplace safety and health of our nation’s workers depends on DOL’s strong enforcement of these

laws.

CHALLENGE FOR THE DEPARTMENT:  The OIG has consistently revealed a pattern of weak oversight, inadequate

policies, and a lack of accountability on the part of MSHA made more of a challenge by years of resource shortages.  

Congress has allocated additional funding.  However, it will take several years for the Department to be fully

functional with these increased resources. Insufficient resources during a period of increasing mining activity made

it difficult for the Department to ensure that it had enough resources in the right places to ensure the safety of

miners.  These resource issues further reemphasize the need for MSHA to have adequate procedures in place for

carrying out its mission.  Further, MSHA management must monitor performance to ensure that its employees are

following those procedures and documenting their activities.   

The OIG’s recent audits have documented the need for MSHA to improve its operating procedures and

management oversight.  For example, an OIG report on MSHA inspections found that MSHA did not complete 147

required safety inspections at 107 underground coal mines where approximately 7,500 miners worked during FY

2006.  In an OIG audit of MSHA’s process for approving the roof control plan at Utah’s Crandall Canyon Mine, the

OIG found that MSHA was negligent in its review, approval, and oversight of the roof control plan

Likewise, the Independent Review Team established to evaluate MSHA’s actions prior to the August 2007 accident

at the Crandall Canyon Mine and during the subsequent rescue activities, identified many serious deficiencies in

MSHA’s actions, including inadequate evaluation of the engineering data to justify mining in the North and South

Barriers and inadequate oversight of the plan evaluation and approval process by MSHA management.  The review

concluded that MSHA’s failure to adequately evaluate the roof control plans contributed to the August accident.   

An OIG audit of how MSHA determines whether a fatality is mining‐related found that investigators and decision

makers lacked independence and investigative documentation was not always complete.  The OIG also found that

decisions about the cause of a fatality were sometimes made on a manager’s preliminary assessment and a full

investigation was not done.

OSHA’s mission is to prevent work‐related injuries, illnesses and deaths and to ensure that every working man and

woman in the nation has safe and healthful work conditions; however, work‐related fatalities reported in the BLS

Census of Fatal Occupational Injuries were 5,764 in 2004, 5,734 in 2005, 5,840 in 2006, and 5,488 in 2007.35  

Because it is impossible for OSHA to inspect the more than seven million workplaces in the nation, it is essential

that OSHA target its limited resources to inspect workplaces with the highest risk of hazardous conditions or which

have a history of causing significant injuries or fatalities.  Recent fatal workplace accidents involving cranes,

combustible dust, and refineries highlight this challenge.  In addition, OSHA must ensure that voluntary compliance

programs are effective.

OSHA’s Consultation Program was designed to encourage employers to volunteer for an inspection and then

resolve work place safety and health issues without the use of enforcement fines and penalties.  However, an OIG

audit found that consultation program officials seldom ensured that interim protection was in place before granting

employers’ requests for extensions to correct serious hazards, and employers who did not complete corrective

actions in a timely fashion were seldom referred for enforcement actions.  The OIG recommended that OSHA

 

35 These numbers include fatalities not under OSHA jurisdiction, such as deaths among miners, transportation workers, domestic workers,

some public employees, and the self‐employed, as well as fatalities that fall outside of OSHA's definition of work‐relatedness.
Management’s Discussion and Analysis

32     United States Department of Labor

establish a performance measure that benchmarks and reports the percentage of serious hazards corrected by the

initial correction due date.

In response to concerns about the effectiveness of OSHA’s enforcement program, the OIG is conducting an audit to

determine whether OSHA has accurately identified high‐risk employers based on OSHA’s definition of these

employers under its Enhanced Enforcement Program.   

OIG’S ASSESSMENT OF THE DEPARTMENT’S PROGRESS:  MSHA and OSHA have made progress in addressing this

challenge.  For example, with supplemental funding provided by Congress, MSHA has hired more mine inspectors to

improve completion of statutorily required inspections.  However, MSHA needs to ensure that its recently hired

inspectors are properly trained.  While new inspectors are trained, MSHA has re‐allocated current resources by

rotating inspectors into understaffed districts for two week intervals to assist in completing all mandated

inspections.  MSHA has also increased and clarified the documentation required to support mine inspection

activities and defined specific steps for reviewing mine plans.   

Further, MSHA has issued guidance to standardize its roof control plan approval process and has developed

checklists to detail required information and documentation when inspectors review roof control plans.  To address

concerns about independence of decisions about mining fatalities, the Fatality Review Committee now includes a

representative outside of MSHA.  However, this individual is still a DOL employee.

MSHA also needs to remain vigilant to ensure that approvals of roof control plans are done in accordance with its

new procedures.  The OIG continues to believe that an individual who is not employed by the Department will

provide a greater degree of independence and integrity to the work of the Fatality Review Committee.  

In response to an OIG report on OSHA’s Consultation Program, OSHA has implemented measures to ensure that

employers are referred for enforcement action when serious safety hazards are not corrected in a timely manner.  

OSHA has also established a new performance measure tied to the initial hazard correction due date to ensure that

serious hazards are corrected in a timely manner without the need for granting time extensions to correct the

hazard.

DEPARTMENT’S RESPONSE:  Following are DOL FY 2008 Actions, Remaining Actions, and Expected Completion

Dates to Challenges Identified by the OIG, GAO, and DOL.

DOL’s Assessment of its Own Progress:  ● Yellow

Protecting the Safety and Health of Workers  This challenge affects Strategic Goal 3 – Safe and Secure Workplaces,

Performance Goal 3A‐ Improve workplace safety and health through compliance assistance and enforcement of occupational

safety and health regulations and standards and Performance Goal 3B‐ Reduce work‐related fatalities, injuries and illnesses

in mines.  Challenge first identified in FY 2005.  

Management Challenge/

Significant Issue  

Actions Taken in FY 2008 Actions Remaining and Expected

Completion Date

Implement the Mine Improvement and

New Emergency Response (MINER) Act

of 2006.  (2007 PAR)

Published final rules for Rescue Teams

and Sealing of Abandoned Areas and

proposed rules on Refuge Alternatives

and on the Utilization of Belt Air and

the Composition and Fire Retardant

Properties of Belt Material in

Underground Coal Mining.   

• Provide guidance on performance‐

based criteria for acceptable

alternatives to underground wireless

communications– Jan 2009.

• Publish final rules on refuge

alternatives and fire retardant

properties of belt material and

continue to review and approve

Emergency Response Plans–Dec 2008.
Management Challenges

FY 2008 Performance and Accountability Report     33

Protecting the Safety and Health of Workers  This challenge affects Strategic Goal 3 – Safe and Secure Workplaces,

Performance Goal 3A‐ Improve workplace safety and health through compliance assistance and enforcement of occupational

safety and health regulations and standards and Performance Goal 3B‐ Reduce work‐related fatalities, injuries and illnesses

in mines.  Challenge first identified in FY 2005.  

Management Challenge/

Significant Issue  

Actions Taken in FY 2008 Actions Remaining and Expected

Completion Date

Strengthen MSHA accountability

program.  (OIG 2007, OIG 05‐07‐002‐06‐

001)

http://www.oig.dol.gov/public/reports/oa/2007/05‐

07‐002‐06‐001.pdf  

• Created and staffed an Office of

Accountability.

• Revised current MSHA Accountability

Program and Accountability Program

Handbook.  

Office of Accountability to monitor the

implementation of management

controls–Ongoing.

Ensure the consistency and rigor of the

process to review and approve roof

control plans.  (OIG‐ 05‐08‐003‐06‐001)   http://www.oig.dol.gov/public/reports/oa/2008/05‐

08‐003‐06‐001.pdf

• Standardized MSHA’s roof control

plan approval process in checklist

form.  

• Required documentation in MSHA’s

roof control review files.  

• Issued instructions regarding which

roof control or ground support plans

must be reviewed by the Roof

Control Division.

• Clarified handling of non‐rescue

personnel in rescue operations.  

• Issued Program Information Bulletin

on retreat mining software.  

•Developed criteria for assessing the

quality of roof control plans.

Re‐evaluate roof control plans for all

mines–Ongoing.

Ensure that fatality investigations follow

consistent well‐documented procedures.  

(OIG 05‐08‐002‐06‐001)

http://www.oig.dol.gov/public/reports/oa/2008/05‐

08‐002‐06‐001.pdf

• Included information on non‐

chargeable fatalities on MSHA’s

website.

•Amended the Accident/Illness

Investigation Procedures Handbook

to clarify first responders’

responsibilities, require fatality

information and evidence to be

transmitted to headquarters prior to

a chargeability determination, and

clarify investigative protocol and

documentation required.

No actions remaining.

Improve guidance and oversight of mine

Emergency Response Plans.  (GAO 08‐

424)

• Issued checklist and guidance on

requirements for Emergency

Response Plan (ERP) review.

•Developed list of mines for ERP

review.

• Required headquarters review of ERP

violations for consistency.

• Required inspectors to cite the

statutory provision of the MINER Act

applicable to emergency response.

• Issued guidance to ensure that

repeat violations are captured.

• Required inclusion of ERPs in

accountability reviews.

• Review ERPs every six months.

•Work with NIOSH to provide guidance

on performance‐based criteria for

acceptable technological alternatives

to underground wireless

communications–Jan 2009.  

•Headquarters evaluates issued

violations and determines if policy

clarifications are necessary to improve

consistency–Ongoing.

•Hold regular discussions with District

Managers to develop best practices

and improvements for ERPs–Ongoing.
Management’s Discussion and Analysis

34     United States Department of Labor

Protecting the Safety and Health of Workers  This challenge affects Strategic Goal 3 – Safe and Secure Workplaces,

Performance Goal 3A‐ Improve workplace safety and health through compliance assistance and enforcement of occupational

safety and health regulations and standards and Performance Goal 3B‐ Reduce work‐related fatalities, injuries and illnesses

in mines.  Challenge first identified in FY 2005.  

Management Challenge/

Significant Issue  

Actions Taken in FY 2008 Actions Remaining and Expected

Completion Date

Ensure that employees follow

procedures.

Worked on revisions to the Metal and

Nonmetal General Inspection

Procedures Handbook.

Issue revised Metal and Nonmetal

General Inspection Procedures Hand‐

book – Dec 2008.

Replace retiring mine inspectors.  

Implement localized and targeted

recruiting to increase the applicant pool

Implement Human Resources Strategic

Plan FY 2006 ‐2011 for hiring new mine

inspectors. (2007 PAR)

MSHA hired enough coal enforcement

personnel to bring the strength to

highest since 1994 and began a similar

hiring initiative that will place its Metal

and Nonmetal mine enforcement at

the highest level in more than 20

years.

Continue to implement localized and

targeted recruiting–Ongoing.

Ensure that OSHA funded consultation

projects refer uncorrected serious

hazards to OSHA enforcement. (2007

PAR)

• Implemented measures to ensure

that employers not correcting

hazards in a timely way are referred

for enforcement action.  

• Established a performance measure

for timeliness of serious hazard

correction.  

No actions remaining.

CHALLENGE:  Improving Performance Accountability of Grants

OVERVIEW:  In FY 2007, the Department’s Employment and Training Administration (ETA), issued $5.5 billion in

formula grants and almost $1 billion in discretionary grants for job training and employment services.  Since 2001,

ETA has spent nearly $900 million in discretionary grant funds on the High Growth Job Training Initiative (High

Growth), Community‐Based Job Training Initiative (Community Based), and the Workforce Innovation in Regional

Economic Development (WIRED).  These initiatives were designed to give greater emphasis to the employment and

training needs of high‐growth, high‐demand industries.  

All state and local government and nonprofit recipients that expend $500,000 or more in Federal assistance in one

year are required by the Single Audit Act to obtain an annual audit by an independent public accountant.  The Act

mandates the examination of a recipient’s financial records, financial statements, federal award transactions and

expenditures, the general management of its operations, the systems of internal control, and the federal assistance

itself received during the audit period.  ETA grants are awarded to state and local governments and other non‐DOL

organizations.  The Department relies on audits conducted under the Single Audit Act to provide oversight of its

grants – both formula and discretionary.

CHALLENGE FOR THE DEPARTMENT:  DOL continues to face challenges in ensuring that discretionary grants are

properly awarded and that the Department receives the quality of services that the taxpayers deserve.  Successfully

meeting the employment and training needs of citizens requires selecting the best service providers, making

expectations clear to grantees, ensuring that success can be measured, providing active oversight, evaluating

outcomes, and disseminating and replicating proven strategies and programs.  Both OIG and GAO have found in the

past year that ETA continues to have weaknesses in managing its grants to this end.  In audits involving the High

Growth, Community Based, and WIRED initiatives, these weaknesses have included the lack of competition in

awarding grants, grants that failed to achieve major performance goals, grant agreements with goals that were so

unclear it was impossible to determine success or failure, and grants whose required matching funds were not
Management Challenges

FY 2008 Performance and Accountability Report     35

provided.  Moreover, ETA continues to be challenged to provide adequate oversight and monitoring of the grants it

awards, as the agency lacks reliable and timely performance data that would allow identification of problems in

time to correct them.  Finally, ETA has not evaluated the usefulness of individual grant products or the overall

effectiveness of its discretionary grant initiatives.

Another challenge for the Department related to both formula and discretionary grants is that grantees’ audits

conducted under the Single Audit Act by independent public accountants are not always completed timely and

information from single audits is not always reliable.  The OIG has found serious deficiencies in these audits that

demonstrate that the Department is not receiving timely, accurate, reliable information that will assist it making

the best possible program and funding decisions.   

OIG’S ASSESSMENT OF THE DEPARTMENT’S PROGRESS: As a result of the audits by the OIG and GAO, ETA has

recently increased the emphasis placed on awarding discretionary grants competitively, developed procedures

designed to better document decisions and discussions that lead to grant actions, implemented new procedures to

ensure the proper justification of any future non‐competitive awards, and provided training to agency grant officers

on these new procedures.  ETA has also stated that future agreements for pilots and demonstration grants will

require grantees to obtain an independent evaluation of grant results.  While these actions should help to improve

performance accountability, ETA needs to focus its future efforts on determining how best to prioritize its available

resources to adequately monitor grant performance and how to evaluate grants to ensure desired results are

achieved.   

The Department has implemented procedures requiring written notifications be sent to grantees when single audit

reports are submitted more than three months past the due date.  The notifications serve to remind the grantees of

the timeframes established in OMB Circular A‐133, to ensure awareness that the reports were submitted untimely,

and to prevent future untimely submissions.

DEPARTMENT’S RESPONSE:  Following are DOL FY 2008 Actions, Remaining Actions, and Expected Completion

Dates to Challenges Identified by the OIG, GAO, and DOL.

DOL’s Assessment of its Own Progress:  ● Yellow

Improving Performance Accountability of Grants   Affects Strategic Goal 1: A Prepared Workforce, Performance

Goals 1C‐1D, and Goal 2:  A Competitive Workforce, Performance Goals 2A‐G.  Challenge first identified in FY 2007.    

Management Challenge/

Significant Issue  

Actions Taken in FY 2008 Actions Remaining and Expected

Completion Date

Ensure that grants are properly

awarded.  90 percent of the 39 audited

grants awarded under the President’s

High Growth Job Training Initiative were

awarded non‐competitively.  (OIG 02‐

08‐201‐03‐390)

http://www.oig.dol.gov/public/reports/oa/2008/

02‐08‐201‐03‐390.pdf

•Updated process for handling non‐

competitive proposals so compliance

with requirements is fully

documented.  

• Funding for unsolicited (non‐

competitive) proposals for amounts

greater than $100,000 which do not

have an exception must be approved

by the DOL Procurement Review

Board.  

•All grants are currently being awarded

competitively.

•Monitor grantee compliance with

OMB Circular A‐133 (Audits of State,

Local Governments and Non‐Profit

Organizations) audit requirements and

place further emphasis on this

requirement in grant packages–FY

2009.

• Emphasize use of electronic reports in

tracking and evaluating grantees’

actual cash needs–FY 2009.
Management’s Discussion and Analysis

36     United States Department of Labor

Improving Performance Accountability of Grants   Affects Strategic Goal 1: A Prepared Workforce, Performance

Goals 1C‐1D, and Goal 2:  A Competitive Workforce, Performance Goals 2A‐G.  Challenge first identified in FY 2007.    

Management Challenge/

Significant Issue  

Actions Taken in FY 2008 Actions Remaining and Expected

Completion Date

Ensure that grantees accomplish their

grant objectives and enhance

monitoring of direct grants.  (OIG‐02‐

08‐204‐03‐390)

http://www.oig.dol.gov/public/reports/oa/2008/

02‐08‐204‐03‐390.pdf

Enhance monitoring of direct grants,

including the High Growth Job Training

Initiative (HGJTI), Community Based Job

Training Grants (CBJTG), and Workforce

Innovation in Regional Economic

Development (WIRED) Grants. (OIG

2007‐2008) (GAO 08‐486)

•Updated the Grants Management

Desk Reference covering the grant

process from solicitation to closeout.

• Issued the Financial Supplement and

the WIRED Monitoring Supplement to

the Core Monitoring Guide for grants.

• Trained Grants Officers to review

Statements of Work for clarity of

objectives, deliverables, and

performance measures and to observe

match requirements.

• Trained new grantees on financial and

performance requirements at various

training venues, including webinars

and a WIRED fiscal conference.

•Use electronic reports in evaluating

grantees’ cash needs–FY 2009.  

• Continue training Grant Officers on

reviewing Statements of Work and

other areas of grant operations–FY

2009.

• Issue plan for technical assistance to

grantees and provide technical

assistance to grantees–FY 2009.

•Developed a 3 1⁄2 day training course

for Federal Project Officers to address

core competencies and technical skills.

• Conduct pilot test of31⁄2 Day Training

Course and Web‐based tutorial for

Federal Project Officers—Nov 2009.

• Conduct additional Federal Project

Officer training sessions—Dec 2008

through April 2009.  

• Implemented risk‐based monitoring

for WIRED grants, including training

Federal Project Officers and reviewing

Generation 1 grantees.  

• Conduct fiscal and program reviews of

Generation II WIRED grantees–FY

2009.  

•Monitor third party evaluations of

HGJTI, CBJTG, and WIRED training

grants and identify any interim

successes and findings–FY 2009.

• Identified methods for collecting

common measures data for HGJTI,

CBJTG, and WIRED grantees and

implemented on‐line reporting for

HGJTI and CBJTG grantees.

• Collect common measures’ data and

compute results–FY 2009.  

Ensure that costs for Earmark Grants

are allowable.  (OIG 02‐08‐203‐03‐390)  

http://www.oig.dol.gov/public/reports/oa/2008/

02‐08‐203‐03‐390.pdf

Initial determination disallowed $11.2

million in questioned costs and required

the grantee to correct deficiencies

regarding documentation of eligibility.

Conduct Federal Project Officer training

covering grant monitoring, particularly

regarding documentation required of

grantees–FY 2009.

Single Audits. (OIG 2006‐2008)  

(FY 2006‐7 PAR)

•Developed and tested monitoring

procedures for reviewing grantee

submissions of FY 2006 single audit

reports.

• Completed review of FY 2006 single

audit reports.

•Mailed letters to grantees with

delinquent reporting and grantees

without single audit reports.

•Drafted standard operating

procedures.  

• Send follow up letters to grantees who

continue to be delinquent–Nov 2009.

• Codify standard operating procedures

into Procedures Manuals–FY 2009.
Management Challenges

FY 2008 Performance and Accountability Report     37

CHALLENGE:  Ensuring the Effectiveness of the Job Corps Program

OVERVIEW:  The purpose of the Job Corps program is to assist eligible at‐risk youth who need intensive education

and training services in a safe, residential environment.  Job Corps has contracts with private companies to operate

98 centers and interagency agreements with the Departments of Interior and Agriculture to operate 28 centers.  

The program was appropriated nearly $1.6 billion in FY 2008.   

CHALLENGE FOR THE DEPARTMENT:  The OIG’s work has consistently identified challenges to the effectiveness of

the Department’s Job Corps program.  These challenges include ensuring the safety and health of students and

having accurate, reliable data about the program’s performance.  A cornerstone of the Job Corps program is

removing students from unsafe environments and placing them in a safe residential training program.  Ensuring

maintenance of its facilities is a challenge for Job Corps.  Unsafe conditions resulting from inadequate maintenance

adversely impacts the overall success of the Job Corps program.  

OIG audits have documented numerous health and safety problems at certain centers, such as water‐damaged and

collapsing ceiling tiles; mold on student dormitory walls and ceilings; and missing or inoperable emergency exit

signs.  Further, Job Corps officials need to do more to address the problems of illegal drugs and violence at its

facilities.

OIG audits have also found that contractors have manipulated performance data to inflate their success.  The OIG

has repeatedly found problems with the reporting of student outcomes, on‐board strength and attendance.  This is

a particular challenge for Job Corps when centers are operated by contractors through performance‐based

contracts which tie incentive fees and bonuses directly to contractor performance largely measured by on‐board

strength, attendance, and outcomes.  Under such contracts, there is a risk that contractors will inflate their

performance reports so they can continue to operate centers.  It is essential for Job Corps to have reliable,

accurate, and timely data, so that the Department can evaluate how well student needs are being met.  

OIG’S ASSESSMENT OF THE DEPARTMENT’S PROGRESS:  Job Corps has addressed a number of student safety and

health issues and indicated that it will provide more rigorous monitoring of all centers.  Also, Job Corps has taken

action to improve financial and performance data reliability at all centers.  Although, each center will conduct

mandatory audits of student records concurrent with annual center quality assessments, more needs to be done to

resolve problems with inaccurate performance data.   

Although Job Corps is continuing its efforts to maintain a safe and healthy environment for its students, it must be

held accountable to monitor and verify that all centers are being managed and maintained to ensure safe and

healthy environments.
Management’s Discussion and Analysis

38     United States Department of Labor

DEPARTMENT’S RESPONSE: Following are DOL FY 2008 Actions, Remaining Actions, and Expected Completion

Dates to Challenges Identified by the OIG, GAO, and DOL.

DOL’s Assessment of its Own Progress:  ●Green ↑ (improved from FY 2007)

Ensuring the Effectiveness of the Job Corps Program   Affects Strategic Goal 1 – A Prepared Workforce,

Performance Goal 1B, Improve educational achievements of Job Corps students and increase participation of Job Corps

graduates in employment and education.  Challenge first identified in FY 2006.   

Management Challenge/

Significant Issue  

Actions Taken in FY 2008 Actions Remaining and Expected

Completion Date

Promote effective regional monitoring,

including ensuring that contractors

provide accurate performance data.

(OIG ‐26‐08‐002‐01‐370)

http://www.oig.dol.gov/public/reports/oa/2008/2

6‐08‐002‐01‐370.pdf  

(OIG‐26‐08‐003‐01‐370)

http://www.oig.dol.gov/public/reports/oa/2008/2

6‐08‐003‐01‐370.pdf

(2007 DOL)  

• Required Regional Offices to perform

rigorous data quality/data integrity

reviews in addition to comprehensive

onsite policy compliance monitoring

reviews at least once every 24 months.  

• Completed Project Manager training

for all regions.

•Assessed $585,000 in liquidated

damages for recovery.

• Revised Interagency Agreements with

Interior and Agriculture to provide

more accountability on financial and

property management and greater

oversight by Job Corps.   

• Continue to conduct rigorous data

integrity audits concurrently with

onsite compliance/quality

assessments –FY 2009.

•Atlanta Regional Director will increase

monitoring efforts at the North

Carolina Center operated by the

USDA– FY 2009.

Ensure student safety and health.  

(OIG 2007‐2008)

(OIG‐26‐08‐001‐01‐370)

http://www.oig.dol.gov/public/reports/oa/2008/2

6‐08‐001‐01‐370.pdf  

  

• Reviewed center safety and health

programs, provided abatement

guidance, and monitored quarterly

facility inspection reports.

• Disseminated information promoting

safety and health through the Job

Corps Directives system.

•Updated the Job Corps Safety and

Occupational Health Program to

comply with regulatory guidelines and

to incorporate OIG recommendations.

• Enforced the Zero Tolerance Policy

against violence and drugs.  

• Completed Oconaluftee Center

repairs.  

• Conduct annual Safety and Health

Information Management System

Training Seminar for 80 participants –

Oct 2008.

• Continue to implement the Job Corps

Safety and Occupational Heath

Program participants–Ongoing.

• Continue to enforce the Zero

Tolerance Policy against violence and

drugs–Ongoing.

Assess incoming students for cognitive

disabilities.  Federal law requires

assessment for cognitive disabilities

under specific circumstances. (OIG

2007)

•Updated the data collection system to

improve tracking of students with

disabilities.   

•Outreach Admissions counselors now

seek guidance from Regional Disability

Coordinators and qualified personnel

on accommodating disabled students.

• Converted all part‐time Regional

Disability Coordinators to full‐time.

University of Kansas Center for

Research on Learning to conduct a

professional development conference

to train Job Corps academic and career

technical managers in standards‐based

instruction for students with learning

disabilities–FY 2009.  
Management Challenges

FY 2008 Performance and Accountability Report     39

CHALLENGE:  Safeguarding Unemployment Insurance

OVERVIEW:  The Department partners with the states to administer unemployment benefit programs.  State

Unemployment Insurance (UI) provides benefits to workers who are unemployed and meet eligibility requirements

established by their respective states.  UI benefits are financed through employer taxes imposed by the states and

collected by the Internal Revenue Service, which holds them in the Unemployment Trust Fund (UTF) until needed to

pay benefits.   

The Department funds State Workforce Agencies (SWAs) which administer the UI program through grant

agreements.  These grant agreements are intended to ensure that SWAs administer the UI program efficiently and

that they comply with Federal laws and regulations.  In addition, the SWAs are required to have disaster

contingency plans in place to enable them to administer benefits in the aftermath of a disaster such as a hurricane.

Disaster Unemployment Assistance (DUA), is a Federally funded program that provides financial assistance to

individuals who lose their jobs as a direct result of a major disaster and are ineligible for other UI.   

CHALLENGE FOR THE DEPARTMENT:  Reducing and preventing UI and DUA overpayments, combating fraud against

these programs, and timely detecting and recovering overpayments that do occur remains a major challenge for the

Department and states.  In FY 2007, the Department reported more than $3 billion in UI overpayments—a slight

drop from $3.1 billion in FY 2006.  However, the Department did not meet its target goal of identifying and

establishing for recovery 60 percent of UI overpayments in FY 2007.   

OIG work following Hurricanes Katrina and Rita identified potential benefit overpayments as a result of claimants

concurrently filing under the UI and DUA programs; states not timely verifying eligibility for DUA; and other

reasons.  For example, the OIG found that Louisiana paid unemployment benefits to claimants when the National

Directory of New Hires (NDNH) database reported those individuals as having obtained jobs.  This one example

represented potential overpayments of $51 million.  Following the 2005 hurricanes, the OIG opened over 300 cases

of potential UI and DUA fraud resulting in 142 indictments and 86 convictions.  To date, 240 of these cases have

been closed.

It is a challenge for the Department, other Federal agencies, and the states to have systems and controls in place to

quickly prevent or respond to improper payments during national emergencies or disasters.  The Department needs

to promote states’ use of the National Directory of New Hires (NDNH) database to prevent and timely detect

overpayments.  The Department also needs to ensure that SWAs have adequate Information Technology (IT)

Contingency Plans that will enable them to continue to pay UI benefits in the event of a disaster such as a

hurricane.  It is critical that all SWAs have IT contingency plans for UI to ensure individuals who rely on these

benefits receive this vital support in a time of need and uncertainty.

Preventing fraud against the UI program is also a challenge.  The OIG investigates fraud committed by individuals

who do not report or underreport outside income while receiving UI benefits.  In addition to single claimants and

fictitious employer‐related schemes, OIG investigations have uncovered schemes in which individuals have used

identity theft to illegally obtain benefits and schemes in which UI benefits have been paid to ineligible claimants.

OIG’S ASSESSMENT OF THE DEPARTMENT’S PROGRESS:  The Department has taken some measures to reduce and

prevent UI and DUA overpayments.  The Department stated in its FY 2006 Performance and Accountability Report

that it has developed a new core performance measure on overpayment detection.  Although the Department

implemented this new performance measure two years ago, there has been only a slight drop in the UI

overpayment rate.  The Department is also working with state agencies to encourage the use of the NDNH

database, which will improve the states’ efforts to detect overpayments early.  The OIG is currently conducting an

audit to assess the states’ use of this tool.   
Management’s Discussion and Analysis

40     United States Department of Labor

In coordination with other Federal partners and the National Association of State Workforce Agencies, the

Department has developed action plans using lessons learned from recent disasters.  The Department has also

brought together Federal partners to develop a resource guide to facilitate coordination and streamline the

delivery of services in the event of a major disaster.   

The OIG is working with UI’s state partners to more effectively provide training to detect and prevent UI fraud.

DEPARTMENT’S RESPONSE: Following are DOL FY 2008 Actions, Remaining Actions, and Expected Completion

Dates to Challenges Identified by the OIG, GAO, and DOL.

DOL’s Assessment of its Own Progress:  ●Green

Safeguarding Unemployment Insurance   Affects Strategic Goal 4 – Strengthened Economic Protections, and

Performance Goal 4A‐ 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.  Challenge first

identified in FY 2000.  

Management Challenge/

Significant Issue  

Actions Taken in FY 2008 Actions Remaining and Expected

Completion Date

Prevent overpayments.  OIG work

following Hurricanes Katrina and Rita

identified potential benefit

overpayments as a result of claimants

concurrently filing under the UI and

DUA programs; states not timely

verifying eligibility for DUA; and other

reasons. (OIG‐06‐08‐001‐03‐315)

http://www.oig.dol.gov/public/reports/oa/2008/0

6‐08‐001‐03‐315.pdf

OIG’s audit of the Benefit Accuracy

Measurement program found that

expediting implementation of National

Directory of New Hires (NDNH)

database connectivity in 10 states, and

increasing its use in another 8 states,

could save the Unemployment Trust

Fund $428 million annually.  

• Issued report on lessons learned from

hurricanes and recommendations for

UI and DUA preparedness planning.

• Issued guidance to states on Disaster

Unemployment Assistance eligibility

requirements.

• 48 states began cross‐matching UI

against the NDNH, which provides the

most cost‐effective means of

controlling the biggest cause of UI

overpayments– persons who continue

to claim UI benefits after returning to

work.   

•Addressed the second largest cause of

overpayments–errors in handling

separation issues‐‐by supporting

development of the Separation

Information Data Exchange System

(SIDES) so accurate information on

circumstances of job separations

reaches adjudicators in time to result

in accurate decisions.   

• States that have not already

implemented NDNH cross‐matching

will include Corrective Action Plans in

their FY 2009 State Quality Service

Plan submissions providing milestones

for cross‐match completion–Dec 2008.

•Develop web services architecture and

test plan documentation for SIDES and

initiate system testing and user

training in the five consortium States–

FY 2009.  

• Promote state use of a variety of

databases‐‐UI Interstate Benefits

Inquiry application, Social Security,

Alien Verification for Entitlement,

Department of Motor Vehicles, and

Department of Corrections‐‐to prevent

and detect improper UI benefit

payments–Ongoing.  

Reduce fraud.  Continue to promote

enactment of the 2008 Integrity Act and

conduct an Integrity Conference for

State UI agencies.  

Held National Unemployment Insurance

Integrity Professional Development

Conference in Salt Lake City, Utah.  The

Administration’s UC Integrity Act has

not yet been acted upon by Congress.

Continue to promote enactment of the

2008 Integrity Act– FY 2009.   

CHALLENGE:  Improving the Federal Employees’ Compensation Act Program

OVERVIEW:  The Federal Employees’ Compensation Act (FECA) Program provides income and pays medical

expenses for covered Federal civilian employees injured on the job or who have work‐related occupational

diseases, and dependents of employees whose deaths resulted from job‐related injuries or occupational diseases.  
Management Challenges

FY 2008 Performance and Accountability Report     41

This program is administered by the Department and impacts employees and budgets of all Federal agencies.  FECA

benefit expenditures totaled $2.6 billion in 2007.  Most of these costs were charged back to individual agencies for

reimbursement to the Department’s Office of Workers’ Compensation Programs (OWCP).

CHALLENGE FOR THE DEPARTMENT:  The structure and operation of the FECA program is both a Departmental and

a government‐wide challenge.  All Federal agencies rely upon OWCP to adjudicate the eligibility of claims, to

manage the medical treatment of those claims, and to make compensation payments and to pay medical expenses.  

Ensuring proper payments while being responsive and timely to eligible claimants is a challenge for OWCP.  Among

these challenges are moving claimants off the periodic rolls when they can return to work or their eligibility ceases,

preventing ineligible recipients from receiving benefits, and preventing fraud by service providers and by individuals

who receive FECA benefits while working.   

The OIG recognizes that it is difficult to identify and address improper payments and/or fraud in the FECA program.  

Another difficulty is that OWCP does not have the legal authority to match FECA compensation recipients against

social security wage records.  Currently, OWCP must obtain permission from each individual claimant each time in

order for it to check records.  Being able to do the match would enable OWCP to identify individuals who are

collecting FECA benefits while working and collecting wages.

OIG’S ASSESSMENT OF THE DEPARTMENT’S PROGRESS:  The Department has taken several steps to improve the

administration of FECA.  The Department completed the roll‐out of its new FECA benefit payment system,

Integrated Federal Employee Compensation System, which tracks due dates of medical evaluations; revalidates

eligibility for continued benefits; uses data mining to prevent improper payments; boosts efficiency; and promises

improved customer satisfaction.   

The Department needs to continue to seek legislative reforms to the program.  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 $384 million.  These

legislative reforms would assist the Department to focus on improving case management and to ensure only

eligible individuals receive benefits.

To help ensure proper payments in the FECA program, the Department is seeking legislative authority to easily and

expeditiously access SSA wage records.    

The OIG continues to provide training to DOL and to other Federal agencies in the detection and prevention of

fraud against the FECA program.  In addition, the OIG has started an audit to determine whether OWCP is

complying with Federal regulations and internal policies and procedures when assessing the wage earning capacity

of FECA periodic roll claimants.  

DEPARTMENT’S RESPONSE: Following are DOL FY 2008 Actions, Remaining Actions, and Expected Completion

Dates to Challenges Identified by the OIG, GAO, and DOL.
Management’s Discussion and Analysis

42     United States Department of Labor

DOL’s Assessment of its Own Progress:  ●Green

Improving the Federal Employees’ Compensation Act Program   Affects Strategic Goal 4, Strengthened

Economic Protections and Performance Goal 4B‐Reduce the consequences of work‐related injuries.  Challenge first identified

in FY 2004.  

Management Challenge/

Significant Issue  

Actions Taken in FY 2008 Actions Remaining and Expected

Completion Date

Reduce improper payments.  Ensure

that current medical information for

claimants is on file, so that payments

are not made to those who are no

longer disabled, and monitor and adjust

the Integrated Federal Employees

Compensation System (iFECS) as

necessary. (2007 PAR)

Revise program performance measures

to emphasize payment accuracy,

internal controls, and overpayment

recoveries and collect more detailed

information on improper payments to

better identify improper payment risks

and to address areas of high risk. (GAO‐

08‐486)  

• Completed actions to ensure current

medical information is on file.

• Completed testing IFECS system

controls.  

•Utilized the newly operational Periodic

Entitlement Review tracking system.

• Included a new measure of the timely

processing of identified overpayments

(both pending and preliminary) in the

Operational Plan for 2008.

• Enhanced iFECS to allow agencies to

access details of a payment online so

they can monitor payments and

discover flaws in the data they

submitted.   

• Conducted ongoing system

monitoring.

• Create an electronic form to quickly

report the return to work without a

paper form and mailing–June 2009.  

• Collect information in iFECS to analyze

potential erroneous payments,

including reason codes– Sept 2009.

•Analyze underpayments and over‐

payments to identify training to

improve performance and consider

establishing corresponding

performance goals– March 2010.

• Create a training module addressing

pay rates and initial payments to

improve accuracy–Sept 2010.

• Enhance iFECS to prompt the user

when payment is being made on a

claim with an existing over‐payment

or if the claimant has an over‐payment

in another case–Sept 2010.  

Reduce fraud.  Seek legislative reforms

to discourage unsubstantiated claims

and make other improvements,

including matching of FECA payment

records with SSA records. (2008 OIG,

2007 PAR)

FECA reform proposal included in the FY

2009 President’s Budget to Congress.

Work with Congress to adopt FECA

legislative reform proposal–FY 2009.  

CHALLENGE:  Improving Procurement Integrity

OVERVIEW:  The Department contracts for many goods and services to assist in carrying out its mission.  In FY 2007,

the Department’s acquisition authority exceeded $1.8 billion and included over 10,700 acquisition actions.   

CHALLENGE FOR THE DEPARTMENT:  Ensuring integrity in procurement activities is a continuing challenge for the

Department.  The OIG’s work continues to identify violations of Federal procurement regulations, preferential

treatment in awards, procurement actions that were not in the government’s best interest, and conflicts of interest

in awards.  For example, an OIG audit of an employment and training contract raised concerns about preferential

treatment in how work was directed to a specific subcontractor.  Another audit found no evidence that DOL

Contracting Officers were checking required sources – existing government inventories of excess personal property

or nonprofit agencies affiliated with the Committee for Purchase from People Who Are Blind or Severely Disabled ‐‐ 

before making GSA Schedule procurements.   

The Services Acquisition Reform Act (SARA) of 2003 requires that executive agencies appoint a Chief Acquisition

Officer (CAO) whose primary duty is acquisition management.  However, the Department’s current organization is

not in compliance with this requirement, as the Assistant Secretary for Administration and Management is serving

as the CAO while retaining other significant non‐acquisition responsibilities.   Until procurement and programmatic
Management Challenges

FY 2008 Performance and Accountability Report     43

responsibilities are properly separated and effective controls are put in place, the Department will be at risk for

wasteful and abusive procurement practices.   

In addition, a recent OIG audit of procurements for Job Corps found that procurement personnel did not always

comply with the Federal Acquisition Regulation in obtaining adequate justification for sole source contracts.  The

OIG also determined that there was a lack of training and inadequate oversight during the contracting process.  As a

result, contracting integrity, as well as fair and open competition, could be compromised.   

OIG’S ASSESSMENT OF DEPARTMENT’S PROGRESS:  The Department has taken preliminary steps to implement

SARA.  In January 2007, the Secretary issued Order 2‐2007, which formally established the position of CAO within

DOL.  This Order specifically stated that the CAO will have acquisition management as a primary duty.  Further, the

Order emphasized that the CAO will report to the Secretary with day‐to‐day guidance from the Deputy Secretary

and that the CAO will have responsibility for overseeing other Department acquisition activities.  Unfortunately, the

Department still has not satisfied the full intent of SARA, as the delegated CAO continues to perform many other

duties unrelated to acquisition management, such as serving as the Department’s Chief Information Officer and

overseeing the Department’s budget operations.

DEPARTMENT’S RESPONSE: Following are DOL FY 2008 Actions, Remaining Actions, and Expected Completion

Dates to Challenges Identified by the OIG, GAO, and DOL.

DOL’s Assessment of its Own Progress: ● Yellow

Improving Procurement Integrity   Affects all DOL strategic goals.  Challenge first identified in FY 2005.   

Management Challenge/

Significant Issue  

Actions Taken in FY 2008 Actions Remaining and Expected

Completion Date

Ensure procurement integrity.  (OIG

2005‐2008)

Made significant improvements in the

procurement process:

• Implemented the Federal Standards

for Contracting Officer’s Technical

Representative and Contracting Staff

training.

• Continued the Acquisition Workforce

Skill Gap Assessment,

• Reorganized the OASAM procurement

oversight function and increased the

staffing to increase effectiveness.  

• Issued three DLMS changes related to

acquisition.

• Issued numerous directives and

guidance documents to the

contracting officers and customer

offices.

• Significantly upgraded the oversight of

the DOL purchase card program.

• Complete the comprehensive review

of the Department of Labor

Management Series (DLMS) section for

contracts and grants for required

updates–FY 2009.

• Complete comprehensive review of

Department of Labor Acquisition

Regulations for required updates–FY

2009.

• Conduct procurement reviews of BLS

and MSHA procurement offices–FY

2009.

• Implement mandatory training/

monitoring program for the

acquisition workforce–FY 2009.

• Issue guidance in relation to recent

OIG findings–Dec 2009.

•Draft regulations and implement a

new mandatory oversight procedure

for telecommunications orders–FY

2009.

• Continue to provide overall

procurement policy support, training

and guidance–FY 2009.      

Improve employment and training

contracting.  

Reviewed ETA procurement (at their

request) and recommended process

improvements and training in

procurement requirements.
Management’s Discussion and Analysis

44     United States Department of Labor

Improving Procurement Integrity   Affects all DOL strategic goals.  Challenge first identified in FY 2005.   

Management Challenge/

Significant Issue  

Actions Taken in FY 2008 Actions Remaining and Expected

Completion Date

Resolve the “unresolved and open”

OIG procurement recommendation.

(OIG 2007‐8, 2006‐7 DOL)  Appoint a

Chief Acquisition Officer (CAO) whose

primary duty is acquisition

management.

Considered the recommendation that

DOL procurement responsibilities be

removed from the Office of the

Assistant Secretary for Administration

and Management.  

Decision pending; issue may be held in

abeyance–FY 2009.  

CHALLENGE:  Maintaining the Integrity of Foreign Labor Certification Programs

OVERVIEW:  The Department’s Foreign Labor Certification (FLC) programs provide United States (U.S.) employers

access to foreign labor to meet worker shortages under terms and conditions that do not adversely affect U.S.

workers.  The Permanent Foreign Labor Certification Program allows an employer to hire a foreign worker to work

permanently in the U.S., if a qualified U.S. worker is unavailable.  The H‐1B program allows the Department to

certify employers’ applications to hire temporary foreign workers in specialty occupations such as medicine,

biotechnology, and business.  The H‐2B program permits employers to hire foreign workers to come temporarily to

the U.S. and perform temporary non‐agricultural labor on a one‐time, seasonal, peak load, or intermittent basis.

In March 2005, ETA created the PERM (Permanent Electronic Review Management) system which removed the

states from a direct role in reviewing and auditing applications for foreign labor certification, eliminated the 100

percent review of such applications, and established a random sampling and targeted approach to auditing

applications to ensure compliance with the law and program requirements.   

CHALLENGE FOR THE DEPARTMENT:  Maintaining the integrity of its FLC programs, while also ensuring a timely and

effective review of applications to hire foreign workers, is a continuing challenge for the Department.   

OIG investigations, some of which have been initiated based on referrals from ETA, have identified fraud against

these programs, and is the fastest growing area of OIG investigations.  OIG investigations continue to uncover

schemes carried out by immigration attorneys, labor brokers, and transnational organized crime groups, some with

possible national security implications.  Further, OIG investigations have revealed schemes involving fraudulent

applications that are filed with DOL on behalf of fictitious companies—or applications using names of legitimate

companies without their knowledge.  

An OIG audit of the PERM system found that ETA had changed its methodology for selecting applications to audit.  

Furthermore, ETA had not conducted audits of all the applications selected for audit.  As employers and

representatives such as labor brokers and others learn what elements in an application are likely to trigger an audit,

they may be able to structure applications in a way that could lessen the likelihood of applications being audited.   

OIG’S ASSESSMENT OF DEPARTMENT’S PROGRESS:  The Department has instituted measures to reduce fraud

in its FLC programs.  As a result of OIG investigations repeatedly demonstrating the need to eliminate the practice

of substituting a new foreign worker for the one originally named on a permanent labor certification application, in

July 2007 the Department enacted the Fraud Rule which prohibited the practice of substitution.   

In addition, the OIG and the Department have been working collaboratively to identify and reduce fraud in the FLC

process by providing training and instruction to ETA personnel on better and more creative ways of identifying and

referring to the OIG possible labor‐related visa fraud.  In March 2008, ETA's OFLC launched its Fraud Detection and

Protection Unit designed to recognize visa fraud and more expeditiously respond to OIG requests for program‐

related information.  The OIG continues to work closely with ETA’s fraud unit.
Management Challenges

FY 2008 Performance and Accountability Report     45

DEPARTMENT’S RESPONSE: Following are DOL FY 2008 Actions, Remaining Actions, and Expected Completion

Dates to Challenges Identified by the OIG, GAO, and DOL.

DOL’s Assessment of its Own Progress:  ●Green

Maintaining the Integrity of the Foreign Labor Certification Programs   Affects Strategic Goal 2 – A

Competitive Workforce, Performance Goal 2H‐Address worker shortages through the Foreign Labor Certification. Challenge

first identified in FY 2001.   

Management Challenge/

Significant Issue  

Actions Taken in FY 2008 Actions Remaining and Expected

Completion Date

Reduce high incidence of fraud.  

Increase the detection of fraudulent

labor applications during the

certification process. OIG investigations

of fraud against foreign labor

certification yielded significant results.

  

• Established a Fraud Detection and

Prevention Division that uses data

mining to review activity as well as

enforcement provisions of the recent

“fraud rule.”  

• Collaborated with Departments of

Homeland Security and State in data

sharing to identify, address, and deter

H‐1B and other visa fraud.   

•Monitor the impact of the actions

taken in FY 2008 and make

adjustments as necessary to enhance

detection of fraud–Ongoing.

• Redesign the Labor Condition

Application online filing system to

include data validation edits and logic

checks to help detect fraud–FY 2009.  

Reduce Permanent Labor certification

backlogs.  To address limited resources,

DOL proposed a fee on employers for

the processing of Permanent Labor

Certifications.

• Eliminated backlog.

• Specialized processing with Atlanta

processing PERM applications and

Chicago processing H‐2A and H‐2B

applications, which increased

efficiency and production.

• Proposed charging a fee for service in

FY 2009 budget.

• Revise application for Permanent

Labor Certification to promote clarity

and ease of use by employers–April

2009.

• Seek legislation to implement fee

proposal–FY 2009.

• Increase contractor support for

application processing and auditing–FY

2009.

Review regulations implementing the

H‐2A program and institute changes

providing farmers with an orderly and

timely flow of foreign legal workers,

while protecting the rights of American

laborers.   OIG’s evaluation of the North

Carolina Growers Association (NCGA)

found that NCGA was not accurately

reporting workers who abandoned their

jobs and overstated the number of

workers requested to accommodate

expected abandonments.   

Published a Notice of Proposed

Rulemaking (NPRM) to redesign the

process by which U.S. employers seek

labor certification for temporary

agricultural labor under the H‐2A visa

program.

• Review comments on NPRM and issue

final regulation–FY 2009.

•Develop plans for an online filing

system–FY 2009.

Monitor H‐2B Program for Non‐

agricultural Seasonal Workers

application caseloads and act to

address backlogs as they arise.  

• Implemented specialized processing of

applications.  

• Improved processing performance; 77

percent of H‐2B applications were

processed within 60 days of receipt,

an increase from the prior year.

Monitor the impact of actions taken in

FY 2008 and make adjustments to

prevent backlogs –FY 2009.

Issue H‐2B regulations streamlining the

process by moving from a government‐

certified system to an employer‐

attestation system, akin to the PERM

system that has reduced backlogs.  

Published the Notice of Proposed

Rulemaking (NPRM) that redesigns and

modernizes the application process.

Review NPRM comments–FY 2009.
Management’s Discussion and Analysis

46     United States Department of Labor

CHALLENGE:  Securing Information Technology Systems and Protecting Related Information Assets

OVERVIEW:  It is essential for the Department to ensure that its information systems are secure.  These systems

contain vital sensitive information that is central to the Department’s mission and to the effective administration of

its programs—systems and information that provide the nation’s leading economic indicators such as the Consumer

Price Index, unemployment rate,  injury and illness rates, workers’ compensation benefits, participant pension and

welfare plan information and job and training services.  The Congress and the public have voiced concerns over the

ability of government agencies to provide effective information security and to protect critical data.   

CHALLENGE FOR THE DEPARTMENT:  Security of information technology (IT) systems is a government‐wide

challenge and is a continuing challenge for DOL.  Keeping up with new threats and IT developments, providing

assurances that information technology systems will function reliably, and safeguarding information assets will

continue to challenge the Department today and in the future.   

The OIG’s IT audits have identified access controls, oversight of contractor systems, and the effectiveness of the

Chief Information Officer’s oversight of the Department’s full implementation of mandatory, minimum information

security controls as DOL’s most significant challenges.  The OIG has reported on access control weaknesses over the

Department’s major information systems since FY 2001.  These weaknesses represent a significant deficiency over

access to key systems and may permit unauthorized users to obtain or alter sensitive information, including

unauthorized access to financial records and data.   

Another challenge for the Department is ensuring that information systems operated by contractors have the same

level of IT security controls as systems operated by the Department.  OIG audit work has disclosed security

deficiencies in contractor operated systems.

An OIG FY 2008 Federal Information Security Management Act (FISMA) audit found that the DOL security program

did not fully implement minimum security controls.  The OIG identified pervasive and obvious weaknesses across

DOL, including access controls, certification, accreditation and security assessment, configuration management,

contingency planning, and incident response.  The OIG has identified these same deficiencies in past years’ FISMA

audits. The recurring cycle of the same weaknesses, especially obvious access control vulnerabilities, identified by

the OIG since FY 2006 demonstrates that DOL’s information security program must improve its current effort to

fully implement and monitor information security controls throughout the Department.   

In light of these challenges, the OIG continues to recommend the creation of an independent Chief Information

Officer (CIO) to provide exclusive oversight of IT issues.  Accountability can be further enhanced by developing and

implementing new reporting lines of communication for the Chief Information Security Officer (CISO) and the

Component Program Information Security Officers (CPISO).  These new communication lines will require the CISO to

report directly to both the CIO and an Executive in the Secretary’s Office dealing with major security matters,

including progress on maintaining an effective Department‐wide information security program.  The CPISOs would

continue to report directly to their respective component program Assistant Secretary while also reporting to DOL’s

CISO.  These steps will help to establish a greater degree of accountability for an overall effective information

security program.   

OIG’S ASSESSMENT OF DEPARTMENT’S PROGRESS:  In efforts to fully comply with FISMA, the Department is taking

steps to improve the security of its information systems by focusing on access controls, policies and procedures,

account management, and system authorization.  The Department’s Chief Information Officer plans to improve

upon the testing and monitoring of system security, focusing on those agencies identified as having greater

identified vulnerabilities/risks.  Finally, the Department has required all employees to complete Computer Security

Awareness Training annually.
Management Challenges

FY 2008 Performance and Accountability Report     47

DEPARTMENT’S REPONSE: Following are DOL FY 2008 Actions, Remaining Actions, and Expected Completion Dates

to Challenges Identified by the OIG, GAO, and DOL.

DOL’s Assessment of its Own Progress:  ● Yellow ↓ (decline from FY 2007)

Securing Information Technology Systems and Protecting Related Information Assets   Affects all DOL

strategic goals.  Challenge first identified in FY 2002  

Management Challenge/

Significant Issue  

Actions Taken in FY 2008 Actions Remaining and Expected

Completion Date

Protect access to key systems.  Prevent

unauthorized users from obtaining or

altering sensitive information, including

financial records and data. (OIG 2008,

2007 PAR)

• Required all employees, managers and

contractors to receive mandatory

annual computer security awareness

training.

• Revised and distributed DOL Computer

Security Handbook Volume 1, Access

Controls, and Volume 5, Configuration

Management.  

• Completed Annual Security Controls

Assessment reviews for all DOL major

information systems (MIS).   

Continue Security Controls Test and

Evaluation (SCT&E) Program on access

controls—FY 2009.

Improve security controls.  Improve

testing and monitoring of system

security, focusing on agencies identified

as having greater identified

vulnerabilities and/or risks, and ensure

that systems operated by contractors

have the same level of IT security

controls as those operated by DOL.  

(OIG 2008)

• Implemented security controls to

protect remote information in OMB’s

Memorandum “Protection of Sensitive

Agency Information” including DOL‐

wide protection of personally

identifiable information (PII).  

• Enhanced DOL’s Security Controls Test

and Evaluation Program and

completed specialized security

controls testing for all DOL systems.

•Updated the DOL Computer Security

Handbook to incorporate policies and

procedures for logging computer

readable data extracts.  

• Implemented mobile device

encryption and 2‐Factor

Authentication solutions.

• Reduced four SSN Collections across

three DOL agencies.

• Implement solution for logging

computer readable data extracts–

March 2009.

• Collaborate with agencies on long‐

term SSN reduction issues– Ongoing.

Improve certification and accreditation

of systems.  (OIG 2008)

• Provided certification and

accreditation training to users with

significant security responsibilities.

• Transitioned VETS MIS from contractor

facility to DOL; VETS Information

Security Officer (ISO) works closely

with DOL’s ISO.  

• Complete DOL Computer Security

Handbook update–March 2009.

• Continue to review certification and

accreditation documentation to

ensure adequacy as it is revised and

updated– Ongoing.  

Create an independent Chief

Information Officer (CIO) and

implement reporting for the Chief

Information Security Officer (CISO) and

the Component Program Information

Security Officers (CPISO) to report to

both the CIO and an Executive in the

Secretary’s Office.  (OIG 2007‐2008)  

Considered the creation of a new CIO

position.

With legislative changes to FISMA under

consideration, including creating a chief

information security officer (CISO) in

each agency, action on this issue will be

held in abeyance –FY 2009.
Management’s Discussion and Analysis

48     United States Department of Labor

CHALLENGE:  Ensuring the Security of Employee Benefit Plan Assets

OVERVIEW:  The Department’s mission is to protect the security of retirement, health and other private sector,

employer‐provided benefits for America’s workers, retirees and their families.  These benefit plans consist of

approximately $5.6 trillion in assets covering more than 150 million workers and retirees.  EBSA is charged with

overseeing the administration and enforcement of the fiduciary, reporting, and disclosure provisions of Title I of the

Employee Retirement Income Security Act (ERISA).

CHALLENGE FOR THE DEPARTMENT:  Protecting these benefit plan assets against fraud is a challenge for the

Department.  OIG labor racketeering investigations demonstrate the continued vulnerability of plan assets to

criminal activity.   

Employer benefit plan audits by independent public accountants provide a first‐line defense for plan participants

against financial loss.  Ensuring that audits by independent public accountants meet quality standards adds to the

Department’s challenge in providing adequate oversight.  However, DOL’s authority to require plan audits to meet

standards remains limited because the Department does not have the authority to suspend, debar, or levy civil

penalties against employee benefit plan auditors.  The Department must obtain legislative change to correct

substandard benefit plan audits and ensure that auditors with poor records do not perform additional plan audits.   

Other legislative changes recommended by OIG include the repeal of ERISA’s limited scope audit exemption that

prevents independent public accountants from rendering an opinion on the plans’ financial statements or assets

held in other regulated entities such as financial institutions, requiring plan administrators or auditors to report

potential ERISA violations directly to DOL, and strengthening criminal penalties in Title 18 of the U.S. Code to

provide a stronger fraud deterrent.

Another challenge is the Department’s responsibility for regulatory oversight of ERISA health care provisions.  DOL

needs to continue to work closely with State insurance commissioners and the Department of Justice to assist in

the identification and prosecution of fraudulent Multiple Employer Welfare Arrangements.

The OIG is planning an audit to determine how EBSA evaluates the effectiveness of its National enforcement

projects and uses this information to direct future enforcement activities.  Further, the OIG is beginning an audit to

evaluate whether EBSA’s Rapid ERISA Action Team project proactively identifies employers facing financial

hardships in order to protect the rights and benefits of pension and health plan participants when the plan sponsor

faces severe financial hardship.

OIG’S ASSESSMENT OF DEPARTMENT’S PROGRESS:  While the Department has sought the recommended

legislative changes, these changes have not been enacted.   

DOL continues to utilize a multi‐pronged strategy to help ensure compliance with ERISA Title I.  EBSA has also

reached out to other Federal enforcement agencies to broaden its enforcement efforts.  A Memorandum of

Understanding (MOU) was signed on July 29, 2008, between EBSA and the Securities and Exchange Commission.  

The MOU establishes a process for both agencies to share information and meet regularly on matters of mutual

interest, including findings and trends, enforcement cases, and regulatory requirements.   

DEPARTMENT’S RESPONSE: Following are DOL FY 2008 Actions, Remaining Actions, and Expected Completion

Dates to Challenges Identified by the OIG, GAO, and DOL.
Management Challenges

FY 2008 Performance and Accountability Report     49

DOL’s Assessment of its Own Progress:  ●Green

Ensuring the Security of Employee Benefit Plan Assets  Affects Strategic Goal 4, Strengthened Economic

Protections and Performance Goal 4D‐ Enhance pension and health benefit security. Challenge first identified in FY 2000.    

Management Challenge/

Significant Issue  

Actions Taken in FY 2008 Actions Remaining and Expected

Completion Date

Implement the Pension Protection Act

of 2006.  (2006‐7 DOL)  

Issued regulations implementing the

Pension Protection Act of 2006.  

Continue to implement regulations–FY

2009.

Strengthen oversight authority over

plan auditors and ensure that auditors

with poor records do not perform

additional plan audits.  (OIG 2007‐8)

  

There were no legislative initiatives

during this time.  However, DOL took

the following actions to address the

concern:

• Implemented a CPA firm inspection

program, focusing on firms conducting

a significant number of audits.  

• Reviewed 356 sets of work papers

from CPA firms performing smaller

numbers of audits.

• Referred 25 CPA firms to the American

Institution of Certified Public

Accountants Ethics Division or state

board of public accountancy.  

Continue to focus on CPA firms that

perform a significant amount of plan

audit work and to selectively target

those that have smaller audit practices

for ongoing enforcement–FY 2009.

Continue efforts to decrease the

number of fraudulent Multiple

Employer Welfare Arrangements

(MEWAs).  Carry out regulatory

oversight of ERISA health care providers

by working closely with State insurance

commissioners and the Department of

Justice to identify and prosecute

fraudulent MEWAs.  (OIG 2007‐8)

•Worked with Justice to prosecute

these complex white‐collar crimes.  

• Closed 46 civil and criminal cases.

• Coordinated enforcement actions

against fraudulent MEWAs with the

National Association of Insurance

Commissioners (NAIC).

•Health Fraud/MEWAs was a national

enforcement project for FY 2008, with

a focus on health fraud recidivists.  

•Meet with NAIC quarterly to

coordinate enforcement actions

against fraudulent MEWAs–FY 2009.

• Coordinate closely with NAIC and DOJ

officials–FY 2009.

• Post names of individuals and entities

against whom DOL obtains health

fraud or MEWA‐related injunctions on

DOL’s public website–FY 2009.

CHALLENGE:  Preserving Departmental Records  

OVERVIEW:  The Federal Records Act of 1950 requires that the head of each Federal agency establish and maintain

an active records management program.  The National Archives and Records Administration has oversight

responsibilities for Federal records management programs.  The Department’s Assistant Secretary for

Administration and Management is responsible for managing the Department’s records and for providing overall

policy direction for the Department’s records management program.  The Department’s records management

program consists of records creation, maintenance and use, and disposition of records to achieve adequate and

proper documentation of the Department’s policies and transactions.

CHALLENGE FOR THE DEPARTMENT:  It is a challenge for the Department to ensure that it preserves records in

accordance with laws and regulations, and properly disposes of those records it is not required to keep.  It is also a

major challenge for the Department to have an effective recordkeeping and document management system to

manage e‐mails and electronic file needs.  DOL may be at risk of not being able to address in a timely and complete

manner e‐mail and electronic file needs required as a result of legal hold orders and litigation discovery.   

An additional challenge is the proper handling for both hard copy and electronic records that do not have legal

retention requirements.  Although these documents and files are not considered long‐term Federal records, they
Management’s Discussion and Analysis

50     United States Department of Labor

may be subject to legal holds, congressional requests, and requests under the Freedom of Information Act.  It is

therefore important that they are disposed of in accordance with an appropriate records management program.   

The OIG’s recent audit of the Department’s Records Management Program found that the Department had not:  

conducted comprehensive periodic evaluations of its records management program; provided records

management training to all staff, or effectively managed transitory records or documents that have no legal

retention requirements.  

OIG’S ASSESSMENT OF DEPARTMENT’S PROGRESS:  Records management is an emerging challenge for the

Department and agencies government‐wide, particularly as reliance on electronic documents continues to increase.  

In FY 2008, the Department implemented mandatory Records Management Training for all its employees.  The

Department will conduct periodic evaluations of agency’s records management programs over a five year cycle

beginning in FY 2009.  The Department has undertaken other efforts to improve its records management program,

including issuing guidance and specific instructions on how to handle electronic records, issuing an updated Records

Management Handbook, and updating agency records schedules.  The Department has also stated that it will

update its cost‐benefit analysis regarding the establishment of an electronic recordkeeping and document

management system.  Such a system would provide capabilities for storing, indexing, locating and tracking e‐mails

that are Federal records and addresses the unnecessary retention of e‐mails that are transitory records or non‐

records.

DEPARTMENT’S RESPONSE: Following are DOL FY 2008 Actions, Remaining Actions, and Expected Completion

Dates to Challenges Identified by the OIG, GAO, and DOL.

DOL’s Assessment of its Own Progress:  ●Green

Preserving Departmental Records   Affects all DOL strategic goals.  Challenge first identified in FY 2007  

Management Challenge/

Significant Issue

Actions Taken in FY 2008 Actions Remaining and Expected

Completion Date

Improve the records management

program.  (OIG 2008)

• Completed mandatory records

management training for96 percent of

all managers and employees, including

contractors.

• Standardize the conduct of periodic

evaluations of records management

programs over a five‐year beginning in

FY 2009 and conduct first evaluation–

Dec 2008.

Implement effective recordkeeping

and document management for e‐

mails and electronic files.  (OIG 2008)

http://www.oig.dol.gov/public/reports/oa/2008/

03‐08‐001‐07‐001.pdf

• Issued guidance and instructions on

proper handling of electronic records.

•Updated Records Management

Handbook and agency records

schedules to cover e‐mails and

electronic files.

•Update cost‐benefit analysis of an

electronic recordkeeping and

document management system.  

Address the system’s latest technical

developments, optimal system design

and deployment (distributed or

centralized), capabilities for storing,

indexing, locating and tracking e‐mails

that are Federal records, and the

unnecessary retention of e‐mails that

are transitory records or non‐records–

March 2009.

EMERGING CHALLENGE

Congress enacted the Energy Employees Occupational Illness Compensation Program Act to provide timely,

uniform, and adequate compensation to civilian men and women suffering from cancer and other illnesses incurred

as a result of their work in the nuclear weapons production and testing programs of the Department of Energy and
Management Challenges

FY 2008 Performance and Accountability Report     51

its predecessor agencies.  As of August of this year, the Department had received 167,018 claims, and issued

decisions to approve or deny benefits on nearly 82 percent of these claims.  The Department had approved slightly

more than 39 percent of claims and paid nearly $3.8 billion in compensation plus more than $200 million in medical

reimbursements.

Recent inquiries by several members of Congress and the public have raised concerns as to whether the

Department unfairly denies too many claims and whether claims decisions are timely.

In response to concerns about the Energy workers’ program, the OIG is conducting an audit to determine whether

claim decisions issued by the Department complied with applicable law and regulations, and whether the

Department has a system in place to ensure that claims are adjudicated as promptly as possible and claimants are

kept informed.
52     United States Department of Labor

The President’s Management Agenda

In FY 2008, the Department continued its focus on implementing the President’s Management Agenda (PMA) and

securing the taxpayer benefits tied to PMA success.  Announced in 2001, the PMA remains the key strategy for

improving the management and performance of the Federal government.  The objective is to ensure 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.

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.  On June 30, 2005, the Department of Labor became the first Executive Branch

department or agency to achieve green status scores on all five government‐wide PMA initiatives.  While not an

end in itself, this achievement represents an ongoing commitment to good management to bring quality services to

the American people.   

As noted on the table below, as of September 30, 2008, DOL is pleased to have again achieved all‐green status

scores on the five government‐wide initiatives.  DOL has also achieved all‐green status scores on the three PMA

program initiatives managed by DOL.  Government‐wide PMA results can be found at www.results.gov.   

Department of Labor’s PMA Scorecard Status

Executive Branch Management Scorecard September 2007 Status September 2008 Status

Human Capital

Green Green

Commercial Services Management

Green Green

Financial Performance

Green Green

E‐Government

Green Green

Performance Improvement Initiative

Green Green

Eliminating Improper Payments

Green Green

Faith‐Based and Community Initiative

Green Green

Federal Real Property Asset Management

Green Green

To ensure that the good‐government principles are used in day‐to‐day management, the Department uses a similar

scorecard on a semi‐annual basis to measure DOL individual agency progress on the PMA.  As we approach the

eighth year of PMA implementation, it is useful to review the Department’s accomplishments in all five

government‐wide initiatives and the three PMA initiatives managed by DOL.

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.  To develop future leaders with
President’s Management Agenda

FY 2008 Performance and Accountability Report     53

the critical skills and experience needed to effectively manage DOL programs, the Department has established the

MBA Fellows, Senior Executive Service (SES) Candidacy, and Management Development programs.  Each of these

programs is structured to develop the core competencies required for successful performance in the SES and

necessary to continue the Department’s mission.   

Since their inception, these programs have trained 230 participants, who are now better prepared to successfully

manage DOL’s programs.  Of the 92 MBA Fellows, DOL has retained 70 (76 percent), exceeding our own established

target.  The Management Development Program has been similarly effective, as 54 percent of the 48 graduates

from the first two classes have been promoted to managerial or supervisory positions.  Because attrition in the

Department’s ranks of SES is anticipated to be up to 70 percent over the next five years, the SES Career

Development Program is critical to our succession planning.  We are pleased to report that the Department

retained 45 (80 percent) of the 56 graduates from the program since its inception.  Of the 19 graduates who are

now in SES positions, 17 were retained for at least three years following graduation and 15 continue to be

employed by DOL.     

Commercial Services Management

The Commercial Services Management initiative – which in FY 2008 replaced the Competitive Sourcing initiative – is

aimed at making a more competitive Federal workforce.  Commercial Services Management allows the government

to take advantage of market‐based competition by having current Federal employees compete against private

sector bidders for work that is deemed commercial activity through OMB Circular No. A‐76, Performance of

Commercial Activities.  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 competition process generally results in savings regardless of whether the performance decision

is in favor of the government or the private sector.

Before 2001 DOL held no competitions under Circular A‐76, and to the extent that DOL agencies used contractor

support, it was done without the benefit of competition.  Since implementing its Commercial Services Management

initiative, DOL has completed 28 A‐76 competition studies covering 1,068 FTE positions, saving the government

approximately $67 million.  Of the 28 competitions, 26 were retained “in house,” with the work continuing to be

performed by Federal employees.  

Improved Financial Performance

The Improved Financial Performance initiative is focused on ensuring responsible stewardship of public funds.  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.  This excellence is evidenced by

DOL’s clean audit opinion for FY 2008, which marks the 12th straight year for this achievement.  Prior to 2001, the

arduous task of closing the Department’s books meant delaying the issuance of the audited financial statements.  

Beginning in 2004, the Department accelerated the closing of its books and has been able to issue its audited

financial statements by November 15th – three months earlier than in the past. Producing timely financial

statements and receiving a clean audit opinion demonstrate the Department’s commitment to secure the best

performance and highest measure of accountability to the American people.   

Cost Analysis Manager (CAM), the Department’s managerial cost accounting system, provides program managers

with the cost of significant outputs of their major programs, which enhances decision‐making and assists in the

efficient and effective operation of programs.  CAM produced the data for the cost of the Department’s goals at the

strategic and performance goal levels for this report; and for the third straight year CAM provided cost data at the

performance indicator level.  These data provide insight into the cause‐and‐effect relationship between the costs of

outputs and the activities performed by the Department.  In other words; CAM data enable DOL to identify what

was spent, how it was spent, what was produced, and what goals were supported.  As a result of the data provided

by CAM some DOL agencies have been able to refine their budgeting to more accurately reflect costs.  This has
Management’s Discussion and Analysis

54     United States Department of Labor

allowed precious funds to be distributed more appropriately to agency programs, facilitating increases in overall

performance.   

 

Expanded Electronic Government (E‐government)  

This initiative requires Federal agencies and departments to develop secure Information Technology (IT) systems

and strictly adhere to IT project cost, schedule, and performance projections.  One example of this approach is E‐

Grants.  E‐Grants is a web‐based grants management tool used by all DOL grant‐making programs to award some

$9 billion in grants each year.  E‐Grants lowers administrative costs, strengthens internal controls, and improves

efficiency and customer service.  Estimated savings and cost avoidance associated with E‐grants is nearly $20

million over the system’s twelve‐year life.  Another example is the Safety and Health Information Management

System (SHIMS), which is a Web‐based system for collecting, submitting and tracking Federal workers’ injury and

illness compensation claims.  SHIMS, a “best practice” of U.S. Government agencies, will lead to efficiency gains by

providing timely and accurate workplace safety data.  The increased speed and accuracy expected from SHIMS will

greatly enhance the timeliness of submission of workers’ compensation claims; provide managers, supervisors, and

employees access to safety data; and furnish DOL with a mechanism for performing analysis of injury trends and

safety incidents.  The estimated cost avoidance from SHIMS is $2.4 million dollars over the system’s life time.

DOL also continues to seek other creative strategies and efficiencies to better serve our stakeholders.  In April 2002,

GovBenefits.gov was launched – with DOL serving as the managing partner.  GovBenefits’ mission is to use the

Internet to connect citizens to government benefit program eligibility information; increase access to information,

particularly for people with disabilities; reduce the burden and difficulty of doing business with the government;

and continue to add programs to become the single source for Federal, State, and local government benefit

programs.  In April 2005, DOL launched GovBenefits en Español – and in April 2007, GovBenefits.gov was named as

one of the Top 50 most innovative government programs in the Innovations in American Government Award

program of Harvard University’s John F. Kennedy School of Government.  In fact, GovBenefits.gov was one of only

six Federal programs so recognized.  Since its 2002 launch, GovBenefits.gov has had over 25 million visits – and now

includes over 1,000 programs, both Federal and State.   

Performance Improvement Initiative

The Performance Improvement Initiative – which, as of July 1, 2007, replaced the Budget and Performance

Integration initiative of the PMA – 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, it has also resulted in a gradual cultural shift that fosters a closer dialogue among program,

performance, budget, and finance staff.  Following are four notable areas of progress:

Departmental E‐Budgeting System (DEBS)

Prior to 2001, the budget process was a tedious, paper‐based exercise.  However, DOL has automated the budget

formulation process with the use of the Departmental E‐Budget System (DEBS).  DEBS allows budget analysts the

ability to easily and electronically merge budget data with justification narrative using a web browser.  After a pilot

phase, the DEBS system was rolled out to all of DOL for the FY 2009 budget cycle.

Program Assessment Rating Tool (PART)

DOL recently concluded two re‐assessments through the 2008 PART process – the Federal Employees’

Compensation Act (FECA) and the WIA Youth Activities.  FECA’s PART rating remained at Moderately Effective, while

the WIA Youth program improved upon its previous Ineffective rating (2003 PART assessment) to a rating of

Adequate.  The reduction in the volume of assessments in 2008 is due to the government‐wide initiative to review

all PART performance measures.  The PART performance measures analysis consisted of an independent review for

their clarity, outcome orientation and ambitiousness.  DOL will use the findings of the independent review as well

as an internal, DOL review of the measures, to make improvements to our performance measures.  PART

assessments, scores, ratings, and Improvement Plans are published on www.ExpectMore.gov.  
President’s Management Agenda

FY 2008 Performance and Accountability Report     55

Rigorous Evaluation of Major Job Training Programs

DOL hired a contractor to conduct an independent study of the WIA Adult and Dislocated Workers programs’

effectiveness – using administrative data – to be completed in 2008.  Also in 2008, DOL launched a rigorous, seven‐

year evaluation to determine WIA Adult, Dislocated Worker and Youth services’ long‐term impact on participants’

employment and earnings outcomes, compared to those who do not receive program services.

Strategic Planning and Program Performance

The Government Performance and Results Act of 1993, calls for six‐year strategic plans that must be updated every

three years.  The Department’s current strategic plan was issued in September 2006 and covers Fiscal Years 2006

through 2011.  DOL will soon begin to develop an updated Strategic Plan – covering Fiscal Years 2009 through 2014

– which will be in place no later than September 30, 2009.   

The Department’s four strategic goals of A Prepared Workforce, A Competitive Workforce, Safe and Secure

Workplaces, and Strengthened Economic Protections have served us well – but the 2009 strategic planning process

will offer a new opportunity to re‐examine DOL’s goals, program strategies and performance targets.  This will allow

DOL to continue to articulate the critical results the Department will seek to achieve and describe the planned

strategies to ensure success.  The 2009 planning process will also allow DOL to solicit feedback from key

stakeholders, such as Congressional leadership and the public.

Agency‐specific PMA Program 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.   

Eliminating Improper Payments Initiative  

The Eliminating Improper Payments initiative seeks to better detect and prevent improper payments to ensure

taxpayer dollars are spent wisely and efficiently.  At DOL, developing strategies and the means to reduce improper

payments is good stewardship – and good business.  Accurate payments lower program costs, thereby improving

efficiency.  In FY 2005, when the Administration introduced this PMA scorecard initiative, the Department received

a yellow rating.  Within one year, DOL's programs classified as high risk for improper payments met the improper

payments reduction targets and other requirements of the PMA initiative and earned DOL a green in both progress

and status on this scorecard.    

DOL is required annually to estimate the amount of improper payments made in the identified high risk programs;

report those estimates to Congress; and convey what actions DOL is taking to reduce the improper payments.  The

Department has three programs classified as high‐risk for improper payments.  Two are benefit programs –

Unemployment Insurance (UI) in ETA and the Federal Employees' Compensation Act (FECA) program in ESA – and

the third is the Workforce Investment Act (WIA) Adult, Dislocated Worker, and Youth grant programs in ETA.

DOL continues to develop strategies to improve payment integrity for its programs.  For example, through the

efforts of the Department’s Office of the Chief Financial Officer and ETA, 48 States now use a cross‐match of

National Directory of New Hires data with State UI claimant data to identify individuals who returned to work and

are, therefore, no longer eligible to receive UI benefits.  The FECA and WIA programs have developed systems and

audit procedures to help identify and reduce improper payments.   

Faith‐Based and Community Initiative

The Faith‐Based and Community Initiative is focused on tapping into the unique work of local faith‐based and

community organizations (FBCOs) to help more Americans overcome barriers to employment, find jobs and stay

employed.  Prior to 2001, the Federal government often impeded or ignored the efforts of faith‐based and

community groups to address social problems by imposing an improperly restrictive view of their appropriate role.  

Now, the Department has regulations clarifying how faith and community‐based organizations can participate in
Management’s Discussion and Analysis

56     United States Department of Labor

competitions for and use DOL funding.  The Department employs 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 ex‐offenders transition from prison to work,

and reducing exploitive child labor abroad.   

DOL’s Center for Faith‐Based and Community Initiative (CFBCI) worked with the Employment and Training

Administration to develop the Grassroots Grants program, dedicating $10.9 million Federal dollars to 247

grassroots FBCOs in 42 States to serve (in partnership with One‐Stop Career Centers) more than 37,700

hard‐to‐serve individuals – ranging from ex‐offenders to homeless individuals to persons with disabilities – placing

15,376 of those individuals in jobs.  Since 2001, efforts supported by the Bureau of International Labor Affairs,

Office of Child Labor, Forced Labor and Human Trafficking, have withdrawn or prevented more than 1.2 million

children around the world from exploitive child labor, largely through the work of international and nonprofit

organizations, including indigenous community and faith‐based groups.

Federal Real Property Asset Management

The Federal Real Property Asset Management initiative is aimed at better managing the Department’s properties.

Prior to 2001, DOL component agencies managed their owned real property assets independent of any centralized,

coordinated, and consistent oversight process.  For DOL nationwide office space occupied through agreements with

GSA, the Department had no automated reporting system to help manage this space.  The appointment of a Senior

Real Property Officer, establishment of a Real Property Working Group, incorporation of Federal Real Property

Council performance measures into property site survey/data collection activities and the creation of an online

Space Management System has brought centralized oversight, more consistent real property management

practices, and increased information sharing among DOL agencies with real property assets.   

From 2001 to 2008, DOL closed more than 100 offices and released more than 100,000 square feet of space – thus

achieving a cost avoidance of approximately $3 million in rent during this period.  These key results and related Real

Property successes of all DOL agencies – especially the Office of Job Corps, MSHA, and OASAM – led to an upgrade

to green in DOL’s status on DOL’s Real Property scorecard in March 2008 – completing a clean sweep of green on all

eight of our second‐quarter FY 2008 PMA scorecards.

1913‐ 2013: Planning Starts for the Department of Labor

Centennial Celebration  

Legislation establishing the U.S. Department of Labor was

signed by President William Howard Taft on March 4, 1913 –

just hours before leaving office.  While the Department’s

Centennial is still over four years away, Secretary Chao

appointed two co‐chairs to begin planning events to

commemorate this momentous occasion.  While future

Secretaries will decide upon the executive leadership and

make other key decisions for the 100th anniversary events,

the recently appointed two career‐level co‐chairs will help

avoid any delay in the momentum for planning this event.

Photo Credit:  DOL    
57     United States Department of Labor

Performance Section
Performance Section

58     United States Department of Labor

Reporting Performance Results

The Performance Section of this report presents results at the Strategic Goal and Performance Goal levels.  The four

Strategic Goals established in our FY 2006‐2011 Strategic Plan are general outcomes clearly linked to the

Department’s mission.  Performance goals articulate more specific objectives associated with one or more

programs administered by a distinct DOL agency.  Progress in achieving these goals is measured by one or more

quantifiable performance indicators, for which targets are established in the annual Performance Budget Overview.  

Each of the four strategic goal sections is introduced by an overview of results, net cost and future plans for its

component performance goals.  Results at the performance goal level are presented in separate narratives, each of

which includes the following:

• Performance Goal statements appear at the top of the page, followed by number that help organize this

report but also correspond to commitments in DOL’s annual budget\performance plans.  The first two digits

correspond to the funding (budget) period; in this report, “08” indicates goals reporting on a fiscal year and

“07” those reporting on a program year.  The single digit following the hyphen identifies the strategic goal

and the letter distinguishes the performance goal from others in the same group (e.g., 08‐1A).  The agency

acronym (e.g., BLS) is in parentheses.17

• Indicators, Targets and Results tables list each indicator, its targets and results for the reporting period and

previous years that have data for the same indicators.  Indicators that were dropped prior to the current

year are not shown; however, a note indicates where additional historical performance information (legacy

data) can be obtained.  Where all data for any year are shown, goal achievement is indicated.  Where

“baseline” appears in the target cell for new indicators, no data were available for establishing a numerical

target, and these data do not count towards goal achievement.  If results improve over the prior year but

do not reach the target, “I” appears in the target cell.  Net cost associated with the goal and indicators is

also provided.18

• Program Perspectives and Logic narratives describe the purpose of the program, how its activities are

designed and managed to have a positive impact on the goal, and how it measures success and external

factors that influence performance.  Photos and vignettes communicate examples of programs’ impact at

the personal level.

• Analysis and Future Plans narratives interpret results, assess progress, explain shortfalls and describe

strategies for improvement.  Performance data at the indicator level and net cost at the goal level are

displayed in charts where sufficient data are available to illustrate trends.   

• PART, Program Evaluations and Audits tables provide updated information on Program Assessment Rating

Tool reviews and improvement plans.  Relevant audits and evaluations completed during the fiscal year are

summarized in tables that summarize relevance, findings and recommendations, and next steps.  

• Data Quality and Top Management Challenges narratives discuss DOL’s confidence in the performance

information reported for the goal’s measures and address management challenges that may have

significant implications for achievement of program performance goals.19  

 

17 FY 2008 covers October 1, 2007 to September 30, 2008; PY 2007 covers July 1, 2007 to June 30, 2008. 18 See also Program Net Costs table in Cost of Results section of the Program Performance Overview (Management’s Discussion

and Analysis). 19 See Top Management Challenges table in Management’s Discussion and Analysis.
Introduction

FY 2008 Performance and Accountability Report     59

Data Quality

This report is published six weeks after the end of the fiscal year.  Since the Department uses a wide variety of

performance data submitted by diverse systems and governed by agreements 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 final review of the report in

early October.  If the data will not be available by then, the agencies 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 the Office of Inspector General (OIG).  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 in this report.  With very few exceptions, final (actual) data are available by the end of the

calendar year; these data will be reported in the FY 2010 President’s Budget and the FY 2009 Performance and

Accountability Report.

OIG 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 at the bottom of each

performance goal history.  Lack of findings does not imply that data are factual.

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

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

performance goal in this report.  OMB Circular No. A‐11, Preparation of Submission and Execution of the Budget,

defines “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

uncommon occurrence, as most DOL performance goals have sufficient indicators and historical data to allow

reasonable estimation of results.20

DOL uses a Data Quality Assessment process to improve the quality of performance information reported to the

public.  By doing so, DOL not only increased the transparency of data quality among performance goals, but also

implemented a forward‐looking method for systematically evaluating data systems using widely accepted criteria.  

By increasing the visibility of data quality, DOL is using the assessment process as an important benchmark for

monitoring progress and stimulating change.

Data assessments are based on seven criteria, of which two – accuracy and relevance – are weighted twice as much

as others in the rating system (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 or worthwhile.  In FY 2008, no data assessments resulted in

this rating.

 

20 Last year, data for one program/performance goal – the Community Based Job Training Grants (CBJTG) – were considered

inadequate and omitted from the FY 2007 Performance and Accountability Report.  Systems that would allow CBJTG to report

on the job training common measures are currently being developed.  Consequently, CBJTG measures were excluded from

DOL’s FY 2008 Performance Plan and again excluded from the Performance and Accountability Report.
Performance Section

60     United States Department of Labor

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

After three years, the DOL data quality assessment process continues to challenge agencies’ data systems.  

Designed to encompass more than the mechanics of data collection, the assessments also question the value of

information collected and the extent to which it provides evidence of goal achievement.  One of the most
Introduction

FY 2008 Performance and Accountability Report     61

important outcomes of this process, aside from increasing the transparency of performance information reported

in the PAR, is encouraging the development of plans to either maintain or improve data quality.  

In FY 2006, DOL established the data quality assessment scale

recognizing that the Department lacked a systematic process

for advancing the department‐wide goal to improve the

quality of data presented in the PAR.  The data quality

assessment process supports this goal by exposing data

quality issues and seeking targeted remedies strictly within

the parameters of the performance goal data for that fiscal

year.  The data quality assessment process matures each year

to realistically reflect the pace of progress and to incorporate

further guidance from OMB.  

In the first year, DOL conducted baseline assessments of data for all performance goals.  In FY 2007, DOL reviewed

these assessments to determine whether ratings merited an upgrade or downgrade.  By contrast, the prior year

assessment process primarily collected improvement plans based on the recently completed baseline assessments.  

The FY 2008 assessment required updates on activities to strengthen data, as defined by the rating scale criteria, or

to maintain already robust systems.  Agencies sought upgrades based on improvements to this fiscal year’s data.  

Downgrades were also possible, as evidenced with last year’s downgrade of Senior Community Service Employment

Program (SCSEP) within ETA, but did not occur in FY 2008.

Data for sixty‐three percent of performance goals are rated Very Good or Excellent, and with the inclusion of Good,

the total reaches 92 percent.  No performance goals were rated Unsatisfactory, nor were any rated Data Quality

Not Determined (DQND) due to fundamental problems with accuracy and relevance.  Three performance goals

received upgrades – two of which were rated DQND in FY 2007.  PBGC implemented new performance measures

from its FY 2007 PART which better reflect the mission of the program, thus satisfying the threshold criterion of

relevance.  ETA’s SCSEP expeditiously addressed the issues of accuracy and completeness related to the quality of

its performance data, which had undermined its ability to report results in the FY 2007 PAR.  Grantee reporting was

carefully reviewed for anomalies and variations throughout the year to ensure improved data quality and complete

reporting by year’s end.  MSHA improved the timeliness of its health indicators by fully implementing more rigorous

reporting requirements for its field and district offices, thereby increasing its score from a Good to Very Good.  The

last section of each performance goal narrative contains additional information about data quality.

At the Departmental level, certain criteria are met more frequently than others.  With

the two performance goal upgrades, all DOL performance goals satisfy the threshold

criteria of accurate and relevant. Over two‐thirds of performance goals are supported

by data that is valid, timely, and complete.  As indicated in the adjacent table, the clear

challenges for many performance goals are data reliability and the ability to verify the

data.  Less than half of all performance goals have data quality controls in place that

routinely monitor data and are fully integrated into the data collection system.  

Verifiability emerges as a predominate issue largely as a result of ETA’s numerous grant

programs and its challenges monitoring and enforcing standards among grantees’

diverse data systems.  The reliability issue covers numerous agencies and generally

reflects a lack of uniform definitions for data collection or inconsistent data reporting across years.  As agencies

refine performance measures, methodologies, and definitions to improve performance reporting, they can find it

more difficult to demonstrate meaningful trends.  

In FY 2009, in addition to the agencies’ self‐assessments and OASAM’s review of those assessments, the

Department will undertake an independent evaluation of the data for selected programs/performance goals.  This

evaluation will also analyze the current rating scale and make recommendations to improve the scale and process,

particularly in support of the heightened requirements in OMB Circular No. A‐11 (2008).  

Data

Quality

Criteria Met

Percent of

Performance

Goals

Verifiable 46%

Reliable 67%

Valid 71%

Timely 79%

Complete 79%

Accurate 100%

Relevant 100%

FY 2008 DOL Performance Goal

Data Quality Scores

Very Good

46%

Excellent 17%

Good 29%

Fair 8%

FY 2008 Performance and Accountability Report     63   

Strategic Goal 1:  A Prepared Workforce

Develop a prepared workforce by providing effective training and support services to new and

incumbent workers and supplying high‐quality information on the economy and labor market.

America’s engine of prosperity is its skilled workforce.  Maintaining a country’s strong national economy depends,

in part, on developing a steady stream of workers who possess skills required by today's employers.  To expand the

size and capabilities of the labor pool, DOL provides comprehensive training programs that focus on specific

occupational skills while taking into account job seekers’ circumstances.  The Department also produces labor

statistics that individuals and businesses can use to better understand the job market and the economy.  DOL

agencies and offices supporting this goal are:

• Bureau of Labor Statistics (BLS),

• Office of Job Corps (OJC),

• Employment and Training Administration (ETA),

• Veterans’ Employment and Training Service (VETS),

• Women’s Bureau, and

• Center for Faith‐Based and Community Initiatives.

A prepared workforce has the skills and the education that

employers demand.  Education – from literacy to vocational

training – plays a fundamental role in preparing workers for life‐

long employment.  In addition, DOL programs focus on helping

those who face exceptional barriers to successful employment.  

These individuals, such as low‐income youth and homeless

veterans, benefit from training tailored to their unique needs.  

Here are a few highlights of program outcomes for FY 2008:

For Youth

• Despite not meeting its indicator targets, Job Corps

continued to place nearly three quarters of the

disadvantaged youth it served in employment, post‐

secondary education, or advanced occupational skills

training.

• Fifty‐seven percent of the Workforce Investment Act

(WIA) Youth program’s participants attained credentials

such as a General Equivalency Diploma (GED), high school

diploma or certificate – the program exceeded the target

by 12 percentage points.

For Workers in the Trades

• For the third consecutive year, the fraction of workers in

apprenticeship programs who remained employed for

nine months after entry rose – to 84 percent, and their

average wages rose to nearly $16 per hour.  

For Veterans

• Entered employment and employment retention rates for

all veterans served by One‐Stop Career Centers reached

61 percent and 81 percent, respectively.  

Jenira, age 19, is a freshman at Penn State

University’s Shenango Valley campus.  Her high

school principal referred her to the WIA Youth

program at PA CareerLink Mercer County during

her senior year of high school because she

became homeless in the 11th grade when her

mother was incarcerated.  Jenira enrolled in the

program, was able to obtain part‐time

employment, and with the help of some of her

teachers at Sharon High School, was able to find

a small place of her own.  She graduated in June,

2007 and continues to support herself and

pursue her college education with the help of

scholarships.  Jenira wants to pursue a career as

a Registered Nurse and work with the elderly.  

She says, “Growing up, I didn’t even believe

graduating from high school was a possibility, let

alone attending college.  All my inspiration

comes from people putting their trust in me and

seeing my best qualities.  I have potential...I can

make it.” Photo credit:  Commonwealth Media Services
Performance Section

64 United States Department of Labor

• Disabled veterans also reached their entered employment and employment retention targets with

outcomes of 57 percent and 80 percent, respectively – notable results, considering their significant barriers

to employment.

For more specific information, see the Performance Goal narratives.   

The chart below presents FY 2008 achievements as measured by performance goals and indicators.  The

performance goal number, goal statement, and responsible agency appear on the left axis, the total percentage of

indicator targets reached or improved is indicated in the horizontal bars, and the goal result is on the right axis.  

Corresponding strategic goal and DOL‐wide averages are presented at the bottom of the chart.  If the goal is

achieved, the bar will run all the way across because, by definition, all indicator targets were reached.  If the goal is

substantially achieved, the total can range from 80 percent to 100 percent and includes indicators for which the

target was not reached, but results improved over the previous year.

Strategic Goal 1 ‐ A Prepared Workforce

67%

0%

100%

50%

100%

65%

65% 5%

0%

08‐1A  Improve information available to decision‐makers on

labor market conditions, and price and productivity changes.

(BLS)

07‐1B  Improve educational achievements of Job Corps students,

and increase participation of Job Corps graduates in

employment and education.  (OJC)

07‐1C  Increase placements and educational attainments of

youth served through the WIA youth program.  (ETA)

08‐1D  Strengthen the registered apprenticeship system to meet

the training needs of business and workers in the 21st Century.

(ETA)

07‐1E  Improve the employment outcomes for veterans who

receive One Stop Career Center services and Homeless Veterans’

Reintegration Program services.  (VETS)

Goal 1 Average

DOL Average

Not Achieved

Not Achieved

Achieved

Not Achieved

Achieved

Goal

Achievement

Targets reached Improved

As indicated in the chart above, DOL had five performance goals under Strategic Goal 1 in FY 2008, of which two

were achieved (40 percent) – below the Department‐wide average of 50 percent.  BLS did not achieve its goal; only

four of its six targets were reached.  Job Corps did not reach any of its targets for placement in employment or

education; credential attainment; and literacy or numeracy gains.  The WIA Youth Program, which uses the same

measures but has different targets, achieved its goal by reaching targets for placement and student academic

attainment; baseline data were also collected for the literacy/numeracy measure.  The Office of Apprenticeship did

not achieve its goal; the employment retention target was reached, but not the average hourly wage gain target.  

VETS’ goal was achieved; targets for all four of the indicators for which they had data were reached.
Strategic Goal 1

FY 2008 Performance and Accountability Report     65

Over the last few years, Job Corps and the WIA Youth program have implemented the Federal job training program

common measures for youth.21  These measures reflect shared outcome goals and facilitate comparison for

management purposes.  The charts below provide results to date for both programs.  Although both programs

target out‐of‐school and at‐risk youth, the results for the three indicators may continue to differ because of the

distinct design of each program.  One is primarily a longer‐term residential program, while the other provides

services to youth in their communities.  Also, they have followed different common measures implementation

trajectories.  For more detailed discussion, see each program’s performance goal narrative in the pages that follow.

 

21 The three measures, also referred to as placement, credential attainment and literacy/numeracy, are: Percent of participants

entering employment or enrolling in post‐secondary education 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; and Percent of students who will achieve literacy or numeracy gains of one Adult Basic Education (ABE) level

(approximately equivalent to two grade levels).   

Literacy or Numeracy Gains

(one or more Adult Basic Education level)

20%

30%

40%

50%

60%

70%

2004 2005 2006 2007

Program Year

Job Corps WIA Youth

Placement in Post‐Secondary Education, Advanced

Training or Employment

50%

60%

70%

80%

90%

2004 2005 2006 2007

Program Year

Job Corps WIA Youth

Credential Attainment

(GED, Diploma, or Certificate)

30%

40%

50%

60%

70%

2004 2005 2006 2007

Program Year

Job Corps WIA Youth
Performance Section

66     United States Department of Labor

The table below provides net costs for all performance goals and indicators associated with this strategic goal.22  

Those with labels that begin with “07” operate on a Program Year (PY) basis, and are reporting on the period from

July 1, 2007 to June 30, 2008 due to the forward funding authorized in the Workforce Investment Act of 1998.

  

Net Costs ($Millions) 23

Goal or Indicator FY 2006

PY 2005

FY 2007

PY 2006

FY 2008

PY 2007

Strategic Goal 1:  A Prepared Workforce $3,360 $3,267 $3,464

Performance Goal 08‐1A (BLS)

Improve information available to decision‐makers on labor market conditions, and

price and productivity changes.

573 574 574

Percent of output, timeliness, accuracy, and long‐term improvement targets

achieved for labor force statistics − 268 276

Percent of output, timeliness, accuracy, and long‐term improvement targets

achieved for prices and living conditions − 198 192

Percent of output, timeliness, accuracy, and long‐term improvement targets

achieved for compensation and working conditions − 95 92

Percent of output, timeliness, accuracy, and long‐term improvement targets

achieved for productivity and technology − 12 13

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

Satisfaction Index) − 0 0

Cost per transaction of the Internet Data Collection Facility − 1 1

Dollars not associated with indicators 573 − −

Performance Goal 07‐1B (Job Corps)

Improve educational achievements of Job Corps students and increase participation of

Job Corps graduates in employment and education.

1,402 1,485 1,589

Percent of participants entering employment or enrolling in post‐secondary

education 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

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

Education (ABE) level

1,402 1,485 1,589

 

22 Rows labeled “Dollars not associated with indicators” indicate costs that cannot be associated with the current set of

performance indicators.  For some goals, indicator costs are intentionally combined by merging cells because program

activities are not separable into categories associated with one or another of them (e.g., job training program common

measures – entered employment, employment retention and average earnings). 23 Net cost as defined in a footnote to the Cost of Results discussion in Management’s Discussion and Analysis.
Strategic Goal 1

FY 2008 Performance and Accountability Report     67

Net Costs ($Millions) 23

Goal or Indicator FY 2006

PY 2005

FY 2007

PY 2006

FY 2008

PY 2007

Performance Goal 07‐1C (WIA Youth)

Increase placements and educational attainments for youth served through the WIA

youth program.

1,017 866 966

Percent of youth who enter employment or the military or enroll 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

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

Education (ABE) level

1,017 866 966

Performance Goal 08‐1D (Apprenticeship)

Improve the registered apprenticeship system to meet the training needs of business

and workers in the 21st Century.

25 24 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 24 25

Performance Goal 07‐1E (VETS Employment Services)

Improve the employment outcomes for veterans who receive One‐Stop Career Center

services and Homeless Veterans’ Reintegration Program (HVRP) services.

212 211 221

Percent of Veteran participants employed in the first quarter after exit

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

employed in the second and third quarters after exit

89 90 93

Percent of Disabled Veteran participants employed in the first quarter after exit

Percent of Disabled Veteran participants employed in the first quarter after exit still

employed in the second and third quarters after exit

89 90 95

Entered employment rate for homeless veteran HVRP participants  

Employment retention rate after 6 months for homeless veteran HVRP participants

30 29 31

Dollars not associated with indicators 4 2 2

Other (Youth Offender Reintegration, Indian and Native American Youth Programs,

etc.) 131 107 89
Performance Section

68     United States Department of Labor

Improve information available to decision‐makers on labor market conditions, and price

and productivity changes.

   

    Performance Goal 08‐1A (BLS)

Indicators, Targets and Results

*Indicator target reached (Y), improved (I), or not  reached (N)

FY 2006

Goal Not

Achieved

FY 2007

Goal

Achieved

FY 2008

Goal Not

Achieved

Target 85% 80% 92%

Result 79% 92% 86%

* N Y N

Percent of output, timeliness, accuracy, and long‐term improvement targets

achieved for labor force statistics

Cost — $268 $276

Target 85% 90% 90%

Result 94% 90% 92%

* Y Y Y

Percent of output, timeliness, accuracy, and long‐term improvement targets

achieved for prices and living conditions

Cost — $198 $192

Target 85% 86% 96%

Result 77% 96% 96%

* N Y Y

Percent of output, timeliness, accuracy, and long‐term improvement targets

achieved for compensation and working conditions

Cost — $95 $92

Target 85% 86% 100%

Result 100% 100% 71%

* Y Y N

Percent of output, timeliness, accuracy, and long‐term improvement targets

achieved for productivity and technology

Cost — $12 $13

Target 75% 79% 79%

Result 79% 79% 82%

* Y Y Y

Customer satisfaction with BLS products and services per the American

Customer Satisfaction Index

Cost — $0 $0

Target $2.58 $1.79 $1.11

Result $1.82 $1.12 $0.76

* Y Y Y

Cost per transaction of the Internet Data Collection Facility

Cost — $1 $1

Goal Net Cost (millions) $573 $574 $574

Source(s): Office of Publications and Special Studies report of release dates against OMB release schedule for BLS Principal Federal Economic

Indicators, News releases for each Principal Federal Economic Indicator, BLS budget submissions and Quarterly Review and Analysis

System, ACSI Quarterly E‐Government scores.

Note:  Costs for this goal are net costs as defined in a footnote to the Cost of Results discussion in Management’s Discussion and Analysis.

Program Perspective and Logic

The Bureau of Labor Statistics 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, BLS 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, and decisions that affect virtually all Americans.
Strategic Goal 1

FY 2008 Performance and Accountability Report     69

BLS reports performance for this goal by aggregating the underlying

performance measures of output, timeliness, accuracy, and long‐term

improvement for its statistical programs into four comprehensive performance

indicators.  BLS demonstrates continuous improvement by setting more

ambitious targets on its indicators.  In addition, the performance measures that

underlie those indicators encompass enhancements to BLS products.  Examples

of these enhancements include new price indexes for four specialty trade

contractors, and the addition of three new countries (Argentina, Slovakia, and

the Philippines) to the BLS manufacturing series.

BLS measures customer satisfaction with its Occupational Outlook Handbook

(OOH) Web page (www.bls.gov/OCO/), a nationally recognized source of career

information.  OOH is one of the most frequently used BLS Web pages, and the

performance indicator allows BLS to assess enhancements and identify potential

areas for further improvement.  In addition, BLS reports on the efficiency of its

Internet Data Collection Facility (IDCF), a single, secure architecture that BLS

surveys use to collect information from respondents online.  IDCF is an

important tool for offering a wider range of reporting options to respondents, as

well as a more economical means of data collection.

Analysis and Future Plans

BLS reached targets for four of its six performance indicators.  BLS reached 86

percent of the underlying targets for its labor force statistics indicator, missing

the target by six percentage points.  The Current Employment Statistics (CES)

and Local Area Unemployment Statistics programs did not reach their timeliness

targets because the September 2007 Metropolitan Area Employment and

Unemployment news release, which includes data from both programs, was

issued a few minutes late due to a systems error.  The CES program also missed

a workload measure target because BLS released fewer series than planned due

largely to confidentiality and reliability reviews.  In addition, the Quarterly

Census of Employment and Wages program missed one of its workload targets

because business establishment growth was lower than projected.

BLS reached 71 percent of the underlying targets for its productivity and

technology indicator, missing the target by 29 percentage points.  The Major

Sector Productivity program missed its timeliness target because a Productivity

and Costs news release was delayed to correct an error in the text.  The Industry

Productivity program also missed its workload measure due to discontinuation

of 32 productivity‐related measures for four manufacturing industries.

BLS reached 92 percent of the underlying targets for its prices and living

conditions indicator, exceeding its target by two percentage points.  The

International Price Program missed two workload targets, and the Consumer

Expenditure Survey missed one workload target.  BLS reached 96 percent of the

underlying targets for its compensation and working conditions indicator.  The

Census of Fatal Occupational Injuries missed its accuracy measure due largely to delays in obtaining data from one

State.

Using the American Customer Satisfaction Index survey to measure the OOH Web page, BLS exceeded its target of

79 percent.  BLS also exceeded its target for decreasing the cost per transaction of its IDCF.  The cost per

transaction of $0.76 in FY 2008 decreased from $1.12 in FY 2007, and surpassed the target of $1.11.

To generate the highest yields

for their clients, investment

firms must be able to reliably

anticipate market movements.  

Jeff works as Chief Economist for

a money management firm that

manages portfolios for both

institutional and individual

investors.  Jeff uses the BLS

Employment Situation and other

BLS Labor Force Statistics data to

get a macroeconomic view of

the economy to help guide his

investment decisions.  In

particular, Jeff recently used

data from the Job Openings and

Labor Turnover Survey (JOLTS) to

examine labor market churn and

wage inflation.  Sector‐specific

data are particularly useful to

Jeff as he analyzes the different

sectors of the economy.  The

JOLTS data assist Jeff in his

economic research and Federal

Reserve analysis.  BLS statistics

help Jeff manage his portfolios

and anticipate labor market

movements throughout the

business cycle.  Photo credit:  

Horizon Investments, LLC
Performance Section

70     United States Department of Labor

Costs associated with this performance goal were virtually unchanged from FY 2007‐08.

PART, Program Evaluations and Audits

PART Year Rating

2003 Effective

PART Findings and Improvement Plan:   

http://www.whitehouse.gov/omb/expectmore/summary/10000326.2003.html

FY 2008 Progress on PART Improvement Plan

• Conducting an independent evaluation on how the agency is improving its effectiveness in meeting the needs of its data

users.  The evaluation proposal was approved in April 2008.  However, BLS is deferring the evaluation until 2009 due to

budget constraints.  BLS will prepare a statement of work by March 2009.

• Developing additional efficiency and cost‐effectiveness measures to demonstrate ongoing program improvement.  BLS

continues to report on its cost per transaction of the IDCF.  BLS added an efficiency measure in the 2009 budget to

reduce the cost per housing unit initiated in the Consumer Price Index (CPI) as part of a plan to implement a more

representative and current sample of geographic areas, as well as a continuously updated housing sample in the CPI.  

BLS is developing a new efficiency measure for FY 2010.

• Establishing more ambitious targets for its long term and annual performance measures to drive continued improvement.

BLS regularly reviews its targets to promote continuous improvement.  For example, in 2007, BLS added new Business

Employment Dynamics series at the State level.  Between 2006 and 2007, BLS accelerated the release of selected SOII

data by four months, and added three countries to its International Comparisons series.  In 2007, and again in 2008, BLS

raised the targets for several of its performance indicators.

“Customer Satisfaction with the BLS Occupational Outlook Handbook (OOH) Website” September 2008

(Federal Consulting Group)

Relevance:  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 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 and Recommendations:

• BLS received a customer satisfaction score of 82 percent

for 2008.  Results from the OOH customer satisfaction

survey suggest better search, navigation, and site

performance could improve overall customer

satisfaction.

Next Steps:  

• As the culmination of a multiyear improvement effort,

BLS launched an enhanced Web site in July 2008 that was

redesigned with feedback from customers, including the

OOH customer satisfaction survey results.  The

redesigned BLS Web site, which includes the OOH page,

offers improved navigation as user‐tested menus enable

faster and more efficient browsing, and improved search

capability by upgrading to a new search engine.  These

improvements will enhance OOH customer experience.

Additional Information:  A copy of the quarterly news release can be found at

http://www.foreseeresults.com/_downloads/acsicommentary/ACSI_EGov_Report_Q3_2008.pdf.

Data Quality and Top Management Challenges

Data quality for this performance goal is rated Excellent.

24  BLS has instituted rigorous, systematic, and

comprehensive controls to ensure that the data quality retains its Excellent rating.  The data are highly relevant; 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.

 

24 Information on DOL’s Data Quality Assessments, conducted annually for each performance goal, can be found in the

Introduction to the Performance Section.
Strategic Goal 1

FY 2008 Performance and Accountability Report     71

Improve educational achievements of Job Corps students and increase participation of

Job Corps graduates in employment and education.

Performance Goal 07‐1B (OJC)

Indicators, Targets and Results  

*Indicator target reached (Y), improved (I), or not  reached (N)

PY 2004

Goal Not

Achieved

PY 2005

Goal Not

Achieved

PY 2006

Goal Not

Achieved

PY 2007

Goal Not

Achieved

Target 85% 85% 87% 82%

Result 84% 80% 74% 73%

Percent of participants entering employment or enrolling in post‐

secondary education or advanced training/occupational skills

training in the first quarter after exit * N N N N

Target 64% 64% 65% 64%

Result 64% 60% 57% 53%

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

certificate by the end of the third quarter after exit

* Y N N N

Target 45% 45% 58% 58%

Result 47% 58% 58% 53%

Percent of students who will achieve literacy or numeracy gains of

one Adult Basic Education (ABE) level (approximately equivalent to

two grade levels) * Y Y Y N

Goal Net Cost (millions) $1,309 $1,402 $1,485 $1,589

Source(s): Job Corps Management Information System.

Legacy Data: Some indicators not shown for PY 2004.  Complete indicators, targets and results for PY 2001‐04 are available in the FY 2006

report at http://www.dol.gov/_sec/media/reports/annual2006/PGD.htm.  See Performance Goal 05‐1.1B.

Note:  Costs for this goal are net costs as defined in a footnote to the Cost of Results discussion in Management’s Discussion and Analysis.  

Costs for PY 2006 have been restated since publication of the FY 2007 Performance and Accountability Report to correct improper

inclusion of $198 million in revenue and apply a more accurate means of splitting grant costs.  Costs are not allocated to the indicator

level for placement, credential and literacy/numeracy measures because program activities are not separable into categories associated

with one or another.   

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 2,000 students, are located in both urban and rural communities.  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.   

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 revise

its training strategies.  In response, Job Corps developed and has begun to implement its New Vision, an approach

that focuses on applied academics by increasing the rigor and relevance of academic and career technical training;

incorporating industry‐based standards and certifications; reinforcing a standards‐based curriculum approach; and

providing a more comprehensive system of on‐center and post‐center support services.  This approach is providing

students with valuable credentials and competitive skills they need to pursue challenging careers – and the timing is

critical since recent statistics indicate that national youth unemployment rates are rising.   Performance of the Job

Corps program is assessed using the Federal job training program common measures for youth – placement in

employment or education, attainment of a degree or certificate, and literacy or numeracy gains – as indicators of

student achievement in improving their long‐term employability.

    
Performance Section

72     United States Department of Labor

Analysis and Future Plans  

Job Corps’ performance was significantly below the desired

outcomes for all three indicators.  Placement of Job Corps

graduates and former enrollees in employment, the

military or post‐secondary education mirrored the national

employment picture and declined in PY 2007.  The result of

73 percent is far below the 82 percent target but just one

percentage point lower than the PY 2006 result.  Job Corps

attributes its National Certification Initiative, which

increased emphasis and rigor for career technical training

programs, for the impact on the PY 2007 certificate

attainment rate; the result of 53 percent is four points

lower than last year and 11 points below the target.  Job

Corps anticipates that the more stringent requirements for

career technical training completion will continue to affect

the results of the certificate attainment rate as all

necessary support structures for the Certification Initiative

– which would assist more students with successful

completion of their training program – have not yet been

fully implemented.  This in turn will temporarily affect the

placement rate, as a decreased graduation rate leads to a

larger proportion of non‐graduating former enrollees.  

Former enrollees traditionally have a lower placement rate

than graduates because they have not attained the

qualifications (educational or career technical training) that

would make them more competitive in the labor market.  

Also, non‐graduating former enrollees’ placement window,

the period during which placement assistance is offered

and placement data are captured, is just 90 days, versus

the six‐month window for graduates.  Job Corps expects PY

2008 performance indicator results to continue the

downward trend, although changes are expected to be

small – a few percentage points.  

Literacy/numeracy gains were also lower than expected; the PY 2007 result of 53 percent was five percentage

points short of the target and PY 2006 result of 58 percent.  Literacy/numeracy gains may not recover, either, in

part due to a continued adjustment from paper/pencil to the online version of the Test for Adult Basic Education –

a diagnostic test used by Job Corps to determine skill levels and aptitudes.  Finally, implementation of the New

Vision focus on applied academics is expected to continue to impact students’ learning gains.

To curb early departures, most often due to violations of Zero Tolerance policy against drugs and violence or to the

inability of students to adjust to the residential nature of the program, Job Corps is continuing to explore the impact

of initiatives designed to improve the program’s results:

• Career Success Standards is a set of eight behavioral effectiveness standards for personal and workplace

competencies that seem to be positively impacting center culture, address student retention and career

preparation, and prepare students with the soft skills employers now demand of their employees;

• The Speakers, Tutors, Achievement, Retention and Success (STARS) initiative appears to be increasing

students’ academic achievement, career skills attainment, and retention in the program by providing

motivational speakers, and highly qualified tutors and mentors to assist them with academics, career

technical training and personal and social development; and

Like many young people, Alison didn’t recognize the

value of education – until she came to Job Corps.  With

focus and hard work, Alison graduated from Job Corps in

2007, earning a high school diploma and a certificate in

accounting.  She currently works as a Federal civilian

employee, processing national invoices and regional tort

claims for Job Corps’ National Office.  Above, Alison

consults with Margaret Carson, Division Chief, Budget

and Facilities Support.  Alison credits her Job Corps

classroom and work‐based learning experiences with

helping her develop the organizational, communication,

and data entry skills that prepared her for the

position.  Alison also recognizes opportunity when she

sees it, which is why – thanks to her employee benefits

package – she is currently enrolled in a business

management class at Southeastern University.  Alison

now gives back by speaking with friends and other

young people who are interested in Job Corps.

Photo credit: Peni Webster
Strategic Goal 1

FY 2008 Performance and Accountability Report     73

• Pre‐employment Drug Testing Pilot identifies random samples of applicants who are screened for drugs

prior to enrollment.  Program research shows that testing positive on the initial drug test is a reliable

predictor of students separating from the program due to Zero Tolerance infractions.

In addition, Job Corps is working to expand services to English Language Learners in an effort to increase successful

outcomes for students across the country with limited English proficiency.  Plans also include improving services to

students with cognitive disabilities. Specifically, Job Corps has made periodic updates to its data collection system

to improve tracking of students with disabilities.  Upon the applicant’s disclosure of a disability and subsequent

request for accommodation, Outreach Admissions counselors seek guidance from both the Regional Disability

Coordinator and qualified personnel on how to best

accommodate the student’s needs.  During PY 2008,

Job Corps will convert the part‐time Regional

Disability Coordinators to full‐time.

Costs associated with this performance goal

increased by seven percent from PY 2006‐07.  The

following factors contributed to this increase: higher

utility and heath care costs, salary increases and

adjustments for academic and career technical

training instructors, and additional unforeseen costs

associated with expansion of the program to include

a new Job Corps Center.

PART, Program Evaluations and Audits

PART Year Rating

2007 Adequate

PART Findings and Improvement Plan:   

http://www.whitehouse.gov/omb/expectmore/summary/10002372.2007.html

FY 2008 Progress on PART Improvement Plan

• Exploring opportunities to improve cost effectiveness and performance outcomes at the 28 non‐DOL owned properties

which are operated for Job Corps by the Departments of Agriculture and Interior.  The US Department of Agriculture

(USDA) and DOL have a new Interagency Agreement with increased provisions for oversight of the program and financial

management of the Job Corps Civilian Conservation Centers (CCC).  The National Office has provided a number of

Webinars, regional conferences and one‐on‐one technical assistance for all centers to assist them in improving program

performance.  The Job Corps Regional Directors have improved communications with the Forest Service National

Headquarters staff to quickly identify and address programmatic issues.  DOL is conducting an audit of USDA and DOI PY

2006 expense reporting and accounting procedures for center operating and construction funds.

• Improving the tracking and reporting of Job Corps facility conditions and using the data to inform resource allocation

decisions regarding improvements and maintenance.  In an effort to support the goals and objectives of both the

President’s Real Property Asset Management Initiative and the Department’s Asset Management Plan, Job Corps has

implemented extensive improvements to the real property data systems.  Improvements have included incorporating

performance information (condition index, mission dependency, and utilization) into the decision‐making process and

developing a demolition project recommendation process.  The property inventory has documented a steady

improvement in facility condition.  The Department, mainly as a result of these Job Corps activities, achieved green

status on the Administration’s Real Property scorecard in the 2nd quarter of FY 2008 and continues to achieve its goals.

• Adopting efficiency measures that are linked to performance outcomes, account for all costs, and facilitate comparisons

across Department of Labor training and employment programs.  Job Corps has contracted with a technical expert

familiar with DOL’s cost accounting systems to analyze both the merits and shortcomings of the method for measuring

Job Corps’ cost‐effectiveness and efficiency; a draft report with revised efficiency measures that will capture the unique

characteristics of the portfolio of Job Corps outcomes is expected by the end of 2008.  In the meantime, Job Corps is

working to improve efficiency results via energy reduction investment and commodity purchase, and fleet and

telephone line reduction, and has already realized cost savings and cost avoidance of approximately $5 million annually.

Performance Goal 07‐1B

Net Costs ($ Millions)

1,589

1,402 1,309 1,485

0

500

1,000

1,500

2,000

2004 2005 2006 2007

Program Year
Performance Section

74     United States Department of Labor

“Performance Audit of the Cleveland Job Corps Center,” September 2007 (Office of Inspector General)

Relevance:  The Office of Inspector General (OIG), as part of its ongoing review of Job Corps Centers and their operators,

conducted this audit to determine if the operator complied with laws, regulations and contract provisions in its reported

performance measures and financial operations.

Findings and Recommendations:

• The Center operator did not 1) properly reconcile Public

Vouchers submitted for payment with expenses

reported on Financial Reports as required, 2) properly

obtain consulting services, or 3) maintain a record of the

services received.

• The OIG recommended that Job Corps develop an

oversight process requiring contractors to reconcile

differences between amounts recorded on Public

Vouchers and reported expenses and that Job Corps

train personnel monitoring Center financial activities.

Next Steps:  

• Job Corps established a new Financial Management

workgroup to review current policies and identify areas

that need revision.

• The National Office of Job Corps conducts annual

Program Managers’ training which includes contract

oversight and financial management training.  

• The Chicago Regional Office has initiated the process to

recover liquidated damages.  

Additional Information:  The report is available at http://www.oig.dol.gov/public/reports/oa/2007/26‐07‐003‐01‐370.pdf.

“Performance Audit of the Laredo Job Corps Center,” September 2007 (OIG)

Relevance:  The assigned audit of the Laredo Job Corps Center was conducted to determine if the operator complied with

laws, regulations and contract provisions in its reported performance measures and financial operations.

Findings and Recommendations:  

• Center officials did not reporting student attendance as

required and as a result, overstated the On Board

Strength (OBS); it was recommended that Job Corps

recover liquidated damages for overstating OBS.

• The OIG also found that Center officials did not comply

with Job Corps’ admission requirements (background

checks were not routinely performed).

Next Steps:  

• The Dallas Regional Office has requested that the Laredo

center operator reconcile bed check reports and rosters.

• The Dallas Regional Office has initiated the process to

recover liquidated damages.    

• The National Office of Job Corps issued a PRH Change

Notice to provide guidance on conducting and

documenting background checks.  

Additional Information:  The report is available at http://www.oig.dol.gov/public/reports/oa/2007/09‐07‐002‐01‐370.pdf.

Data Quality and Top Management Challenges

Data quality for this performance goal is rated Very Good.

25  When the OIG cited insufficient management controls

over performance data in 2004, DOL designed and implemented new data integrity procedures which require

regional offices to utilize targeted samples (highlighting where error or manipulation may have occurred) for audit

reviews conducted in conjunction with on‐site assessments.  When Regional Offices find that Center operators have

not complied with contractual obligations, liquidated damages are identified and assessed.  Since 2004, $585,397 in

liquidated damages have been recovered.  The Office of Job Corps is confident that the new data integrity strategy

is producing more reliable student outcome data from Job Corps centers and career transition service providers.

To address Ensuring the Effectiveness of the Job Corps Program (see the Top Management Challenges section of

Management’s Discussion and Analysis), DOL is improving the way Regional Offices monitor the performance of

contractors that operate 94 of its Job Corps centers.  In FY 2007, a new process that included both a fiscal and a

performance review was implemented.  Over a one‐year period all six Regional Offices received specialized training

on monitoring contractor performance of financial management and cost reporting, data integrity, and asset

management.  The Departments of Interior and Agriculture operate the remaining 28 Job Corps centers via

Interagency Agreements with DOL.  In March 2008, a new Interagency Agreement was signed with USDA – which

requires Agriculture to be more accountable for the funds transferred to them and allows DOL the flexibility it

needs to operate the centers.  In addition, effective July 1, 2008, the three centers formerly operated by the

National Park Service were transferred to the USDA’s Forest Service.  

 

25 Information on DOL’s Data Quality Assessments, conducted annually for each performance goal, can be found in the

Introduction to the Performance Section.
Strategic Goal 1

FY 2008 Performance and Accountability Report     75

Increase placements and educational attainments for youth served through the WIA

Youth program.

Performance Goal 07‐1C (ETA)

Indicators, Targets and Results

*Indicator target reached (Y), improved (I), or not  reached (N)

**Estimated

PY 2005

Goal

Achieved

PY 2006

Goal

Achieved

PY 2007

Goal

Achieved

Target baseline 60% 61%

Result 57.8% 60% 67%**

Percent of participants entering employment or enrolling in post‐secondary

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

after exit * Y Y Y

Target baseline 40% 45%

Result 36% 44% 57%** Percent of students who attain a GED, high school diploma or certificate by

the end of the third quarter after exit

* Y Y Y

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

Education (ABE) level (approximately equivalent to two grade levels) Result — —    31%**

Goal Net Cost (millions) $1,017 $866 $966

Source(s): Annual State WIA performance reports (ETA‐9091).

Legacy Data:  Some indicators not shown for PY 2001‐04.  Complete indicators, targets and results for PY 2001‐04 are available in the FY 2006

report at http://www.dol.gov/_sec/media/reports/annual2006/PGD.htm.  See Performance Goal 05‐1.1A.

Note:  Net costs are defined in a footnote to the Cost of Results discussion in Management’s Discussion and Analysis.  Costs are not allocated

to the indicator level for placement, credential and literacy/numeracy measures because program activities are not separable into

categories associated with one or another.  This goal was reported Substantially Achieved in the FY 2007 PAR based on estimated data.

Program Perspective and Logic

The Workforce Investment Act authorizes services to low‐income youth (age 14‐21) with barriers to employment.  

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.  Youth are

prepared for employment and post‐secondary education by stressing linkages between academic and occupational

learning.  Services available to youth include tutoring, alternative schools, summer employment, occupational

training, work experience, leadership development, mentoring, counseling, supportive services such as assistance

with child care and housing, and follow‐up services such as on‐going career counseling after a youth exits the

program.

DOL collects data for three performance indicators, all Federal job training program common measures for youth

that enable the program to describe and compare the outcomes of its core purposes to other education,

employment and job training programs.  The first measure, percent of youth participants who are in employment

or enrolled in post‐secondary education or training, indicates whether DOL is transitioning youth into the workforce

or post‐secondary education — a key to successful careers.  The second, percent of participants who attain a

diploma, GED, or certificate, is a proxy for the effectiveness of the program in preparing youth participants to

compete in the 21st century economy.  The third indicator measures literacy/numeracy gains by out‐of‐school youth

participants who are deficient in basic skills.  Progam Year 2007 is the first full year in which complete data on this

measure is available for analysis.  DOL will use the PY 2007 data as a baseline to establish targets for PY 2008.

  

Analysis and Future Plans

The WIA Youth program achieved its performance goal in PY 2007.  The program exceeded its placement in

employment or education target by six percentage points and surpassed the degree or certificate attainment target

by twelve percentage points.  Both results represent improvement over PY 2006; they are noteworthy
Performance Section

76     United States Department of Labor

achievements in light of the program’s increasing services to the neediest youth, including out‐of‐school youth –

populations that are difficult to serve and historically have low performance outcomes.    

The Department will continue to implement strategies that recognize out‐of‐school and at‐risk youth as an

important part of the new workforce.  WIA youth programs connect these youth with quality secondary and post‐

secondary educational opportunities, in addition to high‐growth and other employment opportunities.

In 2006, DOL formed the Shared Youth Vision (SYV) Federal Partnership with the Departments of Health and Human

Services, Education, Justice, Housing and Urban Development and Transportation, plus the Social Security

Administration and the Corporation for National and Community Service.  The Partnership assists States in

coordinating resources and program delivery strategies to achieve positive outcomes for the neediest youth.  DOL

and the SYV Federal Partnership have continued to work with the 16 SYV Pilot States that were awarded funds in

2006 to develop and implement projects that integrate services for specific populations of the neediest youth.  

Through a peer‐to‐peer mentoring initiative, the Pilot States are sharing knowledge and best practices on serving

the neediest youth with 12 non‐pilot States.  

Costs associated with this performance goal rose

by seven percent from PY 2004‐05, fell 15

percent between PY 2005‐06, then rose again by

12 percent  from PY 2006‐07, reflecting

fluctuation in the timing of expenditures; States

have three years to expend funds.  Annual

variations in costs are also attributable to

fluctuations in the number of participants

served.  Costs are not allocated at the indicator

level, as funds provided to the States support all

the measured outcomes and many of the youth

who exit the program experience all three

(placement, credentials and literacy/numeracy gains).

PART, Program Evaluations and Audits

PART Year Rating

2008 Adequate

PART Findings and Improvement Plan:   

http://www.whitehouse.gov/omb/expectmore/summary/10000342.2008.html

FY 2008 Progress on PART Improvement Plan

• Strengthen accountability for employment outcomes and skill attainment by adopting common performance measures

and targets to allow for comparisons with other Federal job training programs.  DOL developed a preliminary estimate in

Performance Goal 07‐1C

Net Costs ($Millions)

966 866 947 1,017

0

400

800

1,200

2004 2005 2006 2007

Program Year

At 17, Maira came to the Wisconsin’s Waukesha County Workforce

Development Center in 2003 for help with school.  She was behind in

class and getting poor grades – due in part to major family difficulties.  

After enrollment in the WIA Youth program, Maira earned a High School

Equivalency Diploma (HSED) and prepared for college.  A summer work

experience with the Waukesha Police Department convinced Maira to

pursue a career in police science.  While attending Waukesha County

Technical College, Maira gave birth to a baby girl (Isabella) and still

completed that semester with good grades.  In May 2007, Maira

graduated with a criminal justice degree and was selected to attend the

Recruit Academy at Milwaukee Area Technical College for a 13 week

training program.  After completing the training program, she accepted

an officer position with the Fond du Lac Police Department with a

starting wage of $19.00/hour.  Photo credit:  DOL/ETA
Strategic Goal 1

FY 2008 Performance and Accountability Report     77

PY 2007 for the literacy/numeracy measure, the last of the common measures to be fully implemented.  Based on this

estimate, DOL will establish targets for PY 2008.

• Conducting an evaluation to determine WIA services' impact on employment and earnings outcomes for participants.  In

June 2008, DOL awarded a contract to conduct a rigorous, long‐term impact evaluation of WIA programs.  

• Adopting efficiency measures that are linked to performance outcomes, account for all costs, and facilitate comparisons

across Department of Labor training and employment program.  A final report of the efficiency measure study with

recommendations for appropriate outcome‐based efficiency measures for DOL’s employment and training programs will

be completed by December 2008.  The selected measure or measures will be implemented during Program Year 2009.

“Disconnected Youth:  Federal Action Could Address Some of the Challenges Faced by Local Programs That Reconnect

Youth to Education and Employment,” February 2008 (Government Accountability Office)

Relevance:  The Government Accountability Office (GAO) examined the challenges that 39 youth programs face in serving

youth, who have disconnected from education and employment, and found that the structure of workforce investment

board contracts with local service providers often hinders service to the youth most in need of assistance. 

Findings and Recommendations:

• GAO found that workforce investment board contracts

with local service providers often require the providers

to achieve performance goals for participants in one‐

year time frames, which is very challenging for programs

serving the most at‐risk youth.  Since funding in

subsequent years is often contingent on meeting

performance goals, the contract structure de‐

incentivizes service to these youth.

• GAO recommended that DOL work with States and

workforce investment boards to ensure that they have

the information and guidance needed to develop and

implement contracts that allow local programs to serve

the youth most in need of assistance and meet

performance goals. 

Next Steps:  

• DOL convened WIA state, local, and youth service

providers in late fall of 2008 to get a better

understanding of contracting issues and to gather local

examples of contracts that have the components and the

flexibility to successfully serve the youth most in need.  

• Using input from the discussions with service providers,

DOL will issue guidance to the workforce development

system by the end of 2008 that will provide specific

examples of ways to develop contracts with local service

providers that allow them to successfully serve youth at

varying skill levels.

Additional Information:  The report available at http://www.gao.gov/new.items/d08313.pdf.

“Workforce Development: Community Colleges and One‐Stop Centers Collaborate to Meet 21st  Century

Workforce Needs,” May 2008 (GAO)

Information on this study is provided in the corresponding table for Performance Goal 07‐2A.

Data Quality and Top Management Challenges

The data quality score for this performance goal also applies to Performance Goals 2A and 2B, which rely on the

same data collection system to determine employment outcomes for WIA program participants.  Data quality for

these performance goals are rated Very Good.

26  Data verification remains an area for improvement, and extensive

efforts have been directed toward improving data quality through the use of ETA’s data validation system and

monitoring at both the national and regional levels (see also Improving Performance Accountability of Grants in the

Top Management Challenges section of Management’s Discussion and Analysis).  In particular, the Department

provided technical assistance to States on the integration of quality controls into data collection and reporting

systems, conducted several regional training sessions and webinars to address technical and policy questions about

performance reporting, and issued revised guidance in October 2007 on WIA incentives and sanctions that included

data validation results as one of the criteria for determining eligibility for WIA incentive awards.  In addition, in PY

2006, revisions to the draft Core Monitoring Guide were made to better address data validation concerns.  The Core

Monitoring Guide is continually revised to address new issues that arise during site visits.  Site visits are conducted

to ensure compliance with reporting standards.

 

26 Information on DOL’s Data Quality Assessments, conducted annually for each performance goal, can be found in the

Introduction to the Performance Section.
Performance Section

78     United States Department of Labor

Improve the registered apprenticeship system to meet the training needs of business and

workers in the 21st Century.

Performance Goal 08‐1D (ETA)

Indicators, Targets and Results

*Indicator target reached (Y), improved (I), or not  reached (N)

FY 2005

Goal

Achieved

FY 2006

Goal

Achieved

FY 2007

Goal

Achieved

FY 2008

Goal Not

Achieved

Target Baseline 78% 79% 84%

Result 78% 82% 83% 84%

Percent of those employed nine months after registration as an

apprentice

* Y Y Y Y

Target Baseline $1.26 $1.33 $1.51

Result $1.26 $1.32 $1.50 $0.61

Average hourly wage gain for tracked entrants employed in the

first quarter after registration and still employed nine months

later * Y Y Y N

Goal Net Cost (millions) $23 $25 $24 $25

Sources: Registered Apprenticeship Partners Information Data System (RAPIDS) and Registered Apprenticeship Information System (RAIS).

Legacy Data:  One indicator for FY 2005 was dropped; it is not included in this table.  Complete indicators, targets, and results for FY 2002‐05

are available in the FY 2006 report at http://www.dol.gov/_sec/media/reports/annual2006/PGD.htm.  See Performance Goal 06‐1.1A.

Note:  Costs for this goal are net costs as defined in a footnote to the Cost of Results discussion in Management’s Discussion and Analysis.  

“Tracked entrants” is defined as the cohort of apprentices registered and entered into RAPIDS during a given reporting period.  The 25

States that have federally registered apprenticeship programs enter data on individuals into the system.  Costs are not allocated to the

indicator level for retention and earnings measures because program activities are not separable into categories associated with one or

the other.

Program Perspective and Logic

Established in 1937, the National Registered Apprenticeship System is a partnership of the Department of Labor,

State agencies, sponsors, industry leaders, employers, employer associations, labor and management organizations,

and educational institutions.  It provides opportunities for jobseekers to secure jobs with career paths, earn

competitive wages, and obtain nationally‐recognized industry credentials.  The apprenticeship training system

promotes and registers programs and apprentices, certifies standards, safeguards the welfare of the apprentices,

and provides a nationally recognized system for skilled and technical occupational training programs throughout

the United States.  Apprenticeship programs use a combination of classroom training and on‐the‐job training under

close supervision of a skilled worker to teach apprentices the practical and theoretical requirements of a highly

skilled occupation.  Most of the training costs are borne by apprenticeship program sponsors.

The Department promotes the apprenticeship training system to potential sponsors and participants and registers

and monitors these partners’ apprenticeship programs, in some cases via State Apprenticeship Agencies (SAAs) –

which are delegated this authority by the Secretary of Labor.  SAA’s certify that standards are met for quality,

fairness, and opportunity, and that apprenticeship programs incorporate appropriately supervised on‐the‐job

learning and occupation‐related technical instruction.

As a system based on voluntary industry participation, apprenticeship program performance is directly impacted by

external factors such as the wage rates determined by local apprenticeship sponsors and by the demand for skilled

and technical labor in local markets.  Two performance indicators, “apprentices employed nine months after

registration” and “average hourly wage gain for tracked entrants,” are used to indicate progress towards program

completion and the value of skills obtained.
Strategic Goal 1

FY 2008 Performance and Accountability Report     79

Analysis and Future Plans

The Apprenticeship system did not achieve its performance goal for FY 2008 since the wage gain target was not

reached.  The retention result continues a three‐year trend of improvement since the baseline was established in FY

2005.  While the 61‐cent average hourly wage gain (from $15.27 to $15.87) was far below the target of $1.51, it

translates to an annual increase of $1,269.  The decline in construction associated with a deteriorating housing

market had a significant impact on the number of registered apprentices.  DOL expects that even fewer apprentices

will be registered in the construction industry in FY 2009 and that this will continue to exert downward pressure on

retention and average earnings measures of Apprenticeship program performance.  Occupational demands are

projected to continue shifting toward high growth industries.  For example, United Parcel Service recently

registered a large number of apprentice truck drivers with higher‐than‐average starting wages.  These

apprenticeships also feature above average annual increases that will help offset the expected impact of continued

reductions in construction and related industries.

To improve performance, the Department is seeking changes to existing apprenticeship standards that would

measure apprentices’ attainment of certain skills and competencies in addition to using the traditional, time‐based

approach.  Also, DOL will continue providing technical assistance to Women in Apprenticeship and Non‐Traditional

Occupations (WANTO) grantees, a new consortium that is training over 200 women apprentices.

In order to measure outcomes after apprentices have completed the program, the Office of Apprenticeship is

converting to the common measures and will baseline its performance indicators in FY 2009.  Therefore, the

Apprenticeship program will not appear in the FY 2009 Annual Performance and Accountability Report, but will

return in the FY 2010 Annual Performance and Accountability Report.

Two evaluations will be completed in FY 2009.  Evaluation of Apprenticeship involves surveys of registered

apprenticeship sponsors and visits to five States to determine sponsor views and the costs and benefits of

apprenticeship, types of data maintained, linkages with the One‐Stop service delivery system, and administration of

the apprenticeship system.  Retrospective Look at Apprenticeship includes a review of modernization policies that

the Office of Apprenticeship has implemented and examines their implications on the future of the program.

Costs associated with this performance goal remained fairly constant from FY 2005‐08.  Costs are not allocated to

the performance indicator level, as funding supports both measured outcomes for apprentices served by the

federally administered programs.

Phillina was on public assistance and struggling to raise her child.  She had few skills to secure a

livable‐wage job when she signed up for construction‐readiness training after a presentation by a

recruiter from the Women in Apprenticeship and Nontraditional Occupations program, which is co‐

sponsored by the Office of Apprenticeship and the Women’s Bureau.  Phillina knew she could do the

work, but needed direction and help.  She excelled in every class and the hard physical work gave her

a strong sense of accomplishment.  Phillina participated in the cement mason apprenticeship program,

which requires applicants to complete an examination that includes pushing a wheelbarrow with a 100

pound load.  She stayed after class every day to practice, passed the test and graduated first in her

class of 75 candidates.  Phillina is now working full‐time – earning over $16 per hour plus benefits –

and looking for an apartment to move out of transitional housing.  With the assistance of the Office of

Apprenticeship and her dedication and perseverance, Phillina is well on her way to providing a better

life for herself and her child.  Photo credit: Johanna Chestnutt
Performance Section

80     United States Department of Labor

PART, Program Evaluations and Audits

PART Year Rating

2005

Results Not Demonstrated:

Reflecting lack of data on

the common measures

PART Findings and Improvement Plan:   

http://www.whitehouse.gov/omb/expectmore/summary/10003901.2005.html

FY 2008 Progress on PART Improvement Plan

• Implementing the common measures for earnings and retention and establishing an Internet‐based apprenticeship

registration system to efficiently obtain comprehensive performance data.  The Registered Apprenticeship Partners

Information Data System (RAPIDS) debuted in November 2007.  Phase 2 of RAPIDS is scheduled for completion in FY

2009 and will allow SAAs and sponsors to upload data electronically.  Final proposed revisions to the regulations of the

National Apprenticeship Act implementing the common measures were published on October 29, 2008.  Interim

common performance measure data are being gathered through an agreement with the State of Kansas.  

• Evaluating and reporting participants' employment and earnings after they leave the program to compare

apprenticeship program outcomes with those of other training models.  In September 2008, the Office of Apprenticeship

received initial data for apprentices who completed their apprenticeship training.  The Office of Apprenticeship will

analyze these data and develop performance targets during FY 2009.

• Addressing underrepresentation of women in apprenticeship programs through a reinvigorated Equal Employment

Opportunity review process and tracking and reporting performance.  Three additional WANTO grants were awarded in

FY 2008 to recruit, train, employ, and retain women in registered apprenticeship programs in the construction industry.  

Progress reports from the three FY 2007 WANTO grant recipients were evaluated to determine the success of grantees

in achieving the goal of employing women in non‐traditional apprenticeship occupations, and best practices that can be

shared with the apprenticeship community.

• Adopting efficiency measures that are linked to performance outcomes, account for all costs, and facilitate comparisons

across Department of Labor training and employment programs.  A final report of the efficiency measure study with

recommendations for appropriate outcome‐based efficiency measures for DOL’s employment and training programs will

be completed by December 2008.  The selected measure or measures will be implemented in Fiscal Year 2010.

Data Quality and Top Management Challenges

Data quality for the Apprenticeship program is rated Fair.

27  All Federally‐administered programs (in 25 States)

participate in RAPIDS.  RAPIDS established greater quality controls to ensure timely, complete, and valid data are

collected from the program sponsors that utilize the system.  Verification testing of RAPIDS was completed in the

3rd Quarter of FY 2008 with no major findings.  Additional testing is scheduled for completion at the end of FY 2009.  

Revisions to the regulations to the National Apprenticeship Act that address the quality, flexibility, evaluation and

performance data requirements of Apprenticeship programs were published on October 29, 2008.

As noted in the Analysis and Future Plans section, the Apprenticeship program will be converting to the common

measures in FY 2009.  By March 2009, the Office of Apprenticeship will have three quarters (Quarter 4, FY 2006;

and Quarters 1 and 2, FY 2007) of data for the common measures to develop baseline performance targets.  The

transition to common measures is scheduled to coincide with the availability of unemployment insurance wage

record data from the Wage Record Interchange System, which will be matched against apprenticeship data to

determine performance outcomes.  The methodology for calculating the common performance measures will

further mirror and align apprenticeship results with those used for other DOL employment and training programs.

RAPIDS implementation also addresses Improve Apprenticeship Data Quality (see the Top Management Challenges

section of Management’s Discussion and Analysis) by developing a cost‐effective strategy for collection of data

from programs in 25 States and three territories that are not administered by the Department.  DOL’s oversight of

the Federally‐administered State programs to ensure compliance with Federal guidelines and regulations continues,

as recommended by the Government Accountability Office (GAO‐05‐886).

 

27 Information on DOL’s Data Quality Assessments, conducted annually for each performance goal, can be found in the

Introduction to the Performance Section.
Strategic Goal 1

FY 2008 Performance and Accountability Report     81

Improve employment outcomes for veterans who receive One‐Stop Career Center

services and Homeless Veterans’ Reintegration Program services.

Performance Goal 07‐1E (VETS)

Indicators, Targets and Results

*Indicator target reached (Y), improved (I), or not  reached (N)

**Estimated

PY 2003

Goal

Achieved

PY 2004

Goal

Achieved

PY 2005

Goal

Achieved

PY 2006

Goal Not

Achieved

PY 2007

Goal

Achieved

Target 58% 58% 59% 60% 61%

Result 58% 60% 62% 60% 61%** Percent of Veteran participants employed in the first

quarter after exit

* Y Y Y Y Y

Target 72% 80% 81% 81% 80%

Result 79% 81% 81% 79% 81%**

* Y Y Y N Y

Percent of Veteran participants employed in the first

quarter after exit still employed in the second and

third quarters after exit

Cost — — $89 $91 $93

Target — 54% 55% 55% 56%

Result — 56% 57% 55% 57%** Percent of Disabled Veteran participants employed in

the first quarter after exit

* — Y Y Y Y

Target — 78% 79% 79% 79%

Result — 79% 80% 78% 80%**

* — Y Y N Y

Percent of Disabled Veteran participants employed in

the first quarter after exit still employed in the second

and third quarters after exit

Cost — — $89 $91 $95

Target 54.5% 60% 61% 68% 65.5%

Result 61% 65% 68% 65% — Entered employment rate for homeless veterans

participating in the HVRP

* Y Y Y N —

Target — baseline 58 58.5% 64.5%

Result — 58% 67% 64% —

* — Y Y Y —

Employment retention rate after six months for

homeless veteran HVRP participants

Cost — — $30 $30 $31

Goal Net Cost (millions) — $209 $212 $211 $221

Source(s): State Workforce Agency administrative reports, State unemployment insurance (UI) wage records and homeless veteran grantee

reports.

Legacy Data:  Some indicators not shown for FY 2003‐06.  Complete indicators, targets and results for FY 2003‐06 are available in the FY 2006

report at http://www.dol.gov/_sec/media/reports/annual2006/PGD.htm.  See Performance Goal 05‐1.1C.

Note:  Costs for this goal are net costs as defined in a footnote to the Cost of Results discussion in Management’s Discussion and Analysis.  

Costs are not allocated to the indicator level for employment and retention measures because program activities are not separable into

categories associated with one or another of them.  However, this goal includes two programs with three distinct target populations.  

Costs for each group (all veterans, disabled and homeless veterans) are provided in the cost cell opposite the retention indicators, where

available.  HVRP data for PY 2007 are not available because the reporting system was shut down for a mandatory system redesign.

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 over 2,100 disabled

veterans’ outreach specialists and local veterans’ employment representatives stationed at the nationwide network

of nearly 3,000 comprehensive and affiliate One‐Stop Career Centers.  These staff serve as experts on workforce

resources available for veterans.  The local representatives emphasize the provision of services for recently

separated veterans and handle outreach to employers, while the outreach specialists focus their efforts on
Performance Section

82     United States Department of Labor

intensive services for disabled veterans and other veterans with significant barriers to employment.  The Homeless

Veterans’ Reintegration Program (HVRP) is a much smaller competitive grant program emphasizing stable

employment as the critical factor in mitigating homelessness among veterans.  Program participants are served by

community‐based grantees that provide pre‐employment services, establish linkages with service providers funded

by other Federal agencies, and rely on the specialists to assist them in finding employment 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 grantees serve homeless veterans

who have minimal attachment to the workforce.  DOL applies the Federal job training program 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.  During PY 2007, VETS issued guidance

adding the average earnings indicator for all veterans and all disabled veterans who receive One‐Stop services, and

HVRP completed the transition to common measure definitions of its outcome measures.  In setting performance

targets, VETS seeks to improve service to veterans at a rate that is ambitious yet attainable.  

Analysis and Future Plans

Results for HVRP were not available in time for inclusion in this report; they will be included in future reports.  

Therefore, achievement of this goal for PY 2007 is based on the four indicators for One‐Stop services.  Based on

those results, this goal was achieved, as the targets were reached for all four indicators.  The entered employment

rate for all veterans equals the target, while the results for the other three indicators exceed the targets by one

percentage point.  Results in the charts below are for the first two indicators, which include disabled veterans.

The positive results for these indicators appear to be attributable primarily to measurement effects.  In fact, the

rebound of approximately two percentage points in the results for these indicators for the current year is nearly

identical to the slump of approximately two percentage points experienced for these same indicators the prior

year.  This is believed to reflect the disruption in interstate sharing of data on employment outcomes during PY

2006 that was resolved during PY 2007.

The anticipated publication during PY 2008 of final regulations on priority of service for veterans is likely to enhance

the delivery of veterans’ employment services, leading to an improvement in employment outcomes for all

veterans.  In addition, to improve the outcomes of disabled veterans, VETS continues to expand the Recovery and

Employment Assistance Lifelines program by assigning program outreach staff at major medical installations

throughout the country.  This program, which is complemented by efforts of the Departments of Defense and

Veterans Affairs, provides 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.  Finally,

VETS and the Department of Defense will be implementing a joint initiative during PY 2008 to increase the rate of

participation by transitioning service members in Transition Assistance Program (TAP) employment workshops.  

That initiative is expected to result in an increase the number of veterans accessing One‐Stop Career Centers and

experiencing positive employment outcomes.

Employment Retention ‐ All Veterans

70%

75%

80%

85%

90%

2003 2004 2005 2006 2007

Program Year

Result Target

Entered Employment ‐ All Veterans

50%

55%

60%

65%

70%

2003 2004 2005 2006 2007

Program Year

Result Target
Strategic Goal 1

FY 2008 Performance and Accountability Report     83

Net costs for this performance goal rose by ten percent from PY 2004‐07 due to increased appropriations.  The

trend is uneven due to grantees’ flexibility in the timing of expenditures.

PART, Program Evaluations and Audits

PART Year Rating

2005

(State Grants)

Moderately

Effective

PART Findings and Improvement Plan:   

http://www.whitehouse.gov/omb/expectmore/summary/10003907.2005.html

FY 2008 Progress on PART Improvement Plan

• Setting aggressive targets for performance outcomes to improve services to veterans.  Guidance issued during 2008

called for negotiation of aggressive targets on the basis of consolidated outcomes across the two veterans’ employment

specialties, including the negotiation of weighted entry to employment targets for all veterans.

• Implementing recommendations from follow‐up evaluation to assess veteran outcomes.  The contractor responsible for

this project has recruited a sample of States to participate in a follow‐up study of those veterans whose measured

outcomes were not successful.  The final report is expected in PY 2008.

• Adding the Average Earnings measure to performance measures for All Veterans and for Disabled Veterans.  Guidance

issued during 2008 called for the negotiation of Average Earnings targets for All Veterans and for Disabled Veterans.

PART Year Rating

2006

(HVRP)

Moderately

Effective

PART Findings and Improvement Plan:   

http://www.whitehouse.gov/omb/expectmore/summary/10003912.2006.html

FY 2008 Progress on PART Improvement Plan

• Conducting a rigorous evaluation, to begin in 2007.  Phase I of an independent evaluation to assess the impact of the

Jobs for Veterans Act and the Workforce Investment Act on veterans’ employment services and outcomes was

completed last August.  Phase II, which will analyze causal factors and recommend service improvements based on

participant surveys, will be completed in PY 2008.

• Continuing to improve cost effectiveness and reducing cost disparities across grantees through a competitive grantee

selection process and monitoring.  During PY 2007, HVRP continued to re‐compete all grants every three years; reserve a

number of awards for grantees without prior HVRP experience; include cost‐effectiveness as a criterion for grant award;

and monitor grantees annually with respect to their actual costs per placement.   

• Strengthening accountability by instituting common performance measures that will allow comparison between various

job training programs. Measures will track employment, retention and earnings.  During PY 2007, HVRP continued its

intensive effort to build capacity in common measures across the network of grantees by conducting workshops for all

participants at the program’s annual conference, and planning field follow‐up efforts.

Data Quality and Top Management Challenges

Data for this performance goal, rated Good by the Department’s criteria,28 are tracked using two systems, one

external to VETS.  The four indicators addressing the outcomes of veterans and disabled veterans served by One‐

Stop Career Centers rely upon the reporting system for One‐Stop Career Centers (Performance Goal 07‐2C).  

Therefore, in general, the data quality assessment for that goal (Very Good) also applies to these indicators.  The

two indicators addressing outcomes for homeless veterans served by HVRP rely on the Veterans' Employment and

Training Operations and Program Activity Report (VOPAR).  VOPAR was out of service for most of PY 2007 pending

redesign of the system that is expected to be completed in PY 2008.  This affects the completeness criterion in the

DOL data quality rating system, which in combination with the verifiability criterion not met for the other four

indicators leads to a Good overall assessment for this goal’s data.  VETS issued revised guidance during PY 2007 that

updated and improved several aspects of the agency’s performance measurement systems.  In addition, intensive

workshops on common measures were conducted at the annual conference attended by all grantees’

representatives, with further field follow‐up planned.  VETS has no DOL top management challenges.

 

28 Information on DOL’s Data Quality Assessments, conducted annually for each performance goal, can be found in the

Introduction to the Performance Section.

FY 2008 Performance and Accountability Report     85   

Strategic Goal 2:  A Competitive Workforce

Meet the competitive labor demands of the worldwide economy by enhancing the

effectiveness and efficiency of the workforce development and regulatory systems that assist workers and

employers in meeting the challenges of global competition.

To succeed in the 21st Century, America must be prepared to adapt to changes in the global economy – and that

success will largely depend on a workforce that meets employers’ needs for new and skilled workers.  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 makes strategic investments

in job training and increases accessibility and quality of information to help match workers with employers.

DOL agencies and offices supporting this goal are:   

• Employment and Training Administration (ETA),  

• Office of Disability Employment Policy (ODEP),

• Office of the Assistant Secretary for Policy

(OASP), and  

• Bureau of International Labor Affairs (ILAB).  

Fostering a competitive workforce means helping

American workers acquire the necessary tools and skills

to succeed.  Increasingly, advanced skills are required to

meet the rapidly evolving workforce needs of employers.  

Customized training and assistance to workers –

including those with unique needs such as dislocated

workers, individuals with disabilities, and veterans –

improve their chances to obtain better paying jobs, to

keep those jobs and to advance their careers.

DOL serves America's workers and employers by creating

partnerships between the workforce system and

business.  New approaches are being applied to help

business and industry better access the services of the

state and local workforce investment system and to

educate the public and the workforce system about the

jobs in demand with promising career paths.  To

complement these services, the Foreign Labor

Certification program assists employers whose needs

cannot be supplied locally.

A competitive economic environment also demands a

regulatory structure in which benefits of regulations

exceed their costs.  DOL conducts periodic reviews to

determine if regulations have or will have a significant

economic impact.  These reviews examine the

regulations’ compliance costs and whether the regulatory

burdens of all employers, large and small, are reduced.  In

today’s economy, the well‐being of American workers is

increasingly tied to international stability, which is in part

Sasha was pregnant for the first time at 12 and abusing

drugs by 13; she lived with substance abuse as a driving

force for decades.  With ten children to care for between

the ages of 32 and six, Sasha left prison knowing that

things could not continue as before.  In addition to

working the 12 steps of recovery as treatment for her

addiction, Sasha sought out courses in anger management

and parenting and requested assistance with housing.  

Project REACH, a collaborative effort between One‐Stop

Career Centers and faith‐based and community

organizations, was able to place her in a supportive home

for women until she was employed.  Sasha found a job

doing what she loves best: cleaning.  One day she was

vigorously cleaning outdoor windows at the women’s

home.  A business owner happened by, saw Sasha

working hard, and called later to ask the coordinator of

the home to tell Sasha to stop by his diner if she needed

employment.  Sasha was hired on the spot – her first job

ever!  She has been working there for six months now.  

Photo credit: DOL/ETA
Performance Section

86     United States Department of Labor

a function of broad‐based economic prosperity.  DOL‐supported international technical assistance projects focus on

raising living standards through workplace‐related interventions, supporting the expansion of free and fair trade,

eliminating exploitive child labor, and promoting the basic rights of workers.

Here are a few highlights of FY 2008 performance:

For Workers

• Entered employment rates rose for Employment Service participants

but fell for those served by the WIA Adult and Dislocated Worker

programs and Trade Adjustment Assistance (TAA).29  The Employment

Service results show the system provided employment assistance

and/or workforce and labor market information to nearly 16 million

individuals.

• Retention in employment improved for WIA Adult, Employment

Service, and TAA program participants but fell slightly for the WIA

Dislocated Worker program.

• Average earnings rose for participants in the WIA Adult, WIA

Dislocated Worker, Employment Service, and TAA programs – with

three of the programs exceeding their targets by a thousand or nearly

a thousand dollars.

• Nearly 70 percent of businesses participating in the Women’s Bureau

Flex‐Options program – 3.5 percent more than in FY 2007 – created

or enhanced a flexible workplace practice such as telecommuting, job

sharing, and compressed work week schedules.

For Employers

• Ninety‐four percent of permanent foreign labor certification

applications were processed within six months – up from 74 percent

last year.

• Timeliness for all three temporary foreign labor programs also

increased.  For example, the H‐1B Specialty Occupations Program for

highly skilled professionals processed 100 percent of applications

within the statutory seven‐day timeframe.

For the International Community

• DOL‐supported projects withdrew or prevented 196,312 children

from exploitive labor by providing education and/or training

opportunities.  This brings to almost 1.3 million the total number of

children rescued from exploitive labor around the world through DOL

assistance.

• Through technical support and outreach from DOL‐funded projects,

44 countries increased their capacity to eliminate the worst forms of

child labor – 11 more countries than the target of 33.

For more information, please see the Performance Goal narratives.

The chart below presents FY 2008 achievements as measured by performance goals and indicators.  The

performance goal number, goal statement, and responsible agency appear on the left axis, the total percentage of

 

29 These results – plus the retention results summarized in the next bullet – are displayed in charts on the second page

following this one.   

Each day for eight and a half years,

Melissa worked tirelessly as a

sewing machine operator in

Harrodsburg, Kentucky.  When her

company downsized and she was

laid‐off, she applied for

unemployment benefits and

learned she was eligible for

additional benefits and services

through the Trade Adjustment

Assistance program.  With the

assistance of counseling and

assessments, Melissa set her sights

on a high‐demand career in the

healthcare field.  Through hard

work and dedication, she earned

her Associates degree in Medical

Information Technology from

Bluegrass Community and Technical

College on May 3, 2008.  She is now

employed full‐time with a regional

medical center, and making more

than in her previous job. She enjoys

her work and the people she works

with, and says she is extremely

grateful for this opportunity.

Photo credit: DOL/ETA
Strategic Goal 2

FY 2008 Performance and Accountability Report     87   

indicator targets reached or improved is indicated in the horizontal bars, and the goal result is on the right axis.  

Corresponding strategic goal and DOL‐wide averages are presented at the bottom of the chart.  If the goal is

achieved, the bar will run all the way across because, by definition, all indicator targets were reached.  If the goal is

substantially achieved, the total can range from 80 percent to 100 percent and includes indicators for which the

target was not reached, but results improved over the previous year.

Strategic Goal 2 ‐ A Competitive Workforce

67%

33%

100%

67%

33%

75%

100%

100%

100%

74%

65%

11%

5%

33%

33%

25%

07‐2A  Increase the employment, retention, and earnings of

individuals registered under the Workforce Investment Act Adult

program.  (ETA)

07‐2B  Increase the employment, retention, and earnings of

individuals registered under the Workforce Investment Act

Dislocated Worker Program.  (ETA)

07‐2C  Improve the outcomes for job seekers and employers who

receive One‐Stop employment and workforce information services.

(ETA)

07‐2D  Assist older workers to participate in a demand‐driven

economy through the Senior Community Service Employment

Program.  (ETA)

08‐2E  Assist workers impacted by international trade to better

compete in the global economy through the Trade Adjustment

Assistance Program.  (ETA)  

08‐2F  Address worker shortages through Foreign Labor

Certification Programs.  (ETA)

08‐2G  Build knowledge and advance disability employment policy

that affects and promotes systems change.  (ODEP)

08‐2H  Maximize regulatory flexibility and benefits and promote

flexible workplace programs.  (OASP)

08‐2I  Contribute to the elimination of the worst forms of child

labor internationally. (ILAB)

Goal 2 Average

DOL Average

Not Achieved

Not Achieved

Achieved

Substantially

Achieved

Not Achieved

Substantially

Achieved

Achieved

Achieved

Achieved

       Goal

Achievement

Targets reached Improved

DOL achieved or substantially achieved six of nine performance goals (67 percent) in Strategic Goal 2, which is

above the Department’s average of 50 percent.  The WIA Adult program goal was not achieved, but two of the
Performance Section

88     United States Department of Labor

three Federal job training program common measure30 targets were reached.  The WIA Dislocated Worker goal was

not achieved, either, missing the entered employment and retention targets but reaching the average earnings

target.  All three targets for the One‐Stop employment and workforce information services were reached (goal

achieved).  The Senior Community Service Employment Program substantially achieved its goal by reaching its

employment and retention targets and improving upon the FY 2007 result for average earnings.  The TAA program,

which did not achieve its goal, reached the average earnings target, missed on entered employment, improved

retention but did not reach the target.  The Foreign Labor Certification program substantially achieved its goal by

reaching three targets and improving results for the fourth indicator.  ODEP, the Office of the Assistant Secretary

for Policy and ILAB achieved their goals by reaching all FY 2008 targets.

Five of the ten performance goals in Strategic Goal 2 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 employment retention rate (percent of those who obtained jobs who are still employed six months later).  

The charts below indicate these programs’ current and previous year results.31  Earnings results are not included

because the programs that measure earnings used different indicators prior to this year.  Significant differences in

results between programs are generally explained by differences in types of services offered and populations

served.

 

30 Several Federal agencies, including the Departments of Labor, Education, Health and Human Services, Interior and Veterans

Affairs, administer programs that share the goal of helping people find jobs.  To inform comparative evaluations of

effectiveness, the Administration worked with these agencies to develop outcome measures that apply to their diverse

methods and target populations.  While these measures have evolved over the last several years, they have consistently

focused on participants’ entered employment and employment retention rates, and earnings.   31 Results for the Apprenticeship program (Performance Goal 08‐1D in Strategic Goal 1) are included in the retention chart.  

That program does not measure entered employment because apprentices are by definition already employed.

Retention in Employment

60%

65%

70%

75%

80%

85%

90%

95%

2001 2002 2003 2004 2005 2006 2007 2008

Reporting Year

Adult Dislocated Worker

One‐Stop services Older Workers

Trade Adjustment Apprenticeship

Entry to Employment

30%

40%

50%

60%

70%

80%

90%

2001 2002 2003 2004 2005 2006 2007 2008

Reporting Year

Adult Dislocated Worker

One‐Stop services Older Workers

Trade Adjustment
Strategic Goal 2

FY 2008 Performance and Accountability Report     89

The following table provides net costs for all performance goals and indicators associated with this strategic goal.32  

Those with labels that begin with “07” operate on a Program Year (PY) basis, and are reporting on the period from

July 1, 2007 to June 30, 2008 due to the forward‐funding authorized in the Workforce Investment Act of 1998

(WIA).

Net Costs ($Millions)33

Goal or Indicator FY 2006

PY 2005

FY 2007

PY 2006

FY 2008

PY 2007

Strategic Goal 2:  A Competitive WorkforceT

34 $5,064 $5,060 $4,830

Performance Goal 07‐2A (WIA Adult)

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

Workforce Investment Act (WIA) Adult program.

912 896 844

Percent of participants employed in the first quarter after exit

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

and third quarters after exit

Average earnings in the second and third quarters after exit

912 896 844

Performance Goal 07‐2B (WIA Dislocated Worker)

Increase the employment, retention, and earnings replacement of individuals

registered under the WIA Dislocated Worker program.

1,543 1,409 1,307

Percent of participants employed in the first quarter after exit

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

the second and third quarters after exit

Average earnings in the second and third quarters after exit

1,543 1,409 1,307

Performance Goal 07‐2C (One‐Stop Employment and Workforce Information

Services)

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

and workforce information services.

884 749 732

Percent of participants employed in the first quarter after exit

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

and third quarters after exit

Average earnings in the second and third quarters after exit

884 749 732

Performance Goal 07‐2D (Senior Community Service Employment Program)

Assist older workers to participate in a demand‐driven economy through the Senior

Community Service Employment Program.

432 444 479

Percent of participants employed in the first quarter after exit

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

second and third quarters after exit

Average earnings in the second and third quarters after exit

432 444 479

 

32 Rows labeled “Dollars not associated with indicators” indicate costs that cannot be associated with the current set of

performance indicators.  For some goals, indicator costs are intentionally combined by merging cells because program

activities are not separable into categories associated with one or another of them (e.g., job training program common

measures – entered employment, employment retention and average earnings). 33 Net cost as defined in a footnote to the Cost of Results discussion in Management’s Discussion and Analysis. 34 Costs associated with Performance Goal 07‐2H (OASP) are included in costs allocated to other performance goals.
Performance Section

90     United States Department of Labor

Net Costs ($Millions)33

Goal or Indicator FY 2006

PY 2005

FY 2007

PY 2006

FY 2008

PY 2007

Performance Goal 08‐2E (Trade Adjustment Assistance)

Assist workers impacted by international trade to better compete in the global

economy through the Trade Adjustment Assistance Program.

700 805 756

Percent of participants employed in the first quarter after exit

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

second and third quarters after exit

Average earnings in the second and third quarters after exit

700 805 756

Performance Goal 08‐2F (Foreign Labor Certification)

Address worker shortages through the Foreign Labor Certification Program. 46 63 40

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 permanent labor certification under the

streamlined system that are resolved within six months of filing − − −

Percent of accepted H‐2A applications with no pending State actions processed

within 15 days of receipt and 30 days from the date of need − − −

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

Dollars not associated with indicators 46 63 40

Performance Goal 08‐2G (ODEP)

Build knowledge and advance disability employment policy that affects and promotes

systems change.

50 34 27

Number of policy‐related documents

Number of formal agreements

Number of effective practices

50 34 27

Performance Goal 08‐2I (ILAB)

Contribute to the elimination of the worst forms of child labor internationally. 95 101 79

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

95 101 79

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

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

Demonstrations, Research & Evaluations, Community‐Based Job Training Grants, H‐

1B Technical Skills Training, National Electronic Tools and other ILAB programs)

402 560 566
Strategic Goal 2

FY 2008 Performance and Accountability Report     91

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

Workforce Investment Act Adult Program.

Performance Goal 07‐2A (ETA)

Indicators, Targets and Results

*Indicator target reached (Y), improved (I), or not  

reached (N)

**Estimated

PY 2002

Goal Not

Achieved

PY 2003

Goal

Achieved

PY 2004

Goal

Achieved

PY 2005

Goal

Achieved

PY 2006

Goal Not

Achieved

PY 2007

Goal Not

Achieved

Target 70% 71% 75% 76% 76% 71%

Result 74% 74% 77% 77% 70% 68%** Percent of participants employed in the first

quarter after exit

* Y Y Y Y N N

Target 80% 82% 85% 81% 82% 83%

Result 84% 85% 86% 82% 82% 84%**

Percent of participants employed in the first

quarter after exit still employed in the

second and third quarters after exit * Y Y Y Y Y Y

Target — — — — $11,000 $12,045

Result — — — — $11,870 $13,641** Average earnings in the second and third

quarters after exit (six months’ earnings)

* — — — — Y Y

Goal Net Cost (millions) — — $906 $912 $896 $844

Source(s): Annual State WIA performance reports (ETA‐9091).

Legacy Data: Some indicators not shown for PY 2002‐05.  Complete indicators, targets and results for PY 2002‐05 are available in the FY 2006

report at http://www.dol.gov/_sec/media/reports/annual2006/PGD.htm.  See Performance Goal 05‐4.1A.

Note:  Costs for this goal are net costs as defined in a footnote to the Cost of Results discussion in Management’s Discussion and Analysis.  

Costs are not allocated to the indicator level for employment, retention and earnings measures because program activities are not

separable into categories associated with one or another.

Program Perspective and Logic

The WIA Adult Program helps adult workers (unemployed and employed) acquire the skills they need to compete in

a global economy.  Funds are distributed by formula to States, which operate networks of One‐Stop Career Centers

that provide comprehensive services to workers and employers.  Services include assessments of skills needs,

individual career planning, occupational skills training, on‐the‐job training, skills upgrading, entrepreneurial training,

and adult literacy activities.  States also use the WIA Adult Program to leverage additional Federal and non‐Federal

resources to increase the quality and variety of assistance.  Through collaboration with its program partners, the

WIA Adult Program assists individuals in their career goals, reduces welfare dependency, and improves the quality,

productivity and competitiveness of the nation’s workforce.

DOL measures the success of this program with the Federal job training program common measures. The common

measures enable comparisons to be made to government‐wide education, employment and job training programs

that share similar core purposes.  The common measures are entered employment, employment retention, and

average earnings.  A high entered employment rate indicates success in placing individuals in jobs.  A high retention

rate indicates employment stability.  Increased average earnings indicate that participants are getting better jobs at

better wages.    

Analysis and Future Plans

The performance goal for the WIA Adult Program was not achieved.  DOL reached two of three performance

indicator targets.  The exception was the entered employment rate of 68 percent, which is three percentage points

below the target.  The barrier to achieving this target is in large part due to the policies of a number of States,

including several large States, to co‐enroll a significant number of participants in both the WIA Adult program and

Wagner‐Peyser employment services (Performance Goal 07‐2C).  These policies encourage integrated service
Performance Section

92     United States Department of Labor

delivery; however, Wagner‐Peyser participants have traditionally had a lower employment rate.  Co‐enrollment,

therefore, appears to pull down performance of the WIA Adult and Dislocated Worker Programs.  The Department

is working with the States with co‐enrollment policies to determine whether action is necessary to ensure the

ability to accurately measure the outcomes of these programs in the context of integrated service delivery.

Due partly to co‐enrollment, in PY 2005‐07, the number of people

served by the WIA Adult Program grew from approximately 400,000

to over two million – with many of these new participants receiving

WIA core services.  WIA core services are lower cost interventions

such as job search and placement assistance that may be followed by

higher cost services such as intensive services and training.  While the

outcomes appear to be stabilizing, the number of participants served

continues to rise as new States adopt co‐enrollment practices as a

service delivery approach.  DOL will continue to gather information

from States on the impact of their co‐enrollment policies and

practices, and is talking to States about actions that would support an

optimal co‐enrollment policy – a policy that increases leveraged

resources and yields positive outcomes.

Other program results remained strong.  The employment retention

rate of 84 percent surpassed the target by one percentage point; this

means that many people who initially gain employment after

receiving services maintain their employment after six months.  At

$13,641, the six‐month average earnings result exceeded the target

for PY 2007 by more than one thousand dollars.  Increasing numbers

of WIA Adult Program exiters are entering higher paying positions in

managerial, technical, production, repair and other fields.  DOL will

continue to focus on assisting participants to enter skilled jobs in high

growth occupations that pay good wages.

   

The WIA Adult Program will continue to improve services to WIA

participants by strengthening strategic partnerships with business

and industry, and the education community.  Through strategic

planning efforts and grant application requirements, these

partnerships develop workforce solutions in the context of state and

regional economies.  Additionally, the Department continues to

Employment Retention

70%

75%

80%

85%

90%

2000 2001 2002 2003 2004 2005 2006 2007

Program Year

Result Target

Entered Employment

60%

65%

70%

75%

80%

85%

2000 2001 2002 2003 2004 2005 2006 2007

Program Year

Result Target

Nancy entered the WIA program at the

Pennsylvania (PA) CareerLink Cambria

County in January 2006 as a customer in a

self‐directed job search.  She had not worked

in 26 years; she had been a stay‐at‐home

mom and had battled cancer.  CareerLink

staff referred Nancy to New Choices‐New

Options, a program for displaced

homemakers.  She began typing tutorials and

was referred to the Office of Vocational

Rehabilitation for additional services.  Her

assessment determined math deficiencies

and high interest and aptitude in business.  

She attended Adult Basic Education classes,

entered WIA Workfind, and was temporarily

placed at the PA CareerLink Cambria County

to learn office skills.  Nancy now works as an

administrative professional at a business

located minutes from her home.  Photo credit:

Commonwealth Media Services
Strategic Goal 2

FY 2008 Performance and Accountability Report     93

encourage entrepreneurship training (by developing and promoting curricula) and lifelong learning as important

tools in supporting healthy regional economies.  The Department recently announced a new project to assist

welfare recipients maintain employment and enter or advance in high‐growth careers.

Costs associated with this goal decreased six percent from PY 2006 to PY 2007.  This reflects normal spending

fluctuations since States have three years to expend funds.  Costs are allocated to the performance goal rather than

at the indicator level, as funding supports all the outcomes for the WIA Adult Program.

PART, Program Evaluations and Audits

PART Year Rating

2005 Adequate

PART Findings and Improvement Plan:   

http://www.whitehouse.gov/omb/expectmore/summary/10003900.2005.html

FY 2008 Progress on PART Improvement Plan

• Conducting an evaluation to determine WIA services' impact on employment and earnings outcomes for participants.  An

evaluation of the WIA programs using administrative data will be completed in December 2008.  In June 2008, DOL

awarded a contract to conduct a rigorous net impact evaluation of WIA programs that will take seven years and

compare the employment and earnings of participants with nonparticipants.  

• Adopting efficiency measures that are linked to performance outcomes, account for all costs, and facilitate comparisons

across Department of Labor training and employment programs.  A final report of the efficiency measure study with

recommendations for appropriate outcome‐based efficiency measures for DOL’s employment and training programs will

be completed by December 2008.  The selected measure or measures will be implemented in PY 2009.

• Improving reporting efficiency, program management and accountability through the collection of new information with

WISPR, a common reporting system for WIA, Trade Adjustment Assistance, and Wagner‐Peyser Act Programs.  A final

notice for comment on the proposed Workforce Investment Streamlined Performance Reporting (WISPR) system was

published in the Federal Register.  The comments and the information collection request are under review.

“Most One‐Stop Career Centers Are Taking Multiple Actions to Link Employers and Older Workers,”  April 2008 (GAO)  

Relevance:  GAO examined Labor’s actions to help One‐Stops link employers with older workers and One‐Stops’ actions to

help employers hire and retain older workers.  The report found that most One‐Stops take multiple actions to link employers

and older workers.

Findings and Recommendations:  

• GAO found that DOL has proposed action steps that One‐

Stops may take to link employers and older workers, but

knows little about the results of these efforts.   

• Based on surveys, it appears that One‐Stops have taken

multiple actions to link employers and older workers.  

However, the performance measure tracking

participants’ earnings may create disincentives for

serving older workers who are more likely to work part‐

time at lower wages.

Next Steps:  

• DOL has nearly completed the WIA Quick Net Impact

study, a quasi‐experimental evaluation that examined

net impacts by subgroups, such as those 50 and older,

using administrative data.  A rigorous random

assignment evaluation of the WIA Adult, Dislocated

Worker and Youth programs will assess these programs’

impacts on participants’ post‐program employment and

earnings and their cost effectiveness over a seven‐year

period.  

• To reduce disincentives, older workers qualify as a

special population for the purpose of negotiating State

performance targets.  DOL is also leading a technical

assistance initiative that includes how to best serve

“most‐in‐need” populations such as older workers.   

Additional Information:  The report (GAO‐08‐548) is available at http://www.gao.gov/cgi‐bin/getrpt?GAO‐08‐548.

“Workforce Development: Community Colleges and One‐Stop Centers Collaborate to Meet 21st Century Workforce

Needs,” May 2008 (GAO)

Relevance:  GAO examined community colleges’ interaction with the workforce development system and found that while

state funding and leadership are factors that help integration, the WIA performance system measures and WIA funding are

impediments to integration of community colleges with the workforce system.    
Performance Section

94     United States Department of Labor

Findings and Recommendations:

• Integration between the community colleges and the

workforce system is hampered by the WIA performance

system measures and the WIA funding issues.   

• WIA requirements to meet the performance levels in their

Adult, Dislocated Worker and Youth programs provide a

disincentive for the One‐Stops to serve certain

populations such as those on Temporary Assistance for

Needy Families (TANF) or youth.  GAO found that Labor

has not acted on a prior recommendation to develop a

systematic way to account for differences in the

population groups served by the states’ One‐Stop Centers

and apply it to all States when establishing their

performance levels.  

Next Steps:  

• DOL generally agrees with the findings and conclusions

of the report.  However, DOL expressed concern with

comments from community colleges and state

workforce officials regarding the disincentives resulting

from the WIA performance measures.  The Department

issued guidance that allows for a thorough negotiation

process with the States in setting performance levels.  

States and DOL negotiate targets that drive continuous

improvement while recognizing the need to allow for

harder‐to‐serve populations.  States use adjustment

models to show the effect on measured outcomes by

efforts to increase access to populations with barriers

to employment.  DOL is considering alternative

measures for a pilot.

Additional Information:  The report (GAO‐08‐547) is available at http://www.gao.gov/cgi‐bin/getrpt?GAO‐08‐547.

Data Quality and Top Management Challenges

Data quality for this performance goal is rated Very Good.

35   Refer to the Data Quality and Top Management

Challenges section in Performance Goal 1C, which shares the same data

collection system, for a discussion of improvement efforts.  

 

35 Information on DOL’s Data Quality Assessments, conducted annually for each performance goal, can be found in the

Introduction to the Performance Section.

Originally from Missouri, Chad had spent most of his life in correctional

institutions, on parole or on probation.  After arriving at the Burlington half‐way

house, he met with a WIA employment specialist, and he agreed to try making a

change.  While working two jobs, Chad attended Southeastern Community

College and took classes such as trigonometry, physics and Computerized

Numerical Control (CNC) programming.  His WIA specialist assisted him with

applying for a Pell grant, covered the cost of psychiatric treatment for issues

related to his past drug abuse, and helped provide a suit and tie for job

interviews.  Today, Chad has been out of prison for seven‐and‐a‐half years and

has been drug‐free for over six years.  He is a homeowner and has worked at the

Winegard Company for the past six years as a machinist.  When asked about his

experience, Chad replied, “In 2000, I didn’t have a chance.  If it wouldn’t have

been for this program, I would’ve gone back to prison.” Photo credit: DOL/ETA
Strategic Goal 2

FY 2008 Performance and Accountability Report     95

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

Workforce Investment Act Dislocated Worker Program.

Performance Goal 07‐2B (ETA)

Indicators, Targets and Results

*Indicator target reached (Y), improved (I), or not  

reached (N)

**Estimated

PY 2002

Goal Not

Achieved

PY 2003

Goal Not

Achieved

PY 2004

Goal Not

Achieved

PY 2005

Goal Not

Achieved

PY 2006

Goal Not

Achieved

PY 2007

Goal Not

Achieved

Target 78% 78% 82% 83% 84% 79%

Result 82% 82% 84% 83% 78% 72%** Percent of participants employed in the

first quarter after exit

* Y Y Y Y N N

Target 88% 88% 91% 89% 90% 89%

Result 90% 90% 91% 88% 88% 87%**

Percent of participants employed in the

first quarter after exit still employed in

the second and third quarters after exit * Y Y Y N N N

Target — — — — $13,800 $14,410

Result — — — — $14,265 $15,132** Average earnings in the second and third

quarters after exit (six months’ earnings)

* — — — — Y Y

Goal Net Cost (millions) — — $1,472 $1,543 $1,409 $1,307

Source(s): Annual State WIA performance reports (ETA‐9091).

Legacy Data: Some indicators not shown for PY 2002‐05.  Complete indicators, targets and results for PY 2002‐05 are available in the FY 2006

report at http://www.dol.gov/_sec/media/reports/annual2006/PGD.htm.  See Performance Goal 05‐4.1C.

Note:  Costs for this goal are net costs as defined in a footnote to the Cost of Results discussion in Management’s Discussion and Analysis.  

Costs are not allocated to the indicator level for employment, retention and earnings measures because program activities are not

separable into categories associated with one or another.

Program Perspective and Logic

The WIA Dislocated Worker Program aims to quickly reemploy laid‐off workers and to enhance their employability

and earnings by increasing occupational skills.  The Department allocates 80 percent of the funds by formula to the

States.  The Secretary of Labor may use the remaining 20 percent for discretionary activities specified under WIA,

including assistance to localities that suffer plant closings, mass layoffs or job losses due to natural disasters, and

military base realignment and closures.  Training services available to dislocated workers are occupational skills

training, on‐the‐job training, skills upgrading, entrepreneurial training, job readiness training, adult literacy

activities, and customized training for employers who commit to hiring individuals enrolled in the program.

The Department measures the success of this program with the Federal job training program common measures.

The common measures enable comparisons to be made to education, employment and job training programs

which share similar core purposes.  The entered employment rate measures the success of participants finding a

job.  The retention rate demonstrates if a participant has employment stability, and the average earnings measure

is a six‐month snapshot of wages after program intervention.

Analysis and Future Plans

The performance goal for the WIA Dislocated Worker program was not achieved.  The entered employment rate of

72 percent missed the target by seven percentage points.  The employment retention rate missed the target by just

two percentage points.  As described in the WIA Adult Program (Performance Goal 07‐2A) narrative, the primary

barrier to achieving these targets is co‐enrollment by some States of a significant number of participants in these

two WIA programs and the Wagner‐Peyser employment services (Performance Goal 07‐2C).   
Performance Section

96     United States Department of Labor

The third measure, six‐month average earnings, exceeded the target with a result of $15,132.  While wages will vary

from one participant to another based on skill level and the type of job placement, increasing wages is one indicator

of the Department’s progress in placing dislocated workers in high‐wage, high‐growth occupations.  The

Department continues to encourage States to place a greater focus on providing education and skills training for

high‐growth occupations.  Also, DOL recently

announced new projects to help workers who

have lost their jobs start small businesses and to

raise workers’ education and skill levels.   

Costs associated with this goal decreased seven

percent from PY 2006 to PY 2007, matching the  

decrease in appropriation for the same period.  

Costs are allocated to the performance goal

rather than at the indicator level, as funding

supports all the outcomes for dislocated workers.

PART, Program Evaluations and Audits

PART Year Rating

2003 Adequate

PART Findings and Improvement Plan:   

http://www.whitehouse.gov/omb/expectmore/summary/10000330.2003.html

FY 2008 Progress on PART Improvement Plan

• Conducting an evaluation to determine WIA services' impact on employment and earnings outcomes for participants.   

An evaluation of the WIA programs using administrative data is on schedule to be completed in December 2008.  In June

2008, DOL awarded a contract to conduct a rigorous, long‐term impact evaluation of WIA programs.  

• Adopting efficiency measures that are linked to performance outcomes, account for all costs, and facilitate comparisons

across Department of Labor training and employment programs.  A final report of the efficiency measure study with

recommendations for appropriate outcome‐based efficiency measures for DOL’s employment and training programs will

be completed by December 2008.  The selected measure or measures will be implemented in PY 2009.

• Improving reporting efficiency, program management and accountability through the collection of information with

WISPR, an integrated, streamlined reporting system for WIA, Trade Adjustment Assistance, and Wagner‐Peyser Act and

Jobs for Veterans’ Act state grants.  A final notice for comment on the proposed Workforce Investment Streamlined

Performance Reporting (WISPR) system was published in the Federal Register.  The comments and the information

collection request are under review.

“Most One‐Stop Career Centers Are Taking Multiple Actions to Link Employers and Older Workers,”  April 2008 (GAO)  

Information on this study is provided in the corresponding table for Performance Goal 07‐2A.

Performance Goal 07‐2B

Net Costs ($ Millions)

1307

1472 1543 1409

0

400

800

1,200

1,600

2,000

2004 2005 2006 2007

Program Year

Employment Retention

75%

80%

85%

90%

95%

2000 2001 2002 2003 2004 2005 2006 2007

Program Year

Resul t Target

Entered Employment

65%

70%

75%

80%

85%

90%

2000 2001 2002 2003 2004 2005 2006 2007

Program Year

Result Target
Strategic Goal 2

FY 2008 Performance and Accountability Report     97

“Workforce Development: Community Colleges and One‐Stop Centers Collaborate to Meet 21st Century Workforce

Needs,” May 2008 (GAO)

Information on this study is provided in the corresponding table for Performance Goal 07‐2A.

Data Quality and Top Management Challenges

Data quality for this performance goal is rated Very Good.

36 Refer to the Data Quality and Top Management

Challenges section in Performance Goal 1C, which shares the same data collection system, for a discussion of

improvement efforts.

 

36 Information on DOL’s Data Quality Assessments, conducted annually for each performance goal, can be found in the

Introduction to the Performance Section.

Ron’s story is an example of the public workforce system at its best.  He’s

an ex‐offender who turned his life around.  After earning his General

Equivalency Diploma through the WIA Dislocated Worker Program, he

went on to successfully complete classroom and workplace training for

entry‐level machining positions.  Ron's employer is so impressed by his

enthusiasm and quality work that they recommended him to be a

featured speaker at a workshop encouraging dislocated workers to take

advantage of available training programs in manufacturing.  After one

year, 12 of the 15 workers who started the program with Ron are still

working in manufacturing.  Also, The Workforce Connection Business

Services Team and the Boone & Winnebago Counties Workforce

Investment Board intend to use this training model to meet the needs of

other companies.  Photo credit: DOL/ETA
Performance Section

98     United States Department of Labor

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

workforce information services.

Performance Goal 07‐2C (ETA)

Indicators, Targets and Results

*Indicator target reached (Y), improved (I), or

not  reached (N)

PY 2002

Goal Not

Achieved

PY 2003

Goal

Achieved

PY 2004

Goal Not

Achieved

PY 2005

Goal

Achieved

PY 2006

Goal Not

Achieved

PY 2007

Goal

Achieved

Target 55% 58% 58% 61% 64% 61%

Result 63% 61% 64% 63% 60% 64%

Percent of participants employed in

the first quarter after exit

* Y Y Y Y N Y

Target — 72% 72% 78% 81% 78%

Result — 80% 81% 80% 77% 81%

Percent of participants employed in

the first quarter after exit still

employed in the second and third

quarters after exit * — Y Y Y N Y

Target — — — — $10,500 $11,870

Result — — — — $11,576 $12,763

Average earnings in the second and

third quarters after exit (six months’

earnings) * — — — — Y Y

Goal Net Cost (millions) — — $831 $884 $749 $732

Source(s): Quarterly State WIA performance reports (ETA‐9090).

Legacy Data: Some indicators not shown for PY 2002‐06.  Complete indicators, targets and results for PY 2002‐06 are available in the FY 2007

report at http://www.dol.gov/_sec/media/reports/annual20067/PGD.htm.  See Performance Goal 05‐4.1B.

Note:  Costs for this goal are net costs as defined in a footnote to the Cost of Results discussion in Management’s Discussion and Analysis.  

Costs for PY 2006 have been restated to correct an allocation of costs between this goal and National Electronic Tools (Goal 06‐2E in the

FY 2007 report).  Costs are not allocated to the indicator level for employment, retention and earnings measures because program

activities are not separable into categories associated with one or another.

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 businesses and job seekers.  Core services include job matching, referral,

assessments, a wide array of workforce and labor market information, and career guidance.  Principally funded

through the Wagner‐Peyser Act, as amended by the Workforce Investment Act (WIA) of 1998, these services are

designed to help both employed and unemployed workers obtain jobs and give employers access to skilled workers

who will help them compete in the global economy.  In addition to core services, the One‐Stop Career Centers

provide customized services to clients with special needs such as Unemployment Insurance claimants, veterans,

and migrant and seasonal farm workers.

Employment and workforce information services that account for unique local and regional labor market conditions

and reflect workers’ needs are critical to achieving successful outcomes for job seekers and employers.  Services are

provided in collaboration with a wide array of workforce investment partners and are coordinated with other

services available through One‐Stop Career Centers, such as training, child care, and transportation.  Most services

can be accessed through a suite of electronic workforce tools at CareerOneStop.org, but many participants are

referred to staff for personalized assistance and co‐enrolled in WIA programs.  The Employment Service assists

nearly 16 million participants a year, a high volume compared to other employment and training programs.

The Department uses the common measures for Federal employment and job training programs to evaluate the

effectiveness of its core employment and workforce information services.  Common measures, including the

entered employment rate, the employment retention rate and average earnings, enable comparisons to be made

for employment and job training programs that share similar purposes.  Collectively, the three measures help gauge
Strategic Goal 2

FY 2008 Performance and Accountability Report     99   

the workforce system’s ability to match individuals who are seeking employment with employers who need their

skills.  Unlike the WIA programs, the Employment Service does not provide training services.  This program provides

universal access to job search assistance, counseling, job matching, and workforce and labor market information.  

Therefore, results can be impacted to a higher degree by national unemployment and employment rates as well as

general hiring trends.

Analysis and Future Plans

The performance goal for the Wagner‐Peyser Act’s Employment Service system was achieved.  All three indicator

results reached targets and improved upon PY 2006 performance.  The entered employment rate of 65 percent and

employment retention rate of 80 percent both rose above last year’s results and were comfortably above the

targets set for this year.  The system also posted a very positive six‐month average earnings result of $12,708.  

Collectively, the three measures help gauge the workforce investment system’s ability to help people find a job and

to maintain their employment at good wages.  Overall, the results show the system has been successful in matching

individuals who are seeking employment with employers who need their skills.  Additionally, DOL has observed

more Employment Service participants co‐enrolled in WIA programs.  This partnership has provided more

individuals access to the additional core services, and in some cases, access to intensive and training services.   

Costs associate with this performance goal rose by

six percent from PY 2004‐05, fell by 15 percent

between PY 2005‐06, then fell by two percent from

PY 2006‐07, reflecting a nine percent decrease in

appropriation from PY 2004‐07 and annual

fluctuations in the timing of expenditures.  States

have three years to expend funds.  Costs are

allocated to the performance goal rather than at the

indicator level, as funding supports all measured

outcomes for participants.

PART, Program Evaluations and Audits

PART Year Rating

2004 Adequate

PART Findings and Improvement Plan:   

http://www.whitehouse.gov/omb/expectmore/summary/10002376.2004.html

FY 2008 Progress on PART Improvement Plan

• Tracking the levels of self‐service participants versus staff assisted participants to improve workforce system integration.

DOL reviewed each of the 54 grantee reports and contacted the three States not tracking self‐service participants.  

These States now comply with expectations.  In FY 2009, ETA will take an additional step to improve sub‐components of

the self‐service data.

Employment Retention

65%

70%

75%

80%

85%

2003 2004 2005 2006 2007

Program Year

Result Target

Entered Employment

50%

55%

60%

65%

70%

2002 2003 2004 2005 2006 2007

Program Year

Result Target

Performance Goal 07‐2C

Net Costs ($ Millions)

732

749

831 884

0

200

400

600

800

1,000

2004 2005 2006 2007

Program Year
Performance Section

100 United States Department of Labor

• Improving reporting efficiency, program management and accountability through the collection of new information with

WISPR, an integrated, streamlined reporting system for WIA, Trade Adjustment Assistance, and Wagner‐Peyser Act and

Jobs for Veterans Act state grants.  In October 2008, OMB approved the WISPR documents (Forms 9131, 9132, and

9133) with an implementation date of July 1, 2009.  ETA is developing a revised plan for full implementation of the

WISPR formats.

• Adopting efficiency measures that are linked to performance outcomes, account for all costs, and facilitate comparisons

across Department of Labor training and employment programs.  A final report of the efficiency measure study with

recommendations for appropriate outcome‐based efficiency measures for DOL’s employment and training programs will

be completed by December 2008.  The selected measure or measures will be implemented during Program Year 2009.

“Most One‐Stop Career Centers Are Taking Multiple Actions to Link Employers and Older Workers,” April 2008 (GAO)

Information on this study is provided in the corresponding table for Performance Goal 07‐2A.

“Workforce Development: Community Colleges and One‐Stop centers Collaborate to Meet 21st Century Workforce

Needs,” May 2008 (GAO)

Information on this study is provided in the corresponding table for Performance Goal 07‐2A.

Data Quality and Top Management Challenges

Data quality for this performance goal is rated Very Good.

37  While verification remains an area for improvement,

extensive effort has been directed towards improving data quality through the use of ETA’s data validation system

and monitoring at both the national and regional levels (see the Top Management Challenges section of

Management’s Discussion and Analysis).  The validation initiative for this program is based on a sample.  A sample

approach continues to provide the most logical, administratively feasible, and cost effective means of validation

due to the large number of participants – between 12 and 16 million – who receive core services.  Data validation

activities for PY 2006 data were completed on time.  The deadline for PY 2007 data validation was extended to

October 2008 due to software upgrades to the Data Report and Validation Software.

 

37 Information on DOL’s Data Quality Assessments, conducted annually for each performance goal, can be found in the

Introduction to the Performance Section.

CareerOneStop.org offers workforce information and career

resources to businesses, workforce professionals, job seekers, and

students to foster talent development.  This website is an important

part of the Employment and Training Administration's (ETA) suite of

national electronic tools.  The new Regional Economic Development

(RED) portal supports regional strategic planning and decision

making by offering high quality labor market, economic, and

workforce information in one convenient location.  Content follows

ETA’s Workforce Innovation in Regional Economic Development

(WIRED) initiative model for talent development that drives regional

economic growth and competitiveness. Photo credit: DOL/ETA
Strategic Goal 2

FY 2008 Performance and Accountability Report     101

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

Senior Community Service Employment Program

Performance Goal 07‐2D (ETA)

Indicators, Targets and Results

*Indicator target reached (Y), improved (I), or not  reached (N)

PY 2005

Goal Not

Achieved

PY 2006

Goal Not

Achieved

PY 2007

Sub‐

stantially

Achieved

Target 55% 38% 33%  

Percent of participants employed in the first quarter after exit Result 33% 32% 52%

* N N Y

Target 65% 48% 67%

Result 73% 66% 71%

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

the second and third quarters after exit  

* Y Y Y

Target baseline baseline $6,775

Result — $6,704 $6,713 Average earnings in the second and third quarters after exit (six months’

earnings)

* N — I

Goal Net Cost (millions) $432 $444 $479

Source(s): Quarterly reports from the SCSEP Performance and Results Quarterly (SPARQ) Project Report System.

Note:  Costs for this goal are net costs as defined in a footnote to the Cost of Results discussion in Management’s Discussion and Analysis.  

Costs are not allocated to the indicator level for employment, retention and earnings measures because program activities are not

separable into categories associated with one or another of them.

Program Perspective and Logic

The aging of the baby boomer generation presents both challenges and opportunities to the workforce investment

system.  SCSEP’s goal is to promote self‐sufficiency for older persons by placing them in unsubsidized employment.  

Formula grants to States and competitively awarded grants to public and private non‐profit organizations fund part‐

time, minimum wage employment and job training services for approximately 90,000 low‐income workers age 55

and older.  SCSEP grantees and their affiliates deliver placement and training services and coordinate activities in

partnership with nearly 3,000 comprehensive and affiliate One‐Stop Career Centers nationwide.   

DOL measures SCSEP success using the Federal job training program common measures.  Common measures

(entered employment rate, employment retention rate and average earnings) enable comparisons to be made to

education, employment and job training programs that share similar purposes.  These indicators measure

participants’ improved financial opportunity, stability of their new positions in unsubsidized employment, and

effectiveness of training services, respectively.  Targets for these measures are negotiated with each grantee based

on past and projected outcomes, improvements in program design, and external economic factors.

Analysis and Future Plans

The performance goal for the SCSEP Program was substantially achieved.  Entered employment and employment

retention rates exceeded both PY 2007 targets and PY 2006 results.  However, the retention rate data demonstrate

a slight reduction from PY 2005 data, a benchmark the program intends to exceed in the coming program year.  The

average earnings result was $6,713, only $62 under the PY 2007 target and nine dollars above the PY 2006 result.  

The exceptional improvement in the entered employment rate (20 percentage points) is due to the addition to this

year’s data pool of large numbers of higher performing grantees.  Last year, common measures data were available

for only 22 percent of program participants.
Performance Section

102     United States Department of Labor

The Department continues to analyze data to determine appropriate

performance target levels.  The average earnings measure, adopted last year,

will continue to be monitored to determine the extent to which service interventions and the acquisition of new

skills can lead older workers to more stable employment in jobs that pay good wages.  Additionally, the Department

is focused on implementing regulations based on the

2006 amendments to the Older Americans Act, such

as adopting a new community service performance

measure.

Costs associated with this goal rose eight percent

from PY 2006‐07, which relate to a 12 percent

increase in appropriation and the minimum wage

increase effective July 2007.  Costs are allocated to

the performance goal rather than at the indicator

level, as funding supports all the measured

outcomes for older workers.

PART, Program Evaluations and Audits

PART Year Rating

2003 Ineffective

PART Findings and Improvement Plan:   

http://www.whitehouse.gov/omb/expectmore/summary/10000328.2003.html

FY 2008 Progress on PART Improvement Plan

• Continuing to strengthen program accountability through common performance measures, including developing a new

measure to gauge cost‐effectiveness.  DOL implemented reporting on common measures for this program in PY 2006.  

Program Year 2007 is the first year when all grantees reported on common measures.

• Adopting efficiency measures that are linked to performance outcomes, account for all costs, and facilitate comparisons

across Department of Labor training and employment programs.  A final report of the efficiency measure study with

recommendations for appropriate outcome‐based efficiency measures for DOL’s employment and training programs will

be completed by December 2008.  The selected measure or measures will be implemented during Program Year 2009.

• Publishing a proposed rule to implement the 2006 Older Americans Act amendments. In 2008, DOL published the

proposed rule.  Publication of the final rule is expected in Program Year 2009.

“Most One‐Stop Career Centers Are Taking Multiple Actions to Link Employers and Older Workers,”  April 2008 (GAO)

Information on this study is provided in the corresponding table for Performance Goal 07‐2A.

George, retired since 1995, became a widower at age 80, and decided to return to

work to help people like himself with limited incomes.  He enrolled in the DOL‐

funded Mature Workers program, was selected for training to become a case

manager for other participants, and attended staff development activities

conducted by the Urban League.  George impressed them with his interpersonal

skills and overall proficiency.  George was having financial difficulties and pursued

unsubsidized employment with higher wages.  An Urban League staff member

urged him to apply for a position as a Facilitator Instructor for Citigroup’s financial

literacy program.  He is now working for CitiFinancial helping other people like

himself and credits the Mature Workers program with helping him find rewarding

employment. Photo credit: DOL/ETA

Performance Goal 07‐2D

Net Costs ($ Millions)

479

432 444

0

100

200

300

400

500

600

2005 2006 2007

Program Year
Strategic Goal 2

FY 2008 Performance and Accountability Report     103

Data Quality and Top Management Challenges

The data quality for this performance goal is rated Good.

38  In PY 2007, SCSEP reported complete data on the

common measures from all grantees, restoring its initial rating after a downgrade for PY 2006.39  About two‐thirds

of SCSEP grantees completed validation of PY 2006 data and made significant modifications.  Based on these

changes and the lag in performance data availability, the Department requested that grantees continue to modify

source documentation and validate PY 2007 data during PY 2008.  Grantees will be held accountable for validating

reported data beginning in PY 2009.  DOL has also implemented edit and logic checks, and has a data quality report

and various management reports available to ensure data submitted by the grantees into the SCSEP Performance

and Results Quarterly (SPARQ) Project Report System is verifiable.  Finally, the Department is pursuing access to

unemployment insurance wage records to improve data accuracy and process efficiency.

 

38 Information on DOL’s Data Quality Assessments, conducted annually for each performance goal, can be found in the

Introduction to the Performance Section. 39 In PY 2006, State grantees (serving 22 percent of program participants) but not national grantees reported on these

measures.   
Performance Section

104     United States Department of Labor

Assist workers impacted by international trade to better compete in the global economy

through the Trade Adjustment Assistance Program.

Performance Goal 08‐2E (ETA)

  

Indicators, Targets and Results

*Indicator target reached (Y), improved (I), or

not  reached (N)

**Estimated

FY 2003

Goal Not

Achieved

FY 2004

Goal Not

Achieved

FY 2005

Goal Not

Achieved

FY 2006

Goal

Achieved

FY 2007

Goal

Achieved

FY 2008

Goal Not

Achieved

Target 78% 70% 70% 70% 70% 73%

Result 62% 63% 70% 72% 70% 68%** Percent of participants employed in

the first quarter after exit

* N N Y Y Y N

Target 90% 88% 89% 85% 85% 91%

Result 86% 89% 91% 90% 88% 90%**

Percent of participants employed in

the first quarter after exit still

employed in the second and third

quarters after exit * N Y Y Y Y I

Target — — — — Baseline $14,050

Result — — — — $13,914 $14,278**

Average earnings in the second and

third quarters after exit (six months’

earnings) * — — — — — Y

Goal Net Cost (millions) — — $846 $700 $805 $755

Source(s): Trade Act Participant Report (TAPR) included in the Enterprise Business Support System (EBSS).

Legacy Data: Some indicators not shown for PY 2003‐06.  Complete indicators, targets and results for FY 2003‐06 are available in the FY 2006

report at http://www.dol.gov/_sec/media/reports/annual2006/PGD.htm.  See Performance Goal 06‐4.1B.

Note:  Net costs, which are defined in a footnote to the Cost of Results discussion in Management’s Discussion and Analysis, are not allocated

to the indicator level for employment, retention and earnings measures because program activities are not separable into categories

associated with one or another.  The goal was reported as not achieved in the FY 2006 report; corrections to data for two of the three

indicators changed this result.

Program Perspective and Logic

The 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.  The program’s

primary 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 WIA Adult and Dislocated Worker Programs and the Wagner‐Peyser Act.  The comprehensive

readjustment services and benefits offered by the TAA Program include out‐of‐area job search and relocation

assistance; training that can include occupational, on‐the‐job and remedial training; income support; and access to

Health Coverage Tax Credit benefits.  The One‐Stop system provides counseling, assessment, and placement

services for TAA participants.

The TAA program’s success is measured by the extent to which it helps individuals regain economic self‐sufficiency

by quickly securing and maintaining employment.  Economic factors such as the compatibility of skills in the

available labor force with needs of new businesses contribute importantly to reemployment.  Therefore, TAA

continues to pursue a regional workforce investment strategy designed to create more employment opportunities

that reach more workers and improve access to training.  The federal job training program common measures

enable the comparison of the TAA Program’s results to those of similar education, employment and job training

programs.  Also, use of common measures removes a barrier to service integration among programs by ensuring

that similar definitions and methodologies are used for measuring performance.
Strategic Goal 2

FY 2008 Performance and Accountability Report     105

Analysis and Future Plans

The performance goal for the TAA Program was not achieved in FY 2008.  While the results for average earnings

exceed the target, the target for the percent of participants entering employment was not met.  DOL attributes the

dip in entered employment to economic conditions; the five states with the largest numbers of participants exiting

the TAA program all had unemployment levels above the national average during this reporting period.  The 90

percent result for the number of participants retaining employment did not reach the target but indicates

improvement over the FY 2007 result.  The Department credits the improved earnings with continued high

retention levels to increased demand for trained workers.

DOL continues to explore strategies that will help improve the outcomes of the TAA program.  In collaboration

with the Employment Service and WIA and Unemployment Insurance programs, TAA is hosting a national

reemployment summit in January 2009.  The agenda will emphasize suitable reemployment of individuals who have

lost jobs, including job loss due to foreign trade; it will be attended by state employees that administer the various

programs, including TAA Coordinators.   The Summit aims to enhance the capability of the Workforce system to

improve reemployment outcomes, and to thereby benefit participants in all employment and training programs.  

Costs associated with this performance goal fell six

percent between FY 2007‐08 due to decreased

participation in the Trade Adjustment

Assistance/Trade Readjustment Allowance (TRA)

program.  In addition, the decrease in TRA costs and

participation may be related to the 13 weeks of

Extended Unemployment Compensation which are

now available and replace TRA payments for eligible

workers.  Costs are allocated to the performance goal

rather than at the indicator level, as funding supports

all the outcomes for trade affected workers.

PART, Program Evaluations and Audits

PART Year Rating

2007 Ineffective

PART Findings and Improvement Plan:   

http://www.whitehouse.gov/omb/expectmore/summary/10000340.2007.html

FY 2008 Progress on PART Improvement Plan

• Adjusting the formula for allocating training funds to the States to better reflect the current need for training.  Guidance

announcing the funding allocations for FY 2009 will also indicate DOL's intent to implement a formula change for FY

2010 and beyond.  A Federal Register Notice (FRN) will be issued early in 2009 inviting comment before implementing

this change.  Since funding is annual, implementation is targeted for September 2009.

• Developing an internal review process to verify the accuracy of trade petition certifications and denials.  Options for

developing a trade petition quality review component are being considered.  However, due to the pending program

Entered Employment

50%

60%

70%

80%

90%

2001 2002 2003 2004 2005 2006 2007 2008

Fiscal Year

Result Target

Employment Retention

75%

80%

85%

90%

95%

2001 2002 2003 2004 2005 2006 2007 2008

Fiscal Year

Result Target

Performance Goal 08‐2E

Net Costs ($ Millions)

755

805

700

846

0

400

800

1200

2005 2006 2007 2008

Fiscal Year
Performance Section

106     United States Department of Labor

reauthorization, which is expected to include changes in the certification and denial criteria, the Department will defer

developing this process until the parameters of the new certification process are defined.   

• Adopting efficiency measures that are linked to performance outcomes, account for all costs, and facilitate comparisons

across Department of Labor training and employment programs.  A final report of the efficiency measure study with

recommendations for appropriate outcome‐based efficiency measures for DOL’s employment and training programs will

be completed by December 2008.  The selected measure or measures will be implemented during Program Year 2009.

“Trade Adjustment Assistance: States Have Fewer Training Funds Available than Labor Estimates When Both Expenditures

and Obligations Are Considered,” November 2007 (GAO)  

Relevance: GAO conducted a telephone survey to assess the amount of TAA training funds available for FY 2007, the process

to obligate training funds, and the amount of National Emergency Grants (NEGs) funds awarded for TAA in the past three

fiscal years.

Findings and Recommendations:

• Survey reflected that GAO and DOL estimates of

available training funds differ because Labor’s

estimates include administrative funding but exclude

unliquidated obligations.  GAO also found that States

have far less funding available to provide TAA training

than DOL suggests.

• Surveyed States reported actively managing

obligations, including timely de‐obligations.  However,

DOL’s approach to distributing TAA training funds

continues to be a concern.

• Labor awarded NEG funds to eighteen States to be

used for co‐enrollment of TAA participants.

Next Steps:  

• DOL continues to monitor available funds for expenditure,

by comparing them to the number of participants who

complete their training.

• The allocation formula is under review, including the hold‐

harmless provision, to ensure that current‐year funds are

allocated effectively to meet current‐year TAA needs; and

subject to knowing the outcome of TAA reauthorization.

• DOL awards NEGS to support trade‐displaced workers by

providing “wrap‐around services” and other activities

available under WIA, except training.  The need for two

funding sources further illustrates a program improvement

recommended for TAA reauthorization.

Additional Information: The report (GAO‐08‐165) is available at http://www.gao.gov/cgi‐bin/getrpt?GAO‐08‐165.   

Data Quality and Top Management Challenges

Data quality for this performance goal is rated Fair.

40  An improvement plan has been implemented that includes

updating guidance to regional office staff on monitoring TAA data collection, quality control and reporting methods;

and continuing to require States to conduct data element validation on Trade Act Participant Report records at the

end of each year.  Software is used to randomly select records, not to exceed 160 per State; and the information in

case files is reviewed to ensure the data collected are complete, accurate and verifiable.  In addition, DOL now

monitors data elements reported by States; inconsistent responses prompt a

request for explanation or correction.  Also, as part of its proposed

reauthorization of the program, DOL is seeking authority for obtaining more

timely and accurate reporting from States.

 

40 Information on DOL’s Data Quality Assessments, conducted annually for each performance goal, can be found in the

Introduction to the Performance Section.

Shanna had been working on the washer line at Herrin (IL) Maytag/Whirlpool for eight

years when the plant closed, leaving 1,000 workers unemployed.  “It was a sad, sad

day,” she said.  “Everyone tried to cope the best they could??  After they made the

announcement, we were given the rest of the day off with pay.  I went and picked my

kids up from school and cried.”  Shanna benefitted from an unprecedented cooperative

venture between Man‐Tra‐Con Corporation and John A. Logan College (JALC).  A special

Transition Center at the college was created for former Maytag/Whirlpool employees

to meet, study, receive tutoring and provide mutual support.  With TAA and WIA

Dislocated Worker funding and guidance from a Man‐Tra‐Con career specialist, Shanna

entered JALC.  She graduated on May 16, 2008 with a dozen other former

Maytag/Whirlpool employees, earning an Associate’s Degree and a medical assistant’s

certificate.  Since then, she has worked for Southern Illinois OB‐GYN and Associates.  

Photo credit: DOL/ETA
Strategic Goal 2

FY 2008 Performance and Accountability Report     107

Address worker shortages through Foreign Labor Certification Programs.

Performance Goal 08‐2F (ETA)

Indicators, Targets and Results

*Indicator target reached (Y), improved (I), or not  reached (N)

**Estimated

FY 2005

Goal Not

Achieved

FY 2006

Goal Not

Achieved

FY 2007

Goal Not

Achieved

FY 2008

Sub‐

stantially

Achieved

Target 100% 100% 100% 100%

Result 100% 100% 98% 100%**

* Y Y N Y

Percent of H‐1B applications processed within seven days of the filing

date for which no prevailing wage issues are identified

Cost — — — ―

Target baseline 60% 65% 75%

Result 57% 86% 74% 94%**

* Y Y Y Y

Percent of employer applications for permanent labor certification

under the streamlined system that are resolved within six months of

filing

Cost — — — ―

Target — 95% 95% 60%

Result — 53% 55% 57%**

* — N N I

Percent of accepted H‐2A applications with no pending State actions

processed within 15 days of receipt and 30 days from the date of

need

Cost — — — ―

Target 90% 90% 90% 64%

Result 85% 82% 62% 77%**

* N N N Y

Percent of the H‐2B applications processed within 60 days of receipt

Cost — — — ―

Goal Net Cost (millions) $60 $46 $63 $40

Source(s): Program Electronic Review Management System, Case Management System (CMS), and H‐1B Electronic Processing System.

Legacy Data:  Some indicators not shown for FY 2005.  Complete indicators, targets and results for FY 2005 are available in the FY 2006 report

at http://www.dol.gov/_sec/media/reports/annual2006/PGD.htm.  See Performance Goal 06‐4.1A.

Note:  Costs for this goal are net costs as defined in a footnote to the Cost of Results discussion in Management’s Discussion and Analysis.

Program Perspective and Logic 

Before a foreign worker may obtain employment in the United States, the Immigration and Nationality Act requires

that the Secretary of Labor certify to the Secretaries of Homeland Security and State that the employment of the

foreign worker will not adversely affect the wages and working conditions of U.S. workers who are similarly

employed.  Employers who wish to hire a foreign worker on a permanent basis, and many employers seeking to

hire foreign workers for temporary jobs, must first test the labor market for available U.S. workers.  Labor

certifications issued by the Department support employers’ petitions, filed with the U.S. Citizenship and

Immigration Services, to authorize employment of foreign workers under temporary visas (like H‐2A and H‐2B) or

under permanent, employment‐based visas which may lead to lawful permanent residency.   

Performance indicators are tied to statutory, regulatory, or internal processing requirements for Foreign Labor

Certification programs.  For example, the permanent (PERM) program measures the percent of employer

applications for labor certification resolved within six months of filing; this reflects much shorter processing times

under the streamlined system than under the previous regulation – which could take years.  The other three

performance indicators measure responsiveness to employers’ time‐sensitive demand for permission to hire

temporary workers by tracking applications processed with ranges of seven to sixty days.  Targets are based on
Performance Section

108     United States Department of Labor

performance information, data analysis, and anticipated application caseloads.  In FY 2009, processing times may

actually increase due to new procedures designed to strengthen program integrity.    

Analysis and Future Plans

The goal was substantially achieved; three targets were reached and results for one indicator did not reach the

target but improved from FY 2007.  The H‐1B Specialty Occupations Program for highly skilled professionals

(specialty workers) processed 100 percent of applications — now almost always filed electronically — within the

statutory seven‐day timeframe.  

The target for the PERM program was reached.  Ninety‐four percent of PERM applications were processed within

six months, exceeding the FY 2008 target and the prior year result by about 20 percentage points.  PERM

performance was aided by a one‐time influx of resources that had been committed to eliminating the backlog of

applications in the old permanent program.  Future PERM processing performance will be impacted by the

implementation of integrity actions related to July 2007 fraud rule and the elimination of the program’s backlog of

cases.  The specialized processing of all new PERM applications at the Atlanta National Processing Center, which

began June 2, 2008, is expected to increase efficiency and potentially, output.  The performance target will be

increased for FY 2009 and FY 2010.

Performance of the H‐2A Temporary Agricultural Program improved over FY 2007.  Progress in meeting the 15‐day

statutory processing timeframe to accept or request a modification of applications is slow but steady.  This year,

DOL experienced minor delays in obtaining recruitment reports and housing inspections from employers and State

agencies.  As of June 2008, all new H‐2A applications are being processed at the Chicago National Processing Center

– a change that is expected to increase efficiency and potentially output, as well.    

The H‐2B Program for Non‐agricultural Seasonal Workers reached its target for FY 2008; 77 percent of H‐2B

applications were processed within 60 days of receipt, a 14.6 percent increase from the prior year.  In FY 2009, the

H‐2B program will also benefit from the Department’s specialized processing of applications. All new H‐2B

applications will be processed at the Chicago center, thereby increasing efficiency and potentially output.  DOL has

issued a Notice of Proposed Rulemaking designed to streamline the H‐2B program.  The proposed rule will speed

processing by moving to an employer attestation process akin to the PERM system that has reduced backlogs in the

permanent program.  The performance target will be increased for FY 2009 and FY 2010.

Costs associated with this performance goal dropped 36

percent from FY 2007‐08 due to the timing of awards for

major staffing contracts and infrastructure and

operations, e.g., information technology contracts.  

Costs for contract awards made in the fourth quarter

will be reflected in FY 2009.  The fluctuation from FY

2005‐07 reflects a temporary drop in staff costs during

consolidation of PERM application processing from ten

regional offices into two new National Processing

Centers, followed by staffing up of those centers and the

Backlog Elimination Centers.

PART, Program Evaluations and Audits

PART Year Rating

2004

(H‐1B)

Moderately

Effective

PART Findings and Improvement Plan:   

http://www.whitehouse.gov/omb/expectmore/summary/10002378.2004.html

FY 2008 Progress on PART Improvement Plan

• Implementing new government‐wide information technology security standards as appropriate.  The System Security

Performance Goal 08‐2F

Net Costs ($ Millions)

40

63

46

60

0

20

40

60

80

2005 2006 2007 2008

Fiscal Year
Strategic Goal 2

FY 2008 Performance and Accountability Report     109

Plan, Contingency Plan and Risk Assessment were updated to comply with federal government IT standards.

• Advocating the need for statutory changes that would require employers filing H‐1B applications to test the labor market

to ensure no U.S. workers are available and willing to fill the position.  Legislative action has not been taken.  However,

DOL has enhanced the H‐1B case management system to strengthen screening for errors and omissions to fully

implement its statutory authority under the program.  Also, since 2005, the Department has collaborated with the

Department of Homeland Security and Department of State in a multi‐agency data sharing effort to identify, address,

and deter H‐1B and other visa fraud.

PART Year Rating

2004

(PERM) Adequate

PART Findings and Improvement Plan:   

http://www.whitehouse.gov/omb/expectmore/summary/10002380.2004.html

FY 2008 Progress on PART Improvement Plan

• Developing appropriate performance measures for the new program, and establish ambitious long‐term and annual

targets.  In 2008, the Department established a new fraud detection and prevention unit, and is developing appropriate

integrity measures.

• Revising the application for Permanent Labor Certification (ETA Form 9089) to promote clarity and ease of use by

employers, address implementation of the Fraud Rule, and promote efficient processing.  DOL is working to revise the

current electronic filing system to incorporate the changes to the application form.  The completion of programming and

testing is scheduled for early spring with implementation in April 2009.

Data Quality and Top Management Challenges

Data quality for this performance goal is rated Very Good.

41  Efforts to improve accuracy of reported wages and

Employer Identification Numbers include expansion of the data validation checks built into the H‐1B application

system.  See Labor Could Improve its Oversight and Increase Information Sharing with Homeland Security (GAO‐06‐

720) for an explanation of key data quality issues.  OFLC regularly assesses data quality, collection methods, and the

Web‐based case management systems to ensure that data are reliable, appropriate, and useful to management.   

Integrity of the foreign labor certification program and the ability to process applications in a timely manner remain

among DOL’s top management challenges (see Maintaining the Integrity of the Foreign Labor Certification Program

in the Top Management Challenges section of Management’s Discussion and Analysis).  Since 2007, when it

eliminated the backlog of permanent applications, OFLC has instituted measures and has now created a separate

division to identify, deter, and address fraud in foreign labor certification programs.  OFLC resources are continually

evaluated to ensure the appropriate balance and allocation among its many activities.

Fraud contributes to inefficiency by tying up resources that could help process the large volume of legitimate

applications.  Fraud cases involve applications filed on behalf of fictitious companies, the use of legitimate

companies without their knowledge, the collection of fees from fraudulent applications filed on behalf of foreign

workers, the substitution of aliens for named applicants, and other unscrupulous practices.  Employer compliance is

improving as a result of actions such as the PERM Fraud Rule, which DOL published in the Federal Register on May

17, 2007.  The new rule limits the certification period to 180 days if the certification is not filed in support of a

petition with DHS within that period, prohibits substitution and certain improper payments, and provides for

debarment of employers for prohibited practices.  In addition, the Department took aggressive action to ensure the

integrity of the online application process by including filters to identify applications for audit; supervising

recruitment for employers, when appropriate; and referring matters to the OIG.

 

41 Information on DOL’s Data Quality Assessments, conducted annually for each performance goal, can be found in the

Introduction to the Performance Section.
Performance Section

110     United States Department of Labor

Build knowledge and advance disability employment policy that affects and promotes

systems change.

Performance Goal 08‐2G (ODEP)

Indicators, Targets and Results

*Indicator target reached (Y), improved (I), or not  reached (N)

FY 2005

Goal

Achieved

FY 2006

Goal

Achieved

FY 2007

Goal

Achieved

FY 2008

Goal

Achieved

Target — baseline 20 34

Number of policy‐related documents Result — 20 34 44

* — Y Y Y

Target — baseline 20 23

Number of formal agreements Result — 20 23 36

* — Y Y Y

Target 11 21 20 24

Number of effective practices   Result 19 26 24 27

* Y Y Y Y

Goal Net Cost (millions) $52 $50 $34 $27

Source(s): ODEP Division of Policy Planning and Research and Division of Administrative Systems and Financial Services.

Legacy Data: Some indicators not shown for FY 2005.  Complete indicators, targets and results for FY 2002‐05 are available in the FY 2006

report at http://www.dol.gov/_sec/media/reports/annual2006/PGD.htm.  See Performance Goal 06‐1.1B.

Note:  Costs for this goal are net costs as defined in a footnote to the Cost of Results discussion in Management’s Discussion and Analysis.  

Costs are not allocated to indicators because program activities are not separable into categories associated with one or the other.

Program Perspective and Logic

The Department’s Office of Disability Employment Policy (ODEP) develops and influences the implementation of

policy to reduce barriers to employment for people with disabilities.  Increasing workforce participation of people

with disabilities requires the removal of barriers experienced by job seekers and employees.  ODEP develops policy

about and for workforce systems, employers and the workplace, and employment‐related supports.  Key

components of ODEP’s employer‐focused effort include fostering the implementation of effective policies and

practices, conducting research and analysis that validates and identifies effective disability‐employment strategies,

and providing technical assistance on implementing policy and effective practices.

ODEP’s response to traditionally low employment rates among people with disabilities is comprehensive and

aggressive.  Success requires active involvement and cooperation of stakeholders including Federal, State, and local

agencies; non‐governmental organizations; and private and public sector employers.  Collaboration with these

stakeholders results in policy development and implementation that expands access to systems (such as

employment and training, education, and vocational rehabilitation), and increases the availability and accessibility

of employment‐related supports (such as health care, transportation and technology).  

ODEP’s investments in research and technical assistance activities provide employers with the information they

need to increase the recruitment, retention, and promotion of people with disabilities.  The results of these

activities – policy‐related documents, formal agreements, and effective practices – are reflected in the current

indicators and targets.
Strategic Goal 2

FY 2008 Performance and Accountability Report     111

Analysis and Future Plans

ODEP achieved its goal by reaching all three targets.  ODEP identified 27 effective practices in FY 2008, reaching the

target of 24.  Targets for the two new indicators (34 policy related documents and 23 formal agreements) were

reached, as well, with results of 44 and 36, respectively.

In FY 2008, ODEP continued to conduct research and analysis and provide technical assistance, particularly on and

about employers and their perspectives.  ODEP also continued providing technical assistance to workforce

investment systems through cooperative agreements.  These agreements, which require ongoing collaboration

between ODEP and other entities, fund national technical assistance efforts, disability and employment research,

and the dissemination of effective practices.  ODEP conducted the second phase of a program evaluation in FY 2008

to develop and pilot test a performance measurement system that supports ODEP’s mission.  Findings and

recommendations regarding the results of the pilot test, use of current annual performance measures, and

proposed intermediate outcome measures will be

reviewed and analyzed in FY 2009.

ODEP net costs dropped again in FY 2008 – to $27

million – from $34 million in FY 2007 and from higher

levels in FY 2005‐06.  Net costs include funds

awarded in prior fiscal years.  Reduced funding has

led to a significant reduction in pilot projects.  In FY

2009, additional efficiencies are expected to result

from staff experts’ assumption of work previously

performed by grantees, including lower development

and operation costs associated with grant projects.   

PART, Program Evaluations and Audits

PART Year Rating

2006 Results Not

Demonstrated

PART Findings and Improvement Plan:   

http://www.whitehouse.gov/omb/expectmore/summary/10003911.2006.html

FY 2008 Progress on PART Improvement Plan

• Maintaining a consistent set of performance indicators to measure progress toward achieving long‐term goals and

developing a valid performance management tracking system for collecting data.  The program evaluation work on the

review of the agency’s’ existing performance measures and the pilot testing of proposed intermediate measures have

been completed.  ODEP will be assessing the viability of the proposed recommendations related to the intermediate

outcome measures and data tracking system.   

Gorman P., an equipment operator 2nd Class with the U.S. Navy,

was running convoys in Iraq when a sudden sandstorm caused a

90‐pound wood plank to hit him in the head, causing a traumatic

brain injury.  Due to his new disability, he was unable to return to

his former civilian job as a truck driver.  Although he had some

ideas about alternative career options, he recognized the need for

additional education.  While recuperating from his injury, Gorman

enrolled in the Transition Training Academy (TTA), a pilot project

for disabled veterans returning from Iraq and Afghanistan designed

to hone their information technology skills and provide them with

marketable credentials.  After completing the program, Gorman

obtained a job with a consulting and training services company

teleworking from his home.  Gorman is committed to helping other

disabled veterans transition to the civilian workforce.  "I wouldn't

be where I am today without TTA," he said. "I want to pass along

the opportunities that were given to me."  Photo credit: DOL/ETA

Performance Goal 08‐2G

Net Costs ($ Millions)

27

34

50

52

0

20

40

60

80

2005 2006 2007 2008

Fiscal Year
Performance Section

112     United States Department of Labor

• Conducting a rigorous evaluation to assess the impact and effectiveness of the program's policy and coordination

functions.  ODEP and the contractor developed a set of intermediate outcome measures and pilot tested the use of a

performance measurement system that generates valid and reliable data and evidence to assess the long‐term impact

and effectiveness of the agency's efforts.

“Evaluation of ODEP Performance Measures,” September 2008 (Eastern Research Group)

Relevance:  The evaluation designed and tested a performance measurement system to assess the impact and effectiveness

of ODEP’s policies and initiatives utilizing tools recommended in the prior review of ODEP’s performance measures and

incorporating information from findings and proposed recommendations around the various outcome measures.

Findings and Recommendations:

• The intermediate outcome measures developed as a

result of the pilot indicate increased knowledge and

adoption/implementation of ODEP policies and effective

practices that can be linked to ODEP’s output measures

and long‐term outcome measures.

• ODEP should integrate performance measurement into

its management and implementing a long‐term measure

(Most Significant ODEP‐Related Changes in systems and

entities affecting employment opportunities for persons

with disabilities) to link to intermediate outcomes and

inform an estimation of ODEP’s impacts.

Next Steps:  

• ODEP will continue to track its annual performance using

three output measures: the number of policy

documents, the number of formal agreements, and the

number of effective practices.

• ODEP intends to expand the pilot testing of intermediate

outcome measures that can be linked to annual output

measures and build into long‐term outcome measures.

Additional Information: The report is available at http://www.dol.gov/odep.

 “Case Study Research on the Effect of Employer Practices on Workers with Disabilities,” September 2008 (Syracuse

University‐Burton Blatt Institute)

Relevance: The researchers conducted case studies of companies to identify how organizational structures, values, policies

and routine practices affect the employment of people with disabilities (e.g., with respect to recruiting, hiring, retaining, and

promoting people with and without disabilities).  This multi‐case analysis identified strategies and best practices across

companies that promote the employment of people with disabilities and create inclusive cultures for all diverse employees.  

This analysis will establish a standard method of research for future case studies that will facilitate benchmarking.

Findings and Recommendations:

• Return to work management services viewed as very

effective by 5 of 6 companies surveyed.

• Top management commitment to hire was rated

moderately high by majorities in 6 companies.

• Fairness of work arrangements and HR practices was

rated moderately high across companies.

• Perceived organization support was rated moderately

high.

• Job satisfaction rated moderately high, although lower

for people with disabilities in 5 companies.

Next Steps:  

• Widely disseminate the findings through the internet, in

presentations, and in common business literature.

• Develop messaging for ODEP’s outreach efforts with

employers.

• Incorporate into ODEP’s “Business Case for the

Employment of People with Disabilities”

• Develop and promote the case studies for inclusion in

MBA curricula across the country.

Additional Information:  The report is available at http://www.dol.gov/odep.

Data Quality and Top Management Challenges

Data quality for this goal is rated Good.

42  ODEP relies on contracted external independent evaluators to validate

the data collection systems that support ODEP’s performance measures.  As ODEP continues to implement its

strategic and performance plan, data quality will be improved to ensure uniform guidelines for collecting and

reporting data as well as increasing their validity in measuring program performance.

 

42 Information on DOL’s Data Quality Assessments, conducted annually for each performance goal, can be found in the

Introduction to the Performance Section.
Strategic Goal 2

FY 2008 Performance and Accountability Report     113

Maximize regulatory flexibility and benefits and promote flexible workplace programs.

Performance Goal 08‐2H (OASP)

Indicators, Targets and Results

*Indicator target reached (Y), improved (I), or not  reached (N)

FY 2006

Goal

Achieved

FY 2007

Goal

Achieved

FY 2008

Goal

Achieved

Target 90% 92% 94%

Percent of identified significant regulations that are reviewed or withdrawn Result 92% 95% 95%

* Y Y Y

Target — — 88%

Percent of economically significant regulations that maximize net benefits Result — — 100%

* — — Y

Target — 62% 68.5%

Result — 65% 68.8%

Percent of participating employers who create or enhance a flexible

workplace practice

* — Y Y

Source(s): DOL's Spring 2007 Regulatory Agenda (initiatives supplied by DOL agencies) and Women's Bureau Best Practice intake forms.

Legacy Data: Some indicators not shown for FY 2004‐06.  Complete indicators, targets and results for FY 2004‐06 are available in the FY 2006 report at

http://www.dol.gov/_sec/media/reports/annual2006/PGD.htm.  See Performance Goal 06‐4.2A.

Note:  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.

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.  The Agenda delineates all the regulations DOL expects to have under consideration for

publication, proposal, or review during the coming one‐year period.  The focus of Departmental regulatory activity

will be on the development of effective rules that advance the Department's goals and that are understandable and

usable to the employers and employees in all affected workplaces.

With OASP’s assistance, DOL regulatory agencies establish plans and procedures to prioritize regulatory initiatives

that support this goal.  Most of the items on the Agenda are required to implement new statutory requirements,

court decisions, or policy and program priorities related to the Department’s other strategic goals.  OASP is

responsible for establishing the guiding principles DOL agencies must follow when developing regulations, including

encouraging the use of cost‐benefit analysis, risk assessment, and performance‐based regulatory standards, as well

as reviewing DOL regulations to ensure they do not impose any unnecessary barriers.   

The “Flex‐Options” project, sponsored by DOL’s Women's Bureau, encourages business owners to develop

workplace flexibility policies and procedures for all of their employees, such as telecommuting, job sharing, and

compressed work week schedules.  Employers learn about effective workplace flexibility through one‐to‐one

mentoring relationships with corporate executives who have had positive experiences with such practices and from

others who have years of experience in designing workplace flexibility practices.  

Each indicator for this performance goal measures DOL’s progress in promoting flexibility in ways that are crucial to

a competitive workforce: regulatory and workplace flexibility.  The regulatory flexibility indicators ensure that DOL’s

regulation review plan emphasizes flexibility.  It is based on meaningful criteria that, where feasible, reflect public

input and correct existing regulatory practices that are duplicative, obsolete, or not cost‐effective.  All interested

members of the public are invited and encouraged to let Departmental officials know how regulatory efforts can be

improved, and to comment on the regulations listed on the agenda. Wherever appropriate, DOL will follow up with
Performance Section

114     United States Department of Labor

changes to reduce regulatory burden to improve productivity and competitiveness, while simultaneously protecting

worker rights, benefits and safety.   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 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 of other regulatory projects already underway.  The

Pension Protection Act of 2006 and the MINER Act are examples of legislation that required regulatory actions be

completed in a timely manner in response to statutory requirements.   

  

Analysis and Future Plans

During FY 2008, the Department had 40 items on its regulatory agenda that were relevant to this performance goal

and took action on 38 of them (95 percent), exceeding the target of 94 percent.  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 provisions with regulations that

reflect current technology and market conditions and address present‐day business practices.  In addition, this

initiative focuses on acting on economically significant regulations that maximize net benefits.  In FY 2008, the

Department acted on 100 percent of these regulations.  In FY 2008, the “Flex‐Options” project reached its target

with 68.8 percent of participating employers creating or enhancing their workplace practices.

Progress on this goal requires continuous adaptation of the Department’s existing and proposed regulations to

changing work environments, technology and market conditions.  This includes ensuring that employment‐related

laws, regulations, and regulatory practices and variances that form the regulatory environment do not inhibit non‐

traditional work arrangements (e.g., telecommuting, job sharing, and flexible schedules).  OASP and the

Department’s regulatory agencies, including the Occupational Safety and Health Administration, Mine Safety and

Health Administration, Employment Standards Administration, and the Employee Benefits Security Administration,

will continue to conduct comprehensive reviews of key laws, regulations and other instruments to determine their

effectiveness and applicability to the new workplace, and to respond to outside recommendations for regulatory

reform such as those of the Small Business Administration's Office of Advocacy.     

PART, Program Evaluations and Audits

OASP has not been subject to a PART review.

Data Quality and Top Management Challenges

Data quality for this performance goal is rated Good.

43  Data and results are not estimated, but are based on

reporting from public actions taken as part of the rulemaking process.  Regulatory data 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 provisions 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 for the flexible workplace

measure are reported by the regions based on the number of programs or policies created or enhanced by

participant companies.  Data are cross checked and verified at the regional and national level.

To identify performance data that better represent the desired outcomes, particularly with respect to the

Department’s regulatory agenda, OASP undertook a review of all agency data collection efforts.  The review

enhanced working relationships with all program agencies and led to more uniform and consistent data reporting.  

OASP plans to routinely conduct such a review to maintain improvements in data quality and working relationships

with the various program agencies.  

 

43 Information on DOL’s Data Quality Assessments, conducted annually for each performance goal, can be found in the

Introduction to the Performance Section.
Strategic Goal 2

FY 2008 Performance and Accountability Report     115

Contribute to the elimination of the worst forms of child labor internationally.

Performance Goal 08‐2I (ILAB)

Indicators, Targets and Results

*Indicator target reached (Y), improved (I), or not  reached (N)

FY 2006

Goal

Achieved

FY 2007

Goal

Achieved

FY 2008

Goal

Achieved

Target 178,000 139,000 127,400

Result 236,663 216,438 161,047

Number of children prevented or withdrawn from exploitive child labor and

provided education and/or training opportunities as a result of DOL‐funded

child labor elimination projects * Y Y Y

Target 39 31 33

Result 55 48 45

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

of DOL‐funded child labor elimination projects

* Y Y Y

Goal Net Cost (millions) $95 $101 $79

Source(s): Grantee progress reports and other project monitoring sources.

Note:  Costs for this goal are net costs as defined in a footnote to the Cost of Results discussion in Management’s Discussion and Analysis.  

Costs are not allocated to indicators because program activities are not separable into categories associated with one or the other.

Program Perspective and Logic

The Bureau of International Labor Affairs (ILAB) contributes to the elimination of the worst forms of child labor

internationally through its Congressionally‐mandated research on child labor, efforts to increase public awareness

of the issue, and support of projects to eliminate exploitive child labor and increase access to quality basic

education around the world.  DOL‐funded international child labor projects provide educational and other services

to child laborers, at‐risk children, and their families; assist in strengthening national labor and education

infrastructures, resources, and policies relating to child labor; and undertake research initiatives to better

understand the issue and inform ongoing and future efforts to address it.  ILAB currently provides funding to 40

grantees working in 61 countries worldwide.   

ILAB measures its success towards meeting this

performance goal through two indicators.  

“Children withdrawn” refers to those who have

been removed from exploitive labor and

enrolled in educational programs; “children

prevented” are at‐risk children who have been

provided education services to keep them from

entering exploitive labor.  The second measure

captures ILAB’s success in promoting national‐

level actions such as legislation aimed at

eliminating exploitive child labor and the

integration of child labor concerns in

governments’ anti‐poverty and economic

development programs.  ILAB establishes annual

targets for its two indicators through analysis of

baseline information, individual project targets,

These children live in a fishing community in the Ga District of Ghana and are at high risk of being trafficked.  As

beneficiaries of a DOL‐supported anti‐trafficking project, these children were provided educational stipends so that they

could attend formal schools, and their parents participated in skills training and livelihood activities to increase household

income.  Photo credit: ILO/IPEC
Performance Section

116     United States Department of Labor

past performance, and external factors.  ILAB’s FY 2008 target for the withdrawal and prevention indicator is lower

than its FY 2007 result due to the dollar’s devaluation, and, in some cases, the targeting of difficult‐to‐reach

children needing more costly interventions, such as child victims of trafficking.

In FY 2008, 90 percent of the funding for DOL’s child labor program directly contributed to ILAB’s two performance

indicators; remaining funds contributed indirectly through administrative, oversight, and research functions.  

Various external factors influence ILAB’s targeted outcomes, many of which are inherent to implementing programs

in developing countries.  Civil unrest, natural disasters, economic shocks, exchange rate fluctuations, frequent

changes in governments, and poor infrastructure can impact the progress of project implementation.

Analysis and Future Plans

This goal was achieved.  During FY 2008, DOL‐supported projects withdrew or prevented 161,047 children from

exploitive labor by providing education and/or training opportunities.  This brought to more than 1.2 million the

total number of children rescued from exploitive labor around the world as a result of DOL assistance since 1995.  

Children served by these projects were working or at risk of working in mines, plantations, manufacturing

workshops, garbage dumps, brick kilns, and other hazardous types of work.  Others had been exploited or were at

risk of exploitation in the worst forms of child

labor such as trafficking, debt bondage, forced

labor, and commercial sexual exploitation.

During FY 2008, through technical support and

outreach from DOL‐funded projects, 45 countries

increased their capacity to eliminate the worst

forms of child labor.  For example, in Cambodia,

using technical input from a DOL‐funded project,

employers’ organizations adopted a Code of

Conduct for Employers Against Child Labor.  In

Rwanda, DOL‐funded projects helped the

government incorporate the issue of child labor

into its national poverty reduction strategy

framework as a matter of priority.  The

Department is funding a national child labor

survey that will serve as a basis for developing

and implementing a Rwandan child labor policy.  

Finally, in Guatemala, a DOL project facilitated

the government’s approval of the United Nations

Convention for the Suppression of the Traffic in

Persons and of the Exploitation of the

Prostitution of Others.

In FY 2009, ILAB will strengthen its project

evaluation process, focusing on two main areas.  

First, ILAB will develop a methodology to test the

impact of various direct interventions to gain a

better understanding of what approaches are

most effective in removing children from

hazardous work and retaining them in education

programs.  Second, ILAB will intensify efforts to

use evaluation findings to improve the design,

implementation, and sustainability of new and

ongoing projects.

Before being enrolled at the age of 11 in a DOL‐supported project

in El Salvador, Miguel would wake up at dawn to spend a long day

harvesting shellfish with his father.  He worked long hours, digging

deep with his bare hands into the mud of mangrove swamps to

extract the shellfish.  To repel the mosquitoes and other insects,

Miguel smoked cigars.  In addition – like the other children working

in the swamps – he took pills to stave off exhaustion from the

arduous work.  Today, thanks to funding provided by DOL, Miguel

and over 35,000 other Salvadoran children have been given

another chance in life.  In addition to removing children from the

worst forms of labor or reducing the risk of their involvement in

these types of labor, the project helps transform the education

system and attitudes towards education in the communities it

serves.  Teaching materials from this project were so popular

among teachers that the Ministry of Education used them as a  

model for social studies curricula through the third grade.  The

Ministry also assumed responsibility for 90 after‐school centers

established by the project after it ended.  Photo credit: ILO/IPEC
Strategic Goal 2

FY 2008 Performance and Accountability Report     117

The fluctuation in costs associated with this

performance goal reflect changes in ILAB’s

appropriations for international child labor

elimination projects from FY 2002‐08 and typical lags

between funding and expenditures.  Annual

appropriations for ILAB peaked in FY 2002‐04 at

approximately $82 million per year before declining

slightly in FY 2005 and over 25 percent in FY 2006.  

This reduced level continued through 2008.  In

keeping with this trend, ILAB experienced an increase

in expenditures from FY 2005‐06 and a 22 percent

decrease in expenditures from FY 2007‐08.   

PART, Program Evaluations and Audits

PART Year Rating

2004 Adequate

PART Findings and Improvement Plan:   

http://www.whitehouse.gov/omb/expectmore/summary/10002384.2004.html

FY 2008 Progress on PART Improvement Plan

• Conducting a comprehensive evaluation of the program's technical assistance activities to assess the programs' overall

impact and effectiveness, including program sustainability.  A third‐party evaluation of the impact and effectiveness of

ILAB’s child labor technical cooperation program is ongoing.  It employs a mixed methodology of surveys, interviews and

site visits.  The final report is scheduled for completion in the fourth quarter of FY 2009.

• Reconsidering the agency’s role in government‐wide international assistance efforts.  ILAB anticipates that the results of

the ongoing evaluation will inform policymakers in their review of the agency's future role and responsibilities.  The

evaluation results will be available in the fourth quarter of FY 2009.

• Implementing a cost‐efficiency performance measure to reflect ILAB's policy functions.  ILAB is working to include the

cost‐efficiency measure in the 2010 Budget.

Data Quality and Top Management Challenges

Data quality for this performance goal is rated Excellent.

44  ILAB, which does not have an overseas presence, has

developed a multi‐pronged strategy for monitoring data quality and project performance.  This includes semi‐

annual project‐level financial and technical progress reports, performance monitoring plans, and mid‐term and final

project evaluations.  In addition, financial and performance‐related attestation engagements are being conducted

by a private certified public accounting firm on many DOL‐funded child labor projects.  These attestation

engagements review data to ensure that grantees are reporting results based on ILAB‐established definitions, and

that the data are supported by adequate records and observation.  When issues in reporting are identified,

grantees are required to provide a corrective action plan to revise the data as necessary.

To strengthen project oversight, ILAB introduced a new internal monitoring tool in FY 2008 through pilot

accountability reviews.  These reviews include assessments of reliability and validity of performance data as well as

compliance with OMB circulars, DOL policies, ILAB Management Procedures and Guidelines, and the terms of

grantees’ Cooperative Agreements.

 

44 Information on DOL’s Data Quality Assessments, conducted annually for each performance goal, can be found in the

Introduction to the Performance Section.

Performance Goal 08‐2I

Net Costs ($ Millions)

79

101

95 74

60

80

100

120

2005 2006 2007 2008

Fiscal Year

FY 2008 Performance and Accountability Report     119   

Strategic Goal 3:  Safe and Secure Workplaces

Promote workplaces that are safe, healthful and fair; guarantee workers receive the wages

due them; foster equal opportunity in employment; and protect veterans’ employment and reemployment

rights.

All workers are entitled to safe and secure workplaces – and several

DOL agencies are dedicated to achieving this goal.  These agencies

provide a critical service to the American worker by ensuring that

employers comply with major employment laws that promote

practices that minimize safety and health hazards, protect employees’

wages, provide equal employment opportunity to workers, and

support veterans returning to the civilian workplace:

• Occupational Safety and Health Administration (OSHA),

• Mine Safety and Health Administration (MSHA),

• Employment Standards Administration (ESA), and

• Veterans’ Employment and Training Service (VETS).   

DOL employs a broad range of expertise – from front‐line

investigators to strategic decision makers – to administer these laws

and to educate employers and the public.  Performance goals and

targets for this strategic goal focus on the effectiveness of these

enforcement efforts and compliance programs.  Here are a few

highlights of FY 2008 results:

For Workers

• In workplaces covered by the Occupational Safety and Health

Act, the fatality rate and the injury and illness rate both

decreased, which means fewer workers suffered from

conditions caused or worsened by their work environment.

• In mines, the fatality rate and the all‐injury and illness rate

both decreased to six‐year lows.

For Employees of Federal Contractors

• The discrimination rate among audited contractors rose but

remained below two percent.   

• Compliance rates among audited contractors dipped by one

percentage point to 87 percent compliance rate.

For Returning Veterans

• Claims under the Uniformed Services Employment and

Reemployment Rights Act increased by 15 percent and

meritless claims increased by 29 percent from last year.

• Employer violations decreased by seven percent.  

For more specific information, see the Performance Goal narratives.   

The chart below presents FY 2008 achievements as measured by

performance goals and indicators.  The performance goal number,

goal statement, and responsible agency appear on the left axis, the

total percentage of indicator targets reached or improved is indicated

In 2006, ESA’s Wage and Hour Division’s

(WHD) Los Angeles District Office began a

concentrated effort to increase compliance

in the local car wash industry – a low wage

industry that displayed all the

characteristics of an underground economy.  

Workers were paid in cash, some “under

the table.”  WHD embarked on an

aggressive strategy employing enforcement

techniques and compliance assistance

initiatives to promote industry‐wide

compliance with the minimum wage and

overtime provisions of the Fair Labor

Standards Act.  By 2008, WHD was working

with the Western Car Wash Association

(WCWA) to expand its outreach to

employers.  The agency gave compliance

presentations to hundreds of car wash

operators throughout the Western and

Southwestern regions of California.  The

WCWA, in turn, added a link to the agency’s

Web site to help its members access

compliance information.  WHD’s

enforcement investigations yielded

hundreds of thousands of dollars in back

wages for low‐wage workers.  For example,

a Northridge car wash was ordered to pay

$160,000 in back wages to 84 workers and a

Santa Monica car wash paid $100,000 in

back wages to 55 employees following an

investigation.  Photo credit: DOL/ESA.
Performance Section

120 United States Department of Labor

in the horizontal bars, and the goal result is on the right axis.  Corresponding strategic goal and DOL‐wide averages

are presented at the bottom of the chart.  If the goal is achieved, the bar will run all the way across because, by

definition, all indicator targets were reached.  If the goal is substantially achieved, the total can range from 80

percent to 100 percent and includes indicators for which the target was not reached, but results improved over the

previous year.

Strategic Goal 3 ‐ Safe and Secure Workplaces

100%

67%

40%

65% 5%

0%

0%

0%

7%

17%

08‐3A  Improve workplace safety and health through compliance

assistance and enforcement of occupational safety and health

regulations and standards.  (OSHA)

08‐3B  Reduce work‐related fatalities, injuries, and illnesses in

mines.  (MSHA)

08‐3C  Ensure workers receive the wages due them.  (ESA)

08‐3D  Federal contractors achieve equal opportunity

workplaces.  (ESA)

08‐3E    Reduce employer‐employee employment issues

originating from service members’ military obligations

conflicting with their civilian employment.  (VETS)

Goal 3 Average

DOL Average

Achieved

Substantially Achieved

Not Achieved

Not Achieved

Not Achieved

Goal

Achievement

Targets reached Improved

For Strategic Goal 3, DOL achieved just one of five performance goals (20 percent), below the Department‐wide

average of 50 percent.  OSHA achieved its goal by reaching targets for reducing the workplace injury and illness rate

and the fatality rate.  MSHA did not achieve its performance goal; however, it reached targets for four of six

performance indicators, including reducing fatality and injury rates.  ESA’s Wage and Hour Division did not reach its

four targets (goal not achieved).  ESA’s Office of Federal Contract Compliance Programs did not reach either of its

two targets, therefore did not achieve its goal.  VETS’ goal for protecting employment and re‐employment rights of

service members was not achieved, either; a spike in claims led to a decline in its comprehensive Progress Index.

The following table provides net costs for all performance goals and indicators associated with this strategic goal.45   

 

45 Rows labeled “Dollars not associated with indicators” indicate costs that cannot be associated with the current set of

performance indicators.  For some goals, indicator costs are intentionally combined by merging cells because program

activities are not separable into categories associated with one or another of them (e.g., job training program common

measures – entered employment, employment retention and average earnings).
Strategic Goal 3

FY 2008 Performance and Accountability Report     121

Net Costs ($Millions)46

Goal or Indicator FY 2006

PY 2005

FY 2007

PY 2006

FY 2008

PY 2007

Strategic Goal 3:  Safe and Secure Workplaces $1,189 $1,237 $1,281

Performance Goals 08‐3A (OSHA)

Improve workplace safety and health through compliance assistance and enforcement

of occupational safety and health regulations and standards.

519 547 554

Days away, restricted and transferred (DART) per 100 workers

Workplace fatalities per 100,000 workers for sectors covered by the OSH Act

519 547 554

Performance Goal 08‐3B (MSHA)

Reduce work‐related fatalities, injuries, and illnesses in mines. 348 356 388

Mine industry fatalities per 200,000 hours worked − 121 132

Mine industry injuries per 200,000 hours worked − 107 116

Percent of respirable coal dust samples exceeding the applicable standards for

designated occupations − 50 58

Percent of silica dust samples taken with a result that is less than half of the

exposure limit in metal and nonmetal mines − 35 35

Percent of noise samples taken with a result that is less than half of the exposure

limit in metal and nonmetal mines − 18 16

Percent of noise exposures above the citation level in coal mines − 25 31

Dollars not associated with indicators 348 − −

Performance Goal 08‐3C (Wage and Hour)

Ensure workers receive the wages due them. 214 221 227

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

remedy per 1,000 enforcement hours in complaint cases

112 123 123

Percent of prior violators who achieved and maintained FLSA compliance following

a full FLSA investigation 27 30 30

Low wage workers assisted per 1,000 case hours 39 45 38

Number of wage determination data submission forms processed per 1000 hours 23 23 35

Dollars not associated with indicators 12 − −

Performance Goal 08‐3D (Federal Contractor Compliance)

Federal contractors achieve equal opportunity workplaces. 97 103 102

Discrimination rate for audited Federal contractors 68 72 71

Compliance rate for all other EEO requirements 29 31 31

Performance Goal 08‐3E (USERRA)

Reduce employer‐employee employment issues originating from service members’

military obligations conflicting with their civilian employment.

11 10 10

USERRA Progress Index (measures compliance and assistance performance) 11 10 10

 

46 Net cost as defined in a footnote to the Cost of Results discussion in Management’s Discussion and Analysis.
Performance Section

122     United States Department of Labor

Improve workplace safety and health through compliance assistance and enforcement of

occupational safety and health regulations and standards.

Performance Goal 08‐3A (OSHA)

Indicators, Targets and Results

*Indicator target reached (Y), improved (I), or not  reached (N)

**Estimated

FY 2007

Goal

Achieved

FY 2008

Goal

Achieved

Target 2.3 2.3

Days away from work, job restriction and job transfer (DART) per 100 workers Result 2.1 2.0**

* Y Y

Target 1.73 1.58

Result 1.58 1.57** Workplace fatalities per 100,000 workers (for sectors covered by the Occupational Safety

and Health Act)

* Y Y

Goal Net Cost (millions) $547 $554

Source(s): OSHA Integrated Management Information System (IMIS), Bureau of Labor Statistics (BLS) Current Employment Statistics (CES) and

Annual Survey of Occupational Injuries and Illnesses (ASOII).

Legacy Data:  Some indicators not shown for FY 2003‐06.  Complete indicators, targets and results for FY 2003‐06 are available in the FY 2006

report at http://www.dol.gov/_sec/media/reports/annual2006/PGD.htm.  See Performance Goals 06‐3.1C and 06‐3.1D.

Note:  Costs for this goal are net costs as defined in a footnote to the Cost of Results discussion in Management’s Discussion and Analysis.  

Costs are not allocated to OSHA’s two performance indicators because the same activities contribute to reductions in fatality and

injury/illness indicators, i.e., their costs are not separable.  Calendar year is designated by “CY.”   

Program Perspective and Logic

For over 35 years, OSHA has promoted employee safety and health in the United States by collaborating with

employers and employees to create safe working environments.  A strong, fair, and effective enforcement program

underpins OSHA’s efforts to protect the safety and health of the nation’s workers.  Outreach, education and

compliance assistance complement enforcement and enable OSHA to play a vital role in preventing on‐the‐job

injuries, illnesses and fatalities.  

The majority of working Americans fall under the jurisdiction of Federal OSHA plans or Federally‐approved job

safety and health programs operated by the States (with the exception of miners, transportation workers, domestic

workers, some public employees, and the self‐employed).  OSHA helps to reduce on‐the‐job injuries, illnesses and

deaths by intervening – through compliance assistance and enforcement strategies – at workplaces where

occupational safety and health hazards are more likely to be present and by responding to reports about serious

workplace hazards.   

OSHA tracks the DART and fatality rates to develop targeted national and local programs and to measure

performance.  The agency’s long‐term goals are to reduce the injury and illness rate by 15 percent between

CY2005‐2011 and the workplace fatality rate by 11 percent between FY 2006‐2011.  OSHA creates fiscal year

estimates from the published BLS Survey of Injuries and Illnesses (calendar year) rates of injuries and illnesses

involving days away from work, job restriction, or job transfer (DART).  OSHA’s own Integrated Management

Information System is used to track fatalities and other data for management purposes.  Other factors that affect

achievement of this performance goal include national economic indicators such as employment, changes in

technologies, and workforce characteristics.   

Analysis and Future Plans

OSHA reached both indicator targets and achieved its goal.  This year, the rate of injuries and illnesses involving

days away from work, job restriction, or job transfer declined to an estimated 2.0 cases per 100 workers from last
Strategic Goal 3

FY 2008 Performance and Accountability Report     123   

year’s rate of 2.1 cases, and the fatality rate for sectors covered by the Occupational Safety and Health Act declined

to 1.57 fatalities per 100,000 workers from the FY 2007 rate of 1.58.

In March 2008, the agency

identified combustible dust as a

workplace safety priority.  OSHA

subsequently sent a letter and

Safety and Health Information

Bulletin entitled “Combustible

Dust in Industry: Preventing and

Mitigating the Effects of Fire and

Explosions,” to almost 30,000

workplaces within industries

that often face the potentially

deadly hazard of combustible

dust.  The letter emphasized the

importance of complying with all

applicable OSHA standards, in

particular those relevant to

combustible dust.  The letter also

encouraged employers to make

use of OSHA's on‐site

consultation program, which

offers free and confidential

occupational safety and health

advice to small and medium‐

sized businesses.  Such measures

support OSHA’s mission to promote employee safety and health and reduce occupational injuries and illnesses.

Contributing to the reduced rate of injuries and illnesses in 2008 were seven National Emphasis Programs (NEPs)

and over 100 Local Emphasis Program (LEPs) in areas such as residential construction, logging, and crystalline silica.  

The agency’s Site Specific Targeting Program, which identifies worksites that experience high rates of injury and

illness, also contributed to the rate reduction.   

In the future, OSHA will use data analysis from the new OSHA Information System database to better target where

injury and illnesses are occurring and to build its operating plan around these areas.   

The costs associated with this performance goal increased by two percent between FY 2007 and FY 2008 due to

budgetary increases for pay adjustments and personnel benefits and other administrative costs.

PART, Program Evaluations and Audits

PART Year Rating

2007 Adequate

PART Findings and Improvement Plan:   

http://www.whitehouse.gov/omb/expectmore/summary/10000336.2007.html

FY 2008 Progress on PART Improvement Plan

• Completing regulatory reforms identified in the 2005 Report to Congress on the Costs and Benefits of Federal Regulation.  

OSHA is on track to publish notices of proposed rulemaking for Hazard Communication Training, Hazard

Communication/Material Safety Data Sheets, Walking and Working Surfaces (which includes the Guardrails Around

Stacks of Steel requirement), and Annual Training Requirements for Separate Standards.

• Developing the OSHA Information System to improve data collection.  In FY 2008, the OSHA Information System Team

worked with 175 potential users of the system to test 20 percent of the system’s capabilities.  The System, which will

Since its inception in 2002, OSHA’s Alliance Program has become an integral part of

OSHA’s strategies to reduce workplace fatalities, injuries and illnesses.  Through the

Alliance Program, OSHA works with groups committed to safety and health,

including business, trade or professional organizations, unions and educational

institutions.  These alliances allow the leveraging of resources and expertise to

develop compliance assistance tools and share information with employers and

employees that help prevent injuries, illnesses and fatalities in the workplace.  The

Alliance Program has enabled OSHA to work with a number of organizations that

were previously reluctant to work cooperatively with the Agency.

Photo credit:  DOL/OSHA
Performance Section

124 United States Department of Labor

enhance data collection, data access, and information dissemination for the entire Agency, is scheduled for full

deployment by September 30, 2010.

• Conducting rigorous independent evaluations to examine the relative effectiveness and efficiency of programmatic

approaches.  In response to recommendations resulting from rigorous independent evaluations, in FY 2008, the agency

developed the second version of a user manual for the OSHA Strategic Management Tool.  The tool will help OSHA use

historic and current workplace demographics and occupational injury and illness experience to predict industry‐level

outcomes and to improve strategic management planning.  Additionally, OSHA is considering developing an evaluation

framework so that program evaluation findings can be used as data inputs to the tool.

“EPA and OSHA Could Improve Their Processes for Preparing Communication Products,”  

March 2008 (Government Accountability Office)

Relevance:  GAO examined how OSHA and the Environmental Protection Agency (EPA) develop new communications

products, including the general processes used to prepare products and how these processes compare to those for

rulemaking and how recent administration initiatives may affect them.

Findings and Recommendations:

• GAO recommended that OSHA and EPA ensure their

key general processes for preparing communication

products are documented, made publicly available, and

include time frames or benchmarks, where appropriate.

Next Steps:  

• OSHA will develop key general policies and procedures for

preparing communication products and make these

procedures available to the public.  It will review and

disseminate these products in a timely manner.  

• OSHA will develop a communications plan for optimal

dissemination of the final product.

Additional Information: The report (GAO‐08‐265) is available at http://www.gao.gov/new.items/d08265.pdf.

”OSHA Strategic Management Tool, Version 1.5,” December 2007 (Eastern Research Group)

Relevance:  The report consists of the second version of a user manual for the OSHA Strategic Management Tool.  The Tool

will help the agency use historic and current workplace demographics and occupational injury and illness experience to

predict industry‐level outcomes and to improve strategic management planning.  It is also part of the agency’s PART

Improvement Plan.   

Findings and Recommendations:

• OSHA made significant strides in addressing the objective

of improving data timeliness and integration. Version 2 of

the Tool moves OSHA closer to an integrated data

system.  

• ERG recommended that OSHA develop an evaluation

framework to establish input and output parameters and

methodologies to enable program evaluations to be used

as data inputs to the Tool.

Next Steps:  

• OSHA will continue to implement refinements to and

issue updated versions of the Tool.  

Additional Information:  The report is available by contacting OSHA’s Office of Evaluations & Audit Analysis at 202‐693‐2400.

Data Quality and Top Management Challenges

Data quality for this performance goal is rated Good.

47  For the fatality goal, the agency relies on its Integrated

Management Information System (IMIS) for fatality data and BLS Current Employment Statistics for employment

data.  IMIS data provide the best count of fatalities under OSHA jurisdiction.  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.  For the injury and illness goal,

the agency uses data from the BLS Annual Survey of Occupational Injuries and Illnesses.  While this survey provides

the most comprehensive and reliable injury and illness data currently available on a national level, results are not

available until nine and a half months after the end of the calendar survey year.  Consequently, OSHA’s estimate for

the fiscal year is a projection based on available data from calendar year 2003 onward.  In September 2008, the

GAO launched a study of OSHA’s efforts to ensure the accuracy of reported injury and illness rates.  The study will

 

47 Information on DOL’s Data Quality Assessments, conducted annually for each performance goal, can be found in the

Introduction to the Performance Section.
Strategic Goal 3

FY 2008 Performance and Accountability Report     125

focus on how OSHA’s injury and illness data are collected and reported, and will assess other studies that have

analyzed the accuracy of OSHA injury and illness data.

Collecting complete and comprehensive data on OSHA’s Voluntary Programs remains a challenge for the

Department (see Protecting the Safety and Health of Workers in the Top Management Challenges section of

Management’s Discussion and Analysis).  While OSHA’s voluntary compliance programs yield many positive

outcomes, the OIG found that much of the agency’s data are limited.  Also, GAO recommended that OSHA identify

cost‐effective methods of collecting complete and comparable data on program outcomes.  In response, OSHA now

collects more complete data on voluntary programs as a result of program refinements and is developing a new

OSHA Information System – to be completed in September 2010.  The new system will alert Consultation Program

Officers of employers with serious workplace hazards requiring OSHA enforcement action.  The new system will

not allow the officers to grant extensions of the deadline for addressing the hazard unless the employers have

provided appropriate interim protections for their employees.
Performance Section

126     United States Department of Labor

Reduce work‐related fatalities, injuries, and illnesses in mines.

Performance Goal 08‐3B (MSHA)

 

Indicators, Targets and Results

*Indicator target reached (Y), improved (I), or not  

reached (N)

**Estimated

FY 2003

Goal Not

Achieved

FY 2004

Goal Sub‐

stantially

Achieved

FY 2005

Goal Not

Achieved

FY 2006

Goal Not

Achieved

FY 2007

Goal Sub‐

stantially

Achieved

FY 2008

Goal Sub‐

stantially

Achieved

Target .020 .022 .022 .021 .0201 .0191

Result .023 .017 .018 .022 .0200 .0159**

* N Y Y N Y Y

Mine industry fatalities per 200,000 hours

worked

Cost — — — — $121 $132

Target 3.79 3.85 3.48 3.13 2.82 3.41

Result 4.34 4.07 3.93 3.72 3.50 3.19**

* N N N N I Y

Mine industry injuries per 200,000 hours

worked

Cost — — — — $107 $116

Target 14.2% 11.1% 10.1% 9.5% 9.0% 11.5%

Result 11.7% 10.2% 10.8% 11.3% 12.20% 10.31%

* Y Y N N N Y

Percent of respirable coal dust samples

exceeding the applicable standards for

designated occupations

Cost — — — — $50 $58

Target — — — — 75.5% 31.18%

Result — — — — 31.82% 31.33%

* — — — — Y I

Percent of silica dust samples taken with a

result that is less than half of the exposure

limit in metal and nonmetal mines

Cost — — — — $35 $35

Target — — — — 71.3% 64.23%

Result — — — — 65.54% 57.03%

* — — — — Y Y

Percent of noise samples taken with a

result that is less than half of the exposure

limit in metal and nonmetal mines

Cost — — — — $18 $16

Target — — baseline 5.0% 4.8% 3.59%

Result — — 5.3% 4.4% 3.66% 4.55%

* — — N Y Y N

Percent of noise exposures above the

citation level in coal mines

Cost — — — — $25 $31  

Goal Net Cost (millions) — — $307 $348 $356 $388

Source(s): Mine Accident, Injury, and Employment information that mine operators and non‐exempt contractors report to MSHA under Title

30 Code of Federal Regulations Part 50, dust samples collected by MSHA inspectors; Coal Mine Safety and Health MIS, and Metal and

Non‐Metal Mine Safety and Health MIS.

Legacy Data: Some indicators not shown for FY 2002‐06. Complete indicators, targets and results for FY 2002‐06 are available in the FY 2006

report at http://www.dol.gov/_sec/media/reports/annual2006/PGD.htm.  See Performance Goals 06‐3.1A and 06‐3.1B.

Note:  In FY 2003‐06, MSHA had separate safety and health goals and in FY 2005, OSHA and MSHA shared performance goals.  Achievement is

restated as if there had been a single MSHA goal.  Costs for this goal are net costs as defined in a footnote to the Cost of Results

discussion in Management’s Discussion and Analysis.   
Strategic Goal 3

FY 2008 Performance and Accountability Report     127

Program Perspective and Logic

The Mine Safety and Health Administration’s (MSHA) mission is to protect the safety and health of the nation’s

miners under the provisions of the Federal Mine Safety and Health Act of 1977 (Mine Act), as amended by the Mine

Improvement and New Emergency Response Act of 2006 (MINER Act).   

Since the earliest days, the job of mining coal and

other useful materials out of the earth has been

one of the world's most dangerous occupations.  

Public concern about the fatalities, injuries and

destruction resulting from mine accidents

prompted passage of much‐needed safety

legislation, and intensified the search for safer

mining methods and improved training practices

and technology.  Growing cooperation among

industry, labor and government also has

contributed to making mining safer and more

healthful.  

Mining deaths and injuries have significantly

declined over the past 30 years.  In 1978, the first

year MSHA operated under the Mine Safety and

Health Act of 1977, 242 miners died in mining

accidents.  Last year, in 2007, 67 fatalities were

reported.  Despite this decline, however, the

current fatality and injury numbers (and frequency

rates) remain unacceptable.  In FY 2008, MSHA

implemented its 100 Percent Inspection Plan and

accomplished its goal of completing every

required inspection at every mine throughout the

country.  MSHA uses incidence rate indicators – the number of fatalities and injuries per 200,000 hours worked by

miners – to assess the effectiveness of its efforts to protect the safety of the nation’s miners.  These rates reflect

not only the number of fatalities and injuries, but also the amount of time (hours worked) miners are exposed to

potential hazards.  There are two sets of health indicators for this performance goal, which target reductions to

exposures to noise and dust in coal mines, and reductions in low‐level exposure samples taken for noise and silica

in metal and non‐metal (M/NM) mines.  These indicators address significant health risks to miners; noise exposure

is a major health concern because it may lead to hearing loss, and exposure to coal and silica dust may cause lung

disease such as pneumoconiosis (black lung) among coal miners and silicosis among miners in metal and nonmetal

mines.

Analysis and Future Plans  

MSHA substantially achieved its performance goal,

reaching four of six indicator targets, and substantially

reaching its silica dust sample indicator target.  The

fatality incidence rate and all‐injury incidence rate

targets were reached this year.  In addition, the all‐injury

incidence rate dropped for the fifth consecutive year.  

Coal mine noise exposure targets were not reached, but

the targets for coal dust and M/NM mine noise were

reached.  MSHA did not reach its target to reduce the

percent of coal mine noise exposures above the citation

level.  Attainment of the coal mine noise target was

Simulating real events and emergencies is one of the most

effective ways to train people.  Recognizing this, MSHA created

concrete burn pads to give fire brigade and mine rescue team

members hands‐on experience using different devices in fighting

fires in a mining environment.  Prior to the hands‐on experience,

trainees must complete classroom training on fire classifications,

firefighting equipment, and various hazards such as electrical

shock, toxic and asphyxiating gases, oxygen deficiency, and

explosive gases. Photo credit:  DOL/MSHA

Fatality Rate ‐ All Mines

Incidents per 200,000 hours worked

0

0.01

0.02

0.03

2003 2004 2005 2006 2007 2008

Result Target
Performance Section

128     United States Department of Labor

partially linked to increased coal production, which correlates with new mining entities that lack adequate noise

controls and more difficult mining processes which generate noise at higher levels.  

MSHA made many changes and enhancements in FY 2008; its 100 Percent Inspection Plan was fully implemented.  

MSHA increased its presence at mine sites, improved the quality of inspections, implemented a new inspection

tracking system, strengthened and updated its citation and penalty structure, and aggressively pursued scofflaw

mine operators.  MSHA also increased its number of enforcement personnel, and improved inspector training.  For

example, MSHA increased course offerings and enhanced course content to include new inspection tracking

requirements, documentation for roof control files, and oversight of mine Emergency Response Plans.  MSHA

believes the increased presence of its enforcement staff at the job sites has – and will continue to have – a positive

impact on mine safety and health.  While many of these changes are a result of the MINER Act, MSHA has also

revised other policies and procedures, such as final

rules on Mine Rescue Team Equipment and Asbestos,

Special Emphasis Programs for Retreat Mining and

Respirable Dust, and an Inspection Tracking System

which will enhance MSHA’s ability to evaluate

inspection progress and compliance with procedures.

Costs for this performance goal increased ten percent

from FY 2007‐08, due primarily to increased

enforcement activity in support of the 100 Percent

Inspection Plan.  Prior increases (FY 2005‐07) are

attributed to higher compensation and rent

expenses.

PART, Program Evaluations and Audits

PART Year Rating

2003 Adequate

PART Findings and Improvement Plan:   

http://www.whitehouse.gov/omb/expectmore/summary/10001101.2003.html

FY 2008 Progress on PART Improvement Plan

• Implementing the MINER Act of 2006.  MSHA published the final rule on Refuge Alternatives and the final rule on the

Utilization of Belt Air and the Composition and Fire Retardant Properties of Belt Material in Underground Coal Mining.  

MSHA continues to work on wireless communications or tracking systems and continues to review and approve

Emergency Response Plans.

• Completing 100 percent of the required inspections.  MSHA completed all required inspections in FY 2008.

• Deploying a new Web tool which allows mining companies to review their history and how assessments are broken

down. MSHA activated a new feature on its Web site that provides additional tools to assess the safety performance at

mines and which will enable users to access violations per inspection day and repeat violations of the same standard.  

All‐Injury Rate ‐ All Mines

Incidents per 200,000 hours worked

0

1

2

3

4

5

2003 2004 2005 2006 2007 2008

Result Target

Percent of Respirable Coal Mine Dust Samples

Exceeding Applicable Standardsfor Designated

Occupations

0

5

10

15

20

2002 2003 2004 2005 2006 2007 2008

Result Target

Performance Goal 08‐3B

Net Costs ($ Millions)

388

356 348

307

0

100

200

300

400

500

2005 2006 2007 2008

Fiscal Year
Strategic Goal 3

FY 2008 Performance and Accountability Report     129

“Mine Safety:  Additional Guidance and Oversight of Mines’ Emergency Response Plans Would Improve the Safety of

Underground Coal Miners,”  April 2008 (GAO)

Relevance:  The MINER Act of 2006 requires underground coal mine operators to develop emergency response plans to

improve accident preparedness, including providing a refuge of air to miners trapped underground and wireless

communications systems. GAO examined the effectiveness of the approval process and the status of implementation of the

plans.

Findings and Recommendations: 

• GAO recommended that MSHA clarify guidance on

requirements for key components of Emergency

Response Plans; and that MSHA ensure that district

offices are consistently applying MSHA guidance on

approving and enforcing Emergency Response Plans.

• GAO also recommended that MSHA and NIOSH jointly

develop guidance on how mine operators can meet the

June 2009 deadline for wireless communication.

Next Steps:

• Rulemaking on refuge alternatives for underground

mines to increase the survival of miners trapped

underground will be completed by December 2008.

• Work with NIOSH to evaluate communication

technologies and to provide guidance for mine operators

on meeting the requirement to provide post accident

wireless communication systems is ongoing.  Should

wireless technology not be commercially available by

June 15, 2009, the MINER Act allows for alternative

means of compliance.

• In June 2008, MSHA issued guidance to District Managers

clarifying requirements for Emergency Response Plans.  

Plans from mines throughout the country are being

reviewed to ensure consistency.

• MSHA will be implementing policy to ensure that repeat

violations are captured in a mine’s violation history, that

the penalty assessment amount reflects that history, and

that operators comply with the most protective

standards.

Additional Information:  The report (GAO‐08‐424) is available at http://www.gao.gov/cgi‐bin/getrpt?GAO‐08‐424.  

Data Quality and Top Management Challenges

Data quality for this goal is rated Very Good – an increase from the Good rating received in 2007.48  The OIG and

GAO pointed out the lack of data on contractor49 hours worked at the mine level and recommended that mine

operators report all hours worked for both employees and contractors.  MSHA could then verify that all data

relevant to reported injuries and fatalities have been included.  MSHA officials believe that the data on non‐exempt

contractor hours are sufficient at the national level for calculating the all‐injury and fatality rates.  However, having

contractor data at the mine level could enhance enforcement effectiveness.  The OIG also pointed out that some

MSHA District or Field offices did not record their noise sample results and some did not record the correct date of

the sample results.  As a result of this finding, MSHA is implementing and improving its quality controls, to help

ensure that the sampling information that they gather is accurately recorded in the management data system.  

Additionally, MSHA is ensuring that the health sampling procedures in its Health Inspection Procedure Handbooks

are implemented through management oversight.  In response to previous Major Management Challenges, MSHA

created an Office of Accountability and revised the MSHA Accountability Program Handbook, continued to

implement the MINER Act, and implemented its succession plan to replace retiring mine inspectors.

 

48 Information on DOL’s Data Quality Assessments, conducted annually for each performance goal, can be found in the

Introduction to the Performance Section. 49 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.
Performance Section

130     United States Department of Labor

Ensure workers receive the wages due them.

Performance Goal 08‐3C (ESA)

Indicators, Targets and Results

*Indicator target reached (Y), improved (I), or not  reached (N)

FY 2004

Goal

Achieved

FY 2005

Goal

Achieved

FY 2006

Goal

Achieved

FY 2007

Goal Not

Achieved

FY 2008

Goal Not

Achieved

Target — — baseline 296 274

Result — — 293 271 272

* — — Y N N

Number of workers for whom there is an agreement

to pay or an agreement to remedy per 1,000

enforcement hours in complaint cases

Cost — — $112 $123 $123

Target 74% 72% 73% 77% 67%

Result 71% 72% 76% 66% 56%

* N Y Y N N

Percent of prior violators who achieved and

maintained Fair Labor Standards Act (FLSA)

compliance following a full FLSA investigation

Cost — — $27 $30 $30

Target — — — 304 422

Result — — — 418 302

* — — — Y N

Low‐wage workers assisted per 1,000 case hours

Cost — — $39 $45 $38

Target baseline 1,506 1,491 1,852 2,662

Result 1,491 1,667 1,834 2,636 2,246

* Y Y Y Y N

Number of wage determination data submission

forms processed per 1,000 hours

Cost — — $23 $23 $35

Goal Net Cost (millions) — $214 $214 $221 $227

Source(s): Wage and Hour Investigator Support and Reporting Database (WHISARD), regional logs and reports on local initiatives, and

investigation‐based compliance surveys.

Legacy Data: Some indicators not shown for FY 2004‐06.  Complete indicators, targets and results for FY 2004‐06 are available in the FY 2006

report at http://www.dol.gov/_sec/media/reports/annual2006/PGD.htm.  See Performance Goal 06‐2.1A.

Note:  Costs for this goal are net costs as defined in a footnote to the Cost of Results discussion in Management’s Discussion and Analysis.

Program Perspective and Logic

The Employment Standards Administration’s Wage and Hour Division’s (WHD) mission is to promote and achieve

compliance with labor standards to protect and enhance the welfare of the nation’s workforce.  Through WHD, the

Department assures compliance with 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 protections afforded to workers under the Migrant and Seasonal Agricultural Worker Protection Act and

the Family and Medical Leave Act.  WHD enforces field sanitation standards in agriculture and government contract

prevailing wage statutes and administers the wage determination provisions of the Davis‐Bacon and Service

Contract Acts.

The program’s performance objectives are to maximize benefits for the greatest number of workers through

efficient complaint resolution, to promote sustained compliance among investigated employers, to increase

compliance on behalf of low‐wage workers in industries with the most persistent and serious violations, and to

issue accurate and timely wage rates for workers on Federally‐funded or assisted contracts.  WHD balances its

enforcement resources among three strategies – compliance assistance, partnerships, and enforcement (complaint‐

driven and directed investigations).  Compliance assistance activities promote voluntary compliance by employers.  

Partnerships leverage resources and broaden the program’s impact.  Directed investigations in low‐wage industries
Strategic Goal 3

FY 2008 Performance and Accountability Report     131

– where workers are reluctant to complain – detect, remedy, and deter violations.  Complaint investigations serve

individual complainants and provide opportunities for detecting and remedying violations on behalf of other

employees.  The wage determination strategies center on increased wage survey participation, timely processing of

wage data submission forms, and effective verification of wage rate information.

WHD measures results for each of its four performance

objectives.  Performance indicators for complaint resolution and

low‐wage industry compliance promote efficient investigations

and encourage the agency to secure remedies on behalf of all

potentially affected workers.  Complaint investigations have

demonstrated a positive effect on future compliance and

directed enforcement initiatives have discouraged recidivism and

boosted industry‐wide compliance.  Efficient handling of

complaint and directed investigations can serve to promote

compliance.  To measure trends in recidivism rates, WHD

conducts an annual compliance survey of prior violators.  These

survey results are used to establish annual goals, assess the

agency’s impact on employer behavior, and test the effectiveness

of various regional strategies on long‐term compliance.  The wage

determination performance indicator tracks efficiencies in the

review and analysis of survey data, which in turn drives the goal

for improved timeliness of Davis‐Bacon Act wage rates.

Changes in employers’ and employees’ economic security have an

impact on compliance with laws enforced by WHD.  Factors such

as increased competition among employers, higher supply costs,

use of multiple levels of subcontracting, and greater use of

contingent workers can contribute to employer non‐compliance.

WHD identified higher levels of unemployment and increased

employment of immigrants in low‐wage industries as two

significant factors affecting enforcement outcomes.  Foreign‐born

workers constituted 15.7 percent of the labor force in 2007 —

47.7 percent of the net increase in the labor force from 2000 to

2007.  WHD attributes fewer complaints and greater difficulty in

identifying violations to workers’ reluctance to discuss

compliance issues given these economic trends.  In recent years,

back wage collections and the number of workers assisted

increased despite the declining number of cases and complaints

(23 percent since 2003). WHD’s recovery levels reflect its

targeted enforcement strategy to conduct more resource

intensive investigations to secure compliance on behalf of more workers.  As a result, investigators are taking

longer to complete more complex investigations, as indicated by the FY 2008 result.  

Analysis and Future Plans

In FY 2008, WHD set performance targets for the agency’s four indicators to improve upon the FY 2007 results.  The

agency did not reach its established targets in FY 2008.  The number of workers assisted per 1,000 enforcement

hours in complaint cases, 272 in FY 2008, was higher than the 2007 result of 271 but just under the target of 274.  

WHD has noted a slight corresponding decrease in the average number of days to conclude a complaint

investigation, which may be attributed to complaint resolution strategies, such as training on efficient investigation

techniques, reviewing complaint inventories weekly, and shifting investigators to offices with high backlogs, that

were implemented in every district office in FY 2008.  The increase in resource intensive H‐1B complaint cases may

The WHD employs targeted strategies of

enforcement, compliance assistance, and public

awareness to ensure the continued safe

employment of young workers.  One of the

enforcement priorities is to increase compliance

in low‐wage industries – including compliance

with the Fair Labor Standards Act’s youth

employment provisions.  In FY 2008, WHD

focused on increasing compliance among

employers that hire young workers to load or

operate paper balers and compactors.  Such

hiring is in violation of a hazardous occupation

order.  Nationwide, local WHD offices targeted

establishments that commonly employ minors in

violation of the order by mailing compliance

assistance materials to employers; investigating

retail stores; posting stickers (see photo); and

reaching out to shopping mall management

companies.  To increase public awareness, they

trained educators on the law, made public

service announcements, hosted rallies, and

publicized the agency’s YouthRules! Web site.  

Photo credit:  DOL/ESA
Performance Section

132 United States Department of Labor

also be affecting the result.  WHD did not reach its target of 422 workers assisted in low‐wage industries per 1,000

enforcement hours.  The FY 2008 result was 302 assisted per 1,000 hours.  The FY 2007 result for this measure,

however, was impacted by one significant case.  If that case is excluded, WHD’s FY 2007 result would have been 293

workers assisted per 1,000 enforcement hours, and WHD would have realized a three percent increase in FY 2008

for this performance indicator.   There are other indications that the agency was more efficient in FY 2008 than

previous years.  Since FY 2005, for example, WHD has increased the percent of directed investigations with

violations by nearly nine percentage points, which demonstrates increased efficiencies in targeting industries and

employers with violations.  WHD realized a similar increase (2.6 percentage points) in complaint violation cases,

which suggests better and more efficient complaint screening and processing.

WHD will continue to integrate the findings of its low‐wage evaluation studies into its directed enforcement

program.  WHD’s FY 2009 performance plan maintains an agency‐wide focus on identifying and remedying

violations that may arise from contingent employment relationships, especially those involving misclassification of

employees as independent contractors.  Each district office will also develop and refine strategies to ensure that

complaint investigations affect compliance on behalf of all workers that may be subject to a violation, and that

complaint investigations are resolved in a timely manner.  Nevertheless, WHD anticipates that the number of

immigrants participating in the workforce and the increase in contingent employment relationships will continue to

challenge the agency’s effort to affect compliance.  These economic and workforce trends, including associated

language barriers, complicate WHD’s investigations and its ability to meet these efficiency objectives.

WHD continues to see a decline in the percent of prior violators that were found in compliance.  The overall level of

compliance among prior violators decreased by ten percentage points from 66 percent in FY 2007 to 56 percent in

FY 2008.  The severity of violations, however, also declined as evidenced by the number of employers that owed

less back wages to fewer workers.  In FY 2008, WHD increased the sample size of prior violators to test the

effectiveness of various regional strategies on recidivism.  Each region will continue to refine its strategic approach

to increasing compliance among prior violators.  Successful re‐investigations and compliance strategies will be

analyzed, refined, and disseminated as best practices in FY 2009.

Wage determination efficiency also declined in FY 2008.  WHD processed 2,246 forms per 1,000 hour in FY 2008 – a

15 percent decline from FY 2007.  With the long‐anticipated completion of new automated technologies, WHD

regional offices shifted their focus from processing new survey forms to processing a backlog of data submission

forms from pending surveys that have been on hold while the automated systems were being implemented.  The

backlogged data submission forms required staff to perform a more complex time‐consuming review than newer

survey data forms.  As a result, the number of forms processed decreased and the time for processing forms

increased in FY 2008.  The survey backlog will be eliminated by the end of calendar year 2008, and WHD should see

rapid improvements in the rate at which survey data submission forms are processed.

Net costs for this performance goal rose slightly from PY 2004‐07, reflecting increases in salaries and expenses.

PART, Program Evaluations and Audits

PART Year Rating

2006

(Enforcement

and Compliance)

Moderately

Effective

PART Findings and Improvement Plan:   

http://www.whitehouse.gov/omb/expectmore/summary/10003908.2006.html

FY 2008 Progress on PART Improvement Plan

• Standardizing the organizational process for developing and monitoring strategic partnerships.  To increase the

effectiveness of its compliance assistance partnership programs, WHD is requiring all regional and local partnerships to

capture and report their outputs.

• Reviewing and implementing recommendations of independent evaluations to improve program performance and

efficiency.  WHD started implementing recommendations from an evaluation of the agency’s enforcement efforts in
Strategic Goal 3

FY 2008 Performance and Accountability Report     133   

low‐wage industries.  The recommendations outlined approaches for more effectively targeting FLSA violators in priority

low‐wage industries and ensuring that corresponding performance targets promote ambitious outcomes.

PART Year Rating

2003

(Prevailing Wage

Determination)

Results Not

Demonstrated

PART Findings and Improvement Plan:   

http://www.whitehouse.gov/omb/expectmore/summary/10001099.2003.html

FY 2008 Progress on PART Improvement Plan

• Modifying wage survey and outreach strategies to improve data collection processes.  WHD continues to examine ways

to improve the wage survey, outreach, and data collection processes to reduce the average age of Davis‐Bacon wage

rates.  The program is targeting an average age of five years by 2012, against a 2007 baseline of 9.5 years.  WHD also

updated the Automated Survey Data System guide to ensure consistent protocols among survey staff.

• Improving program management by establishing a new‐hire and refresher training program for Wage Analyst, Wage

Specialists, and Construction Industry Research and Policy Center staff.  WHD established a training program for regional

and national WHD staff and for the University of Tennessee’s Construction Industry Research and Policy Center to

improve program management.

“Evaluating the Efficiency and Effectiveness of WHD’s Low‐Wage Program,” March 2008 (Mathematica, Inc.)

Relevance:  WHD has recently implemented strategies to promote internal efficiencies, increase productivity, and maximize

effectiveness.  This evaluation analyzed WHD’s investigative efficiency and targeting strategies in low‐wage industries. 

Findings and Recommendations:

• WHD has been successful in targeting and

screening investigations in industries and

establishments with substantial violations.   

• Directed investigations are an effective way to

detect employee violations, although generally

less efficient than complaint investigations in

detecting back wages, except in restaurants.     

• The relationship between establishment age and

investigative efficiency differs by industry among

both directed and complaint cases.

Next Steps:  

• WHD will incorporate the report findings into the FY 2009

planning process.   

• The findings will help the agency more effectively target

violators and ensure that its corresponding performance targets

are ambitious.

Additional Information:  For additional information on this report, contact the Wage and Hour Division, Office of External

Affairs, 200 Constitution Avenue, NW, Washington, D.C. 20210, or call (202) 693‐0051.

“Evaluation of Recidivism Among Previously Investigated Employers,” January 2008 (SRA International, Inc.)

Relevance:  The study assessed the effectiveness of a variety of WHD enforcement and compliance methods intended to

reduce FLSA recidivism among employers who have previously been detected violating provisions of Acts enforced by WHD;

the goals and measures relating to recidivism, including the Government Performance and Results Act measure reported in

the Annual Performance and Accountability Report; and the effectiveness of the enforcement tools and compliance actions

that WHD uses to discourage recidivism among previously investigated employers.

Findings and Recommendations:

• Full compliance is a valid measure, but employers

can improve their performance in relation to the

goal without reaching it.  Adopting measures that

focus more directly on the workers and their

wages would more clearly connect the measure

to the WHD’s stated goal and to statutory intent.

• Overall, the agency’s enforcement actions and

compliance tools have had substantial success in

improving the compliance of prior violators.

Next Steps:

• WHD is reviewing the recommendation to revise the measure

for this goal in light of GAO’s criticism related to the frequent

modification of performance measures.

• For purposes of internal planning and best practices, WHD is

measuring whether employers maintain substantial compliance

following a WHD investigation, which is defined as 50%

improvement in both back wages due and employees affected

from last full investigation and the survey reinvestigation and

where fewer than either 20% of the establishment’s workforce

or 20 total employees are due back wages.

Additional Information:  For additional information on this report, contact the Wage and Hour Division, Office of External

Affairs, 200 Constitution Avenue, NW, Washington, D.C. 20210, or call (202) 693‐0051.
Performance Section

134     United States Department of Labor

“Fair Labor Standards Act: Better Use of Available Resources and Consistent Reporting Could Improve Compliance,”

July 2008 (GAO)

Relevance:  In response to a congressional request, GAO examined FLSA compliance activities from FY 1997‐2007 and the

effectiveness of WHD’s efforts.

Findings and Recommendations:

• GAO recommended that WHD track all

complaints and actions taken in response to

them, and use this information as part of its

resource allocation process;

• Establish a process to solicit input from external

stakeholders, such as employer associations and

worker advocacy groups, and incorporate it, as

appropriate, into planning processes;  

• Incorporate findings of commissioned studies in

its strategic planning process to improve

targeting of employers for investigations; and

• Improving its tracking of whether penalties are

assessed when repeat or willful violations are

found and whether back wages and penalties

assessed are collected.

Next Steps:  

• WHD will remind field managers of their obligation to comply

with the Field Operations Handbook guidance on registering

complaints and will implement a pilot program to track

incoming inquiries at the district office level.

• WHD will document its consideration of stakeholder input

during its FY 2010 Executive Leadership Team planning meeting,

and continue to incorporate findings of commissioned studies in

its strategic planning process.

• WHD will dissolve ineffective partnerships and evaluate new

opportunities before committing scarce agency resources.

• To complement the information on recidivism that the agency

already collects, WHD will develop standardized reports.  These

data will help determine the effects of back wage collection and

assessment of penalties on reducing recidivism.

Additional Information:  The report (GAO‐08‐962T) is available at http://www.gao.gov/new.items/d08962t.pdf.  

“Audit of the Wage and Hour Division, New Orleans District Office’s Processing of Workers’ Complaints Received in the

Aftermath of Hurricane Katrina,” March 2008 (OIG)

Relevance:  OIG examined WHD’s processing of worker complaints received in the aftermath of Hurricane Katrina.  The audit

objectives were to determine whether the New Orleans Wage and Hour District Office (1) was adequately staffed, (2) used

intake procedures that impeded workers’ ability to file complaints, (3) adequately communicated with complainants, and (4)

performed outreach to gather and investigate complaints made by migrant workers.

Findings and Recommendations:

• WHD adequately staffed the New Orleans office to

serve the workforce after Hurricane Katrina.

• The WHD Continuity of Operations Plan (COOP)

should include contingencies for similar disasters;

• OIG also recommended that WHD district offices

maintain a record of all inquiries, and that DOL

ensure that WHD investigators comply with the

policy on regular communication with complainants.

Next Steps:  

• WHD has modified its COOP plan.

• WHD will ensure that any newly developed staffing allocation

plans include criteria related to the state laws and the level

of state enforcement.

• WHD has directed field managers to comply with the policy

on regular communications with complainants and will

implement a pilot program to track incoming inquiries at the

district office level.

Additional Information:  The report is available at http://www.oig.dol.gov/public/reports/oa/2008/04‐08‐002‐04‐420.pdf.  

Data Quality and Top Management Challenges

Data quality for this performance goal is rated Very Good.

50  With the exception of the wage determination

measures, performance information is extracted from the Wage and Hour Investigator Support and Reporting

Database (WHISARD), the agency’s record of investigative case findings and investigator enforcement time.  

Investigative case records are reviewed by WHD management staff and are the subject of internal accountability

reviews.  The data are reported quarterly and performance statistics are considered throughout the agency’s

strategic planning process.  In FY 2008, WHD completed its fourth study to verify the accuracy and reliability of data

reported in WHISARD.  With respect to the data used to develop wage determinations, WHD implemented a time

reporting process to ensure accurate and timely reporting.  WHD has begun tabulating and reviewing the data

monthly to ensure accuracy.

 

50 Information on DOL’s Data Quality Assessments, conducted annually for each performance goal, can be found in the

Introduction to the Performance Section.
Strategic Goal 3

FY 2008 Performance and Accountability Report     135   

Federal contractors achieve equal opportunity workplaces.

Performance Goal 08‐3D (ESA)

Indicators, Targets and Results

*Indicator target reached (Y), improved (I), or not  

reached (N)

FY 2003

Goal

Achieved

FY 2004

Goal

Achieved

FY 2005

Goal

Achieved

FY 2006

Goal

Achieved

FY 2007

Goal

Achieved

FY 2008

Goal Not

Achieved

Target 9% 9% 7% 6% 2% 1%

Result 1.2% 1% 2% 1.7% 1% 1.8%

* Y Y Y Y Y N

Discrimination rate for audited federal

contractors

Cost — — — $68 $72 $71

Target 59% 61% 62% 64% 86% 89%

Result 72.4% 91% 86% 87.2% 88% 86%

* Y Y Y Y Y N

Compliance rate for all other Equal

Employment Opportunity (EEO)

requirements

Cost — — — $29 $31 $31

Goal Net Cost (millions) — — $99 $97 $103 $102

Source(s): Case Management System (CMS).

Note:  Costs for this goal are net costs as defined in a footnote to the Cost of Results discussion in Management’s Discussion and Analysis.

Program Perspective and Logic

The Employment Standards Administration's Office of Federal Contract Compliance Programs (OFCCP) administers

and ensures compliance with three equal employment opportunity laws that prohibit Federal contractors and

subcontractors from discriminating on the basis of race, color, religion, sex, national origin, disability, and protected

veterans' status.  These laws are:  Executive Order 11246, Section 503 of the Rehabilitation Act of 1973, and the

Vietnam Era Veterans' Readjustment Assistance Act of 1974.   

Through fair and effective enforcement of these laws, the

Department seeks to ensure that Federal contractors provide

equal employment opportunity to all applicants.  Reduced

incidence of discrimination among audited Federal contractors

demonstrates a positive correlation between targeted

enforcement and compliance assistance activities with

performance goal achievements.  Performance results reflect

only the Federal contractors audited in one fiscal year, and as

such, cannot be generalized to all contractors.  Nonetheless,

these annual results allow OFCCP to determine its progress in

identifying and deterring discrimination among audited

contractors.  For example, selection is based on a number of

factors — including Equal Employment Opportunity Reports,

complaints against contractors, the date since the last audit, and

statistical analysis to determine likelihood of violations.  In

addition, several external factors affect the selection list,

including changes in business ownership or corporate structure

that occur between the survey and publication of the report.

Initiatives implemented in the last several years are making

OFCCP a more effective and efficient civil rights enforcement

agency.  Enforcement efforts focus on systemic discrimination,

At OFCCP’s 2007 managers’ conference in New

Orleans, Louisiana, James C. Pierce, Director of

the Functional Affirmative Action Program Unit

(FAAP), addressed regional, district, and area

managers.  In 2002, OFCCP enacted new policy

initiatives and directives to clarify guidance for

employers and more enforceable standards to

improve the agency’s civil rights enforcement.  

The FAAP provision allows contractors to

establish multiple affirmative action programs

based on the operational components of their

lines of business or functions.  Photo credit:  DOL/ESA
Performance Section

136     United States Department of Labor

cases involving a significant number of workers or applicants subjected to discrimination.   The Federal Contractor

Selection System’s enhanced selection method for identifying which contractors will be audited has helped OFCCP

monitor a larger portion of the federal contractor universe than in the past.  The Data Integrity Team Initiative has

resulted in fewer hours spent researching contractor jurisdiction, improved case management, and increased

resources for systemic discrimination cases.  The Compliance Assistance Program focuses on raising contractor

awareness of equal employment opportunity obligations and encouraging self‐evaluations.  OFCCP provides one‐

on‐one customer assistance, including online tools and resources that teach contractors how to comply with

Federal employment laws.

Analysis and Future Plans

OFCCP did not reach its goal.  For audited Federal contractors, the discrimination rate rose from one percent in FY

2007 to 1.6 percent in FY 2008 and compliance with all other EEO requirements fell slightly, to 87 percent.  These

results were due to a higher number of systemic cases closed and fewer completed compliance evaluations.  In FY

2008, OFCCP completed 4,333 compliance evaluations, of which 78 were classified as having systemic violations.  By

comparison, OFCCP closed 60 systemic violation cases and completed 4,923 compliance evaluations in FY 2007.

While performance fell short in FY 2008, OFCCP has worked to improve its effectiveness in several program areas.

To attain greater consistency and efficiency, OFCCP developed a procedure for the analysis of compensation data to

better support the desk audit process, including enhanced screening procedures for compensation evaluations.  

The design and deployment of the new Federal Contract Compliance System remained a priority as the system

significantly enhances statistical data tracking throughout the compliance evaluation process.

In FY 2008, OFCCP formulated two new initiatives that promote the hiring of veterans and protect the rights of

applicants with disabilities.  The Good Faith Initiative for Veterans Employment reviews the efforts of Federal

contractors in seeking, employing, and promoting qualified veterans in the workplace and rewards those who

demonstrate exemplary affirmative action efforts.  The Ensuring the Accessibility of Online Application System is

designed to make certain that qualified applicants with disabilities, including disabled veterans, can compete for

jobs when using an online application system.

Costs for this performance goal were virtually unchanged from FY 2007‐08.

PART, Program Evaluations and Audits

PART Year Rating

2004 Adequate

PART Findings and Improvement Plan:   

http://www.whitehouse.gov/omb/expectmore/summary/10000332.2004.html

FY 2008 Progress on PART Improvement Plan

• Exploring the development and implementation of new performance measures with challenging targets for all agency

performance goals.  OFCCP is expanding the available quantifiable data elements in the current Case Management

System, in addition to other outside data elements that may be related to measurement of performance indicators.  As

part of this process, enhancements to the system were tested and deployed throughout FY 2008.   

• Continuing to modernize the agency's data collection system.  The new Federal Contract Compliance System will be

designed to further expand available quantifiable data elements.  A Request for Information to collect written

information about the capabilities of various suppliers will be issued in early FY 2009.

“Women’s Earnings: Federal Agencies Should Better Monitor Their Performance in Enforcing Anti‐Discrimination Laws,”

August 2008 (GAO)

Relevance: This evaluation assessed how DOL enforces laws addressing gender pay disparities among Federal contractors,

provides outreach, and determines its performance in these areas.   

Findings and Recommendations:

• GAO found that OFCCP has not yet evaluated

whether its statistical model effectively predicts

systemic discrimination.

Next Steps:  

• OFCCP’s contractor scheduling is not based solely on the use of

this statistical model, but on several factors.  Nonetheless,

OFCCP has set aside funding to continue an evaluation of its
Strategic Goal 3

FY 2008 Performance and Accountability Report     137

• OFCCP’s data system lacks a unique code to help

the agency easily determine contractor

compliance with the self‐evaluation requirement.

scheduling process in FY 2009.

• OFCCP does not depend solely on contractor self‐evaluation to

identify potential discrimination.  Rather, the agency conducts

its own audit of a contractor’s employment practices, including

compensation activities.  As noted above, OFCCP has planned

an upgrade of its IT system to broaden the range of data input

that will aid in program monitoring.

Additional Information:  The report (GAO‐08‐799) is available at http://www.gao.gov/products/GAO‐08‐799.

Data Quality and Top Management Challenges

Data quality for this performance goal remains Very Good.1  OFCCP continues to explore its data reporting

capabilities to support the development of alternative measures to improve measurement validity.  As discussed

earlier, performance results reflect compliance and discrimination rates among a different set of contractors each

year.  Nonetheless, OFCCP’s archaic database undermines the extent further improvements and changes can be

realized, and a replacement system remains a top funding priority.   

Despite the above GAO report findings on enforcement data quality, OFCCP does maintain robust quality controls

for its core data on systemic discrimination, case closures, and violations – the principal data reported in the PAR.  

These data are cross‐checked at several organizational levels and used in evaluating manager performance.  In

addition, OFCCP established a data integrity team in 2007, within the Division of Program Operations that audits

the data system for data quality.  Other examples of some of OFCCP’s good data quality practices include updating

the Case Management System with compliance audit data supporting performance goals, which are available in

monthly, quarterly, and annual reports.  OFCCP recently implemented a Business Process Rule which enforces the

data collection requirements and responsibilities of each organizational level.  This effort further enhances the

timing and accuracy of data entries completed at field offices.
Performance Section

138     United States Department of Labor

Reduce employer‐employee employment issues originating from service members’

military obligations conflicting with their civilian employment.

Performance Goal 08‐3E (VETS)

Indicators, Targets and Results

*Indicator target reached (Y), improved (I), or not  reached (N)

**Estimated

FY 2006

Goal

Achieved

FY 2007

Goal

Achieved

FY 2008

Goal Not

Achieved

Target 105% 101% 115%

USERRA Progress Index (measures compliance and assistance performance) Result 108% 113% 106%**

* Y Y N

Goal Net Cost (millions) $11 $10 $10

Source(s): USERRA Information Management System (UIMS).

Note:  Costs for this goal are net costs as defined in a footnote to the Cost of Results discussion in Management’s Discussion and Analysis.

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.  These rights and protections were established by the

Uniformed Services Employment and Reemployment Rights Act (USERRA).

VETS provides a range of USERRA‐related services, including compliance assistance to employers and protected

individuals and investigation of individuals’ complaints alleging violation of their rights.  VETS seeks to reduce both

employer violations and the filing of meritless complaints by protected individuals.  The indicator for this goal

focuses on resolving filed claims.  DOL has found that 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 at employers and members of National Guard and Reserve units to

increase knowledge and understanding of USERRA’s key provisions.

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 sub‐indicators are:

1. Number of Guard/Reserve demobilized per USERRA claim filed by Guard/Reserve,  

2. Number of Guard/Reserve demobilized per USERRA claim filed by Guard/Reserve in primary issues,51  

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 the number of USERRA assistance contacts per Guard/Reserve mobilized and

demobilized.  The Employer Support for the Guard and Reserve, an agency in the Department of Defense, also

provides outreach and handles USERRA inquiries.  However, that agency is outside the scope of VETS’ Progress

Index.

 

51 Reinstatement and Military Obligations Discrimination
Strategic Goal 3

FY 2008 Performance and Accountability Report     139

Analysis and Future Plans

The goal was not achieved, largely due to the effects of a significant increase in VETS' USERRA claims compared to

the previous year.  This increase was in part attributable to the termination of a VETS/U.S. Office of Special Counsel

(OSC) demonstration project, which shifted roughly half of all Federal USERRA claims to OSC from FY 2005 through

the first quarter of FY 2008.  VETS' overall USERRA claims increased by 15 percent in FY 2008 compared to the

previous year, with meritless claims increasing by 29 percent.  However, violations decreased by seven percent,

reflecting the impact of VETS’ aggressive compliance assistance efforts, with over 562,000 individual contacts since

September 2001.  Compliance assistance efforts will continue to focus on National Guard and Reserve components,

because they are the source of most USERRA claims.  In FY 2007, for example, Guard/Reserve claims accounted for

81 percent of total claims.  VETS expects this trend to continue and possibly increase due to mobilizations and

demobilizations relating to the Global War on Terror.

Costs associated with this goal were relatively unchanged between FY 2006 and FY 2008.

PART, Program Evaluations and Audits

The USERRA program has not been subject to a PART review.

Data Quality and Top Management Challenges

Data quality for this performance goal was rated Good.  While the data are complete and timely, there is room for

improvement in verifiability and reliability.  These aspects of the UIMS are being addressed by Quality Assurance

Reviews at State, regional, and national levels.  VETS has no DOL top management challenges.

FY 2008 Performance and Accountability Report     141   

Strategic Goal 4:  Strengthened Economic Protections

Protect and strengthen worker economic security through effective and efficient provision of

unemployment insurance and workers’ compensation; ensuring union transparency; and securing pension

and health benefits.

DOL increases the economic security of America's working families by administering payment of temporary benefits

for the unemployed, protecting Federal workers from the economic effects of work‐related injuries and illness;

ensuring that labor union operations are transparent; and protecting employee benefits plans against fraud, abuse,

and mismanagement, and insuring defined benefit pension plans.  These operations are carried out by three DOL

agencies and a government corporation whose board is chaired by the Secretary of Labor:  

• Employment and Training Administration (ETA),  

• Employment Standards Administration (ESA),

• Employee Benefits Security Administration (EBSA), and

• Pension Benefit Guaranty Corporation (PBGC).

For these agencies, protecting America’s workers means

protecting their economic security.  DOL provides benefits

and enforces laws that provide a safety net for workers and

ensure transparency among the unions that represent

them.  Every employee faces unforeseen risks, and these

agencies work to ensure that unemployed workers receive

benefits; that workers in special industries receive

compensation when injured or fall victim to job‐related

illnesses; that pension contributions and health benefits are

secure; and that unions deliver honest elections and

financial records.  Here are a few highlights of FY 2008

results:

For the Unemployed

• 65 percent of unemployed workers found jobs

within six months of their first benefit payment.

• For the second year in a row, over 85 percent of

new employers received timely unemployment

insurance tax liability determinations.  

For the Injured or Ill Worker

• Federal employees lost fewer days of work due to a

work‐related injury or illness – 41 per 100

employees, compared to over 60 just a few years

ago.

• Black Lung and both types of nuclear workers’

claims (energy program Parts B and E) were

processed eight percent, 29 percent, and five percent faster, respectively, than last year.

• Nearly 95 percent of final decisions on energy program claims were made timely – up more than seven

percentage points from FY 2007.

For Union Members

• Although targets for further improvement were not reached, the fractions of acceptable union annual

reports and unions with democratic officer election procedures both remained above 90 percent.

Debit cards put unemployment payments into the

hands of some beneficiaries faster, more safely and

securely than checks because not all claimants have

bank accounts.  As part of its long‐standing practice of

promoting technological improvements in the

Unemployment Insurance (UI) program, in FY 2006,

DOL provided $1.79 million in grants to 20 States for

the implementation of debit card and/or direct deposit

for UI Benefit payments.  Forty‐three States now use

debit cards, are pilot testing or planning for their use.  

Forty‐four States are making UI benefit payments by

direct deposit or planning to do so.  Texas reports that

all of its benefits are paid by debit card while New

Mexico and Louisiana make at least 80 percent of their

payments by debit card.  Photo credit: DOL/ETA
Performance Section

142 United States Department of Labor

For Workers with Pensions

• Pension insurance program customers’ satisfaction continued to increase – to 72 percent for premium

filers, 80 percent for trusteed plan participants, and 89 percent for retiree beneficiaries (from 68 percent,  

79 percent, and 85 percent, respectively, in FY 2005).

For more specific information on the programs, see the Performance Goal narratives.

The chart below presents FY 2008 achievements as measured by performance goals and indicators.  The

performance goal number, goal statement, and responsible agency appear on the left axis, the total percentage of

indicator targets reached or improved is indicated in the horizontal bars, and the goal result is on the right axis.  

Corresponding strategic goal and DOL‐wide averages are presented at the bottom of the chart.  If the goal is

achieved, the bar will run all the way across because, by definition, all indicator targets were reached.  If the goal is

substantially achieved, the total can range from 80 percent to 100 percent and includes indicators for which the

target was not reached, but results improved over the previous year.

Strategic Goal 4 ‐ Strengthened Economic Protections

50%

90%

100%

75%

71%

65% 5%

0%

08‐4A  Make timely and accurate benefit payments to

unemployed workers, facilitate the reemployment of

Unemployment Insurance (UI) claimants, and set up tax

accounts promptly for new employers.  (ETA)

08‐4B  Reduce the consequences of work‐related injuries.  (ESA)

08‐4C  Ensure union financial integrity, democracy and

transparency.  (ESA)

08‐4D  Enhance pension and health benefit security.  (EBSA)

08‐4E  Improve the pension insurance program.  (PBGC)

Goal 4 Average

DOL Average

Not Achieved

Substantially

Achieved

Not Achieved

Achieved

Not Achieved

Goal

Achievement

Targets reached Improved

DOL achieved or substantially achieved two of the five performance goals in Strategic Goal 4 (40 percent) – below

the 50 percent Department‐wide average.  The Unemployment Insurance program did not achieve its goal; it

reached two of its four indicator targets.  ESA’s Office of Workers’ Compensation Programs (OWCP) substantially

achieved its goal by reaching nine of 10 targets for Federal Employees' Compensation Act, Longshore and Harbor

Workers' Compensation, Black Lung Benefits and Energy Employees Occupational Illness Compensation programs.  

ESA’s Office of Labor‐Management Standards (OLMS) did not achieve its performance goal; the targets for its three

indicators were not reached.  EBSA achieved its goal by reaching all targets.  PBGC did not reach its goal but did

reach three of four targets.
Strategic Goal 4

FY 2008 Performance and Accountability Report     143

The following table provides net costs for all performance goals and indicators associated with this strategic goal.52   

Net Costs ($Millions)53

Goal or Indicator FY 2006

PY 2005

FY 2007

PY 2006

FY 2008

PY 2007

Strategic Goal 4:  Strengthened Economic Protections54 $35,705 $38,495 $48,957

Performance Goal 08‐4A (Unemployment Insurance)

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.

33,340 34,647 45,035

Mandated benefit payments55 30,506 32,069 42,281

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

Percent of the amount of estimated overpayments that States detect and establish

for recovery − − −

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

in which they received their first payment − − −

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

end of the first quarter in which liability occurred − − −

Dollars not associated with indicators 2,834 2,645 2,755

Performance Goal 08‐4B (Workers’ compensation)

Reduce the consequences of work‐related injuries. 2,130 3,554 3,693

Mandated benefit payments 1,708 3,050 3,204

Federal Employees' Compensation Act (FECA) Program

Lost production days rate (LPD per 100 employees) for all government agency

cases

7 7 7

Lost production days rate (LPD per 100 employees) for the United States Postal

Service 7 7 7

Savings resulting from Periodic Roll Management case evaluations 20 34 15

Rate of change in the indexed cost per case receiving medical treatment

compared to the Milliman USA Health Cost Index 22 40 25

Targets for six communications performance areas 7 12 8

Longshore and Harbor Worker’s Compensation Program

Average days required to resolve disputed issues in contested cases

6 6 4

 

52 Rows labeled “Dollars not associated with indicators” indicate costs that cannot be associated with the current set of

performance indicators.  For some goals, indicator costs are intentionally combined by merging cells because program

activities are not separable into categories associated with one or another of them (e.g., job training program common

measures – entered employment, employment retention and average earnings). 53 Net cost as defined in a footnote to the Cost of Results discussion in Management’s Discussion and Analysis. 54 Costs for Performance Goal 08‐4E (PBGC) are not referenced because the Corporation’s financial statements are not part of

the Department’s consolidated statements.  PBGC’s financial statements can be found in their Annual Management Report at

http://www.pbgc.gov/docs/PBGCAMR.pdf. 55 Mandatory benefit payments for Unemployment Insurance and Workers’ Compensation programs account for most costs for

Performance Goals 08‐4A and 08‐4B.  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.
Performance Section

144     United States Department of Labor

Net Costs ($Millions)53

Goal or Indicator FY 2006

PY 2005

FY 2007

PY 2006

FY 2008

PY 2007

Division of Coal Mine Workers’ Compensation

Average number of days to render a decision on a claim 24 26 17

Percent change in Black Lung average medical treatment cost for the previous

year compared to the National Health Expenditure Projection − − 2

Energy Employees Occupational Illness Compensation Program

Average number of days to process Part B initial claims 155 185 60

Average number of days to process Part E initial claims − − 58

Percent of Part B and Part E final decisions processed within 180 days where there

is a hearing or 75 days where there is no hearing 16 18 18

Dollars not associated with indicators 159 172 270

Performance Goal 08‐4C (Labor‐Management Standards)

Ensure union financial integrity, democracy and transparency.

56 68 58

Percent of unions with fraud 18 35

Ratio of criminal cases to targeted audits − −

29

Percent of union reports meeting standards of acceptability 8 16

Percent of unions filing reports electronically   − −

11

Percent of unions in compliance with Labor‐Management Reporting and Disclosure

Act (LMRDA) standards for democratic union officer elections 11 13

Average number of days to resolve union officer election complaints − −

14

Dollars not associated with indicators 20 4 3

Performance Goal 08‐4D (EBSA)

Enhance pension and health benefit security. 179 176 170

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

Ratio of criminal cases accepted for prosecution to cases referred

− 103 102

Applications for Voluntary Compliance programs − − −

Dollars not associated with indicators 179 44 68
Strategic Goal 4

FY 2008 Performance and Accountability Report     145

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.

Performance Goal 08‐4A (ETA)

Indicators, Targets and Results

*Indicator target reached (Y), improved (I), or not  

reached (N)

**Estimated

FY 2003

Goal Not

Achieved

FY 2004

Goal Not

Achieved

FY 2005

Goal Not

Achieved

FY 2006

Goal Not

Achieved

FY 2007

Goal Not

Achieved

FY 2008

Goal Not

Achieved

Target 91% 89.2% 89.9% 89.9% 90.0% 88.4%

Result 89% 90.3% 89.3% 87.6% 88.2% 86.8%

Percent of intrastate first payments made

within 21 days

* N Y N N N N

Target 59% 59% 59.5% 59.5% 60.0% 56.0%

Result 54% 57.4% 58.7% 62.1% 54.8% 56.5%**

Percent of the amount of estimated

overpayments that the States detect and

establish for recovery * N N N Y N Y

Target — — — baseline 65.0% 65.2%

Result — — — 62.4% 65.1% 64.9%**

Percent of UI claimants reemployed by the

end of the first quarter after the quarter in

which they received their first payment * — — — Y Y N

Target 80% 82.2% 82.4% 82.5% 82.8% 84.9%

Result 83% 83.6% 82.4% 83.7% 85.6% 85.5%**

Percent of new employer tax liability

determinations made within 90 days of the

end of the first quarter in which liability

occurred * Y Y Y Y Y Y

Goal Net Cost (millions) — — $34,243 $33,340 $34,697 $45,035

Source(s): Payment Timeliness: 9050, 9050p, Reports Payment Accuracy: Benefit Accuracy Measurement (BAM) program and ETA 227

Report, Facilitate Reemployment: ETA 9047 Report, New Status Determinations Timeliness: ETA 581 Report.

Legacy Data: Some indicators not shown for FY 2003‐05.  Complete indicators, targets and results for FY 2003‐05 are available in the FY 2006

report at http://www.dol.gov/_sec/media/reports/annual2006/PGD.htm.  See Performance Goal 06‐2.2B.

Note:  Costs for this goal are net costs as defined in a footnote to the Cost of Results discussion in Management’s Discussion and Analysis.  

Approximately $2 billion of the net cost is for administration; the rest is for benefit payments to individuals.  Costs are not allocated to

the indicator level because performance indicators do not map to administrative cost categories or benefit payments.  See Analysis and

Future Plans section in the following narrative.  

Program Perspective and Logic

By temporarily replacing part of unemployed workers’ lost wages, the Federal‐State Unemployment Insurance (UI)

system minimizes individual financial hardship resulting from unemployment and stabilizes the economy during

economic downturns.  States operate their own programs under their own laws, which must also conform to and

substantially comply with Federal law.  As the Federal partner, DOL provides program leadership, allocates

administrative funds, provides technical assistance, and exercises performance oversight to ensure that State

partners meet Federal UI laws and regulations.  Measuring efficiency and effectiveness of States’ administrative

operations is an important aspect of program management.  For both workers and employers, success is measured

by timely payment of benefits; accurate payments; prompt determination of new employers’ tax liabilities; and

promoting reemployment of claimants in suitable work.

As economic conditions change, the resulting workloads affect many aspects of the UI system performance.  For

example, when unemployment rises, more claims are filed and UI payment timeliness generally declines.  On the

other hand, when business creation slows, it reduces the number of new employer tax accounts and the timeliness

of tax liability determinations generally improves.  In addition, non‐economic events can be extensive enough to

affect aggregate UI system performance; an example was the series of hurricanes that hit the Gulf region during

2005.  Performance targets are based on the Administration’s economic assumptions, which are subject to change.
Performance Section

146 United States Department of Labor

Analysis and Future Plans

Based on the most recent data covering 12 months of performance, the UI system did not reach FY 2008 targets for

first payment timeliness and claimants’ reemployment rate.  However, the targets for new employer tax liability

determinations and detection of

overpayments were reached.  First payment

timeliness declined in California, Georgia,

Indiana, Kansas, Massachusetts, Minnesota,

Missouri, New Hampshire, Rhode Island,

Virginia, and Washington.  The decrease in

performance is largely attributable to

increased workloads.  The number of UI first

payments made from October 1, 2007 to

September 30, 2008 (8.9 million) was 17.1

percent higher than those made during the

preceding 12‐month period (7.6 million).  

State agencies’ overpayments established for

recovery increased by 1.7 percentage points

over the FY 2007 result.  Overpayments

estimated by the Benefit Accuracy

Measurement (BAM) program decreased by

$10.6 million, from 5.9 percent to 5.6 percent

of UI benefits paid, while overpayments established for recovery by the state agencies increased by $25 million.  

The reemployment rate of 64.9 percent for claimants reemployed in CY 2007 is 0.2 percentage points below the

target for FY 2008, primarily due to changes in the national unemployment rate.

To meet all its performance goals, the Department has several initiatives under way:

• Address the largest cause of UI improper payments – claiming benefits after returning to work – by

continuing to promote the use of the National Directory of New Hires (NDNH) by all States.

• Address the second largest cause of overpayments – errors in handling separation issues – by continuing

two efforts: facilitating the design and implementation of the Unemployment Insurance Separation

Information Data Exchange System (SIDES), which is expected to provide more timely and complete

separation information; and coordinating design and development of additional State adjudication training

courses to reduce claimant eligibility determination errors.

• Facilitate a National UI Benefits and Adjudication Conference for States to share best practices and discuss

new strategies to improve UI benefits program performance and payment accuracy.

• Issue guidance to the states to address legislative requirements of the Unemployment Compensation

Integrity Act of 2008, which authorizes recovery of some UI fraud overpayments by offsetting Federal

income tax refunds.

In FY 2008, the UI system costs were $10 billion higher

than in FY 2007.  Approximately $4 billion of this

increase is attributable to the Emergency

Unemployment Compensation program.  The rest of the

increase reflects the increase in the average

unemployment rate from 4.5 percent to 5.3 percent.  

Overall, benefit payments rose 32 percent to $42.281

billion in FY 2008 from $32.069 billion in FY 2007.  

Administrative costs increased by seven percent, from

$2.578 billion to $2.755 billion.  DOL collects

information on State spending of UI grant funds;

however, the categories in which cost data are collected

UI Indicators and Total Unemployment Rate

50%

55%

60%

65%

70%

75%

80%

85%

90%

95%

2002 2003 2004 2005 2006 2007 2008

Fiscal Year

UI Indicators

4.0%

4.5%

5.0%

5.5%

6.0%

6.5%

Timeliness

Overpayments

Reemployment rate Liability

Total Unemployment Rate

Performance Goal 08‐4A

Net Costs ($ Millions)

45,035

34,243 33,240 34,647

0

10,000

20,000

30,000

40,000

50,000

2005 2006 2007 2008

Fiscal Year
Strategic Goal 4

FY 2008 Performance and Accountability Report     147   

are generally functional or workload categories – initial claims, continued claims, eligibility determination, appeals,

employer accounts, tax audits, overhead, and infrastructure costs such as space and information technology.  These

categories do not align well with UI performance measures, which span multiple functions.  For example, the cost

of timely first payments would include some portion of the costs attributable to initial claims, eligibility

determinations, employer accounts, tax audits, and a share of overhead and infrastructure costs.  Therefore,

separating costs by performance indicator is not currently feasible.

PART, Program Evaluations and Audits

PART Year Rating

2003 Moderately

Effective

PART Findings and Improvement Plan:   

http://www.whitehouse.gov/omb/expectmore/summary/10001102.2003.html

FY 2008 Progress on PART Improvement Plan

• Integrating use of the National Directory of New Hire (NDNH) crossmatch into the UI Benefit Accuracy Measurement

(BAM) survey to improve detection of claimants' eligibility for UI benefits.  As of July 1, 2008, 48 States were matching

paid claims cases with the NDNH or their State Directory of New Hires.  

• Advising, facilitating and coordinating state adjudication training designed to improve claimant eligibility

determinations.  Five training sessions were completed in FY 2007 and five in FY 2008 with a total of 400 staff trained.

• Supporting a five‐state consortium's development of the Separation Information Data Exchange System (SIDES) to ensure

that accurate employer information on the circumstances of job separations reaches adjudicators in time to result in

accurate decisions.  DOL is working with the consortium and its contractor to facilitate development and testing of

SIDES, which will support the exchange of information on the reasons for claimant separations between employers and

State Workforce Agencies.  The five consortium States plan to have SIDES completely implemented in CY 2009.  

“Worker Profiling and Reemployment Services Evaluation of State Worker Profiling Models: Final Report,”  March 2007

(Coffey Communications, LLC)

Relevance:  The purpose of this study was to improve State worker profiling models by establishing an approach for

evaluating their accuracy, applying this approach to current State models to determine how effective they are at predicting

UI benefit exhaustion, and identifying best practices in operating and maintaining worker profiling models.  

Findings and Recommendations:

• Basic assessments of model effectiveness were

conducted for 28 States, and extended analyses were

conducted for nine of them.

• Performance of profiling models is reasonably good.  

Detailed analysis of State data shows that almost all of

the 28 State models analyzed perform better than

random assignment of claimants to services.

Next Steps:  

• DOL is providing technical assistance on a State‐by‐State

basis to assist in updating their profiling models.

Additional Information:  The report is available at http://wdr.doleta.gov/research/.  

“Reemployment and Eligibility Assessment (REA) Study – FY 2005 Initiative,” March 2008 (IMPAQ International, LLC)

Relevance:  The purpose of this study was to evaluate the implementation of the REA Initiative and test its efficacy.  The

study included an analysis of REA impacts on employment and UI benefits receipt in two states.

Findings and Recommendations:

• While the REA Initiative was successfully implemented

in most States, researchers experienced methodological

challenges establishing valid treatment and comparison

groups and providing data via the required reports in

most states.  The findings from two States (see below),

while informative, cannot be generalized to all states.

• Analysis of REA impacts in Minnesota using State UI

administrative records and follow‐up interview data

indicated that REA enhanced the rapid reemployment

of unemployed workers and reduced overpayments.  A

similar analysis in North Dakota, however, found no

statistically significant program impacts.

Next Steps:  

• The Department will continue to analyze the outcomes

and effectiveness of the REA initiative.
Performance Section

148 United States Department of Labor

Additional Information: The report is available at http://wdr.doleta.gov/research/.

“Evaluation of State Implementation of Section 303(k) of the Social Security Act,” June 2008

(Coffey Communications, LLC and the Urban Institute)

Relevance:  The report provides information on State actions to meet the requirements of Public Law 108‐295, the “State

Unemployment Tax (SUTA) Dumping Prevention Act of 2004”, which amended section 303(k) of the Social Security Act (SSA)

by establishing a minimum nationwide standard for curbing an unemployment compensation tax rate manipulation scheme

known as “SUTA dumping.”  P.L. 108‐295 required the Secretary of Labor to conduct a study of state implementation and

report the findings to Congress.

Findings and Recommendations:

• Several states indicated that there is a need for

additional Federal legislation and/or other Federal

action to improve the effectiveness of SUTA dumping

detection, prevention, and enforcement; and

• States need technical assistance and/or training.

Next Steps:  

• DOL convened a National SUTA Dumping Detection

Forum that included volunteer State and Federal staff.  

Participants recommended formation of three teams to

study and provide guidance: electronic information

sharing tools, Web‐based training tools and mentoring

programs, and performance measure development.  

Plans are to provide substantive outcomes in each of the

three areas in FY 2009.  

Additional Information:   The report is available at http://wdr.doleta.gov/research/.

Data Quality and Top Management Challenges

Data quality for this performance goal was rated Very Good.

56 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 to reduce instances of overpayment and worker

misclassification by assuring that definitions are uniformly applied among the States and that performance data are

correctly reported.  In FY 2008, ETA implemented a UI Data Validation (DV) program to verify that UI activities are

reported according to prescribed definitions.  States are required to submit their DV results as part of the State

Quality Service Plan (SQSP) process.  States that fail DV must describe in the SQSP Corrective Action Plan or

narrative the actions they plan to take to pass DV.  

Reducing improper payments and improving the integrity and solvency of the UI program remain among the

Department’s top management challenges (see Safeguarding Unemployment Insurance in the Top Management

Challenges section of Management’s Discussion and Analysis).  DOL continues to aggressively address the leading

cause of overpayments – individuals who claim benefits after returning to work – by promoting use of the NDNH,

which provides state agencies with information on the claimants’ employment status.  As of July 1, 2008, 48 State

agencies submitted files of UI payments for NDNH matching as part of their UI integrity operation.  To improve the

accuracy of the overpayment detection measure, all States are required to cross‐match paid UI claims selected for

BAM audits with the NDNH data.  As of July 1, 2008, 45 state BAM programs had implemented NDNH matching and

three additional states were matching with their State Directory of New Hires.   

The weakening in the economy has affected State trust fund accounts.  More than half of the States reported a

negative cash flow in the 12 months ending in March 2008, and two States borrowed from the Federal

Unemployment Account this fiscal year.  Overall, balances are expected to decline seven percent this fiscal year.  

Several existing and proposed measures are expected to improve trust funds’ solvency.  All States’ UI tax schedules

are indexed; when trust fund balances fall below predetermined levels, tax rates rise to increase contributions.  

Ongoing efforts to prevent, detect and recover overpayments will conserve scarce funds.  Finally, DOL is in the

process of implementing a regulation requiring a State to meet a funding goal in order to get the interest‐free cash‐

flow loan – which the State needs to make benefit payments.  This requirement will provide an incentive to States

to improve solvency and will establish a DOL position on what constitutes an adequate fund balance.

 

56 Information on DOL’s Data Quality Assessments, conducted annually for each performance goal, can be found in the

Introduction to the Performance Section.
Strategic Goal 4

FY 2008 Performance and Accountability Report     149

Reduce the consequences of work‐related injuries.

Performance Goal 08‐4B (ESA)

Indicators, Targets and Results

*Indicator target reached (Y), improved (I), or not  

reached (N)

**Estimated

FY 2003

Goal Sub‐

stantially

Achieved

FY 2004

Goal Sub‐

stantially

Achieved

FY 2005

Goal Sub‐

stantially

Achieved

FY 2006

Goal

Achieved

FY 2007

Goal Sub‐

stantially

Achieved

FY 2008

Goal Sub‐

stantially

Achieved

Target 54.7 55.4 61.0 60.0 49.0 48.5

Result 55.0 61.9 56.0 52.2 46.3 41.0**

* N N Y Y Y Y

Federal Employees’ Compensation Act

(FECA) program

Average lost production days (LPD) per

100 non‐Postal employees)  resulting

from work‐related injury and illness Cost — — — $7 $7 $7

Target 130 146 148 146 130 142

Result 143 147 135 142 135 134**

* N N N Y N Y

Average lost production days (LPD) per

100 Postal employees  resulting from

work‐related injury and illness

Cost — — — $7 $7 $7

Target $20 $18 $17 $13 $8 $14

Result $25 $24 $23 $16 $17 $17

* Y Y Y Y Y Y

First‐year benefit savings as a result of

Periodic Roll Management (PRM) reviews

($million)

Cost — — — $20 $34 $15

Target ≤9.1% ≤8.8% ≤8.8% ≤8.7% ≤8.3% ≤8.5%

Result ‐2.8% +2.4% +2.8% +6.3% +8.1% +3.2%

* Y Y Y Y Y Y

Rate of change in medical cost per case is

below comparable measure of the

annual rate of change in the national

Milliman USA Health cost index (MHCI) Cost — — — $22 $39 $25

Target baseline 3 3 4 4 5

Result 5 4 3 4 4 5

* Y Y Y Y Y Y

Targets for six communications

performance areas

Cost — — — $7 $12 $8

Target 279 273 245 250 248 baseline

Result 266 247 254 235 230 239

* Y Y N Y Y —

Longshore and Harbor Worker’s

Compensation Program

Days required to resolve disputed issues

in contested cases Cost — — — $6 $6 $4

Target — — 320 315 247 220

Result — — 323 251 224 205

* — — — — Y Y

Division of Coal Mine Workers’

Compensation

Average number of days to render a

decision on a claim Cost — — — $24 $26 $17

Target — — — — — ≤6.1%

Result — — — — — +10%

* — — — — — N

Percent change in Black Lung average

medical treatment cost from the

previous year compared to the National

Health Expenditure Projection (NHEP) Cost — — — — — $2

Target — — — — — 226

Result — — — — 238 164

* — — — — *— Y

Energy Employees Occupational Illness

Compensation Program (EEOIC)

Average number of days to process part

B initial claims Cost — — — — *— $60
Performance Section

150     United States Department of Labor

Target — — — — — 290

Result — — — — 293 284

* — — — — — Y

Average number of days to process part

E initial claims

Cost — — — — — $58

Target — — — 80% 85% 87%

Result — — —   89% 88% 93%

* — — — Y Y Y

Percent of Part B and Part E final

decisions processed within 180 days

where there is a hearing and within 75

days where there is no hearing Cost — — — $16 $18 $18

Goal Net Cost (millions) — — $6,131 $2,130 $3,554 $3,693

Source(s): FECA Integrated Federal Employees’ Compensation System, Federal agency payroll offices, Office of Personnel Management

employment statistics, FECA Central Medical Bill Processing system, Milliman USA Cost Index Report, FECA Tele‐communications system

standard reports, FECA district office and national MIS reports, Longshore Case Management System, Black Lung Automated Support

Package, and Energy Program Case Management System.

Legacy Data: Some indicators not shown for FY 2003‐07.  Complete indicators, targets and results for FY 2003‐06 are available in the FY 2006

report at http://www.dol.gov/_sec/media/reports/annual2006/PGD.htm.  See Performance Goal 06‐2.2C.  Complete indicators, targets

and results for FY 2007 are available at http://www.dol.gov/_sec/media/reports/annual2007/PGD.htm.  See Performance Goal 07‐4B.  

Program Perspective and Logic

Through the Employment Standards Administration’s Office of Workers' Compensation Programs (OWCP), 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, and  

• Energy Employees Occupational Illness Compensation (EEOIC) for nuclear weapons employees of the

Department of Energy or its contractors.  

OWCP activities emphasize adjudicating claims and paying benefits accurately and in a timely manner, efficiently

mediating disputed claims, assisting with injury recovery and return to work, controlling costs, providing responsive

informational and other assistance to customers, and assisting employers with regulatory compliance and

participation in program administration.  OWCP examines the relationships among investments, activities and

program results to allocate funds to achieve program goals.   

Performance measures for this goal track the outcomes of key OWCP strategies and program priorities.  Lost

production day (LPD) rates capture time away from work in Federal employee injury cases.  FECA uses nurse case

managers and other strategies to coordinate medical care and assist with return to work to significantly reduce the

LPD.   Communications goals increase customer access to program information and responsiveness to customer

requests for assistance.  Periodic roll management generates benefit cost savings through the careful review of

cases to determine if continued disability status is warranted and to determine the reemployment potential of

those currently receiving compensation payments.  The FECA and Black Lung programs measure themselves against

nationwide indices to gauge their effectiveness in containing medical benefit costs.  The Black Lung program

measures average time to render claims decisions and its efficiency in producing quality decisions.  By reducing the

average processing time for disputed claims, the Longshore program contributes to its chief outcome of resolving

claims appropriately and equitably at minimum cost to all parties.  Effective dispute resolution works to reduce

extended hearings and appeals processes by raising the quality of communications, medical evidence, mediation

services, and clarity of decisions.  The Energy program measures processing efficiency and service delivery time

using two measures that track average days to process initial claims and the share of final decisions produced

timely.  Target levels take into consideration the differing complexities of Energy cases according to medical

exposure and reported illness.
Strategic Goal 4

FY 2008 Performance and Accountability Report     151

Several external factors challenge the achievement of the OWCP program mission.  The number and types of jobs

available for return to work placement are driven by employment and business technology trends—the

modernization of U.S. Postal Service (USPS) operations and resulting elimination of traditional jobs and reductions

in employment levels is one compelling example as evidenced by the recent increase in the LPD rate.  These

changes determine both the availability of jobs and their skill requirements for injured workers trying to return to

duty.  The trend in the nature of new injury cases and the type of assistance they require reflect an aging

workforce.  For example, while musculoskeletal injuries still predominate, back injuries that used to be the most

common, are now accompanied by knee, hip and shoulder problems.  The cost of medical care continues to rise

with better and earlier diagnostic medical technology, medicines and treatment procedures.  The nation’s

expanded use of private contractor resources to support the wars in Iraq and Afghanistan has increased the

number of deaths and injuries compensable under the Defense Base Act (DBA) and the War Hazards Compensation

Act, both of which are administered by OWCP.  New technologies and higher customer expectations continue to

challenge OWCP to provide greater information at higher access speeds.  The EEOIC program structure mandates

that certain cancer claims be transferred to the Department of Health and Human Services’ National Institute for

Occupational Safety (NIOSH).  Length of processing times in these cases impacts EEOIC program performance.  

Analysis and Future Plans

DOL substantially achieved this performance goal in FY 2008 by reaching nine of ten targets.  The following results

discussion is organized in three categories: Return to Work, Containing Program Costs, and Customer Service.

Returning Injured Employees to Work

Shortening the time out of work for injured workers is a major indicator of the FECA program’s effectiveness.  The

LPD is measured for each Federal agency’s cases within the first year from date of injury against the employment

levels of those agencies.  The rate (per 100 employees) is derived from that calculation.  Both of FECA’s LPD targets

were met in FY 2008 and the program remains on track to achieve its long‐term LPD goals.  The significant decrease

in the average length of disability in FECA’s Quality Case Management cases – over 20 percent reduction in the past

decade – contributed to this success.  Under the President’s Safety, Health and Return‐to‐Employment (SHARE)

initiative (for which Secretary Chao has the government‐wide lead), non‐Postal agencies reduced injuries, including

an annual decrease in new lost‐time injury claims over the last four years, and LPD rates.  While the Postal Service

LPD remains higher than most agencies, FECA met its LPD target in FY 2008.

USPS continued to report high levels of new lost‐time injuries.  Its employment levels have declined due in part to

the automation of many job functions. USPS is also reviewing limited duty positions for elimination.  Overall, fewer

positions are available for reemploying and transitioning injured workers.  In response, FECA adjusted out‐year LPD

targets to capture these external factors and will track additional measures linked to specific USPS strategies.  For

example, FECA established an operational goal for Postal workers affected by job eliminations who return to the

FECA payment rolls.  Through the vocational rehabilitation program, FECA aims to increase the number of claimants

placed in jobs with new employers.

Containing Program Costs

Measured in financial terms, FECA outcomes reflect the efficiency and quality of benefit payment activities and the

impact of case management and benefit services.  FECA continues to meet the Periodic Roll Management (PRM)

savings goal through its directed review of long‐term disability cases to determine continued eligibility.  Nearly half

of the over 3,000 cases reviewed in FY 2008 produced cost savings of $17 million.  Since 1999, DOL has saved well

over $1 billion through PRM.  FECA effectively manages medical costs through centralized bill processing,

strengthened reviews of treatment authorization requests, fee schedules, and stronger automated edits and other

controls.  In FY 2008, the indexed rate of change in FECA average medical treatment costs indicator reached its

target; it rose by 3.2 percent compared to the change rate of national health care costs of 8.5 percent projected by

the Milliman USA Health Cost Index.  Comparing the FECA medical cost growth rates to the nationwide rates since

FY 2000 equates to (conservatively) a cost reduction of nearly $30 million annually.
Performance Section

152     United States Department of Labor

The Black Lung Program reported baseline results of $3,281 for the average

medical cost containment indicator in FY 2008.  The indicator compares the

annual rate of change in average Black Lung Program medical costs for eligible

miners to the annual change rate reported in the National Health Expenditure

Projection (NHEP), a nationwide index published by Centers for Medicare and

Medicaid Services, Office of the Actuary.  The Black Lung Program did not reach

its FY 2008 target to maintain costs at or below the NHEP projection of 6.1

percent. The increase in average per capita Black Lung medical treatment costs

was due to a surge in the number of costly, compensable in‐patient hospital

billings in the third quarter.  With a cohort of less than 10,000 covered former

coal miners, a single procedure can significantly raise average costs.  For

example, a lung transplant could generate costs of $250,000 to $300,000 and

raise the average per capita costs by more than $25,000 to $30,000 or one

percent of the expected annual cost of medical treatment care.  Average medical

costs were well below the target for most of FY 2008 with the exception of a

short period of time during the third quarter of FY 2008 when the surge in

compensable in‐patient hospital billings occurred.  The Black Lung Program

expects to achieve its long term targets and will continue to analyze the data to

determine whether additional strategies are needed to achieve the goal.

Customer Service

To support its communications goal, FECA has established specialist positions,

strengthened procedures, and instituted challenging performance standards in

FECA field offices.  Results include more than doubling the number of customers

obtaining information from, or submitting documentation through, FECA

automated systems.  Since 2003, average caller wait times have been reduced by

half; turnaround time to caller inquiries has been reduced by more than 70

percent; response effectiveness has improved by nearly 40 percent; 98 percent of

calls meet program standards of quality; and, in 2008, FECA extended access to its

Claimant Query System and doubled — to approximately 1.2 million — the

number of Federal employees that can obtain information on their claims on line.

In FY 2008, the average time to resolve disputed issues in Longshore claims was

239 days, representing a nine day increase over the 2007 result.  The significant

increase in Defense Base Act (DBA) injury and death cases – from 347 cases in FY

2002 to 15,141 cases in FY 2007 – in connection with the wars in Iraq and

Afghanistan prompted Longshore to establish a new baseline in FY 2008 and new

targets for the out‐years.  OWCP will continue conducting outreach and working

closely with parties to contested cases in order to reach a timely resolution.

The Black Lung Program achieved its target for claims processing.  The processing

timeliness indicator was refined in FY 2008 to better capture performance results

by setting goals for four separate categories:  Responsible Operator Merit Cases,

Trust Fund Merit Cases, Responsible Operator Non‐Merit Cases, and Trust Fund

Non‐Merit Cases.  As a result of addressing these cohorts separately, the overall

average claims processing time was reduced from 224 days in FY 2007 to 205 days

in FY 2008.  The Black Lung Program will continue to evaluate the target for this

indicator to ensure that it is realistic in relation to performance results.    

The Energy program’s commitment to providing exceptional customer service is

demonstrated by improving the timeliness of recommended claims decisions.  

While working as a construction

superintendent on a U.S.

embassy project in Bogota,

Colombia, Raymond developed

an acute viral syndrome that led

to severe cardiomyopathy.  In

1995, he received an urgently

needed heart transplant that

was covered under the Defense

Base Act and overseen by

OWCP’s Division of Longshore

and Harbor Workers’

Compensation (Longshore).  In

2007, histransplanted heart

began to weaken and histeam

of treating doctors

recommended a re‐transplant.  

The insurance carrier challenged

the medical necessity of the

procedure.  The DOL claims

examiner in Longshore’s San

Francisco office held an

emergency conference with the

attorneys of both partiesthat

resulted in a strong

recommendation that the carrier

authorize the re‐transplant. It

was accepted and Raymond

received a successful heart re‐

transplant in 2008.  According to

Raymond’s attorney, “none of

this would have happened

without OWCP!”  As

demonstrated by Raymond’s

circumstances, the Longshore

Division’srole as mediator in

claim‐related disputes can

positively and significantly

impact the lives of individual

claimants.  Photo credit:  DOL/ESA
Strategic Goal 4

FY 2008 Performance and Accountability Report     153

The program measures the average days to process initial claims for Part B and Part E claims separately due to the

different exposures and conditions covered under each Part.  The Energy program exceeded its initial processing

performance measure for Part B claims with a result of 164 days against a target of 226 days, and Part E claims

were processed in an average of 284 days against a target of 290 days.  In addition, the Energy program measures

efficiency and productivity in processing final decisions.  This measure’s primary focus is to increase the number of

claimants who receive a final decision within the prescribed regulatory timeframes.  In FY 2008, 93 percent of final

decisions were issued within 180 days, against a target of 87 percent.  During the FY 2010 budget review, the

Energy program will evaluate the ambitiousness of FY 2009 and out‐year targets based on FY 2008 results.

Costs for this performance goal rose by four percent (from $3,554 million to $3,693 million) from FY 2007‐08.  

OWCP benefit expenditures rose by five percent reflecting regular cost‐of‐living increases and an increase in the

proportion of Energy cases with higher benefit entitlements, including those for cancer, impairment and wage‐loss.  

Other benefit cost changes included an increase in Black Lung Trust Fund interest payments and an upward

adjustment in EEOIC program future liabilities.  Administrative expenses were three percent lower ($489 million vs.

$504 million) reflecting variations in the timing of contract obligations and expenditures from FY 2006 to FY 2008

and reductions in FY 2008 budget authority for the OWCP programs.

PART, Program Evaluations and Audits

PART Year Rating

2008

(FECA)

Moderately

Effective

PART Findings and Improvement Plan:   

http://www.whitehouse.gov/omb/expectmore/summary/10000334.2008.html

FY 2008 Progress on PART Improvement Plan

• Working with Congress to update the benefit structure, adopt best state practices, and convert benefits for retirement‐

age individuals to a typical retirement level. The FECA reform proposal is included in the FY 2009 President's Budget.

• Implementing recommendations from an independent evaluation to improve significant components of FECA processes,

including industry best practices. Improvements being made to the COP (continuation‐of‐pay) Nurse program include an

electronic means to receive reports from employing agencies when an injured employee has returned to work, a Web

portal through which to receive reports from nurses in the field, and a standardized case evaluation guide for nurses

• Conducting preliminary work, including the development of a logic model, that will serve as a basis for a future impact

evaluation of FECA’s disability management activities and program effectiveness.  A contract to evaluate the Quality

Case Management and vocational rehabilitation processes in addition to developing a logic model has been awarded.   

PART Year Rating

2005

(Longshore) Adequate

PART Findings and Improvement Plan:   

http://www.whitehouse.gov/omb/expectmore/summary/10003904.2005.html

FY 2008 Progress on PART Improvement Plan

• Identifying reforms to strengthen the Longshore and Harbor Workers' Compensation Act.  Pursuant to recommendation

from a 2007 independent evaluation, Longshore expanded the number of offices handling Middle East Defense Base Act

cases.  Other recommendations (e.g., to improve program outcomes, increase efficiency) are under review.

• Evaluating proposed alternatives for modifying the automated claims system for tracking the benefit delivery services of

employers and carriers and to allow comparisons with similar programs.  Special Fund automated systems are being

consolidated to enhance management controls, accuracy, and security.  These changes will also improve efficiency;

enhance maintenance controls; and streamline the process for recording, reviewing and approving procedures.

• Evaluating recent efforts to improve processes and controls in the program's disbursement system in response to

shortcomings identified in a 2004 audit.  Established a FY 2008 baseline specific to the increased workload resulting from

Defense Base Act cases; will establish out‐year targets for dispute resolution timeliness based upon the FY 2008 result.

PART Year Rating

2003

(Black Lung)

Moderately

Effective

PART Findings and Improvement Plan:   

http://www.whitehouse.gov/omb/expectmore/summary/10001098.2003.html

FY 2008 Progress on PART Improvement Plan

• Establishing performance goals for the OALJ, BRB, and Solicitor that are ambitious and contribute to efficient
Performance Section

154     United States Department of Labor

adjudication of Black Lung claims.  DOL’s Benefits Review Board and Solicitor now have performance measures and

targets for their work related to the Black Lung program. The Department is also working with the Office of

Administrative Law Judges to establish measures and targets for Black Lung claims.

• Completing review of independent program evaluation recommendations for improved program performance measures

and implement, as appropriate.  Some recommendations from a FY 2007 evaluation have already been implemented.  

The Department is implementing additional recommendations, including a revised method of calculating the accuracy of

data entry and a new standard for measuring compliance with debt management standards.

• Revising procedures for beneficiary and representative payee monitoring to better coordinate and further automate.  

Revised procedures – which include annual reviews of beneficiary eligibility update questionnaires, establishment of

standards for reviewing selection of representative payees, and accounting for benefits administered – have been

established, and beneficiary and representative payee reviews are being monitored accordingly.

PART Year Rating

2007

(EEOIC) Adequate

PART Findings and Improvement Plan:   

http://www.whitehouse.gov/omb/expectmore/summary/10009004.2007.html

FY 2008 Progress on PART Improvement Plan

• Working with the National Institute for Occupational Safety and Health (NIOSH) to establish compatible timeliness

measures that are consistent with program goals, and reporting performance against those goals.  The Department and

NIOSH collaborated to establish NIOSH timeliness performance measures.  Reporting against goals will be ongoing.

• Obtaining an independent, comprehensive evaluation of the program.  In FY 2008, the Energy program underwent a

management study to evaluate and recommend ways to enhance program operations; including an analysis of

workflow, training, technology, workload, claims processing, and organization and management structure.  In addition, a

customer satisfaction survey will be conducted in FY 2009.

• Improving coordination with State workers' compensation systems to prevent duplicate payments.  Cross‐matching

procedures were developed with the State of Ohio.  This information will be used to help EEOIC coordinate Part E

benefits with State workers’ compensation benefits to eliminate duplication of payments.  

“Evaluation of the Federal Employees’ Compensation Program:  Improved Early Disability Management,” February 2008

(SRA International, Inc.)

Relevance:  A process evaluation of the FECA Continuation of Pay Nurse Program recommended actions to improve the

delivery of nurse intervention services to injured Federal workers during the initial 45 days (continuation‐of‐pay period)

immediately following injury that considered industry best practices in early case intervention.

Findings and Recommendations:  

• Processes for nurse referrals, reporting, and information

sharing with employing agencies are inconsistent among

FECA offices; roles and responsibilities are not well

understood; performance management and quality

assurance is lacking; and there are communication and

administrative delays.

• Clarify purpose, objectives and outcomes; streamline the

nurse referral process; speed reporting of return‐to‐work

and filing of nurse reports; and improve information

sharing with employing agencies

Next Steps:  

• Providing an electronic capability for employing

agencies to report when injured worker has returned

to work;  

• Developing a Web portal for Continuation of Pay (COP)

nurses for transmitting case status reports;  

• Publishing a standardized case evaluation guide.

Additional Information:  Copies available from the Division of Federal Employees’ Compensation, U.S. Department of Labor,

Room S‐3229, 200 Constitution Ave., N.W, Washington, D.C. 20210.

“Energy Employees Compensation – Actions to Promote Contract Oversight, Transparency of Labor’s Involvement, and

Independence of Advisory Board Could Strengthen Program,” October 2007  (GAO)

Relevance:  GAO examined the costs and oversight of NIOSH’s contracts, the implementation of the conflict of interest policy

for NIOSH and its contractors, the extent of Labor’s involvement in NIOSH’s activities and actions to deny benefits, and

challenges to advisory board independence and options to enhance it.

Findings and Recommendations:

• To increase transparency and facilitate

congressional oversight of Labor’s involvement in

NIOSH activities, take steps to ensure that

Next Steps:  

• DOL concurred with the GAO findings and recommendations.

In 2008, OWCP implemented the recommendation to

substantiate written comments on NIOSH documents with a
Strategic Goal 4

FY 2008 Performance and Accountability Report     155

comments on draft NIOSH technical documents

and SEC petition evaluations more explicitly

indicate how the comments are intended to

promote clarity and consistency and thereby

facilitate adjudication of claims.

rationale and basis.

Additional Information:  The report (GAO‐08‐4) is available at http://www.gao.gov/new.items/d084.pdf.

“Federal Workers’ Compensation – Better Data and Management Strategies Would Strengthen Efforts to Prevent and

Address Improper Payments,” February 2008 (GAO)

Relevance:  GAO examined how effectively the Department of Labor’s Office of Workers’ Compensation Programs manages

the risk of improper FECA compensation payments, what vulnerabilities, if any, exist in OWCP’s procedures for making FECA

wage loss payments, and how well OWCP ensures the recovery of identified FECA overpayments.   

Findings and Recommendations:

• GAO estimated FY 2006 improper payments

of $13.3 million (approximately 0.7% of FY

2006 FECA compensation benefits paid);

however, GAO acknowledged its estimation

technique differed from OMB guidance on

reporting erroneous payment rates.

• The agency should revise its program

performance measures to increase emphasis

on payment accuracy, adequate internal

controls, and overpayment recoveries.

• Collect more detailed information on

improper payments, such as the causes of

overpayments and underpayments, and use

these data to better identify improper

payment risks and address areas of high risk.

Next Steps:  

• OWCP’s Operational Plan for 2008 includes a new measure of the

timely processing of identified overpayments (both pending and

preliminary) that complements the existing timeliness measures.  

Further, the Department’s OMB Circular No. A‐123 Reviews and

DOL OIG’s annual audits further address qualitative issues, including

a test of OWCP’s internal control process.

• To further improve this process, OWCP is developing ways to collect

information in the integrated Federal Employees' Compensation

System (iFECS) for the analysis of potential erroneous payments.  

Reason codes are being developed to help analyze the various types

of overpayments.  As for underpayments, one of the district offices

is already conducting a pilot audit of potential erroneous payments

that may be implemented on a national level.

Additional Information:  The report (GAO‐08‐284) is available at http://www.gao.gov/new.items/d08284.pdf.

“FY 2007 Longshore and Harbor Workers’ Compensation Act Special Fund Audit,” March 2008 (OIG)

Relevance:  The OIG audited the financial statements of the Longshore and Harbor Workers’ Compensation Act Special Fund

as of September 30, 2007, and for the year then ended.

Findings and Recommendations:

• Establish formal policies and procedures for

periodic review and analysis of outstanding

accounts receivable and require more formal

communication regarding credit and

corrections between the program and

accounting offices.

• Establish and enforce more formal

management review of journal entries,

accounts receivable analysis, the allowance

computation, and draft financial statements.

Next Steps:  

• Formal procedures establishing monthly review and analysis of

outstanding receivables with formal communication of credit and

corrections between the program and accounting offices was

implemented in FY 2008.

• ESA has in place a formal process of review for all journal entries as

well as the preparation of the Financial Statements.  ESA will

ensure that this process is strictly adhered to and that a thorough

review takes place and includes all necessary signatures or initials.

Additional Information:  The report is available at http://www.oig.dol.gov/public/reports/oa/2008/22‐08‐004‐04‐432.pdf.

“FY 2007 District of Columbia Workmens’ Compensation Act Special Fund Audit,” March 2008 (OIG)

Relevance:  The OIG audited the financial statements of the District of Columbia Workmens’ Compensation Act Special Fund

as of September 30, 2007, and for the year then ended.

Findings and Recommendations:  

• Establish formal policies and procedures for

periodic review and analysis of outstanding

accounts receivable and require more formal

communication regarding credit and

corrections between the program and

Next Steps:  

• Formal procedures establishing monthly review and analysis of

outstanding receivables with formal communication of credit and

corrections between the program and accounting offices were

implemented in FY 2008.

• ESA has in place a formal process of review for all journal entries
Performance Section

156     United States Department of Labor

accounting offices.

• Establish and enforce more formal

management review of journal entries,

accounts receivable analysis, the allowance

computation, and draft financial statements.

as well as the preparation of the Financial Statements.  ESA will

ensure that this process is strictly adhered to and that a thorough

review takes place and includes all necessary signatures or initials.

Additional Information: The report is available at http://www.oig.dol.gov/public/reports/oa/2008/22‐08‐005‐04‐432.pdf.  

Data Quality and Top Management Challenges

Data quality for this performance goal is rated Excellent,

57 reflecting OWCP’s long history of managing workers’

compensation case record data and benefit payment histories.  Performance measurement, also a long‐standing

priority for OWCP, relies primarily upon data extracted from internal automated case management and benefit

payment systems.  Technology upgrades to OWCP automated data systems have made possible more efficient

reporting processes and improved statistical report design and content.  Enhanced systems also enable OWCP to

better test performance data, make quality improvements and increase accuracy.  Outside sources, including other

Federal agencies, the nationally known research institute, Milliman USA, and the Centers for Medicare and

Medicaid Services Office of the Actuary within the Department of Health and Human Services, also provide

performance data.

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 claims data record.  Other quality tools include

extensive checks and edits built into automated data processing system programming, second‐tier certifications of

claims and payment decisions, telephone call monitoring, and regular 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,

which emphasizes a culture of performance accountability.

A fundamental challenge in delivering workers’ compensation is to ensure proper payments while providing timely,

responsive services to eligible claimants (see Improving the Federal Employees’ Compensation Act Program in the

Top Management Challenges section of Management’s Discussion and Analysis).  To that end, strengthening system

controls to minimize improper payments remains an ongoing DOL priority.  However, improper payments represent

a very small portion of the $2.6 billion in total annual FECA benefit payments.  DOL’s Office of the Chief Financial

Officer determined a 0.1 percent error rate in an FY 2007 sampling of FECA payments.   

OWCP continues to strengthen system controls.  In FY 2008, the FECA program completed the adjustment and

testing of the iFECS system to ensure that current medical information for claimants is on file (an OIG

recommendation), so that payments are not made to those who are no longer disabled.  OWCP also has remedial

actions underway that address findings of an FY 2008 GAO report (GAO‐08‐486) that recommended a revision of

the FECA program’s performance measures to ensure increased emphasis on payment accuracy, adequate internal

controls, and overpayment recoveries; and that the program collect more detailed information on improper

payments and use these data to better identify improper payment risks and to address areas of high risk.

The Office of Inspector General determined that discovery and prevention of fraud would be assisted through the

routine matching of FECA payment records against Social Security wage records to identify those who are collecting

FECA benefits while working.  In response to this finding, DOL has included an additional provision into its proposal

to reform the FECA that would provide the legal authority to conduct these matches.  The FECA reform proposal,

which also includes provisions to enhance incentives for injured employees to return to work and address benefit

equity issues, was included in the 2009 President’s Budget.  

 

57 Information on DOL’s Data Quality Assessments, conducted annually for each performance goal, can be found in the

Introduction to the Performance Section.
Strategic Goal 4

FY 2008 Performance and Accountability Report     157

Ensure union financial integrity, democracy, and transparency.

Performance Goal 08‐4C (ESA)

Indicators, Targets and Results

*Indicator target reached (Y), improved (I), or not  reached (N)

FY 2006

Goal Not

Achieved

FY 2007

Goal Sub‐

stantially

Achieved

FY 2008

Goal Not

Achieved

Target 8% 7.5% 7%

Result 8% 7% 7.6%

* Y Y N

Percent of unions with fraud

Cost $18 $35 $29

Target — — baseline

Result — — 11.5%

* — — — Ratio of criminal cases to targeted audits

Cost — — —

Target 96% 97% 97%

Result 93% 95% 95%

* N I N

Percent of union reports meeting standards of acceptability

Cost $8 $16 $11

Target — — baseline

Result — — 20%

* — — — Percent of unions filing reports electronically

Cost — — —

Target Baseline 92.5% 93%

Result 92% 92.3% 91.3%

* Y I N

Percent of unions in compliance with Labor‐Management Reporting and

Disclosure Act (LMRDA) standards for democratic union officer elections

Cost $11 $13 $14

Target — — baseline

Result — — 92

* — — — Number of days to resolve union officer election complaints

Cost — — —

Goal Net Cost (millions) $56 $68 $58

Source(s): OLMS union compliance audit information and e.LORS data system.

Note:  Costs for this goal are net costs as defined in a footnote to the Cost of Results discussion in Management’s Discussion and Analysis.  

Allocations among the three enforcement areas are provided opposite the old indicators for FY 2006‐07 and opposite the new indicators

for FY 2008.

Program Perspective and Logic

The Employment Standards Administration’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).  The LMRDA 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 and union audits, and

administers the reporting and public disclosure program.
Performance Section

158     United States Department of Labor

Union transparency underpins the achievement of union democracy and financial integrity objectives.  OLMS

measures transparency by tracking the acceptability — compliance with a series of filing standards — of union

financial reports filed for public disclosure.  The 2003 baseline revealed that approximately 73 percent of union

reports met standards of acceptability.  Since the FY 2003 baseline of 73 percent, OLMS has consistently achieved

compliance rates exceeding 90 percent for the last four years.

OLMS measures the effectiveness of its audit and

embezzlement investigations by tracking indicators of

fraud in a random sample of audited unions.  OLMS did

not reach its FY 2008 target.  However, since 2004,

union audits with indicators of fraud have decreased

by 1.4 percent — from nine percent to 7.6 percent in

FY 2008.  The same sampling also determines whether

unions are in compliance with critical LMRDA

standards for democratic union office elections, such

as the timely notification of elections.  While OLMS did

not reach the target for this indicator, the compliance

rate decreased by two percent between FY 2007 and

FY 2008 (95 percent versus 93 percent), but remains

high overall.  

  

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.  

OLMS dedicates more than 50 percent of its annual

resources to support a program of audits and criminal

investigations to protect the millions of dollars in dues

paid by labor union members.  OLMS dedicates about

20 percent of its annual budget to investigating union

member complaints of election misconduct and

supervising union officer election reruns to assure compliance with LMRDA union democracy provisions.

Analysis and Future Plans

Despite the decreased performance from FY 2007, the level of performance remains high.  These results further

support OLMS’ intent to transition to new performance measures, which clearly demonstrate room for

improvement.  In 2008, OLMS began developing strategies to achieve success under the new performance goals,

including additional internal measures for the timely resolution of union member complaints.  OLMS has also

identified barriers to submitting union reports electronically, including specific recommendations from a cost‐

benefit analysis of its electronic reporting and disclosure system.

In 2008, OLMS established the baseline results for three performance measures that will replace the current

measures.  As demonstrated by prior year results, OLMS has achieved consistently high performance in the current

measurement areas.  To promote targeted program improvements, the new measures more narrowly focus on key

program processes.  In addition, the union fraud and democracy measures will no longer rely upon random audits,

thereby redirecting resources to targeted enforcement activities.

• Union Transparency.  OLMS aims to increase the percent of union financial reports filed electronically to

improve their accuracy, completeness, and timeliness for public disclosure on the OLMS Web pages.  

OLMS Investigator Robert Loniewski (standing) and Assistant

United States Attorney Richard Resnick of the Western

District of New York review the facts of the case prior to a

court appearance regarding an OLMS investigation.  This

investigation resulted in the conviction of a former employee

who embezzled more than $17,000 from a labor union.  The

employee was ordered to make full restitution to the union

and was placed on probation for five years.  Photo credit:

DOL/ESA/OLMS
Strategic Goal 4

FY 2008 Performance and Accountability Report     159

• Financial Integrity.  OLMS aims to more effectively and accurately identify cases of fraud and

embezzlement, which will be measured as the percent of audits resulting in the opening of a criminal case.   

• Union Democracy.  OLMS aims to improve the timely resolution of union election complaints, which will be

measured by the days to resolve the complaints.

A major challenge is the increased complexity of union financial investigations.  By employing improved analytical

tools and using statistical techniques to identify anomalies in union financial reports, OLMS will strive to more

effectively identify criminal violations.  OLMS will continue efforts to identify procedures that can be streamlined in

order to better serve its constituents.

Net costs associated with this performance goal decreased by fifteen percent from FY 2007‐08, mostly due to a shift

in OIG audit and investigative priorities.     

PART, Program Evaluations and Audits

PART Year Rating

2005 Adequate

PART Findings and Improvement Plan:   

http://www.whitehouse.gov/omb/expectmore/summary/10003903.2005.html

FY 2008 Progress on PART Improvement Plan

• Developing and implementing specific performance indicators to measure agency progress towards ensuring union

democracy.  OLMS piloted a measure of compliance with LMRDA election standards, but in 2008 has developed a

timeliness measure that will not rely on a random sample of audited unions for data and will replace the current

democracy measure.

• Conducting an external review of program processes to identify areas for improvement.  In 2007, OLMS underwent an

evaluation of its reporting and disclosure program.  In 2008, a subsequent cost‐benefit analysis recommended ways to

improve the electronic filing process for unions, which are currently under review.  In 2009, OLMS will undergo another

program evaluation that will strictly focus on improving the efficiency of its manual filing process, which remains the

predominant filing method for Labor‐Management forms.  Recommendations will also focus on ways to improve the

quality of the forms published online.

• Working with Congress to obtain the authority to impose civil monetary penalties on organizations and individuals who

fail to comply with the reporting requirements of the Labor Management Reporting and Disclosure Act.  OLMS is working

with Congress to obtain the authority to implement civil and monetary policies for organizations and individuals who fail

to comply with the LMRDA.  In 2008, legislation was introduced in both chambers of Congress (S. 2878 and H.R. 5775)

that would provide OLMS with this authority.

“Labor‐Management Reporting and Disclosure Program Evaluation,” March, 2008 (ERG)

Relevance:  This study evaluated the OLMS electronic reporting and disclosure system and made recommendations for its

improvement.  The system is vital to reporting and disclosure and to overall administration of the LMRDA program.

Findings and Recommendations:

• The evaluation found that, while a rich data source, the

present user interfaces of the Internet Public Disclosure

system were confusing.  A series of recommendations

that would make the system more intuitive for users and

thus make information more accessible were presented

by the evaluators.

Next Steps:  

• OLMS is in the process of implementing a number of the

proposals made to improve the system.   

Additional Information:  A copy of the complete report can be obtained from the Office of Labor‐Management Standards,

Office of Policy, Reports, and Disclosure, U.S. Department of Labor, FPB N5609, 200 Constitution Ave., NW, Washington, D.C.

20210 or by calling (202) 693‐1233.
Performance Section

160     United States Department of Labor

Data Quality and Top Management Challenges

Data quality for this performance goal was rated Good.

58  OLMS had relied on annual survey data to report for

measurement of performance goals.  By replacing the studies presently being used for its performance goals, OLMS

expects to greatly improve data quality in all areas.  OLMS uses its Case Data System to track investigations and

performance.  The electronic reporting and disclosure database provides quick access to accurate and timely union

financial data.  OLMS is in the process of implementing three new performance measures.  Each of these measures

will rely on data from either the Case Data System or the Electronic Labor Organization Reporting System.  Both are

mature, robust systems, and OLMS expects that the data retrieved from these systems will allow the Office to track

long‐term trends and identify areas in which program operations can be improved.  OLMS will continue to promote

the use of electronic filing for union financial reports that will enable additional error checking for data accuracy.  

Further, because the data used for performance measurement is available in databases routinely used for agency

management, no additional resources will be required to maintain and update the data set, thus improving

reporting efficiency over prior efforts which required additional effort to acquire and collate required data.

 

58 Information on DOL’s Data Quality Assessments, conducted annually for each performance goal, can be found in the

Introduction to the Performance Section.
Strategic Goal 4

FY 2008 Performance and Accountability Report     161

Enhance pension and health benefit security.

Performance Goal 08‐4D (EBSA)

Indicators, Targets and Results

*Indicator target reached (Y), improved (I), or not  reached (N)

FY 2005

Goal

Achieved

FY 2006

Goal

Achieved

FY 2007

Goal  

Achieved

FY 2008

Goal

Achieved

Target — — 48% 50%

Result — — 67% 74%

* — — Y Y

Ratio of criminal cases accepted for prosecution to cases

referred

Cost — — $103 $102

Target — — 61% 64%

Result — — 69% 70%

Ratio of closed civil cases with corrected fiduciary violations

to civil closed cases

* — — Y Y

Target 8,340 13,500 13,838 21,000

Result 14,082 17,214 20,123 28,261

* Y Y Y Y

Applications to Voluntary Compliance programs

Cost — — — —

Goal Net Cost (millions) $160 $179 $176 $170

Source(s): Enforcement Management System (EMS) and Delinquent Filer Voluntary Compliance (DFVC) Tracking System.

Legacy Data: Some indicators not shown for FY 2005‐07.  Complete indicators, targets and results for FY 2003‐06 are available in the FY 2006

report at http://www.dol.gov/_sec/media/reports/annual2006/PGD.htm.  See Performance Goal 06‐2.2C.  The customer satisfaction

indicator was dropped this year; FY 2007 results are available at http://www.dol.gov/_sec/media/reports/annual2007/SG4.htm

(Performance Goal 07‐4D).

Note:  Costs for this goal are net costs as defined in a footnote to the Cost of Results discussion in Management’s Discussion and Analysis.  

The cost listed for the first indicator also includes the costs associated with the civil ratio measures.  Costs are not allocated to the

indicator level for the civil and criminal ratio measures because these programs are not separable into individual costs.

Program Perspective and Logic

The Employee Benefits Security Administration (EBSA) is responsible for ensuring compliance with 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 acceptance

rates, DOL demonstrates 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, DOL helps ensure workers’ and retirees’ benefits are protected.

EBSA oversees benefit security for nearly 700,000 private retirement plans, 2.5 million health plans, and similar

numbers of other welfare benefit plans, such as those providing life or disability insurance.  Benefit plans under

EBSA’s jurisdiction cover approximately 150 million participants and beneficiaries and over $5 trillion in assets.

Analysis and Future Plans

EBSA achieved its performance goal.  The agency reached its performance target for the ratio of closed civil cases

with corrected fiduciary violations to closed civil cases.  With respect to criminal case work, EBSA reached its target

to report cases accepted for prosecution.  In 2008, EBSA began implementing a regulation that provides a safe

harbor for assessing the timeliness of forwarding participant contributions to 401(k) plans with less than 100

participants.  The regulation defines the period under which participant contributions to a small plan will be

deemed to be made in compliance with the law.  This safe harbor regulation could substantially impact both the

civil and criminal enforcement programs because approximately one‐third of all investigations conducted by EBSA

focus on this issue.  EBSA has historically found and corrected violations in a high percentage of these cases.  The
Performance Section

162     United States Department of Labor

new regulation, which provides plan sponsors with a bright line rule to follow, could materially reduce EBSA’s

enforcement ratios, because there may well be fewer violations – the intended purpose of the regulation.  It is

difficult, however, to predict the magnitude of the impact. EBSA will analyze the impact of the regulation

subsequent to FY 2008 results and adjust its performance targets, as necessary.

Each of the indicators in the table

to the left are component

indicators of the broader “Ratio

of closed civil cases with

corrected fiduciary violations to

civil closed cases” indicator

whose performance is presented

in the table on the preceding

page.  These indicators monitor

the success of five critical national

enforcement priority initiatives.  

The agency measures the success

of these initiatives through ratio

performance measurements (see

table).  The composition of these

performance measures may change from year‐to‐year as the agency satisfies its commitments and assumes new

priorities.  The Consultant Advisor Project (CAP) ratio, which includes a small number of carefully targeted cases

and focuses on the receipt of improper, undisclosed compensation by pension consultants and other investment

advisers, is a new program with extremely complex and time consuming cases; baseline data are being collected.  

EBSA exceeded its targets for the Employee Contribution, Multiple Employer Welfare Arrangements, and Rapid

ERISA Action Team projects.  Although EBSA did not reach its Employee Stock Ownership Plans project target, the

result was a significant improvement over FY 2007.  EBSA is reviewing the strategies to improve performance

further.

EBSA reached its voluntary compliance target in FY 2008.  EBSA

continued to monitor its compliance assistance measure that

demonstrates achievements in voluntary compliance programs,

such as the Voluntary Fiduciary Correction Program and the

Delinquent Filer Voluntary Compliance Program.  To meet the

demands of a rapidly changing and complex employee benefits

environment, EBSA will deter and correct violations of relevant

statutes, facilitate compliance assistance by plan sponsors, plan

officials, providers of services to benefit plans, and other

members of the regulated community; and assist workers in

understanding their rights and responsibilities via aggressive,

grassroots outreach and education.

In addition, EBSA continued to assist workers in getting the information they need to exercise their rights, assist

plan officials to understand the requirements of the law, and develop policies and regulations that encourage the

growth of benefits.  This year, Benefit Advisors continued to provide superior participant assistance by responding

to 99 percent of all written inquiries within 30 days of receipt and responding to over 99 percent of telephone

inquiries by the close of the next business day.  In FY 2008, DOL obtained monetary results of approximately $1.2

billion.  Monetary results are a product of EBSA's investigative, compliance and participant assistance activities.  

Last year, the Gallup Organization deemed certain aspects of the agency’s customer service program as World

Class, a designation reserved for only the highest performing organizations. In 2008, the General Services

National Enforcement Initiatives

Each Indicator is the Ratio of Closed Cases with Corrected Fiduciary Violations to total closed cases

Target 80% Employee Contribution Project

Result 83%

Target 61% Employee Stock‐Ownership Plans

Result 56%

Target 58% Multiple Employer Welfare Arrangements

Result 77%

Target 51% Rapid ERISA Action Team

Result 68%

Target baseline Consultant/Advisor Project (CAP)

Result —

EBSA investigated a health plan responsible for

providing benefits to more than 1,000 restaurant

and bar workers in New Jersey and discovered

more than 10,000 unpaid medical claims.  In

addition, service providers to the health plan had

charged excessive administrative fees. The

Department sued, and in February 2008, the court

approved a settlement and appointed an

independent fiduciary to take over the plan.  The

defendants paid $2.3 million to the plan and were

barred from ever serving as a fiduciary or service

provider to any other ERISA‐covered benefits plan.
Strategic Goal 4

FY 2008 Performance and Accountability Report     163

Administration recognized the EBSA Participant Assistance Program with its first‐annual Citizen Service Award for

excellence in customer service.  To continue customer service improvement, EBSA completed work with Gallup to

evaluate a Regional office experiencing challenges with customer satisfaction.  Through this evaluation, EBSA

identified several barriers to customer service success as well as actionable

recommendations that would mitigate or eliminate the barriers.  Regional staff

received customized training incorporating this barrier analysis.  

In 2008, EBSA also continued its critical regulatory role implementing the

Pension Protection Act (PPA) of 2006.  The President signed the PPA to protect

workers and retirees and to encourage continued sponsorship of pension plans.  

EBSA has the primary responsibility for developing more than two dozen

regulations to implement the PPA.  EBSA is working closely with the other ERISA

agencies (i.e., the Internal Revenue Service and the Pension Benefit Guaranty

Corporation) to coordinate respective regulatory and guidance efforts to

implement the PPA.

The three percent decrease in net cost of this performance goal between FY 2007 and FY 2008 reflects changes in

administrative expenses.

PART, Program Evaluations and Audits

PART Year Rating

2004 Moderately

Effective

PART Findings and Improvement Plan:   

http://www.whitehouse.gov/omb/expectmore/detail/10000338.2004.html  

FY 2008 Progress on PART Improvement Plan

• Implementing program improvements based on the independent evaluations completed or currently underway.  EBSA

implemented program improvements recommended in the Gallup Organization Compliance Assistance evaluations.

• Developing ways to quantify and reduce the burden imposed by EBSA’s regulations.  Independent evaluator completed

its second year regulatory review confirming that EBSA’s evaluative process for cost‐benefit analysis remains sound.

• Continuing to support pension reform to ensure promises to employees are kept.  To date, EBSA has issued or undertaken

24 PPA‐related regulatory or guidance actions.

“EBSA Analysis of Compliance Assistance Programs,” December 2007 (Gallup Organization)

Relevance:  The purpose was to understand and to improve customer service of the EBSA Compliance Assistance Program.

Findings and Recommendations:

• Performance data indicated 82% of customers believe

they received above average service from EBSA and

evaluators concluded that improving customer

satisfaction is within the control of employees.   

• The evaluator recommended that EBSA ensure effective

selection, training, and rewarding of employees; develop

regular opportunities to share new ideas and practices

among the numerous EBSA offices; conduct regular

workforce planning exercises to ensure customer needs

are met in timely manner; and foster a culture of

commitment to improving customer service by sharing

survey results with all employees and continuously

engaging in dialogue about how to improve results.

Next Steps:  

• All program offices responsible for compliance

assistance developed a performance improvement

action plan responsive to their unique findings as

provided by Gallup.  Offices will be implementing

improvement plans, as necessary.

Additional Information:  A copy of the complete report can be obtained from the Employee Benefits Security

Administration, 200 Constitution Avenue. N.W., Room N‐5625 Washington, DC, 20210, or by calling 202‐693‐8655.

EBSA investigated a Jacksonville,

Florida building contractor’s

profit sharing plan and

determined that the building

contractor had withdrawn all of

the assets from the plan and used

them to operate his business,

contrary to law.  As a result of the

Department’s efforts, the building

contractor restored $194,109 to

the plan for the benefit of 11

participants.
Performance Section

164     United States Department of Labor

“EBSA Barrier Analysis of Customer Satisfaction and Engagement,” November 2007 (Gallup Organization)

Relevance:  This study followed up on a Gallup survey indicating a regional office faced unique customer service challenges.

Findings and Recommendations:

• The evaluator identified barriers to excellent customer

service and recommended that EBSA (1) Clearly define

supervisor role and ensure measuring and monitoring of

team progress; (2) Identify long‐term customer service

goals and specific activities to produce results; (3)

Conduct regular biweekly meetings and formal biannual

training sessions; and (4) Develop clear framework for

handling participant inquiries.

Next Steps:  

• Regional leadership will implement a customer service

improvement plan that was developed using

recommendation from the Gallup evaluation.  

• Regional office staff will participate in customized

training that incorporates the specific results of the

barrier analysis as well as training in how to provide

excellent customer service based on Gallup’s many years

of expertise.

Additional Information:  A copy of the complete report can be obtained from the Employee Benefits Security

Administration, 200 Constitution Avenue, N.W., Room N‐5625 Washington, DC, 20210, or by calling 202‐693‐8655.

“Regulatory Review for the Employee Benefits Security Administration,” June 2008 (ICF International)

Relevance:  The review results will guide and inform the regulatory decision‐making process through regulatory analysis.   

EBSA is required, under Executive Order 12866, to conduct cost‐benefit analyses of “economically significant” regulations.

Findings and Recommendations:

• The evaluator found that benefits of the Participant Fee

Disclosure Proposed Regulation outweigh the costs.

• EBSA’s evaluative process for cost‐benefit analysis is

sound.  For large rules, the process is largely consistent

with OMB guidance and standard economic practice.  To

improve the regulatory analysis, the evaluator

recommended that EBSA treat regulatory alternatives

with more analytical rigor, increase the scope of

alternatives considered, and include comparisons of the

costs and benefits of possible alternatives in the decision

making process.  Regulatory training to junior economic

staff to expedite the Regulatory Impact Assessment (RIA)

development process would also improve the analysis.

Next Steps:  

• EBSA will consider the data and information needs of its

regulatory analysis team when awarding research

contracts in 2008.  EBSA intends to use the expertise of

its contractors in regulatory analysis, as appropriate.

• EBSA will conduct in‐house training sessions relating to

economic analysis of regulatory initiatives and intends to

make further training opportunities available to staff.

Additional Information:  A copy of the complete report can be obtained from the Employee Benefits Security

Administration, 200 Constitution Avenue, N.W., Room N‐5625 Washington, DC, 20210, or by calling 202‐693‐8655.

Data Quality and Top Management Challenges

Data quality for this performance goal is rated Excellent.

59  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 of randomly selected closed cases.  The Voluntary Fiduciary Correction

Program data is maintained in the EMS and the Delinquent Filer Voluntary Compliance Program tracking system.

The Inspector General has listed “Ensuring the Security of Employee Benefit Plan Assets” (see the Top Management

Challenges section of Management’s Discussion and Analysis) as a major challenge for EBSA that cites benefit plan

audits, benefit plan fraud, and corrupt multiple employer welfare arrangements as areas of concern.  Because these

risks go to the heart of EBSA’s goal to secure pension and health plans, the agency has taken specific actions,

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.

 

59 Information on DOL’s Data Quality Assessments, conducted annually for each performance goal, can be found in the

Introduction to the Performance Section.
Strategic Goal 4

FY 2008 Performance and Accountability Report     165

Improve the pension insurance program.

Performance Goal 08‐4E (PBGC)

Indicators, Targets and Results

*Indicator target reached (Y), improved (I), or not  reached (N)

FY 2004

Goal Not

Achieved

FY 2005

Goal Not

Achieved

FY 2006

Goal Not

Achieved

FY 2007  

Goal Sub‐

stantially

Achieved

FY 2008

Goal Not

Achieved

Target 71 72 74 68 69

Customer Satisfaction score for premium filers Result 69 68 68 70 72

* N N N Y Y

Target 77 78 80 80 80

Result 78 79 75 78 81

Customer Satisfaction score for trusteed plan

participant callers

* Y Y N I Y

Target — 84 84 85 85

Result — 85 85 88 89

Customer Satisfaction score for retirees receiving

benefits from the PBGC

* — Y Y Y Y

Target — — — — 3.0

Result — — — 3.0 3.3

Number of years between the date of Trusteeship

and the date the Benefit Determination is issued

* — — — — N

Source(s): American Customer Satisfaction Index (ACSI) and Federal Register.

Legacy Data: Some indicators not shown for FY 2007.  Results for the three indicators that were dropped are available at

http://www.dol.gov/_sec/media/reports/annual2007/SG4.htm.  See Performance Goal 07‐4E.

Note:  Costs are not provided because the PBGC is not included in the Consolidated Statement of Net Costs.  However, in accordance with

the requirements of the Government Performance and Results Act (GPRA), the PBGC’s performance reporting is included in this report

because its performance goals are included in the Department’s performance budget.

Program Perspective and Logic

The Pension Benefit Guaranty Corporation (PBGC) operates in accordance with policies established by its Board of

Directors: the Secretaries of Labor (Chairman), Commerce and Treasury.  PBGC protects the retirement incomes of

44 million American workers in over 30,000 defined benefit pension plans, which provide specified monthly

benefits at retirement, often based on salary and years of service.  The Corporation safeguards the pension

insurance program and provides exceptional service to its customers, while it exercises effective stewardship over

its resources.  It is responsible for the current and future pensions of about 1.3 million people, including those who

have not yet retired and participants in multiemployer pension plans receiving financial assistance.

PBGC receives no funds from general revenues.  Operations are financed by insurance premiums set by Congress

and paid by sponsors of defined benefit plans, investment income, assets from pension plans trusteed by PBGC, and

recoveries from the plans’ former corporate sponsors.  However, the PBGC’s premium structure does not

adequately reflect the risks posed by individual plans.  While the Deficit Reduction Act and the Pension Protection

Act, both enacted in 2006, made significant structural changes to the defined benefit system, they did not fully

address the Corporation’s long‐term challenges.  Although current assets are sufficient to meet liabilities for a

number of years, the PBGC does not have the resources to fully satisfy its long‐term obligations to plan participants.  

Further reforms are needed to address a large gap between assets and liabilities ($11 billion as of 9/30/2008).

PBGC uses the American Customer Satisfaction Index (ACSI) survey methodology to monitor its progress in meeting

the needs and expectations of participants, premium filers, and other stakeholders.  Using ACSI survey results,

PBGC evaluates the effectiveness of its services to customers and makes targeted improvements.  Another key
Performance Section

166     United States Department of Labor

measure of PBGC mission effectiveness is the time required to provide participants with a final determination of

their benefits.  To address the shortage of resources needed to satisfy long‐term plan obligations, this year PBGC

will provide an analysis of options for improving the pension insurance program’s financial condition.  

Analysis and Future Plans

In FY 2008, PBGC met or exceeded its targets for most of its performance indicators.  As demonstrated in the chart,

the result for the premium filer customer satisfaction indicator was 72, up two points from last year's record high of

70.  This improved satisfaction can be

attributed to two new avenues for providing

information to practitioners – a free online

subscription service and frequently asked

questions (FAQs) on the Web site as well as

expanded hours of customer support at

peak filing times.  The ACSI score for

participant callers to the Customer Contact

Center was 81 this year, up three points

from last year – a record high for PBGC.  

This improved satisfaction can be attributed

to increased training of Contact Center staff

to ensure callers receive high‐quality

service.  Retirees scored PBGC’s service at

89, maintaining a consistently high level of

satisfaction of services from PBGC.  Finally, PBGC did not meet its target for the average time (number of years) to

issue benefit determinations, which increased to 3.3 years from 3 years.  The issuance of very complex

determinations from plans trusteed in 2004 and 2005 adversely impacted performance measurement and will

continue to impact 2009 performance.  Process improvement efforts underway should streamline the benefit

determination process and reduce process times in the future.

Through the 2007 PART process, PBGC established a qualitative performance goal to “commit to eliminate PBGC's

deficit and account for PBGC's expected losses.”  While PBGC alone cannot fix the Corporation's solvency problems,

the agency is actively supporting efforts to eliminate its deficit and account for its expected losses by providing

research and analytical support to Administration policymakers and Congress as they consider alternative reform

efforts.  To address the shortage of resources needed to satisfy long‐term plan obligations, this year PBGC began an

analysis of options for improving the pension insurance program’s financial condition.  The Corporation expects to

complete this report in early calendar year 2009.

PART, Program Evaluations and Audits

PART Year Rating

2007 Moderately

Effective

PART Findings and Improvement Plan:   

hhttp://www.whitehouse.gov/omb/expectmore/summary/10002382.2007.html

FY 2008 Progress on PART Improvement Plan

• Refining and maturing the new certification and accreditation process for deployment of major systems and General

Support System using relevant information technology (IT) guidelines.  In June 2008, PBGC completed its first milestone

by developing a comprehensive approach to information and infrastructure security by finishing its IT Certification and

Accreditation process for the corporation’s general support systems and major applications.   

• Educating the public on the issues facing the private defined benefit pension system and working with Congress on

legislative reforms to enable the PBGC to meet its long‐term obligations to retirees.  PBGC will complete its first report in

early calendar year 2009.  

• Using the information PBGC collects to mitigate risk and prepare for workload changes associated with pension plan

terminations.  PBGC increased communication among its operating units through weekly updates that focus on likely

plan terminations to better prepare for workload changes and mitigate risk.  

Customer Satisfaction

65

70

75

80

85

90

2002 2003 2004 2005 2006 2007 2008

Retiree Target

Retiree Result

Participant Target

Participant Result

Premium Target

Premium Result
Strategic Goal 4

FY 2008 Performance and Accountability Report     167

“Pension Benefit Guaranty Corporation: A More Strategic Approach Could Improve Human Capital Management,”

June 2008 (GAO)

Relevance:  GAO analyzed PBGC’s workforce to assess whether it is well positioned to fulfill its promise to retirees who

depend on it to protect their pension benefits.

Findings and Recommendations:

• Integrate workforce and succession planning into

human capital planning, systematically collect and

analyze workforce data, and fully explore compensation

options under the PBGC’s statutory authority.

Next Steps:  

• In the fall of 2008, PBGC submitted a formal,

comprehensive human capital plan to the Office of

Personnel Management and OMB; and developed a plan

to improve collection and analysis of workforce data.

• The PBGC continues to explore compensation options.

Additional Information:  The report (GAO‐08‐624) is available at http://www.gao.gov/new.items/d08624.pdf.

“PBGC Assets: Implementation of New Investment Policy Will Need Stronger Board Oversight,” July 2008 (GAO)

Relevance:  GAO assessed PBGC’s procedures for developing and implementing investment policies and its most recent

investment policy for potential risks and benefits.

Findings and Recommendations:

• Improve Board of Directors monitoring of progress in

achieving investment policy goals and analyze the new

investment policy to gauge the potential risk of new

investment allocations.

Next Steps:  

• PBGC will perform sensitivity analyses.

Additional Information: The report (GAO‐08‐667) is available at http://www.gao.gov/new.items/d08667.pdf.

“Pension Benefit Guaranty Corporation: Some Steps Have Been Taken to Improve Contracting, but a More Strategic

Approach is Needed” September 2008 (GAO)

Relevance:  GAO assessed the role contracting plays in PBGC’s efforts to accomplish its mission and the steps PBGC has taken

to improve acquisition infrastructure and contract oversight.

Findings and Recommendations:

• Provide additional oversight of contracts and focus on

outcomes rather than processes.  

• Reflect the importance of contracting within the agency’s

strategic plan and better link staffing and contracting

decisions in achieving the Corporation’s mission.  

Next Steps:  

• PBGC is considering these recommendations and will

determine courses of action by mid‐November 2008.

Additional Information:  The report (GAO‐08‐871) is available at   http://www.gao.gov/new.items/d08871.pdf.

Data Quality and Top Management Challenges

Data quality for this performance goal is rated Very Good.

60  PBGC moved from a rating of Data Quality Not

Determined in 2007 to Very Good this year with the addition of the benefit determination timeliness measure.  The

timely issuance of the benefit determination is an important outcome for PBGC beneficiaries.  By moving beyond

customer service and including an important dimension of PBGC’s operations – benefit determinations – PBGC

satisfied the criterion of relevance.

Top management challenges include governance of PBGC, information security and implementation of the pension

reforms in the Pension Protection Act.  To address the governance issues, the Board of Directors amended PBGC by‐

laws to streamline processes and clarify the roles and responsibilities of the Board, Board Representatives and

PBGC Director.  Continuing with its comprehensive approach to information and infrastructure security and to

address information technology security concerns, PBGC completed IT Certification and Accreditation of its general

support systems and major applications.  This long‐term effort will conclude in 2011.  Following enactment of the

Deficit Reduction Act and the Pension Protection Act in 2006, PBGC focused on drafting regulations to implement

the premium reforms.  At the end of March 2008, PBGC published final regulations that amend premium rates and

payment, and change the variable‐rate premium for plan years beginning on or after January 1, 2008.

 

60 Information on DOL’s Data Quality Assessments, conducted annually for each performance goal, can be found in the

Introduction to the Performance Section.

Financial Section 
170     United States Department of Labor

Message from the Chief Financial Officer

As a Federal entity, the Department of Labor must be transparent and accountable to its

broad community of stakeholders.  To that end, I am proud to report that for the twelfth

year in a row the Department received an unqualified “clean” opinion from its Inspector

General on its consolidated financial statements.   

We have also received other external validation of the Department’s ongoing effort to

improve financial management and produce user‐friendly and transparent reports.  In the

past year, the Department earned its eighth consecutive Certificate of Excellence in

Accountability Reporting from the Association of Government Accountants and once

again was recognized by the Mercatus Center for producing an annual report that was

one of the best in government in terms of accuracy, transparency, and public benefit.  

The Department also produced a “highlights” version of last year’s report, which the Mercatus Center deemed the

best in government.  The Department also maintained its “green” ratings on key President’s Management Agenda

scorecards for improving financial performance and eliminating improper payments, remaining one of only a

handful of Federal entities to demonstrate continued success and improvement in these areas.   

With such substantial recognition both inside and outside of government for sound, accountable, and transparent

financial management, our stakeholders should have confidence in our efforts to further strengthen financial

management practices at the Department moving forward.  To that end, allow me to share several of the

Department’s financial management accomplishments during FY 2008.

The value and benefit of managerial cost accounting continues to be recognized throughout the Department, as

more users are being trained and new functionality is being developed for Cost Analysis Manager (CAM), the

Department’s cost accounting system.  Manager are taking the vast amount of data available and using it to make

more informed decisions on the directions of their programs.  Departmental users are able to share best practices

and lessons learned with each other to ensure that this resource is being utilized optimally.

We are on schedule to launch a new core financial management system by this time next year.  The system will

enable us to continue to ensure compliance with financial management requirements in a more effective manner.  

The system will foster better customer service and more efficient financial management operations, while

facilitating accountability and transparency at all levels.

We are laying the foundation for a more effective risk management program at the Department.  By integrating risk

into the decision‐making process, we will be well positioned to address the varied challenges facing our programs.

As we move into the new fiscal year, I am confident that we will continue to build on our accomplishments and

provide more effective and efficient financial management.  This will enable us to provide the transparent and

accountable information our stakeholders have come to expect.   

Douglas W. Webster

Chief Financial Officer

November 17, 2008
FY 2008 Performance and Accountability Report     171

KPMG LLP 

2001 M Street, NW 

Washington, DC 20036 

Independent Auditors’ Report 

Secretary and Inspector General 

U.S. Department of Labor: 

We have audited the accompanying consolidated balance sheets of the U.S. Department of Labor (DOL) as of 

September 30, 2008 and 2007; the related consolidated statements of net cost and changes in net position, and 

combined statements of budgetary resources for the years then ended; and the statements of social insurance as of 

September 30, 2008, 2007, and 2006 (hereinafter referred to as “consolidated financial statements”). The objective of 

our audits was to express an opinion on the fair presentation of these consolidated financial statements. In connection 

with our fiscal year 2008 audit, we also considered DOL’s internal controls over financial reporting 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. 

We have also examined DOL’s compliance with section 803a of the Federal Financial Management Improvement 

Act of 1996 (FFMIA) as of September 30, 2008. 

SUMMARY 

As stated in our opinion on the consolidated financial statements, we concluded that the consolidated financial 

statements present fairly, in all material respects, the financial position of DOL as of September 30, 2008 and 2007; 

its net costs, changes in net position, and budgetary resources for the years then ended; and the financial condition of 

its social insurance program as of September 30, 2008, 2007, and 2006, in conformity with U.S. generally accepted 

accounting principles. 

As discussed in our opinion on the consolidated financial statements, the statements of social insurance present the 

actuarial present value of DOL’s future expenditures to be paid to or on behalf of participants, estimated future 

income to be received from excise taxes, and estimated expenditures for administrative costs and interest payments 

during a projection period ending in 2040. 

Also as discussed in our opinion on the consolidated financial statements, in fiscal year 2008, DOL changed the 

financial statement presentation of its custodial activities from a principal financial statement to a disclosure in the 

accompanying notes to the consolidated financial statements. 

Our consideration of internal control over financial reporting resulted in the following conditions being identified as 

significant deficiencies: 

1. Lack of Adequate Controls over Access to Key Financial and Support Systems 

2. Weakness Noted over Payroll Accounting 

3. Lack of Segregation of Duties over Journal Entries 

However, none of the significant deficiencies are believed to be material weaknesses. 

KPMG LLP, a U.S. limited liability partnership, is the U.S. 

member firm of KPMG International, a Swiss cooperative. 
Financial Section

172     United States Department of Labor

The results of our tests of compliance with certain provisions of laws, regulations, contracts, and grant agreements 

disclosed one instance of Anti-Deficiency Act noncompliance that is 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. 07-04, Audit Requirements for Federal Financial Statements. 

As stated in our opinion on DOL’s compliance with FFMIA, we concluded that DOL complied, in all material 

respects, with the requirements of FFMIA as of September 30, 2008. 

The following sections discuss our opinion on DOL’s consolidated financial statements; our consideration of DOL’s 

internal controls over financial reporting; our tests of DOL’s compliance with certain provisions of applicable laws, 

regulations, contracts, and grant agreements; and management’s and our responsibilities. 

OPINION ON THE FINANCIAL STATEMENTS 

We have audited the accompanying consolidated balance sheets of the U.S. Department of Labor as of September 30, 

2008 and 2007; the related consolidated statements of net cost and changes in net position, and the combined 

statements of budgetary resources for the years then ended; and the statements of social insurance as of September 

30, 2008, 2007, and 2006. The accompanying statements of social insurance as of September 30, 2004 and 2005 were 

not audited by us and, accordingly, we do not express an opinion on them. 

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, 2008 and 2007; its net costs, changes in net 

position, and budgetary resources for the years then ended; and the financial condition of its social insurance program 

as of September 30, 2008, 2007, and 2006, in conformity with U.S. generally accepted accounting principles. 

As discussed in Note 1-W to the consolidated financial statements, the statements of social insurance present the 

actuarial present value of DOL’s future expenditures to be paid to or on behalf of participants, estimated future 

income to be received from excise taxes, and estimated expenditures for administrative costs and interest payments 

during a projection period ending in 2040. 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 statement of social insurance and the fact that future events and 

circumstances can not be known with certainty, there will be differences between the estimates in the statement of 

social insurance and the actual results, and those differences may be material. 

Also as discussed in Note 1-B to the consolidated financial statements, in fiscal year 2008, DOL changed the 

financial statement presentation of its custodial activities from a principal financial statement to a disclosure in the 

accompanying notes to the consolidated financial statements. DOL revised its fiscal year 2007 consolidated financial 

statements and notes to conform to this fiscal year 2008 presentation. 

The information in the Management’s Discussion and Analysis, Required Supplementary Information, and Required 

Supplementary Stewardship Information sections is not a required part of the consolidated financial statements, but is 

supplementary information required by U.S. generally accepted accounting principles. 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. 

The information in the Secretary’s Message, Performance Section, Other Accompanying Information and 

Appendices are presented for purposes of additional analysis and are not required as part of the consolidated financial 
Independent Auditors’ Report

FY 2008 Performance and Accountability Report     173

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 the internal control over financial reporting was for the limited purpose described in the 

Responsibilities section of this report and would not necessarily identify all deficiencies in the internal control over 

financial reporting that might be significant deficiencies or material weaknesses. 

A control deficiency exists when the design or operation of a control does not allow management or employees, in 

the normal course of performing their assigned functions, to prevent or detect misstatements on a timely basis. A 

significant deficiency is a control deficiency, or combination of control deficiencies, that adversely affects DOL’s 

ability to initiate, authorize, record, process, or report financial data reliably in accordance with U.S. generally 

accepted accounting principles such that there is more than a remote likelihood that a misstatement of DOL’s 

consolidated financial statements that is more than inconsequential will not be prevented or detected by DOL’s 

internal control. A material weakness is a significant deficiency, or combination of significant deficiencies, that 

results in more than a remote likelihood that a material misstatement of the financial statements will not be prevented 

or detected by DOL’s internal control. 

In our fiscal year 2008 audit, we consider the deficiencies, described in Exhibit I, to be significant deficiencies in 

internal control over financial reporting. However, we believe that none of the significant deficiencies presented in 

Exhibit I are material weaknesses. 

We noted certain additional matters that we will report to management of DOL in a separate letter.

COMPLIANCE AND OTHER MATTERS 

The results of certain of our tests of compliance as described in the Responsibilities section of this report, exclusive 

of those referred to in FFMIA, disclosed one instance of Anti-deficiency Act noncompliance that is required to be 

reported herein under Government Auditing Standards or OMB Bulletin No. 07-04, and is described in Exhibit II. 

The results of our other tests of compliance as described in the Responsibilities section of this report, exclusive of 

those referred to in FFMIA, disclosed no instances of noncompliance or other matters that are required to be reported 

herein under Government Auditing Standards or OMB Bulletin No. 07-04. 

Other Matters. DOL is currently reviewing two incidents regarding potential violations of the Anti-deficiency Act. As 

of the date of this report, no final noncompliance determination has been made. 

We noted certain additional matters that we will report to management of DOL in a separate letter. 

OPINION ON COMPLIANCE WITH FFMIA 

DOL represented that, in accordance with the provisions and requirements of FFMIA, the Secretary of Labor 

determined that the DOL’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 as of September 30, 2008. Under section 803a of FFMIA, the U.S. 

Department of Labor’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 
Financial Section

174     United States Department of Labor

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. 

In our opinion, the U.S. Department of Labor complied, in all material respects, with the aforementioned 

requirements as of September 30, 2008. 

RESPONSIBILITIES 

Management’s Responsibilities. Management is responsible for the consolidated financial statements; establishing 

and maintaining effective internal control; and complying with laws, regulations, contracts, and grant agreements 

applicable to DOL. 

Auditors’ Responsibilities. Our responsibility is to express an opinion on the consolidated financial statements of 

DOL based on our audits. We conducted our audits 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. 07-04. Those standards and OMB 

Bulletin No. 07-04 require that we plan and perform the audits 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 audits provide a reasonable basis for our opinion. 

In planning and performing our fiscal year 2008 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 as a basis for designing our auditing procedures for 

the purpose of expressing our opinion on the consolidated financial statements. 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 express an opinion on the effectiveness of DOL’s internal control over financial 

reporting. Accordingly, we do not express an opinion on the effectiveness of DOL’s internal control over financial 

reporting. 

As part of obtaining reasonable assurance about whether DOL’s fiscal year 2008 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. 07-04, including the provisions referred to in section 803(a) of FFMIA.

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. 
Independent Auditors’ Report

FY 2008 Performance and Accountability Report     175

Our responsibility also included expressing an opinion on DOL’s compliance with FFMIA section 803a requirements 

as of September 30, 2008, 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. 

______________________________ 

DOL’s response to the findings identified in our audit is presented in Exhibit I. We did not audit DOL’s response 

and, accordingly, we express no opinion on it. 

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 14, 2008 
Financial Section

Significant Deficiencies

Exhibit I

176     United States Department of Labor

1. Lack of Adequate Controls over Access to Key Financial and Support Systems 

In fiscal year (FY) 2007, we reported a significant deficiency related to the lack of adequate controls over access 

to key financial and support systems. 

The Office of the Inspector General (OIG) recommended that management: 

• Identify key financial information technology (IT) controls and incorporate them into the U.S. Department of 

Labor’s (DOL) internal control and Office of Management and Budget (OMB) Circular No. A-123 testing 

process, to ensure that these controls are documented and operating effectively during the year. 

• Coordinate efforts among the DOL agencies to develop and/or enforce procedures and controls to address 

access control weaknesses in current financial management systems. 

During our FY 2008 audit, we noted that DOL identified and tested key IT controls as part of its OMB Circular 

No. A-123 testing process. Specifically, we noted that the testing included following up on certain prior year IT 

findings and testing the design and operating effectiveness of certain key current year controls. Certain parts of 

the OMB Circular A-123 IT testing were performed concurrently with our IT testing and were not completed in 

time for us to assess the adequacy of the process. 

Additionally, we noted that 30 prior year findings related to access controls have not been corrected by 

management (5 in the Office of the Chief Financial Officer (OCFO), 11 in the Employment and Training 

Administration (ETA), 4 in the Office of the Assistant Secretary for Administration and Management (OASAM), 

and 10 in the Employment Standards Administration (ESA)). In addition, in FY 2008, we identified access 

control weaknesses that resulted in 14 new findings (2 in the OCFO, 2 in ETA, 1 in OASAM, and 9 in ESA). 

The specific nature of these weaknesses, their causes, and the systems impacted has been communicated 

separately to management. 

In summary, we noted issues with account management, configuration management, and review of system audit 

logs in our FY 2008 testing of DOL’s IT systems, that present more than a remote likelihood that a misstatement 

of DOL’s financial statements that is more than inconsequential will not be prevented or detected. As such, we 

believe that these new weaknesses and the uncorrected prior year control weaknesses represent a significant 

deficiency over access to key financial and support systems. Specifically, the following control weaknesses were 

present in multiple financial systems across various DOL agencies. 

• Account Management: 

• Account management controls such as user access request, modification, and termination procedures 

were not documented; 

• Account management controls were not performed, such as incomplete or missing access request, 

modification, and termination forms; 

• Periodic user account reviews or re-certifications were not performed; 

• Generic accounts existed on systems; 

• Access authorization, recertification, and periodic reviews of data center access were not consistent with 

policies; 

• Certain terminated personnel had active system accounts, and in some cases, terminated employees 

accessed systems after their termination date; and 

• Certain human resources personnel had access to create and approve personnel action requests on their 

own. 
Independent Auditors’ Report

Significant Deficiencies

Exhibit I

FY 2008 Performance and Accountability Report     177

• Configuration Management: 

• Technical security standards and policies need to be updated and implemented to include stronger logical 

access security controls. Specifically, patches were not applied to systems in a timely manner; 

unnecessary services were not disabled; and access to sensitive files, directories, or software was not 

restricted; 

• Production servers were not configured in accordance with baseline configurations or to the most 

appropriate settings; 

• Password settings do not comply with the Office of the Chief Information Officer Computer Security 

Handbook; and 

• Inactive accounts were not disabled or deleted in a timely manner. 

• Review of System Audit Logs: 

• Audit logs monitoring user and administrator activity, changes to security profiles, remote access logs, 

access to sensitive directories, and failed login attempts are not reviewed, or documentation of audit log 

reviews was not maintained; 

• Audit log review procedures were not documented and finalized; 

• Audit logs were not secured against editing by system administrators; and 

• Application-level audit logs (e.g., significant transactions and changes to sensitive tables) were not 

proactively reviewed. 

These findings are the result of weaknesses in the implementation and monitoring of Departmental processes and 

procedures. Certain parts of management’s OMB Circular No. A-123 IT testing were not completed in time for 

us to assess whether the process was adequate or addressed our recommendation. While the agencies closed 24 

prior year findings, they have not invested the necessary level of effort or properly allocate their resources to 

ensure that policies are designed and operating effectively. These access control weaknesses could result in users 

with inappropriate access to financial systems; inefficient processes; lack of completeness, accuracy, or integrity 

of financial data; and/or undetected unusual activity within financial systems. 

Based on these facts noted as part of our FY 2008 audit, we consider the recommendation related to testing key 

financial IT controls as part of the OMB Circular No. A-123 testing process resolved and open. However, we 

have revised the status of the recommendation related to coordinating efforts among the DOL agencies to 

develop and/or enforce procedures and controls to address access control weaknesses in current financial 

management systems from resolved and open to unresolved.

Management’s Response: DOL maintains policies, procedures and standards for management, operational, and 

technical controls that collectively provide compound safeguards and redundant security measures to ensure the 

integrity of DOL financial systems. Additionally, of the 44 open notifications of findings and recommendations 

(NOFRs) auditors issued to four DOL agencies in this draft audit report, none concluded that the cited weakness 

in agency-level access controls in and of itself amounted to a “significant deficiency.” 

In FY 2008, DOL Management continued to focus on aggressive remediation efforts resulting in substantial 

improvements to the Department’s overall IT control environment, resulting in closure of 24 prior year audit 

findings. Additionally, the OCIO security monitoring program was enhanced to identify deficiencies requiring 

agency corrective action and target areas for additional oversight and monitoring. 

Although fully supportive of the need for continual improvement of IT controls, management maintains that the 

controls inherent to specific applications, as well as manual, and other compensating controls already in place, 
Financial Section

Significant Deficiencies

Exhibit I

178     United States Department of Labor

are sufficiently designed and effective to prevent or detect any unauthorized access to DOL financial systems. As 

such, management believes that the likelihood of a misstatement of DOL’s financial statement is remote. 

In FY 2009, management plans to further strengthen its monitoring program by establishing a Department-wide 

comprehensive strategy to address the identified conditions associated with access controls and configuration 

management procedures and working directly with the agencies to implement the objectives and milestones for 

this strategy (FY 2009 Q2). We will also complete quarterly security control testing to measure the effectiveness 

of the agencies implementation of the access control and configuration management procedures (FY 2009 Q2 – 

Q4). 

Further, the auditors have represented that a detailed report will be issued in December 2008 that will provide the 

in-depth analysis performed in support of its conclusions. Management will be able to provide a more in-depth 

response at that time. 

Regarding A-123 related recommendation, the OMB Circular No. A-123 IT testing was performed on a timely 

basis to meet all A-123 requirements, although certain of the testing may not have been completed on a 

timeframe to enable KPMG to adequately review the work. For FY 2009, we will accelerate the A-123 testing. 

Timing of the testing will depend on when the agency documentation is available, and as constrained by the 

availability of funding due to the restrictions of the continuing resolution. 

Auditor Response: The details of all our FY 2008 IT findings and recommendations were provided to DOL 

management through the NOFR process. While we did not identify any individual finding as a significant 

deficiency, we evaluated the combination of certain findings, in accordance with auditing standards generally 

accepted in the United States of America, to conclude that a significant deficiency does exist. Although 

management stated that they do not concur with our recommendations, they plan on taking steps to address them. 

Therefore, these recommendations are considered resolved and open. 

2. 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 the information that was submitted to NFC via Time and Attendance records was reconciled 

to what was shown as paid in the Detail Pay and Deduct Register. 

We recommended 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, approved by an appropriate supervisor, and maintained. 

During FY 2007, the NFC continued to process DOL’s payroll. The Fiscal Year 2007 – Office of the Chief 

Financial Officer/National Finance Center General Control Review dated September 27, 2007, and issued by the 
Independent Auditors’ Report

Significant Deficiencies

Exhibit I

FY 2008 Performance and Accountability Report     179

USDA’s Office of Inspector General (Report No. 11401-26-FM) reported a qualified opinion regarding the 

effectiveness of NFC’s internal controls for the period July 1, 2006, through June 30, 2007. 

As part of DOL’s corrective action plan for FY 2007, the OCFO’s PeoplePower Task Force created a Time and 

Attendance Reconciliation Report based on the NFC’s Detail Pay and Deduct Register to be used to reconcile 

information sent to NFC to that received and processed by NFC. In March 2007, the DOL OCFO issued policies 

and procedures that state that each DOL Human Resource office should review the Time and Attendance 

Reconciliation Reports each pay period and research and resolve differences identified. No offices that we tested 

complied with the new OCFO procedures, but two offices that we tested performed their own reconciliation 

procedures. 

During FY 2008, the OCFO issued revised policies and procedures dated October 23, 2007, requiring a review of 

the Time and Attendance Reconciliation Reports, and implemented these policies and procedures. The OCFO 

also performed monitoring department-wide to ensure that the reviews were completed, documented, and 

approved by an appropriate supervisor, and maintained. However, we noted that the reconciliation tested from 

the Atlanta processing center did not contain a signature to validate the review. In addition, the Time and 

Attendance Reconciliation Reports do not contain a space for the date of the review; therefore, the timeliness of 

the reconciliations and certifications was not verifiable. 

The policies and procedures issued and the related reviews and audits appeared to reconcile and certify time and 

attendance records only. When we requested supporting documentation for the reviews of other NFC inputs and 

outputs (e.g., Gross Pay and Benefit Withholdings), we noted that the five agencies selected for testwork were 

able to provide the Detail Pay and Deduct Register report; however, the agencies could not provide evidence of 

review or recalculations of payroll-related items other than time and attendance. Therefore, we can not conclude 

that such reviews and recalculations were completed. The lack of compensating reconciliation controls around 

the NFC compensation outputs increases the risk that payroll-related line items may be misstated due to errors in 

payroll processing by NFC. 

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 2008 Report No. 11401-28-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.” 

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 Government Accountability Office’s (GAO) 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.” 

DOL’s policies and procedures do not provide adequate guidance on the need for agencies to review payrollrelated items other than time and attendance records. Therefore, even though the Detail Pay and Deduct Register 

reports are being generated, no requirement exists for agencies to review all payroll information in the reports. In 

addition, the OCFO does not have a process in place to monitor the completion of the reviews of payroll-related 

items other than time and attendance. 

As such, we consider the recommendation we made in FY 2006 as resolved and open. To close this 

recommendation in the future, the DOL OCFO should (a) ensure that Human Resource offices are reconciling all 
Financial Section

Significant Deficiencies

Exhibit I

180     United States Department of Labor

payroll information, not only time and attendance records, provided to the NFC to the payroll information 

processed by the NFC for each pay period, (b) ensure that these reconciliations are documented, reviewed, and 

approved by an appropriate supervisor, and maintained, and (c) update DOL’s current policies and procedures to 

reflect these changes. 

Management Response: The FY 2006 and FY 2007 audits focused on reconciliation of time and attendance. 

Accordingly, management made considerable progress in this area by implementing and monitoring procedures 

requiring reconciliation of time and attendance data. We also implemented improved procedures to reconcile 

payroll data provided by NFC to that recorded in DOLAR$, another critical payroll reconciliation. The updated 

finding for FY 2008 states that DOL does not review or recalculate other elements of pay, such as gross pay and 

withholdings. However, while certain agencies may not have conducted such reviews, we found that major 

agencies (such as ETA, ESA and BLS) are performing various analytical reviews to validate bi-weekly gross 

payroll and use these procedures to detect variances from prior periods or from budgeted amounts. We also 

understand that the ultimate check and balance on payroll are the employees themselves as every employee is 

responsible for ensuring that all aspects of their salary and deductions are correct. 

In FY 2009, the OCFO will work to enhance existing policy and procedures and analytical controls, and will 

expand such controls throughout all DOL agencies. The OCFO will also implement procedures to verify and 

recalculate a sample of payroll transactions recorded throughout the fiscal year, and will develop and utilize 

change reports for purposes of identifying unusual fluctuations in payroll totals. These procedures will be 

developed and implemented by March 31, 2009. 

Auditor Response: DOL indicated above that several of its agencies are performing analytical reviews to validate 

bi-weekly gross payroll; however, DOL did not provide us evidence of these activities during our FY 2008 audit 

procedures. Although management stated that they do not completely concur with our recommendations, they 

plan on taking steps to address them. Therefore, these recommendations are considered resolved and open. 

3. Lack of Segregation of Duties over Journal Entries 

During the FY 2006 audit, we noted that accounting staff from all DOL agencies were able to prepare and enter 

journal entries into the Department of Labor Accounting and Related Systems (DOLAR$) without approval. 

We recommended that management reconfigure DOLAR$ so that journal entries entered into the DOLAR$ 

general ledger system and its successor system are required to be approved electronically by an individual other 

than the preparer before posting. We also recommended that agencies implement manual compensating review 

controls until system controls have been implemented. 

During FY 2007, we found that management had not reconfigured DOLAR$ so that journal entries entered into it 

are required to be approved electronically by an individual other than the preparer before posting because DOL 

plans on implementing a new general ledger system by October 2009. In addition, although the OCFO had 

developed department-wide manual policies and procedures designed to ensure the segregation of journal entry 

preparation and approval authority, we noted that a number of journal entries did not have supporting 

documentation evidencing management review and approval. 

During the FY 2008 audit, we noted that management implemented new department-wide manual policies and 

procedures designed to ensure the segregation of journal entry preparation and approval authority. However, we 

noted that the OCFO did not provide documentation for 134 of 215 journal entries that we selected for review, 

from the period October 1, 2007, to June 30, 2008, to support that these journal entries were reviewed by a 

supervisor or someone other than the preparer before they were posted to DOLAR$. The OCFO considers 39 of 

the 134 exceptions noted to be exempt from department-wide policies and procedures over manual journal 

entries because they are generated by internally-developed programs, which are discussed below in more detail. 
Independent Auditors’ Report

Significant Deficiencies

Exhibit I

FY 2008 Performance and Accountability Report     181

Furthermore, we noted that 8 journal entries were posted to DOLAR$ prior to review and approval as evidenced 

by the signatures on the cover sheets of the journal entries. 

We also noted that certain transactions posted in DOLAR$ related to non-expenditure transfers erroneously 

impact expended and unexpended appropriations balances. To ensure that these balances are correctly reported 

at fiscal year end, the OCFO uses an internally-developed program to generate a manual journal entry to reverse 

the erroneous components of the transfer entries. However, OCFO staff did not update the program to capture 

and correct such errors made in FY 2008 transfer entries. As a result, the balances of expended appropriations 

and unexpended appropriations at fiscal year end were initially misstated by approximately $716 million, and the 

OCFO posted an auditor-proposed adjustment in November to correct the error. OCFO supervisors did not 

identify this error since management consider the related journal entries to be part of an automated process that is 

not subject to the department-wide policies and procedures that require manual journal entries to be reviewed by 

a supervisor or someone other than the preparer before they are posted to DOLAR$. 

By posting transactions without proper review and approval and allowing individuals the authority to prepare and 

approve their own transactions in DOLAR$, there is an increased risk that a material error would not be 

prevented or detected and corrected in a timely manner. 

In addition, management represented that the new core financial management system, to be implemented in 

October 2009, will require electronic approval by someone other than the preparer before journal entries are 

posted. As a result, we were again informed that DOL does not plan to implement the recommendation to 

reconfigure DOLAR$ so that journal entries entered into DOLAR$ are approved electronically by an individual 

other than the preparer before posting. 

Per GAO’s Standards of 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.” 

Since management provided their timeframes to implement the new general ledger system that requires 

electronic approval by someone other than the preparer before journal entries are posted, we consider the 

corrective action recommendation we made in FY 2007 resolved and open. To close the recommendation, 

management needs to ensure that the new core financial management system is configured, upon 

implementation, so that journal entries entered into it are required to be approved electronically by an individual 

other than the preparer. 

Because management does not monitor DOL employees’ compliance with the OCFO policies and procedures in 

place that require all journal entries to be properly prepared, supported, and approved before posting to DOLAR$ 

and that proper segregation of duties is in place related to the preparation and posting of journal entries, we 

consider the manual control recommendation made in FY 2006 as unresolved. To close this recommendation, 

management should (a) monitor DOL employees’ compliance with the department-wide policies and procedures 

in place for documenting the review of all journal entries prior to posting in DOLAR$, (b) update the 

department-wide policies and procedures to require that manual journal entries generated by internally-developed 

programs be reviewed and approved by a supervisor or someone other than the preparer before they are posted to 

DOLAR$, and (c) design and implement detective controls that require supervisors to periodically generate and 

review activity reports that list all journal entries posted to DOLAR$. These controls should ensure that all 

journal entries that are posted are appropriate, supported, and documented. 

Management Response: We analyzed the sample results cited in this finding, and found that not all transactions 

selected were manual entries subject to the standard, department-wide journal entry procedures referred to and 

tested by the auditors. In fact, a number of these transactions were recorded in DOLAR$ via an automated 
Financial Section

Significant Deficiencies

Exhibit I

182     United States Department of Labor

process, or were related to unique activities of DOL agencies, for which different procedures have been put into 

place. In both scenarios, the auditors assumed that such transactions should have been documented and reviewed 

similar to journal entries processed in accordance with the department-wide journal entry procedure. 

Furthermore, we maintain that the internal control standards allow for different types of controls, both preventive 

and detective in nature, which may be used to perform the authorization, recording, and review of transactions, 

and the segregation of duties among these functions. Certain transactions were included as exceptions simply 

because the review function was performed as a separate process after the transaction was recorded in DOLAR$, 

rather than simultaneous with posting. 

We do not agree with the auditor’s statement that "management does not monitor DOL's compliance with 

policies and procedures”. We believe that there is disagreement with what transactions are subject to these 

requirements. That said, we will look to clarifying which transactions are subject to preventive and/or detective 

controls and update the policies accordingly. Knowing that DOL plans to implement the new core financial 

system in FY 2010, we will not consider reconfiguring DOLAR$ at this point in its lifespan. However, the 

OCFO will issue written guidelines and minimum requirements for documenting the authorization, recording and 

review functions for transactions posted outside of the automated interfaces, and for the segregation of duties 

among these functions. The OCFO will periodically monitor compliance with existing policies and procedures 

by testing samples of transactions posted throughout the fiscal year. Our assessment and written procedures will 

be completed by March 31, 2009, and sampling will begin thereafter. 

Auditor Response: We believe that the results of our audit procedures and the misstatement identified support 

our conclusion that a significant deficiency exists in this area. Although management stated that they do not 

completely concur with our recommendations, they plan on taking steps to address them. Therefore, these 

recommendations are considered resolved and open. 
Independent Auditors’ Report

Compliance Matters

Exhibit II

FY 2008 Performance and Accountability Report     183

1. Anti-deficiency Act

During FY 2008, DOL management concluded that an Anti-deficiency Act violation had occurred. The total 

amount of the violation was $39,450,476. The Secretary of Labor has reported the violation to the President of 

the United States, the President of the Senate, the Speaker of the House of Representatives, and the Comptroller 

General of the United States, as required by 31 U.S.C. section 1351. 

The violation occurred in the Employment and Training Administration Community Service Employment for 

Older Americans account (160175) in connection with the Senior Community Service Employment Program in 

each of fiscal years 2003 through 2008, covering appropriations enacted for FY 2001 through FY 2005. These 

violations relate to the reobligation of expired funds for FY 2001 through FY 2005, beyond the period allowed 

for new obligations, as established in DOL’s annual appropriation for this program.

Annual Financial Statements

Principal Financial Statements and Notes
Financial Section

PRINCIPAL FINANCIAL STATEMENTS

188     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  

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) 2008 and 2007 consisted of the following:  

• The Consolidated Balance Sheet, which presents as of September 30, 2008 and 2007 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 Statement of Net Cost, which presents the net cost of DOL operations for the years ended

September 30, 2008 and 2007.  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 15 to the

consolidated financial statements.

• The Consolidated Statement of Changes in Net Position, which presents 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, 2008 and 2007.

• The Combined Statement of Budgetary Resources, which presents the budgetary resources available to DOL

during FY 2008 and 2007, the status of these resources at September 30, 2008 and 2007, the change in

obligated balance during FY 2008 and 2007, and net outlays of budgetary resources for the years ended

September 30, 2008 and 2007.

• The Statement of Social Insurance, which presents the net present value of projected cash inflows and cash

outflows of the Black Lung Disability Trust Fund as of September 30, 2008, 2007, 2006, 2005, and 2004.
Annual Financial Statements

CONSOLIDATED BALANCE SHEET

As of September 30, 2008 and 2007

(Dollars in Thousands)

 FY 2008 Performance and Accountability Report   189

2008 2007

ASSETS

Intra-governmental

Funds with U.S. Treasury (Notes 1-C and 2) 9,428,930 $ 9,982,952 $ 

Investments (Notes 1-D and 3) 73,564,675 76,014,494 

Accounts receivable (Notes 1-E and 4) 4,076,877 4,068,703 

Total intra-governmental 90,066,149 87,070,482 

Accounts receivable, net of allowance (Notes 1-E and 4) 976,428 1,060,223 

Property, plant and equipment, net

 of accumulated depreciation (Notes 1-F and 5) 1,140,999 1,115,819 

Other

Advances (Notes 1-G and 6) 541,565 756,410 

Total assets $ 92,783,756 89,944,319 $ 

LIABILITIES AND NET POSITION

Liabilities (Note 1-I)

Intra-governmental

Accounts payable $ 21,761 28,782 $ 

Advances from U.S. Treasury (Notes 1-J, 8 and 23) 10,483,557 10,057,557 

Other liabilities (Note 11) 230,932 219,337 

Total intra-governmental 10,310,250 10,731,676 

Accounts payable 1,042,185 908,799 

Future workers' compensation benefits (Notes 1-K and 9) 762,836 635,848 

Accrued benefits (Notes 1-L and 10) 1,775,576 1,448,772 

Other

Energy employees occupational illness

 compensation benefits (Note 1-M) 8,099,319 7,501,838 

Accrued leave (Note 1-N) 101,257 111,507 

Other liabilities (Note 11) 260,374 240,849 

Total liabilities 22,630,562 21,300,524 

Contingencies (Note 13)

Net position (Note 1-R)

Unexpended appropriations - other funds 8,169,166 8,207,904 

Cumulative results of operations

Earmarked funds (Note 21) 65,388,181 62,052,699 

Other funds (2,908,108) (2,112,853) 

Total net position 67,313,757 71,483,232 

Total liabilities and net position $ 92,783,756 89,944,319 $ 

The accompanying notes are an integral part of these statements.
Financial Section 

 

CONSOLIDATED STATEMENT OF NET COST 

For the Years Ended September 30, 2008 and 2007 

(Dollars in Thousands) 

190     United States Department of Labor

2008 2007

NET COST OF OPERATIONS (Notes 1-S and 15)

CROSSCUTTING PROGRAMS

Income maintenance

Gross cost $ 43,231,820 53,680,770 $ 

Less earned revenue (3,265,223) (3,365,944) 

Net program cost 50,314,826 39,966,597 

Employment and training

Gross cost 6,088,647 5,703,975 

Less earned revenue (44,925) (12,184) 

Net program cost 6,043,722 5,691,791 

Labor, employment and pension standards

Gross cost 716,808 694,041 

Less earned revenue (11,024) (13,240) 

Net program cost 705,784 680,801 

Worker safety and health

Gross cost 882,471 920,563 

Less earned revenue (2,837) (2,405) 

Net program cost 880,066 917,726 

OTHER PROGRAMS

Statistics

Gross cost 613,949 611,049 

Less earned revenue (5,275) (6,083) 

Net program cost 607,866 605,774 

COSTS NOT ASSIGNED TO PROGRAMS

Gross cost 93,009 111,912 

Less earned revenue not attributed to programs (15,836) (6,325) 

Net cost not assigned to programs 96,076 86,684 

Net cost of operations $ 48,290,719 58,306,994 $ 

The accompanying notes are an integral part of these statements.
Annual Financial Statements

CONSOLIDATED STATEMENT OF CHANGES IN NET POSITION  

For the Years Ended September 30, 2008 and 2007

(Dollars in Thousands)

 FY 2008 Performance and Accountability Report   191

Consolidated Consolidated Consolidated Consolidated

Earmarked All Other Consolidated Earmarked All Other Consolidated

Funds Funds Total Funds Funds Total

Cumulative results

 of operations, beginning $ (2,112,853) 65,388,181 $ 63,275,328 $ 57,146,431 $ (1,434,125) $ 55,712,306 $ 

Budgetary financing sources

 (Note 1-T)

Appropriations used 10,107,739 - 10,107,739 10,482,552 - 10,482,552 

Non-exchange revenue

 (Note 16)

Employer taxes 38,307,831 38,307,831 - 39,910,946 39,910,946 - 

Interest 3,639,276 5,423 3,644,699 3,348,577 9,542 3,358,119 

Assessments 136,827 - 136,827 140,578 - 140,578 

Reimbursement of 

 unemployment benefits 1,768,182 1,768,182 - 1,632,863 1,632,863 - 

Total non-exchange revenue 43,715,289 142,250 43,857,539 44,892,386 150,120 45,042,506 

Transfers without 

 reimbursement (Note 17) (3,683,586) 3,773,365 89,779 (3,470,145) 3,666,500 196,355 

Other financing sources

 (Note 1-U)

Imputed financing from 

 costs absorbed by others 195 117,814 118,009 253 129,606 129,859 

Transfers without 

 reimbursement (Note 17) 3,191 - 3,191 2,469 - 2,469 

Total financing sources 40,031,898 14,144,359 54,176,257 41,422,494 14,431,247 55,853,741 

Net cost of operations (43,367,380) (14,939,614) (58,306,994) (33,180,744) (15,109,975) (48,290,719) 

Net change (3,335,482) (795,255) (4,130,737) 8,241,750 (678,728) 7,563,022 

Cumulative results

 of operations, ending (2,908,108) 62,052,699 59,144,591 65,388,181 (2,112,853) 63,275,328 

Unexpended appropriations,

 beginning 8,207,904 - 8,207,904 8,242,168 - 8,242,168 

Budgetary financing sources

 (Note 1-T)

Appropriations received

 (Note 18-F) 10,936,004 - 10,936,004 11,006,912 - 11,006,912 

Appropriations transferred (431,909) - (431,909) (426,657) - (426,657) 

Appropriations not available (435,094) - (435,094) (131,967) - (131,967) 

Appropriations used (10,107,739) - (10,107,739) (10,482,552) - (10,482,552) 

Subtotal (38,738) - (38,738) (34,264) - (34,264) 

Unexpended appropriations

 ending 8,169,166 - 8,169,166 8,207,904 - 8,207,904 

Net position $ 62,052,699 5,261,058 $ 67,313,757 $ 65,388,181 $ 6,095,051 $ 71,483,232 $ 

2008 2007

The accompanying notes are an integral part of these statements.
Financial Section

COMBINED STATEMENT OF BUDGETARY RESOURCES

For the Years Ended September 30, 2008 and 2007

(Dollars in Thousands)

192     United States Department of Labor

2008 2007

BUDGETARY RESOURCES

Unobligated balance, brought forward, October 1 4,311,781 $ 4,196,286 $ 

Recoveries of prior year unpaid obligations 418,195 220,673 

Budget authority

Appropriations received (Note 18-F) 58,784,002 56,921,801 

Borrowing authority 426,000 426,000 

Spending authority from offsetting collections

Earned

Collected 2,787,587 2,947,436 

Change in receivables from Federal sources (3,996) (5,294) 

Change in unfilled customer orders

Advance received (219) 2,312 

Without advance from Federal sources - - 

Expenditure transfers from trust funds 3,772,387 3,665,542 

Total budget authority 63,795,417 65,928,141 

Nonexpenditure transfers, net (389,627) (9,750) 

Temporarily not available pursuant to Public Law (198,557) (8,474,004) 

Permanently not available (132,191) (852,906) 

Total budgetary resources $ 59,216,554 69,596,904 $ 

STATUS OF BUDGETARY RESOURCES

Obligations incurred (Note 18-A)

Direct $ 52,020,071 62,457,299 $ 

Reimbursable 2,884,702 2,982,177 

Total obligations incurred 54,904,773 65,439,476 

Unobligated balances available

Apportioned 2,440,989 2,499,272 

Exempt from apportionment 178,948 239,399 

Total unobligated balances available 2,738,671 2,619,937 

Unobligated balances not available 1,418,757 1,691,844 

Total status of budgetary resources $ 59,216,554 69,596,904 $ 

CHANGE IN OBLIGATED BALANCE

Obligated balance, net 

Unpaid obligations, brought forward, October 1 9,369,528 $ 9,020,444 $ 

Less uncollected customer payments from Federal sources, 

 brought forward, October 1 (1,261,368) (1,236,852) 

Total unpaid obligated balance, net 8,108,160 7,783,592 

Obligations incurred, net 54,904,773 65,439,476 

Less gross outlays (54,335,016) (65,027,610) 

Less recoveries of prior year unpaid obligations, actual (418,195) (220,673) 

Change in uncollected customer payments from Federal sources 78,017 (24,516) 

Obligated balance, net, end of period

Unpaid obligations 9,369,528 9,363,199 

Less uncollected customer payments from Federal sources (1,183,351) (1,261,368) 

Total unpaid obligated balance, net, end of period 8,179,848 $ 8,108,160 $ 

NET OUTLAYS

Gross outlays $ 54,335,016 65,027,610 $ 

Less offsetting collections (6,420,360) (6,788,590) 

Less distributed offsetting receipts (740,880) (795,011) 

Net outlays $ 47,119,645 57,498,140 $ 

The accompanying notes are an integral part of these statements.
Annual Financial Statements

STATEMENT OF SOCIAL INSURANCE  

As of September 30, 2008, 2007, 2006, 2005, and 2004

(Dollars in Thousands)

 FY 2008 Performance and Accountability Report   193

2008 2007 2006 2005 2004

BLACK LUNG DISABILITY 

 BENEFIT PROGRAM (Notes 1-W and 23)

Actuarial present value of future benefit

 payments during the projection

 period to disabled coal miners

 and dependent survivors 2,139,810 $ 2,450,064 $ 2,722,801 $ 2,622,302 $ 2,880,559 $ 

Present value of estimated future

 administrative costs during 

 the projection period 827,437 831,439 848,218 845,158 759,282 

Actuarial value of future benefit

 payments and estimated administrative

 costs during the projection period 2,967,247 3,281,503 3,571,019 3,467,460 3,639,841 

Less the present value of estimated future

 excise tax income during 

 the projection period 8,009,265 7,897,423 7,957,821 8,536,401 7,671,392 

Excess of present value of estimated future

 excise tax income over actuarial present value of 

 benefit payments and estimated administrative 

 costs for the projection period 5,042,018 4,615,920 4,386,802 5,068,941 4,031,551 

Present value of estimated future interest

 on U. S. Treasury advances during 

 the projection period 22,544,657 21,134,984 20,838,219 21,583,744 19,949,150 

 

Excess of present values of total estimated

 future payments over estimated future excise

 tax income for the projection period (17,502,639) (16,519,064) (16,451,417) (16,514,803) (15,917,599) 

Trust fund net position deficit at start 

 of projection period (Note 21) (10,439,186) (10,027,701) (9,604,743) (9,160,009) (8,711,444)

Present value of total estimated future

 payments and trust fund net position deficit

 over estimated future excise tax income for 

 the projection period (27,941,825) $ $ (26,546,765) $ (26,056,160) $ (25,674,812) $ (24,629,043)

Projection Periods Ending September 30, 2040

Unaudited

The accompanying notes are an integral part of these statements.
Financial Section

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended September 30, 2008 and 2007

194     United States Department of Labor

NOTE 1 ‐ SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

A. Reporting Entity

The U.S. Department of Labor (DOL or the Department), 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

Department’s 2008 Strategic Goals are shown below.  

1. Major program agencies

• Employment and Training Administration (ETA)

• Employment Standards Administration (ESA)

• Office of Job Corps

• Occupational Safety and Health Administration (OSHA)

• Bureau of Labor Statistics (BLS)

• Mine Safety and Health Administration (MSHA)

• Employee Benefits Security Administration (EBSA)  

• 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

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, 2008 and 2007

 FY 2008 Performance and Accountability Report   195

NOTE 1 ‐ SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – Continued

A. Reporting Entity ‐ Continued

2. Major programs

• Income maintenance – Strategic Goal 4      

• Employment and training – Strategic Goals 1 and 2    

• Labor, employment, and pension standards – Strategic Goals 3 and 4

• Worker safety and health – Strategic Goal 3   

• Statistics – Strategic Goal 1

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 OMB.  

For financial statement purposes, funds are classified as earmarked funds and all other funds.   

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 Benefits Revenue 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.  

Claims filed from the origination of the program until June 30, 1973 are paid by the general fund Special

Benefits to Disabled Coal Miners.   

The Gifts and Bequests Fund 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.    
Financial Section

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended September 30, 2008 and 2007

196     United States Department of Labor

NOTE 1 ‐ SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – Continued

A. Reporting Entity ‐ Continued

3. Fund accounting structure – continued

Earmarked funds ‐ continued

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.

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, Health 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.  Job Corps funding, appropriated to ETA in 2006, was transferred to the Office of

Job Corps via an allotment process.  This funding mechanism continued in 2007.  In FY 2007, costs were

reported under the Employment and Training Administration where funds were originally budgeted and

appropriated.  The Consolidated Appropriations Act, 2008 appropriated Job Corps funding directly to the

Office of Job Corps, mandating the creation of a new account for the Office of Job Corps.  In FY 2008, Job

Corps costs associated with the 2008 appropriation are reported under a new sub‐organization for the

Office of Job Corps at the Departmental level.   Costs associated with prior year appropriations continue to

be reported under the Employment and Training Administration.

The Office of Job Corps supports the administration and management of the Job Corps program, which

helps at‐risk youth who need and can benefit from intensive education and training services to become

more employable, responsible, and productive citizens.

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.
Annual Financial Statements

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended September 30, 2008 and 2007

 FY 2008 Performance and Accountability Report   197

NOTE 1 ‐ SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – Continued

A. Reporting Entity ‐ Continued

3. Fund accounting structure ‐ continued

All other funds ‐ continued

• General funds ‐ continued

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.

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.   
Financial Section

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended September 30, 2008 and 2007

198     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 ‐ continued

• General funds ‐ continued

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 (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.
Annual Financial Statements

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended September 30, 2008 and 2007

 FY 2008 Performance and Accountability Report   199

NOTE 1 ‐ SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – Continued

A. Reporting Entity ‐ Continued

3. Fund accounting structure – continued

All other funds ‐ 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 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, and estimated and actuarial projections for the Black Lung social insurance program

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.” Except as described in the

following paragraphs, 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 inter‐fund 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.  DOL changed the financial statement presentation of its custodial

activities from a principal financial statement to a disclosure in the accompanying notes to the consolidated

financial statements in 2008, as allowed by OMB Circular No. A 136 when this activity is immaterial.  Fiscal year

2007 consolidated financial statements and notes have been revised to conform to the current year presentation.
Financial Section

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended September 30, 2008 and 2007

200     United States Department of Labor

NOTE 1 ‐ SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – Continued

B. Basis of Accounting and Presentation ‐ Continued

DOL is a party to allocation transfers with other Federal agencies as both a transferring (parent) entity and a

receiving (child) entity.   Allocation transfers are legal delegations by one department of its authority to obligate

budget authority and outlay funds to another department.  A separate fund account (allocation account) is created

in the U.S. Treasury as a subset of the parent fund account for tracking and reporting purposes.    All allocation

transfers of balances are credited to this account, and subsequent obligations and outlays incurred by the child

entity are charged to this allocation account as they execute the delegated activity on behalf of the parent entity.   

OMB Circular No. A‐136 requires the parent to report all budgetary and proprietary activity in its financial

statements.   DOL allocates appropriations to the Department of Agriculture and the Department of Interior to

provide funds for youth training programs.  Accordingly, all activity for these allocation accounts is included in the

DOL financial statements for FY 2008 and FY 2007. Appropriations have been allocated to DOL from the

Environmental Protection Agency, the General Services Administration, and the Agency for International

Development.  These amounts have not been included in the DOL financial statements for FY 2008 or FY 2007, as

they are reported by those other agencies.

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 a liability is incurred.

Budgetary accounting facilitates compliance with legal constraints on, and controls over, the use of federal funds.

These consolidated financial statements are different from the financial reports, also prepared by DOL pursuant to

OMB directives, used to monitor DOL’s use of budgetary resources.

Throughout these financial statements, intra‐governmental assets, liabilities, earned revenue, and costs have been

classified according to the type of entity with whom the transactions were made. Intra‐governmental assets and

liabilities are those from or to other federal entities. Intra‐governmental earned revenue represents collections or

accruals of revenue from other federal entities, and intra‐governmental costs are payments or accruals to other

federal entities.

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 use by DOL.  (See Note 2)
Annual Financial Statements

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended September 30, 2008 and 2007

 FY 2008 Performance and Accountability Report   201

NOTE 1 ‐ SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – Continued

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.   

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 non‐marketable Treasury one day certificates.  

(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.  
Financial Section

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended September 30, 2008 and 2007

202     United States Department of Labor

NOTE 1 ‐ SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – Continued

E. Accounts Receivable, Net of Allowance ‐ Continued

1. Intra‐governmental accounts receivable ‐ continued

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 and

reimbursements of benefits paid on behalf of reimbursable 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.  Intra‐governmental accounts receivable are considered fully collectible.  

(See Note 4)

F. 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.   Internal use software is considered general purpose

PP&E.  

DOL’s capitalization thresholds are displayed in the following table.

Property classification    Prior to FY 1996 FY 1996 through  

FY 2001

FY 2002 and

thereafter

Useful life

        

Equipment – WCF > $5,000 > $5,000 >= $50,000 >= 2 years

Equipment – Non WCF > $5,000 > $25,000 >= $50,000 >= 2 years

Real Property Purchases or Improvements > $5,000 > $25,000 > $500,000 >= 2 years

Leasehold Improvements > $5,000 > $25,000 > $500,000 >= 2 years

Internal Use Software – WCF > $5,000 * > $5,000 * > $300,000 >= 2 years

Internal Use Software – Non WCF > $5,000 > $300,000 > $300,000 >= 2 years

* Costs were intended to be recovered through charges to other DOL users.
Annual Financial Statements

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended September 30, 2008 and 2007

 FY 2008 Performance and Accountability Report   203

NOTE 1 ‐ SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – Continued

F. Property, Plant and Equipment, Net of Accumulated Depreciation ‐ Continued

PP&E purchases and additions are stated at cost.    Normal repairs and maintenance are charged to expense as

incurred.   PP&E  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 the remaining life of the lease or the useful life of the improvements,

whichever is shorter, 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 PP&E, and the depreciation periods used for each

major classification.  (See Note 5)     

   Years

Structures, facilities and improvements 20 ‐ 50

Furniture and equipment    2 ‐ 36

ADP software    2 ‐ 15

G. 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 6)

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)
Financial Section

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended September 30, 2008 and 2007

204     United States Department of Labor

NOTE 1 ‐ SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – Continued

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 4.250% to 13.875% at September 30, 2008 and from 4.500%

to 13.875% at September 30, 2007.  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)

These advances were retired on October 7, 2008 under the refinancing agreement authorized by the enactment of

the Energy Improvement and Extension Act of 2008 on October 3, 2008.  The Act gave authority to the Black Lung  

Disability Trust Fund to issue obligations to the Secretary of Treasury and gave authority to the Secretary of

Treasury to purchase the obligations.    The repayable advances were retired with the proceeds from these

obligations and a one time appropriation to the Trust Fund.  (See Note  23)
Annual Financial Statements

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended September 30, 2008 and 2007

 FY 2008 Performance and Accountability Report   205

NOTE 1 ‐ SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – Continued

K. Future Workers’ Compensation Benefits

The financial statements include an actuarial 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 actuarial 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 2008 and FY 2007 were as follows:

            COLA               CPIM                            

  FY    2008 2007 2008 2007

2008    N/A    2.63%    N/A     3.74%

2009 3.87% 2.90% 4.01% 4.04%   

2010 2.73% 2.47% 3.86% 4.00%   

2011 2.20% 2.37% 3.87% 3.94%

2012 2.23% 2.30% 3.93% 3.94%   

2013+ 2.30% 2.30% 3.93% 3.94%

Projected annual payments were discounted to present value based on OMB’s interest rate assumptions for ten year

Treasury notes.    For 2008, interest rate assumptions were 4.368% in year one and 4.770% in year two and

thereafter.  For 2007, interest rate assumptions were 4.93% in year one and 5.08% in year two and thereafter.  (See

Note 9)
Financial Section

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended September 30, 2008 and 2007

206     United States Department of Labor

NOTE 1 ‐ SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – Continued

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 10)

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 unemployment benefits, 2008, authorized by the Supplemental

Appropriations Act, 2008, are paid from EUCA and are financed by Federal unemployment taxes and general

fund appropriations.    Emergency benefits were paid in prior years 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‐of‐living 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.
Annual Financial Statements

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended September 30, 2008 and 2007

 FY 2008 Performance and Accountability Report   207

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 work‐  related 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. 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).
Financial Section

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended September 30, 2008 and 2007

208     United States Department of Labor

NOTE 1 ‐ SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – Continued

M. Energy Employees Occupational Illness Compensation Benefits ‐ Continued

DOL has recognized an $8.1 billion and $7.5 billion actuarial liability for estimated future benefits payable by DOL at

September 30, 2008 and 2007, respectively, to eligible individuals under the EEOICPA.  At September 30, 2008, the

undiscounted liability is $13.1 billion discounted to a present value liability of $8.1 billion based on an interest rate

of 4.770% projected over a 52 year period.    At September 30, 2007, the undiscounted liability is $11.1 billion

discounted to a present value liability of $7.5 billion based on an interest rate 5.078% projected over a 51 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.  

N. 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.

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 2008, DOL’s contributions to the FEHBP and FEGLIP were $79.6

and $2.1 million, respectively.   During 2007, DOL’s contributions to the FEHBP and FEGLIP were $77.9 and $2.0

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 $81.1

million in 2008 and $86.5 million in 2007.
Annual Financial Statements

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended September 30, 2008 and 2007

 FY 2008 Performance and Accountability Report   209

NOTE 1 ‐ SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – Continued

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 Civil Service 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 $74.5 million in 2008 and

$68.6 million in 2007.

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 $15,500 of their gross pay to the TSP during

calendar year 2008, but there is no departmental matching contribution.  FERS participants may contribute up to

$15,500 of their gross pay to the TSP during calendar year 2008.  CSRS and FERS contribution limits were the same

during calendar year 2007.  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.   

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 14)
Financial Section

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended September 30, 2008 and 2007

210     United States Department of Labor

NOTE 1 ‐ SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – Continued

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.  Unexpired multi‐year and no‐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.  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 15

to the financial statements.   

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

former employees.
Annual Financial Statements

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended September 30, 2008 and 2007

 FY 2008 Performance and Accountability Report   211

NOTE 1 ‐ SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – Continued

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 16)

• 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.   

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.  
Financial Section

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended September 30, 2008 and 2007

212     United States Department of Labor

NOTE 1 ‐ SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – Continued

T. Budgetary Financing Sources – Continued

2. Non‐exchange revenue – continued

• 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 17)

U. Other Financing Sources

Other financing sources include 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.  (See Note 17)
Annual Financial Statements

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended September 30, 2008 and 2007

 FY 2008 Performance and Accountability Report   213

NOTE 1 ‐ SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – Continued

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.   (See Notes 1‐B and 20)

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.    

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.   
Financial Section

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended September 30, 2008 and 2007

214     United States Department of Labor

NOTE 1 ‐ SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – Continued

W. Significant Assumptions Used in the Statement of Social Insurance ‐ Continued

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

2.4% in each year  and medical cost increases 3.9% in each  year.   Estimates for administrative costs for the first 11

years of the projection are supplied by DOL’s Budget Office, based on current year enacted amounts, 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 4.250% to 13.875% and new borrowings ranging from

4.9% to 5.6%.   

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

4.25%, which is the last actual rate on advances taken at the end of FY 2008.

Based on Treasury’s interpretation of the Energy Improvement and Extension Act of 2008, enacted on October 3,

2008, the temporary increase in coal excise tax rates was extended for an additional five years from January 1, 2014

to December 31, 2018.   The higher excise tax rates will continue until the earlier of December 31, 2018 or the first

December 31 after 2007 in which there exist no (1) balance of repayable advances described in section 9501 of the

Internal Revenue Code and (2) unpaid interest on the advances.   Although the language of section 9501 of the

Internal Revenue Code uses the term "advances," the Treasury has interpreted the language to include any

obligations of the Trust Fund to Treasury.

The Act also authorized the Black Lung Disability Trust Fund to issue obligations to the Secretary of the U.S.

Treasury and gave authority to the Treasury Secretary to purchase the obligations.    On the October 7, 2008

statutory refinancing date, the proceeds from issuance of these obligations, plus a one‐time appropriation, were

used to effect the retirement of the Advances from U.S. Treasury principal and interest that had been outstanding

at the refinancing date.   

The Statement of Social Insurance does not reflect the effect of these subsequent events.  Refer to Note 23 for the

effect of this debt restructuring on the projections included in the Statement of Social Insurance.
Annual Financial Statements

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended September 30, 2008 and 2007

 FY 2008 Performance and Accountability Report   215

NOTE 1 ‐ SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – Continued

X. Tax Exempt Status

As an agency of the Federal government, the Department is exempt from all taxes imposed by any governing body

whether it is a Federal, state, commonwealth, local, or foreign government.  

Y. 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.  

Z. Reclassifications

Certain reclassifications have been made to 2007 financial statements to conform to the 2008 presentation.
Financial Section

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended September 30, 2008 and 2007

216     United States Department of Labor

NOTE 2 ‐ FUNDS WITH U.S. TREASURY

Funds with U.S. Treasury at September 30, 2008 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 13,388 $ $ 45,518 - $ 58,906 $ $ 58,906 - $ 

Trust funds 192,605 (285,620) - (93,015) (503) (93,518) 

General funds 2,489,715 1,340,149 5,555,362 9,385,226 9,385,226 - 

Other - - - - 78,316 78,316 

$ 1,340,149 2,695,708 $ 5,315,260 $ 9,351,117 $ 77,813 $ 9,428,930 $ 

Entity Assets

Funds with U.S. Treasury at September 30, 2007 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 9,254 $ $ 37,715 - $ 46,969 $ $ 46,969 - $ 

Trust funds 172,261 (28,292) - 143,969 (115) 143,854 

General funds 2,415,351 1,604,964 5,692,427 9,712,742 9,712,742 - 

Other - - - - 79,387 79,387 

$ 1,604,964 2,596,866 $ 5,701,850 $ 9,903,680 $ 79,272 $ 9,982,952 $ 

Entity Assets

The negative fund balances reported as of September 30, 2008 and 2007 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 at September 30, 2008 includes $378 million of funds apportioned for use in the

subsequent year.
Annual Financial Statements

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended September 30, 2008 and 2007

 FY 2008 Performance and Accountability Report   217

NOTE 3 ‐ INVESTMENTS

Investments at September 30, 2008 consisted of the following:

Face Premium Interest Net Market

(Dollars in thousands) Value (Discount) Receivable Value Value

Unemployment Trust Fund

Non-marketable

Special issue U.S. Treasury Bonds

4.875% maturing June 30, 2009 3,304,955 40,279 - 3,345,234 3,304,955 

5.000% maturing June 30, 2009 11,000,000 137,500 - 11,137,500 11,000,000 

5.000% maturing June 30, 2010 24,855,747 310,697 - 25,166,444 24,855,747 

4.500% maturing June 30, 2010 5,000,000 56,250 - 5,056,250 5,000,000 

4.500% maturing June 30, 2011 28,271,737 - 318,057 28,589,794 28,271,737 

 72,432,439 - 862,783 73,295,222 72,432,439 

Panama Canal Commission

 Compensation Fund

Marketable

U.S. Treasury Notes

3.500% to 4.750% various maturities 70,089 5 1,166 71,260 71,247 

U.S. Treasury Bonds

11.750% various maturities 5,163 472 228 5,863 5,729 

 75,252 477 1,394 77,123 76,976 

Longshore and Harbor Workers' 

 Compensation Act Trust Fund

Non-marketable

One Day Certificate

0.330% maturing October 1, 2008 61,905 - 61,905 - 61,905 

District of Columbia Workmen's 

 Compensation Act Trust Fund

Non-marketable

One Day Certificate

0.330% maturing October 1, 2008 5,160 - 5,160 - 5,160 

Energy Employees Occupational Illness 

 Compensation Fund

Non-marketable

One Day Certificate

0.330% maturing October 1, 2008 125,265 - - 125,265 125,265 

$ 477 72,700,021 $ 864,177 $ 73,564,675 $ 72,701,745 $ 

Entity investments $ 477 72,590,369 $ 862,871 $ 73,453,717 $ 72,592,093 $ 

Non-entity investments 109,652 - 1,306 110,958 109,652 

$ 477 72,700,021 $ 864,177 $ 73,564,675 $ 72,701,745 $ 
Financial Section

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended September 30, 2008 and 2007

218     United States Department of Labor

NOTE 3 ‐ INVESTMENTS ‐ Continued

Investments at September 30, 2007 consisted of the following:

Face Premium Interest Net Market

(Dollars in thousands) Value (Discount) Receivable Value Value

Unemployment Trust Fund

Non-marketable

U.S. Treasury Certificates of Indebtedness

5.000% maturing June 30, 2008 8,208,313 64,004 - 8,272,317 8,208,313 

Special issue U.S. Treasury Bonds

4.625% maturing June 30, 2008 10,879,148 125,790 - 11,004,938 10,879,148 

4.875% maturing June 30, 2008 10,000,000 121,875 - 10,121,875 10,000,000 

4.875% maturing June 30, 2009 9,980,072 121,632 - 10,101,704 9,980,072 

5.000% maturing June 30, 2009 11,000,000 137,500 - 11,137,500 11,000,000 

5.000% maturing June 30, 2010 24,855,747 310,697 - 25,166,444 24,855,747 

 74,923,280 881,498 - 75,804,778 74,923,280 

Panama Canal Commission

 Compensation Fund

Marketable

U.S. Treasury Bill

Maturing November 15, 2007 7,170 (43) 7,127 - 7,138 

U.S. Treasury Notes

3.625% to 5.625% various maturities 43,152 (142) 753 43,763 43,418 

U.S. Treasury Bonds

10.375% to 11.750% various maturities 27,078 1,013 1,080 29,171 28,054 

 77,400 828 1,833 80,061 78,610 

Longshore and Harbor Workers' 

 Compensation Act Trust Fund

Non-marketable

One Day Certificate

3.99% maturing October 1, 2007 69,979 16 - 69,995 69,979 

District of Columbia Workmen's 

 Compensation Act Trust Fund

Non-marketable

One Day Certificate

3.99% maturing October 1, 2007 6,585 1 - 6,586 6,585 

Energy Employees Occupational Illness 

 Compensation Fund

Non-marketable

One Day Certificate

3.99% maturing October 1, 2007 53,062 12 - 53,074 53,062 

$ 828 75,130,306 $ 883,360 $ 76,014,494 $ 75,131,516 $ 

Entity investments $ 828 75,022,470 $ 882,091 $ 75,905,389 $ 75,023,680 $ 

Non-entity investments 107,836 1,269 - 109,105 107,836 

$ 828 75,130,306 $ 883,360 $ 76,014,494 $ 75,131,516 $ 
Annual Financial Statements

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended September 30, 2008 and 2007

 FY 2008 Performance and Accountability Report   219

NOTE 4 ‐ ACCOUNTS RECEIVABLE, NET OF ALLOWANCE

           

Accounts receivable at September 30, 2008 consisted of the following:

   

Gross Net

(Dollars in thousands) Receivables Allowance Receivables

Entity intra-governmental assets

Due for UCFE and UCX benefits 292,833 $ $ 292,833 - $ 

Due for workers' compensation benefits 3,771,775 3,771,775 - 

Other 12,269 12,269 - 

 4,076,877 4,076,877 - 

Entity assets

State unemployment taxes 823,667 (639,682) 183,985 

Due from reimbursable employers 502,342 (28,540) 473,802 

Benefit overpayments 1,935,897 (1,678,795) 257,102 

Other (2,127) 13,126 10,999 

 (2,349,144) 3,275,032 925,888 

Non-entity assets

Fines and penalties 76,778 (32,605) 44,173 

Backwages (10,418) 16,785 6,367 

 (43,023) 93,563 50,540 

 (2,392,167) 3,368,595 976,428 

$ (2,392,167) 7,445,472 $ 5,053,305 $ 

Accounts receivable at September 30, 2007 consisted of the following:

Gross Net

(Dollars in thousands) Receivables Allowance Receivables

Entity intra-governmental assets

Due for UCFE and UCX benefits 302,723 $ $ 302,723 - $ 

Due for workers' compensation benefits 3,754,382 3,754,382 - 

Other 11,598 - 11,598 

 4,068,703 - 4,068,703 

Entity assets

State unemployment taxes 922,643 (646,571) 276,072 

Due from reimbursable employers 489,269 (30,077) 459,192 

Benefit overpayments 1,907,770 (1,656,975) 250,795 

Other 8,864 (1,727) 7,137 

 3,328,546 (2,335,350) 993,196 

Non-entity assets

Fines and penalties 92,805 (31,820) 60,985 

Backwages (4,797) 10,839 6,042 

 (36,617) 103,644 67,027 

 3,432,190 (2,371,967) 1,060,223 

$ (2,371,967) 7,500,893 $ 5,128,926 $ 
Financial Section

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended September 30, 2008 and 2007

220     United States Department of Labor

NOTE 5 ‐ PROPERTY, PLANT AND EQUIPMENT, NET OF ACCUMULATED DEPRECIATION

Property, plant and equipment at September 30, 2008 consisted of the following:

Accumulated

Depreciation/ Net Book

(Dollars in thousands) Cost Amortization Value

Structures, facilities and improvements

Structures and facilities 1,067,982 $ (437,047) $ 630,935 $ 

Improvements to leased facilities 423,580 (233,798) 189,782 

 (670,845) 1,491,562 820,717 

Furniture and equipment

Equipment held by contractors 166,504 (159,612) 6,892 

Furniture and equipment 51,777 (36,132) 15,645 

 218,281 (195,744) 22,537 

ADP software (92,110) 206,369 114,259 

Construction-in-progress 90,233 90,233 - 

Land 93,253 93,253 - 

$ (958,699) 2,099,698 $ 1,140,999 $ 

Property, plant and equipment at September 30, 2007 consisted of the following:

Accumulated

Depreciation/ Net Book

(Dollars in thousands) Cost Amortization Value

Structures, facilities and improvements

Structures and facilities 1,014,233 $ (409,570) $ 604,663 $ 

Improvements to leased facilities 427,769 (228,257) 199,512 

 (637,827) 1,442,002 804,175 

Furniture and equipment

Equipment held by contractors 168,049 (161,300) 6,749 

Furniture and equipment 54,067 (36,653) 17,414 

 222,116 (197,953) 24,163 

ADP software (74,433) 190,014 115,581 

Construction-in-progress 78,651 78,651 - 

Land 93,249 93,249 - 

$ (910,213) 2,026,032 $ 1,115,819 $ 
Annual Financial Statements

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended September 30, 2008 and 2007

 FY 2008 Performance and Accountability Report   221

NOTE 6 ‐ ADVANCES

Advances at September 30, 2008 and 2007 consisted of the following:

Advances at September 30, 2008 and 2007 consisted of the following:

(Dollars in thousands) 2008 2007

Advances to states for UI benefit payments 706,556 $ 509,848 $ 

Advances to grantees and contractors to finance future DOL program expenditures 35,947 29,504 

Other 2,213 13,907 

$ 541,565 756,410 $ 

NOTE 7 ‐ NON‐ENTITY ASSETS

Non‐entity assets consisted of the following at September 30, 2008 and 2007:

(Dollars in thousands) 2008 2007

Intra-governmental

Funds with U.S. Treasury $ 79,272 77,813 $ 

Investments 110,958 109,105 

 188,377 188,771 

Accounts receivable, net of allowance 50,540 67,027

$ 255,404 239,311 $ 

NOTE 8 ‐ ADVANCES FROM U.S. TREASURY

Advances from U.S. Treasury to the Black Lung Disability Trust Fund during 2008 consisted of the following:

Balance at Balance at

September 30, Net September 30,

(Dollars in thousands) 2007 Borrowing 2008

Intra-governmental

Borrowing from the Treasury 10,057,557 $ 426,000 $ 10,483,557 $ 

Advances from U.S. Treasury to the Black Lung Disability Trust Fund during 2007 consisted of the following:

Balance at Balance at

September 30, Net September 30,

(Dollars in thousands) 2006 Borrowing 2007

Intra-governmental

Borrowing from the Treasury 9,631,557 $ 426,000 $ 10,057,557 $ 

These advances were retired on October 7, 2008 under the refinancing agreement authorized by the enactment of

the Energy Improvement and Extension Act of 2008 on October 3, 2008. (See Note 23)
Financial Section

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended September 30, 2008 and 2007

222     United States Department of Labor

NOTE 9 ‐ FUTURE WORKERS' COMPENSATION BENEFITS

DOL’s liability for future workers’ compensation benefits at September 30, 2008 and 2007 consisted of the

following:

(Dollars in thousands) 2008 2007

Projected gross liability of the Federal government

 for future FECA benefits $ 27,589,632 26,306,065 $ 

Less liabilities attributed to other agencies:

U.S. Postal Service (8,923,407) (9,543,798) 

Department of Navy (2,694,074) (2,685,911) 

Department of Army (1,977,872) (1,980,257) 

Department of Veterans Affairs (1,905,472) (1,826,564) 

Department of Air Force (1,395,449) (1,381,158) 

Department of Transportation (985,336) (949,465) 

Department of Homeland Security (1,795,351) (1,683,569) 

Tennessee Valley Authority (532,499) (538,096) 

Department of Treasury (573,038) (593,196) 

Department of Agriculture (832,013) (775,281) 

Department of Justice (1,046,480) (1,136,570) 

Department of Interior (659,333) (692,389) 

Department of Defense, Other (800,883) (777,041) 

Department of Health and Human Services (282,517) (275,776) 

Social Security Administration (297,932) (271,981) 

General Services Administration (163,826) (164,883) 

Department of Commerce (169,580) (164,416) 

Department of Energy (105,231) (104,734) 

Department of State (68,078) (68,892) 

Department of Housing & Urban Development (84,529) (81,779) 

Department of Education (16,186) (16,554) 

National Aeronautics and Space Administration (63,977) (64,060) 

Environmental Protection Agency (44,615) (39,786) 

Small Business Administration (27,061) (26,321) 

Office of Personnel Management (22,139) (21,020) 

National Science Foundation (1,198) (1,182) 

Nuclear Regulatory Commission (7,059) (6,833) 

Agency for International Development (23,137) (23,528) 

Other (533,779) (569,922) 

 (26,826,796) (25,670,217) 

$ 635,848 762,836 $ 

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 473,892 $ 346,299 $ 

FECA benefits due to eligible workers of DOL and Job Corps enrollees 235,382 237,920 

FECA benefits due to eligible workers of the Panama Canal Commission 53,562 51,629 

$ 635,848 762,836 $ 
Annual Financial Statements

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended September 30, 2008 and 2007

 FY 2008 Performance and Accountability Report   223

NOTE 10 – ACCRUED BENEFITS

Accrued benefits at September 30, 2008 and 2007 consisted of the following:

(Dollars in thousands) 2008 2007

State regular and extended unemployment benefits payable 966,415 $ 1,053,055 $ 

Federal extended unemployment benefits payable 39,144 35,945 

Federal emergency unemployment benefits payable, 2008 324,534 - 

Federal temporary extended unemployment benefits payable 23,971 23,641 

Federal emergency unemployment benefits payable, other 46,739 44,950 

Federal employees' unemployment benefits payable 25,431 30,432 

Federal employees' unemployment benefits for existing

 claims due in the subsequent year 202,759 123,576 

Total unemployment benefits payable 1,628,993 1,311,599 

Black lung disability benefits payable 40,003 43,277 

Federal employees' disability and 10(h) benefits payable 76,952 65,937 

Energy employees occupational illness compensation benefits payable 24,712 24,006 

Longshore and harbor workers disability benefits payable 4,571 3,655 

District of Columbia disability benefits payable 345 298 

$ 1,775,576 $ 1,448,772

NOTE 11 ‐ OTHER LIABILITIES

Other liabilities at September 30, 2008 and 2007 consisted of the following current liabilities:

(Dollars in thousands) 2008 2007

Intra-governmental

Accrued benefits $ 10,385 13,055 $ 

Unearned FECA assessments 51,192 52,724 

Non-entity receipts due to U.S. Treasury 42,803 59,615 

Amounts held for the Railroad Retirement Board 110,455 108,990 

Advances from other Federal agencies 300 750 

Total intra-governmental 219,337 230,932 

Accrued payroll and benefits 48,280 59,043 

Due to Backwage recipients 85,583 84,925 

Unearned assessment revenue 41,965 41,217 

Deposit and clearing accounts 1,216 1,127 

Readjustment allowances and other Job Corps liabilities 54,537 83,330 

 240,849 260,374 

$ 491,306 460,186 $ 
Financial Section

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended September 30, 2008 and 2007

224     United States Department of Labor

NOTE 12 ‐ LIABILITIES NOT COVERED BY BUDGETARY RESOURCES

Liabilities not covered by budgetary resources at September 30, 2008 and 2007 consisted of the following:

(Dollars in thousands) 2008 2007

Intra-governmental

Advances from U.S. Treasury 10,483,557 $ 10,057,557 $ 

Future workers' compensation benefits 231,965 237,920 

Accrued annual leave 96,014 105,763 

Readjustment allowances and other Job Corps liabilities 54,537 83,330 

 392,265 417,264 

$ 10,875,822 10,474,821 $ 

NOTE 13 – CONTINGENCIES

The Department is involved in various lawsuits incidental to its operations.   Judgments resulting from litigation

against the Department are generally paid by the Department of Justice.    In the opinion of management, the

ultimate resolution of pending litigation will not have a material effect on the Department’s financial position.  

NOTE 14 ‐ PENSION EXPENSE  

Pension expense in 2008 consisted of the following:

Total

Employer Costs Imputed Pension

(Dollars in thousands) Contributions by OPM Expense

Civil Service Retirement System 22,251 $ 36,925 $ 59,176 $ 

Federal Employees' Retirement System 103,805 103,805 - 

Thrift Savings Plan 39,286 39,286 - 

$ 165,342 $ 36,925 $ 202,267

Pension expense in 2007 consisted of the following:

Total

Employer Costs Imputed Pension

(Dollars in thousands) Contributions by OPM Expense

Civil Service Retirement System 24,503 $ 39,287 $ 63,790 $ 

Federal Employees' Retirement System 94,390 94,390 - 

Thrift Savings Plan 36,092 36,092 - 

$ 154,985 $ 39,287 $ 194,272

         
Annual Financial Statements

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended September 30, 2008 and 2007

 FY 2008 Performance and Accountability Report   225

NOTE 15 ‐ 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

2008.   
Financial Section

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended September 30, 2008 and 2007

226     United States Department of Labor

NOTE 15 ‐ PROGRAM COST ‐ Continued

             

A. Consolidating Statement of Net Cost by Suborganization

Net cost by suborganization for the year ended September 30, 2008 consisted of the following:

Employment Employment Office Occupational

and Training Standards of Safety and Health

(Dollars in thousands) Administration Administration Job Corps Administration

CROSSCUTTING PROGRAMS

 Income maintenance

Intra-governmental 224,744 $ 901,873 $ $ - $ - 

With the public 47,143,092 5,387,831 - - 

 Gross cost 47,367,836 6,289,704 - - 

Intra-governmental earned revenue (728,874) (2,658,557) - - 

Public earned revenue - - - - 

 Less earned revenue (728,874) (2,658,557) - - 

Net program cost 46,638,962 3,631,147 - - 

 Employment and training

Intra-governmental 40,395 9,493 - - 

With the public 4,634,551 - 808,342 - 

 Gross cost 4,674,946 - 817,835 - 

Intra-governmental earned revenue (11,569) (47) - - 

Public earned revenue (245) - (323) - 

 Less earned revenue (11,814) - (370) - 

Net program cost 4,663,132 - 817,465 - 

 Labor, employment and pension

 standards

Intra-governmental 122,364 - - - 

With the public - 257,241 - - 

 Gross cost - 379,605 - - 

Intra-governmental earned revenue - - - - 

Public earned revenue - (1,000) - - 

 Less earned revenue - (1,000) - - 

Net program cost - 378,605 - - 

 Worker safety and health

Intra-governmental - - 121,944 - 

With the public - - - 416,170 

 Gross cost - - - 538,114 

Intra-governmental earned revenue - - (264) - 

Public earned revenue - - - (1,321) 

 Less earned revenue - - - (1,585) 

Net program cost - - - 536,529 

OTHER PROGRAMS

 Statistics

Intra-governmental - - - - 

With the public - - - - 

 Gross cost - - - - 

Intra-governmental earned revenue - - - - 

Public earned revenue - - - - 

 Less earned revenue - - - - 

Net program cost - - - - 

COSTS NOT ASSIGNED TO PROGRAMS

 Gross cost - - - - 

 Less earned revenue not attributed to programs - - - - 

Net cost not assigned to programs - - - - 

Net cost of operations $ 4,009,752 51,302,094 $ 817,465 $ 536,529 $ 
Annual Financial Statements

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended September 30, 2008 and 2007

 FY 2008 Performance and Accountability Report   227

Bureau of Mine Safety Employee Benefits Veterans' Other

Labor and Health Security Employment Departmental

Statistics Administration Administration and Training Programs Eliminations Total

$ - $ 11,693 - $ $ 1,400 - $ (87,352) $ 1,052,358 $ 

 - - 23,254 - 8,370 65,865 52,628,412 

 - - 34,947 - 9,770 (21,487) 53,680,770 

 - - - - 21,487 - (3,365,944) 

 - - - - - - - 

 - - - - - 21,487 (3,365,944) 

 - - 34,947 - 9,770 - 50,314,826

 - - 10,262 - 427 (17,698) 42,879 

 - - - 199,760 745 17,698 5,661,096 

 - - - 210,022 1,172 - 5,703,975 

 - - - - - (11,616) - 

 - - - - - - (568) 

 - - - - - - (12,184) 

 - - - 210,022 1,172 - 5,691,791

 - 44,430 - 1,023 15,787 (54,113) 129,491 

 - - 111,589 19,047 122,560 54,113 564,550 

 - - 156,019 20,070 138,347 - 694,041 

 - (12,097) - (100) - (12,197) - 

 - - (30) - (13) - (1,043) 

 - - (12,127) - (113) - (13,240) 

 - - 143,892 20,070 138,234 - 680,801

 115,333 - - 4,164 - (58,425) 183,016 

 - 256,221 - - 6,731 58,425 737,547 

 - 371,554 - - 10,895 - 920,563 

 (5) - - - - (269) - 

 - (1,247) - - - - (2,568) 

 - (1,252) - - - - (2,837) 

 - 370,302 - - 10,895 - 917,726

 204,912 - - 11,973 - (24,270) 192,615 

 374,813 - - - 19,351 24,270 418,434 

 579,725 - - - 31,324 - 611,049 

 (1) - - - - (1) - 

 (5,274) - - - - - (5,274) 

 (5,275) - - - - - (5,275) 

 574,450 - - - 31,324 - 605,774

 - - - 115,823 - (3,911) 111,912 

 - - - - (19,747) 3,911 (15,836) 

 - - - - 96,076 - 96,076

$ 574,450 $ 370,302 $ 178,839 $ 230,092 $ 287,471 $ - $ 58,306,994
Financial Section

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended September 30, 2008 and 2007

228     United States Department of Labor

NOTE 15 ‐ 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, 2008 consisted of the

following:

Training and

Employment Employment Office of

(Dollars in thousands) Security Programs Job Corps Eliminations Total

CROSSCUTTING PROGRAMS

 Income maintenance

Benefits 42,543,343 $ 91 $ $ - $ 42,543,434 - $ 

Grants 4,301,250 - - 4,301,250 - 

Interest 3,519 - - 3,519 - 

Administrative and other 519,222 41,411 (41,000) - 519,633 

 Gross cost 47,367,334 41,502 (41,000) - 47,367,836 

Less earned revenue (769,874) - 41,000 - (728,874) 

Net program cost 46,597,460 41,502 - 46,638,962 - 

 Employment and training

Benefits 16,178 - 4,023 20,201 - 

Grants 3,829,199 - 99,997 3,929,196 - 

Administrative and other 295,410 - 430,139 725,549 - 

 Gross cost 4,140,787 - 534,159 4,674,946 - 

Less earned revenue (11,272) - (542) (11,814) - 

Net program cost 4,129,515 - 533,617 4,663,132 - 

Net cost of operations $ 46,597,460 $ 4,171,017 $ 533,617 $ - $ 51,302,094

  

            
Annual Financial Statements

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended September 30, 2008 and 2007

 FY 2008 Performance and Accountability Report   229

NOTE 15 ‐ 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, 2008 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 5,170,202 $ $ - $ - $ (1,712) - $ 5,168,490 $ 

Interest 739,469 - - - 739,469 - 

Administrative and other 381,745 - - - 381,745 - 

 Gross cost 6,291,416 - - (1,712) - 6,289,704 

Less earned revenue (2,660,269) - - 1,712 - (2,658,557) 

Net program cost 3,631,147 - - - 3,631,147 - 

 Labor, employment and

 pension standards

Benefits 12,575 - 27,903 7,986 48,464 - 

Administrative and other 86,773 - 197,433 46,935 331,141 - 

 Gross cost 99,348 - 225,336 54,921 379,605 - 

Less earned revenue - (1,000) - - (1,000) - 

Net program cost 99,348 - 224,336 54,921 378,605 - 

Net cost of operations $ 3,631,147 $ 99,348 $ 224,336 $ 54,921 $ - $ 4,009,752

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

2007.   
Financial Section

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended September 30, 2008 and 2007

230     United States Department of Labor

NOTE 15 ‐ PROGRAM COST ‐ Continued

D. Consolidating Statement of Net Cost by Suborganization  

Net cost by suborganization for the year ended September 30, 2007 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 233,861 $ 916,551 $ $ - $ - 

With the public 36,917,255 5,148,596 - - 

 Gross cost 37,151,116 6,065,147 - - 

Intra-governmental earned revenue (732,135) (2,554,992) - - 

Public earned revenue (1,253) - - - 

 Less earned revenue (733,388) (2,554,992) - - 

Net program cost 36,417,728 3,510,155 - - 

 Employment and training

Intra-governmental 61,577 - - - 

With the public 5,816,989 - - - 

 Gross cost 5,878,566 - - - 

Intra-governmental earned revenue (44,553) - - - 

Public earned revenue (372) - - - 

 Less earned revenue (44,925) - - - 

Net program cost 5,833,641 - - - 

 Labor, employment and pension

 standards

Intra-governmental 120,834 - - - 

With the public 249,898 - - - 

 Gross cost 370,732 - - - 

Intra-governmental earned revenue - - - - 

Public earned revenue - - - - 

 Less earned revenue - - - - 

Net program cost 370,732 - - - 

 Worker safety and health

Intra-governmental - 123,047 - - 

With the public - 406,101 - - 

 Gross cost - 529,148 - - 

Intra-governmental earned revenue - - - - 

Public earned revenue - (1,292) - - 

 Less earned revenue - (1,292) - - 

Net program cost - 527,856 - - 

OTHER PROGRAMS

 Statistics

Intra-governmental - - 195,947 - 

With the public - - 385,328 - 

 Gross cost - - 581,275 - 

Intra-governmental earned revenue - - - - 

Public earned revenue - - (6,083) - 

 Less earned revenue - - (6,083) - 

Net program cost - - 575,192 - 

COSTS NOT ASSIGNED TO PROGRAMS

 Gross cost - - - - 

 Less earned revenue not attributed to programs - - - - 

Net cost not assigned to programs - - - - 

Net cost of operations $ 42,251,369 3,880,887 $ 527,856 $ 575,192 $ 
Annual Financial Statements

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended September 30, 2008 and 2007

 FY 2008 Performance and Accountability Report   231

Mine Safety Employee Benefits Veterans' Other

and Health Security Employment Departmental

Administration Administration and Training Programs Eliminations Total

$ 11,324 - $ $ 2,007 - $ (54,911) $ 1,108,832 $ 

 22,246 - 3,137 - 31,754 42,122,988 

 33,570 - 5,144 - (23,157) 43,231,820 

 - - - 23,157 - (3,263,970) 

 - - - - (1,253) - 

 - - - 23,157 - (3,265,223) 

 33,570 - 5,144 - 39,966,597 - 

 - 10,043 - 448 (20,803) 51,265 

 - 198,798 - 792 20,803 6,037,382 

 - 208,841 - 1,240 6,088,647 - 

 - - - - (44,553) - 

 - - - - (372) - 

 - - - - (44,925) - 

 - 208,841 - 1,240 6,043,722 - 

 43,868 - 1,002 15,775 (50,701) 130,778 

 106,072 - 18,797 160,562 50,701 586,030 

 149,940 - 19,799 176,337 716,808 - 

 (10,982) - (25) - (11,007) - 

 (17) - - - (17) - 

 (10,999) - (25) - (11,024) - 

 138,941 - 19,799 176,312 705,784 - 

 108,334 - 4,321 - (53,979) 181,723 

 233,624 - 7,044 - 53,979 700,748 

 341,958 - 11,365 - 882,471 - 

 - - - - - - 

 (1,113) - - - (2,405) - 

 (1,113) - - - (2,405) - 

 340,845 - 11,365 - 880,066 - 

 - - 12,422 - (23,272) 185,097 

 - - 20,252 - 23,272 428,852 

 - - 32,674 - 613,949 - 

 - - - - - - 

 - - - - (6,083) - 

 - - - - (6,083) - 

 - - 32,674 - 607,866 - 

 - - 96,999 - (3,990) 93,009 

 - - (10,315) - 3,990 (6,325) 

 - - 86,684 - 86,684 - 

$ 172,511 340,845 $ 228,640 $ 313,419 $ $ - 48,290,719 $ 
Financial Section

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended September 30, 2008 and 2007

232     United States Department of Labor

NOTE 15 ‐ 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, 2007 consisted of the

following:  

        

Training and

Employment Employment Office of

(Dollars in thousands) Security Programs Job Corps Eliminations Total

CROSSCUTTING PROGRAMS

 Income maintenance

Benefits 32,334,443 $ 72 $ $ - $ 32,334,515 - $ 

Grants 4,258,410 - - 4,258,410 - 

Interest 3,772 - - 3,772 - 

Administrative and other 554,008 17,911 (17,500) - 554,419 

 Gross cost 37,150,633 17,983 (17,500) - 37,151,116 

Less earned revenue (750,888) - 17,500 - (733,388) 

Net program cost 36,399,745 17,983 - 36,417,728 - 

 Employment and training

Benefits 13,224 - 6,712 19,936 - 

Grants 4,080,988 - 160,323 4,241,311 - 

Administrative and other 314,076 - 1,303,243 1,617,319 - 

 Gross cost 4,408,288 - 1,470,278 5,878,566 - 

Less earned revenue (43,687) - (1,238) (44,925) - 

Net program cost 4,364,601 - 1,469,040 5,833,641 - 

Net cost of operations $ 36,399,745 $ 4,382,584 $ 1,469,040 $ - $ 42,251,369
Annual Financial Statements

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended September 30, 2008 and 2007

 FY 2008 Performance and Accountability Report   233

NOTE 15 ‐ 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, 2007 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 4,924,372 $ $ - $ - $ (1,641) - $ 4,922,731 $ 

Interest 717,214 - - - 717,214 - 

Administrative and other 425,202 - - - 425,202 - 

 Gross cost 6,066,788 - - (1,641) - 6,065,147 

Less earned revenue (2,556,633) - - 1,641 - (2,554,992) 

Net program cost 3,510,155 - - - 3,510,155 - 

 Labor, employment and

 pension standards

Benefits 11,736 - 25,750 7,261 44,747 - 

Administrative and other 86,448 - 190,435 49,102 325,985 - 

 Gross cost 98,184 - 216,185 56,363 370,732 - 

Less earned revenue - - - - - -

Net program cost 98,184 - 216,185 56,363 370,732 - 

Net cost of operations $ 3,510,155 $ 98,184 $ 216,185 $ 56,363 $ - $ 3,880,887
Financial Section

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended September 30, 2008 and 2007

234     United States Department of Labor

NOTE 16 ‐ NON‐EXCHANGE REVENUE

Non‐exchange revenues reported on the Consolidated Statement of Changes in Net Position in 2008 and 2007

consisted of the following:

(Dollars in thousands) 2008 2007

Employer taxes

Unemployment Trust Fund

Federal unemployment taxes 7,281,534 $ 7,238,283 $ 

State unemployment taxes 32,033,466 30,373,647 

 39,271,749 37,655,181 

Black Lung Disability Trust Fund excise taxes 652,650 639,197

 39,910,946 38,307,831 

Interest

Unemployment Trust Fund 3,344,577 3,635,617 

Longshore and Harbor Workers' Compensation Act Trust Fund 1,044 2,077 

District of Columbia Workmen's Compensation Act Trust Fund 127 250 

Panama Canal Commission Compensation Fund 3,108 3,537 

Energy Employees Occupational Illness Compensation Fund 4,252 7,215 

Black Lung Disability Trust Fund 463 551 

 3,358,119 3,644,699 

Assessments

Longshore and Harbor Workers' Compensation Act Trust Fund 127,418 128,934 

District of Columbia Workmen's Compensation Act Trust Fund 8,920 11,264 

Other 380 489 

 136,827 140,578 

Reimbursement of unemployment benefits from state and

 local governments and non-profit organizations

 to the Unemployment Trust Fund 1,768,182 1,632,863 

$ 43,857,539 45,042,506 $ 

NOTE 17 ‐ TRANSFERS WITHOUT REIMBURSEMENT

Transfers from (to) other Federal agencies in 2008 and 2007 consisted of the following:

(Dollars in thousands) 2008 2007

Budgetary financing sources

From H-1B Nonimmigrant Petitioner Account, Department of Homeland Security 86,779 $ 193,355 $ 

From DOL general fund unexpended appropriation

 accounts to the DOL Working Capital Fund 3,000 3,000 

 89,779 196,355

Other financing sources

From General Services Administration 3,191 2,469 

 3,191 2,469

$ 92,970 198,824 $ 

The balance of $89,779 and $196,355 in budgetary financing sources for FY 2008 and 2007, respectively, reflects

the elimination of intra‐DOL transfers of $3,683,586 and $3,470,145.
Annual Financial Statements

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended September 30, 2008 and 2007

 FY 2008 Performance and Accountability Report   235

NOTE 18 ‐ STATUS OF BUDGETARY RESOURCES

       

A. Apportionment Categories of Obligations Incurred

Obligations incurred reported on the Combined Statement of Budgetary Resources in 2008 and 2007 consisted of

the following:

(Dollars in thousands) 2008 2007

Direct Obligations

Category A $ 4,121,138 4,075,613 $ 

Category B 9,068,443 9,137,416 

Exempt from apportionment 49,244,270 38,830,490

Total direct obligations 52,020,071 62,457,299 

Reimbursable Obligations

Category A 194,918 206,345 

Category B 2,775,832 2,689,784

Total reimbursable obligations 2,982,177 2,884,702 

$ 65,439,476 $ 54,904,773

B. Permanent Indefinite Appropriations

DOL’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, 2008 and 2007 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, 2008 and 2007

236     United States Department of Labor

NOTE 18 ‐ STATUS OF BUDGETARY RESOURCES – Continued

C. Legal Arrangements Affecting Use of Unobligated Balances ‐ Continued

(Dollars in millions) 2008 2007

Unemployment Trust Fund unavailable collections, beginning $ 72,448 63,995 $ 

Budget authority from current year appropriations 43,852 44,909 

Less obligations (46,791) (36,456) 

Excess (deficiency) of budget authority over obligations (2,939) 8,453

Unemployment Trust Fund unavailable collections, ending $ 69,509 $ 72,448

D. Explanation of Differences between the Combined 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, 2008 has not

been published as of the issue date of these financial statements.  This document will be available in February 2009.   

A reconciliation of budgetary resources, obligations incurred and net 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, 2007 is shown below.

Budgetary Obligations Net

(Dollars in millions) Resources Incurred Outlays

Combined Statement of Budgetary Resources $ 54,905 59,217 $ 47,120 $ 

Pension Benefit Guaranty Corporation reported separately 19,080 4,573 457 

Distributed offsetting receipts - 795 - 

Amounts in the Combined Statement of Budgetary Resources 

 not included in the budget (81) (12) (5) 

Expired accounts (1,412) (79) - 

Other (16) (8) (7) 

Budget of the United States Government $ 76,788 59,379 $ 48,360 $ 

E. Undelivered Orders

Undelivered orders at September 30, 2008 and 2007 were as follows.

(Dollars in thousands) 2008 2007

Undelivered orders $ 5,678,989 5,604,384 $ 
Annual Financial Statements

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended September 30, 2008 and 2007

 FY 2008 Performance and Accountability Report   237

NOTE 18 ‐ STATUS OF BUDGETARY RESOURCES – Continued

F. Appropriations Received

The Combined Statement of Budgetary Resources discloses appropriations received of $58,784 and $56,922 million

for FY 2008 and 2007, respectively.    Appropriations received on the Consolidated Statement of Changes in Net

Position are $10,936 and $11,007 million for FY 2008 and 2007, respectively.    The differences of $47,848 and

$45,915 million represent certain dedicated and earmarked receipts recognized as exchange revenue or non‐

exchange revenue reported on the Consolidated Statement of Net Cost or the Consolidated Statement of Changes

in Net Position.

NOTE 19 ‐ RECONCILIATION OF BUDGETARY RESOURCES OBLIGATED TO NET COST OF OPERATIONS  

(Dollars in thousands) 2008 2007

Resources used to finance activities

Budgetary resources obligated

Obligations incurred $ 54,904,773 65,439,476 $ 

Recoveries of prior year obligations (418,195) (220,673) 

Less spending authority from offsetting collections (6,718,139) (6,447,616)

Obligations, net of offsetting collections and recoveries 58,303,142 48,236,484 

Other resources

Imputed financing from costs absorbed by others 118,009 129,859 

Transfers, net 2,469 3,191 

Exchange revenue not in budget (733,748) (784,278)

Total resources used to finance activities 57,690,594 47,584,534

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 (139,399) 108,524 

Resources that finance the acquisition of assets (102,539) (129,596) 

Total resources used to finance items not part of the net cost of operations (241,938) (21,072)

Total resources used to finance the net cost of operations 57,448,656 47,563,462

Components of the net cost of operations that will not require or generate

 resources in the current period

 Components requiring or generating resources in other periods

Increase in annual leave liability 10,250 3,735 

Increase in employee benefits liabilities 803,610 633,248 

Other (27,912) 24,250

Total 785,948 661,233

Components not requiring or generating resources

Depreciation and amortization 66,248 61,233 

Revaluation of assets and liabilities 483,119 461,967 

Benefit overpayments (476,977) (457,176)

Total 72,390 66,024

Total components of the net cost of operations that will not

 require or generate resources in the current period 858,338 727,257

Net cost of operations $ 58,306,994 $ 48,290,719
Financial Section

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended September 30, 2008 and 2007

238     United States Department of Labor

NOTE 20 – SOURCES AND DISPOSITIONS OF CUSTODIAL REVENUE

Custodial revenues in 2008 consisted of the following:

Net Cash Increase

Collections (Decrease) in

and Transfers to Amounts to

Cash Less U.S. Treasury be Collected Total

(Dollars in thousands) Collections Refunds General Fund and Transferred Revenues

Civil monetary penalties

OSHA $ (182) 71,367 $ 71,185 $ 1,362 $ 72,547 $ 

MSHA 56,004 56,004 - 8,083 64,087 

EBSA 25,776 25,776 - (5,286) 20,490 

ESA 27,442 - 27,442 (1,305) 26,137

 (182) 180,589 180,407 2,854 183,261 

ETA disallowed grant costs 15,627 15,627 - (19,392) (3,765) 

Other 1,209 - 1,209 (286) 923

$ 197,425 $ (182) $ 197,243 $ (16,824) $ 180,419

Custodial revenues in 2007 consisted of the following:

Net Cash Increase

Collections (Decrease) in

and Transfers to Amounts to

Cash Less U.S. Treasury be Collected Total

(Dollars in thousands) Collections Refunds General Fund and Transferred Revenues

Civil monetary penalties

OSHA $ (233) 65,660 $ 65,427 $ 1,161 $ 66,588 $ 

MSHA 30,357 30,357 - (1,330) 29,027 

EBSA 24,168 24,168 - 3,511 27,679 

ESA 11,689 - 11,689 395 12,084

 (233) 131,874 131,641 3,737 135,378 

ETA disallowed grant costs 4,670 4,670 - 11,377 16,047 

Other 2,676 (2) 2,674 - 2,674

$ (235) 139,220 $ 138,985 $ 15,114 $ 154,099 $ 
Annual Financial Statements

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended September 30, 2008 and 2007

 FY 2008 Performance and Accountability Report   239

NOTE 21 – 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, 2008 is shown below.

Black Lung

(Dollars in thousands) Unemployment Disability Other Total

Assets

Intra-governmental

Funds with U.S. Treasury (147,882) $ 53,064 $ 381,801 $ 286,983 $ 

Investments 73,295,222 77,123 - 73,372,345 

Accounts receivable, net

Due from other Federal agencies

 for UCX and UCFE benefits 292,981 - 292,981 - 

Total intra-governmental 73,440,321 53,064 458,924 73,952,309 

Accounts receivable, net

State unemployment tax 183,985 - 183,985 - 

Due from reimbursable employers 473,802 - 473,802 - 

Benefit overpayments 220,191 10,776 230,967 - 

Other - 2 - 2 

Advances 706,556 - 706,556 - 

Other - 366 - 366 

Total assets $ 63,840 75,024,855 $ 459,292 $ 75,547,987 $ 

Liabilities

Intra-governmental

Accounts payable to DOL agencies 1,176,351 $ $ - $ 1,176,351 - $ 

Advances from U.S. Treasury 10,483,557 - 10,483,557 - 

Amounts held for the Railroad

 Retirement Board 110,455 - 110,455 - 

Other - 7,616 - 7,616 

Total intra-governmental 1,286,806 10,483,557 7,616 11,777,979 

Accounts payable - 14,683 - 14,683 

Future workers' compensation benefits - 53,562 - 53,562 

Accrued benefits 1,628,993 19,469 1,648,462 - 

Other - 602 - 602 

Total liabilities 10,503,026 2,915,799 76,463 13,495,288 

Net position

Cumulative results of operations 72,109,056 (10,439,186) 382,829 62,052,699 

Total liabilities and net position $ 63,840 75,024,855 $ 459,292 $ 75,547,987 $ 
Financial Section

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended September 30, 2008 and 2007

240     United States Department of Labor

NOTE 21 – EARMARKED FUNDS – Continued

The net results of operations of the earmarked funds for the year ended September 30, 2008 is shown below.

Black Lung

(Dollars in thousands) Unemployment Disability Other Total

Cost, net of earned revenues

Benefits (42,533,112) $ (266,960) $ (8,538) $ (42,808,610) $ 

Grants - (90,490) - (90,490) 

Interest (3,519) (739,469) (742,988) - 

Administrative and other (414,822) (376) (21,769) (436,967) 

 (1,006,805) (42,951,453) (120,797) (44,079,055) 

Earned revenue 711,675 - 711,675 - 

 (42,239,778) (1,006,805) (120,797) (43,367,380) 

Net financing sources

Taxes 37,655,181 652,650 38,307,831 - 

Interest 3,635,617 551 3,108 3,639,276 

Reimbursement of unemployment benefits 1,768,182 - 1,768,182 - 

Imputed financing - 195 - 195 

Transfers-in

Department of Homeland Security - 86,779 - 86,779 

DOL entities 2,396 - 2,396 - 

Transfers-out

DOL entities (3,714,880) (57,881) (3,772,761) - 

 39,346,496 595,320 90,082 40,031,898 

Net results of operations (2,893,282) (411,485) (30,715) (3,335,482) 

Net position, beginning of period 75,002,338 (10,027,701) 413,544 65,388,181 

Net position, end of period $ (10,439,186) 72,109,056 $ 382,829 $ 62,052,699 $ 

Advances from U.S. Treasury for the Black Lung Disability Trust Fund were retired on October 7, 2008 under the

refinancing agreement authorized by the enactment of the Energy Improvement and Extension Act of 2008 on

October 3, 2008. (See Note 23)
Annual Financial Statements

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended September 30, 2008 and 2007

 FY 2008 Performance and Accountability Report   241

NOTE 21 – EARMARKED FUNDS ‐ Continued

The financial position of the earmarked funds as of September 30, 2007 is shown below.

Black Lung

(Dollars in thousands) Unemployment Disability Other Total

Assets

Intra-governmental

Funds with U.S. Treasury 103,124 $ 40,359 $ 419,245 $ 562,728 $ 

Investments 75,804,778 80,061 - 75,884,839 

Accounts receivable, net

Due from other Federal agencies

 for UCX and UCFE benefits 302,912 - 302,912 - 

Total intra-governmental 76,210,814 40,359 499,306 76,750,479 

Accounts receivable, net

State unemployment tax 276,072 - 276,072 - 

Due from reimbursable employers 459,192 - 459,192 - 

Benefit overpayments 209,807 10,056 219,863 - 

Other - 2 - 2 

Advances 509,848 379 - 510,227 

Other - 39 - 39 

Total assets $ 50,415 77,665,733 $ 499,726 $ 78,215,874 $ 

Liabilities

Intra-governmental

Accounts payable to DOL agencies 1,242,806 $ $ - $ 1,242,806 - $ 

Advances from U.S. Treasury 10,057,557 - 10,057,557 - 

Amounts held for the Railroad

 Retirement Board 108,990 - 108,990 - 

Other - 7,857 - 7,857 

Total intra-governmental 1,351,796 10,057,557 7,857 11,417,210 

Accounts payable - 26,041 - 26,041 

Future workers' compensation benefits - 51,629 - 51,629 

Accrued benefits 1,311,599 20,559 1,332,158 - 

Other - 655 - 655 

Total liabilities 10,078,116 2,663,395 86,182 12,827,693 

Net position

Cumulative results of operations 75,002,338 (10,027,701) 413,544 65,388,181 

Total liabilities and net position $ 50,415 77,665,733 $ 499,726 $ 78,215,874 $ 
Financial Section

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended September 30, 2008 and 2007

242     United States Department of Labor

NOTE 21 – EARMARKED FUNDS – Continued

The net results of operations of the earmarked funds for the year ended September 30, 2007 is shown below.

Black Lung

(Dollars in thousands) Unemployment Disability Other Total

Cost, net of earned revenues

Benefits (32,325,084) $ (285,632) $ (3,139) $ (32,613,855) $ 

Grants - (103,179) - (103,179) 

Interest (3,772) (717,214) (720,986) - 

Administrative and other (446,430) (593) (19,615) (466,638) 

 (1,003,439) (32,775,286) (125,933) (33,904,658) 

Earned revenue 723,914 - 723,914 - 

 (32,051,372) (1,003,439) (125,933) (33,180,744) 

Net financing sources

Taxes 39,271,749 639,197 39,910,946 - 

Interest 3,344,577 463 3,537 3,348,577 

Reimbursement of unemployment benefits 1,632,863 - 1,632,863 - 

Imputed financing - 253 - 253 

Transfers-in

Department of Homeland Security - 193,355 - 193,355 

Transfers-out

DOL entities (3,604,321) (59,179) (3,663,500) - 

 40,644,868 580,481 197,145 41,422,494 

Net results of operations 8,593,496 (422,958) 71,212 8,241,750 

Net position, beginning of period 66,408,842 (9,604,743) 342,332 57,146,431 

Net position, end of period $ (10,027,701) 75,002,338 $ 413,544 $ 65,388,181 $ 

See Note 23 for the effects of the debt refinancing agreement for the Black Lung Disability Trust Fund authorized by

the enactment of the Energy Improvement and Extension Act of 2008 on October 3, 2008.
Annual Financial Statements

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended September 30, 2008 and 2007

 FY 2008 Performance and Accountability Report   243

NOTE 22 – 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 former standards dealing with dedicated collections, and as a result, the Unemployment Trust Fund and

the Black Lung Disability Trust Fund were classified as earmarked funds. The financial position of the two remaining

trust funds as of September 30, 2008 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 $ 439 735 $ 

Investments 5,160 61,905 

Interest receivable from investments - - 

Total intra-governmental 5,599 62,640 

Other accounts receivable, net 7,971 191 

Total assets $ 5,790 70,611 $ 

Liabilities

Accrued benefits $ 345 4,571 $ 

Other 38,796 2,423 

Total liabilities 43,367 2,768 

Net position

Cumulative results of operations 27,244 3,022 

Total liabilities and net position $ 5,790 70,611 $ 
Financial Section

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended September 30, 2008 and 2007

244     United States Department of Labor

NOTE 22 – DEDICATED COLLECTIONS – Continued

The net results of operations of each trust fund for the year ended September 30, 2008 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 $ (10,158) (130,085) $ 

Net financing sources

Interest 127 1,044 

Assessments 8,920 127,418 

Transfers-out

DOL entities (2,022) - 

 9,047 126,440 

Net results of operations (1,111) (3,645) 

Net position, beginning of period 30,889 4,133 

Net position, end of period $ 3,022 27,244 $ 
Annual Financial Statements

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended September 30, 2008 and 2007

 FY 2008 Performance and Accountability Report   245

NOTE 22 – DEDICATED COLLECTIONS – Continued

The net results of operations of each trust fund for the year ended September 30, 2007 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 $ 75 154 $ 

Investments 6,585 69,979 

Interest receivable from investments 16 1 

Total intra-governmental 6,661 70,149 

Other accounts receivable, net 3,803 327 

Total assets $ 6,988 73,952 $ 

Liabilities

Accrued benefits $ 298 3,655 $ 

Other 39,408 2,557 

Total liabilities 43,063 2,855 

Net position

Cumulative results of operations 30,889 4,133 

Total liabilities and net position $ 6,988 73,952 $ 

The net results of operations of each trust fund for the year ended September 30, 2007 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 $ (9,819) (129,040) $ 

Net financing sources

Interest 250 2,077 

Assessments 11,264 128,934 

Transfers-out

DOL entities (2,042) - 

 11,514 128,969 

Net results of operations 1,695 (71) 

Net position, beginning of period 30,960 2,438 

Net position, end of period $ 4,133 30,889 $ 
Financial Section

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

For the Years Ended September 30, 2008 and 2007

246     United States Department of Labor

NOTE 23 – SUBSEQUENT EVENTS

P.L. 110‐343, Division B‐‐Energy Improvement and Extension Act of 2008, was enacted on October 3, 2008.  Section

113 of the Act allowed for the temporary increase in coal excise tax rates to continue an additional five years

beyond the current statutory limit and restructuring of trust fund debt by the repayment of the market value of

outstanding repayable advances with the proceeds of obligations issued by the Black Lung Disability Trust Fund to

the U.S. Treasury and a one‐time appropriation.

Temporary Increase in Coal Excise Tax Rates.  In accordance with Internal Revenue Code section 4121, the coal

excise tax rates were set to decrease from $1.10 per ton for coal from underground mines and $0.55 per ton for

coal from surface mines (not to exceed 4.4 percent of sales) to $0.50 per ton for coal from underground mines and

$0.25 per ton for coal from surface mines (not to exceed 2 percent of sales) on January 1, 2014.    P.L. 110‐343

extended the temporary increase in coal excise tax rates an additional five years from January 1, 2014 to December

31, 2018.  The higher excise tax rates will continue until the earlier of December 31, 2018 or the first December 31

after 2007 in which there exist no (1) balance of repayable advances described in section 9501 of the Internal

Revenue Code and (2) unpaid interest on the advances.  Treasury has interpreted repayable advances to mean any

obligations of the Trust Fund to Treasury.

Issuance of Obligations by the Black Lung Disability Trust Fund.    P.L. 110‐343 gave authority to the Black Lung

Disability Trust Fund to issue obligations to the Secretary of Treasury and gave authority to the Secretary of

Treasury to purchase the obligations.    The proceeds from issuance of these obligations were used to effect the

refinancing of the Black Lung Disability Trust Fund.  The proceeds from issuance of obligations subsequent to the

refinancing may be used to make benefit payments, other authorized expenditures, or to repay obligations and

interest from the initial refinancing.

Restructuring of Trust Fund Debt.    P.L. 110‐343 provided that the refinancing date occur two days after its

enactment.  Treasury has interpreted this to mean two business days after enactment.  Effective October 7, 2008,

the Black Lung Disability Trust Fund repaid the market value of the outstanding repayable Advances from U.S.

Treasury plus accrued interest, by transferring to the Treasury general fund (1) obligations whose denominations,

rate, and maturity were prescribed by the Secretary of the Treasury and (2) the one‐time appropriation amount,

which was the difference between the proceeds received from issuance of the obligations described above and the

market value of the outstanding advances payable.

The effect of the refinancing was to eliminate high interest rate Advances from U.S. Treasury and replace them with

zero coupon bonds bearing interest rates between 1.412% and 4.556%.  Pursuant to the refinancing, the market

value of the outstanding repayable Advances from U.S. Treasury plus accrued interest was $12.994 billion. The total

par value of the zero coupon bonds is $11.424 billion and the total proceeds to the Black Lung Disability Trust Fund

were $6.496 billion.  The one‐time appropriation amount was $6.498 billion.  The Trust Fund recognized a loss of

$2.496 billion for the difference between the market value of the outstanding advances of $12.994 billion as

determined by Treasury and the carrying value of the outstanding advances and accrued interest of $10.498 billion.

Effect of Restructuring of Trust Fund Debt on the Statement of Social Insurance. This restructuring resulted in an

actuarial present value of future excise tax income during the projection period of $9.293 billion as of October 7,

2008 and an actuarial present value of the par value of the zero coupon bonds coming due during the projection

period of $6.326 billion as of October 7, 2008.  This, with an actuarial present value of $2.967 billion for expenses,

results in a fund balance of zero at the end of the projection period.
Required Supplementary Stewardship Information
Financial Section

REQUIRED SUPPLEMENTARY STEWARDSHIP INFORMATION

(Unaudited)

248     United States Department of Labor

STEWARDSHIP INVESTMENTS IN HUMAN CAPITAL

Stewardship investments are made by DOL on behalf of the nation, providing long‐term benefits that cannot be

measured in traditional financial reports.    DOL’s stewardship investments are in human capital, reported as

employment and training program expenses in DOL’s net cost of operations.   Within DOL, the Employment and

Training Administration (ETA), the Office of Job Corps (OJC), and the Veterans’ Employment and Training Service

(VETS) administer training programs that invest in human capital.    These investments are made for the general

public, and are intended to maintain or increase national economic productive capacity, as demonstrated by

program outputs and outcomes.   

Employment and Training Administration and the Office of Job Corps

In 2008, ETA incurred total net costs of $51.3 billion, providing services to an estimated 26.5 million people.  The

majority of ETA’s net costs consisted of expenditures for employment and training, unemployment insurance and

benefit payments.  Also included in net costs were ETA investments in human capital of $4.3 billion, serving over

4.09 million participants in 2008.  These investments were made through job training programs authorized by the

Workforce Investment Act of 1998 (WIA), Title V of the Older Americans Act, the Trade Act of 1974, as amended by

the Trade Adjustment Assistance Reform Act of 2002, and the National Apprenticeship Act of 1937.   

The Office of Job Corps (OJC), transferred from ETA to the Office of the Secretary (OSEC) in 2006, also invests in

human capital through job training programs authorized by WIA. OJC’s 2008 investment in human capital was

$1,505.0 million. The ETA and OJC job training programs under WIA are discussed below.

Workforce Investment Act Job Training Programs

 Adult employment and training programs – ETA awards financial assistance grants to States and territories to

design and operate training and employment assistance programs for disadvantaged adults, including public

assistance recipients.  ETA’s 2008 investment in human capital through adult programs was $824.8 million.

 Dislocated worker employment and training programs – ETA awards grants to States to provide reemployment

services and retraining assistance to individuals dislocated from their employment.   ETA awards non‐

competitive grants for unexpected economic impacts and emergency dislocations; and competitive grants from

the national reserve account to build training capacity and to train workers through community and technical

colleges.  ETA’s 2008 investment in human capital through dislocated worker programs was $1,414.3 million.

 Youth programs – ETA awards grants to states to support program activities and services to prepare low‐

income youth for academic and employment success, including summer jobs, by linking academic and

occupational learning with youth development activities.    ETA’s 2008 investment in human capital through

youth programs was $962.1 million.

 Job Corps program – OJC awards contracts to support a system of primarily residential centers offering basic

education, training, work experience and other support, typically to economically disadvantaged youth.  Large

and small corporations and non‐profit organizations manage and operate 94 Job Corps centers under these

contractual arrangements.  The remaining 28 centers are operated through interagency agreements between

DOL and the U.S. Departments of Agriculture and Interior.  In addition, 20 operators are contracted to provide

outreach and admissions (OA) and career transition services (CTS).   OJC’s 2008 investment in human capital

through the Job Corps program was $1,505.0 million.
Annual Financial Statements

REQUIRED SUPPLEMENTARY STEWARDSHIP INFORMATION

(Unaudited)

 FY 2008 Performance and Accountability Report   249

 Reintegration of Ex‐Offenders – ETA supports programs to help individuals exiting prison make a successful

transition to community life and long‐term employment through the provision of mentoring and job training

programs to promote the successful return of adult and juvenile ex‐offenders into mainstream society.  ETA’s

2008 investment in human capital through ex‐offender programs was $61.0 million.

 National programs – ETA’s National programs provide employment and training services and support for WIA

nationally administered activities for segments of the population that have special disadvantages in the labor

market, including grants to Indian tribes and other Native American governments or non‐profit organizations,

and to Migrant and Seasonal Farmworker service organizations, to provide training, work experience and

employment‐related services. ETA’s 2008 National Programs investment in human capital was $206.1 million.

Title V of the Older Americans Act, as Amended

ETA also invests in human capital through its older worker program, authorized under Title V of the Older

Americans Act, to benefit low income workers, age 55 and over.  The Older Americans Act Amendments of 2006,

reauthorized and provided important reforms to Title V’s Community Service Employment for Older Americans

Program, including an increase in the percentage of program funds available for skills training and related services.   

 Community Service Employment for Older Americans program (CSEOA) – An employment and training

program that provides part‐time training through work experience in community service activities for low‐

income persons age 55 and older, who wish to remain in or re‐enter the workforce, with the ultimate goal of

moving the participants into unsubsidized employment.  ETA’s 2008 investment in human capital through the

CSEOA program was $497.6 million.

Trade Act of 1974 as Amended

ETA makes investments in human capital through training programs authorized by the Trade Act of 1974, as

amended by the Trade Adjustment Assistance Reform Act of 2002, which consolidated the Trade Adjustment

Assistance (TAA) and the NAFTA Trade Adjustment Assistance programs into a single, enhanced TAA program.

 Trade Adjustment Assistance programs – TAA programs provide training, income support and related

assistance to workers who have been adversely affected by foreign trade agreements.  TAA benefit payments

are classified as income maintenance program costs and are not included as investments in human capital.  

ETA’s 2008 investment in trade adjustment assistance training programs was $248.4 million.

The National Apprenticeship Act

The National Apprenticeship Act of 1937 established the foundation for development of the nation’s skilled

workforce through apprenticeship programs, which combine on‐the‐job learning with related technical instruction

to teach workers the theoretical aspects of skilled occupations.  Funding provides a national system for skilled and

technical occupational training, which promotes apprentices, registers apprenticeship programs, certifies

apprenticeship standards, and safeguards the welfare of apprentices.    ETA’s 2008 investment in apprenticeship

programs was $20.5 million.
Financial Section

REQUIRED SUPPLEMENTARY STEWARDSHIP INFORMATION

(Unaudited)

250     United States Department of Labor

Program Costs and Outputs

The cost of ETA and OJC investments in human capital, and the participants served by each, are shown in the chart

below, for the five year period 2004 through 2008.

ETA And OJC Investments In Human Capital

Program Costs (in Millions) and Participants Served (in Thousands)

For The Five Year Period 2004 Through 2008

 

2008 2007 2006 2005 2004

Program Costs  

Part.

Served Costs

Part.

Served Costs

Part.

Served Costs

Part.

Served Costs

Part.

Served

WIA

Adult (1) $824.8 2,828.7 $ 893.8 1,723.2 $ 884.6 1,052.6 $ 953.9 441.8 $ 962.5 444.3

Dislocated

Worker (2) 1,414.3 401.3 1,466.3 413.1 1,525.1 398.2 1,538.3 361.4 1,533.1 364.4

Youth 962.1 250.7 950.7 248.9 1,006.2 272.9 1,146.5 390.8 1,379.9 423.5

Job Corps 1,505.0 63.4 1,485.6 64.8 1,364.8 61.0 1,367.1 61.9 1,357.5 64.3

Ex‐ 

Offenders (3) 61.0 14.2 76.4 15.7 52.1 11.5 23.7 6.8 29.4 5.7

National

Programs (4) 206.1 44.7 219.7 44.0 267.3 42.1 178.2 54.7 297.1 57.6

Title V

CSEOA 497.6 89.6 450.4 86.4 313.0 93.5 621.9 92.1 429.6 101.4

Trade Act

TAA Training 248.4 82.1 223.1 79.2 188.8 84.2 222.8 95.8 249.1 105.1

Apprenticeship

Act

Apprenticeship

System 20.5 385.7 21.4 309.5 22.4 237.9 21.5 196.2 21.4 198.9

Other (5) 108.2 Na 91.2 Na 99.1 Na 37.4 Na 93.7 Na

TOTAL $5,848.0 4,160.4 $5,878.6 2,984.8 $5,723.4 2,253.9 $6,111.3 1,701.5 $6,353.3 1,765.2

(1) Adult program increases in participants served, beginning in 2006, can be attributed to the inclusion of participants who

access self‐services only and may be co‐enrolled in more than one program.

(2) Dislocated Worker programs also include National Emergency Grant costs and participants.

(3) Ex‐Offender programs include the Prisoner Re‐entry and Youthful Offender programs.

(4) National Programs include the Native American and Migrant and Seasonal Farmworker programs.

(5) Other includes training programs for highly skilled occupations funded through H1‐B fees, and costs for lapsed programs.  
Annual Financial Statements

REQUIRED SUPPLEMENTARY STEWARDSHIP INFORMATION

(Unaudited)

 FY 2008 Performance and Accountability Report   251

Program Outcomes

The overall performance of ETA programs towards the achievement of DOL’s strategic goals is discussed in the

Performance Section of this report.  Outcomes for training programs comprising ETA’s investment in human capital

are shown below for the most current year measured.

Strategic Goal 1 – A Prepared Workforce

 Performance Goal 07.1B (Job Corps) – PY 2007

Improve educational achievements of Job Corps students and increase participation of Job Corps graduates in

employment and education.

This goal was not achieved.  Job Corps did not reach targets in three performance indicators.

 Performance Goal 07.1C (WIA Youth) – PY 2007

Increase placements and educational attainments for youth served through the WIA youth program.

This goal was achieve; ETA reached targets for two performance indicators and met benchmarks for the third.   

 Performance Goal 08.1D (Apprenticeship) – FY 2008

Improve the apprenticeship system to meet the training needs of business and workers in the 21st century.

This goal was not achieved. ETA failed to reach the target for one of two performance indicators.

Strategic Goal 2 – A Competitive Workforce

 Performance Goal 07.2A (WIA Adult) – PY 2007

Increase the employment, retention and earnings of individuals under the WIA Adult program.

This goal was not achieved. ETA failed to reach the target for one of three performance indicators.

 Performance Goal 07.2B (WIA Dislocated Workers) – PY 2007

Increase the employment, retention and earnings of individuals under the WIA Dislocated Worker program.

This goal was not achieved. ETA failed to reach the target for two of three performance indicators.

 Performance Goal 07.2F (CSEOA) – PY 2007

Assist older workers participate in a demand economy through Senior Community Service Employment.

This goal was substantially achieved. ETA reached targets for two performance indicators and improved

performance in the third indicator.

 Performance Goal 08.2G (TAA) – FY 2008

Increase the employment, retention and earnings replacement of workers dislocated in important part because

of trade and who receive trade adjustment assistance benefits.

This goal was not achieved.  ETA failed to reach targets for two of three performance indicators.   
Financial Section

REQUIRED SUPPLEMENTARY STEWARDSHIP INFORMATION

(Unaudited)

252     United States Department of Labor

Veterans Employment and Training Service

The mission of the 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.   

Program Activities

 

Jobs for Veterans State Grants

The Jobs for Veterans Act (JVA) of 2002, which allocates resources to the States through the Jobs for Veterans State

grants program, supports the majority of VETS activities through three major VETS programs, as discussed below:   

 Disabled Veterans Outreach Program (DVOP) Specialist – The DVOP, codified at 38 U.S.C. 4103A, awards

formula grants to State Workforce Agencies (SWAs) to support DVOP specialists providing intensive services to

meet the employment needs of veterans, including counseling, assessment, lifelong learning skills and referral

to training, particularly veterans with disabilities or those who recently separated from the military.

 Local Veterans Employment Representative (LVER) – The LVER, codified at 38 U.S.C. 4104, provides grants to

State Workforce Agencies (SWAs) for the appointment of LVER staff positions identified in Job Service local

offices and One‐Stop Career Centers, to enhance veterans’ services and help them into productive

employment.

 Transition Assistance Program (TAP) – TAP, authorized under 38 U.S.C. 4215 and 10 U.S.C. 1144, operates as a

partnership between the Departments of Labor, Defense and Veterans Affairs.    The program provides

separating service members and their spouses or individuals retiring from military service with career

counseling and training.  TAP workshops are provided throughout the United States and overseas.

   

Federal Management

VETS Federal management activities provide programs and policies to meet the employment and training needs of

veterans.  The majority of resources are devoted to Uniformed Services Employment and Reemployment Rights and

Veterans Preference Rights (USERRA) compliance and outreach. Activities, as discussed below:

 Uniformed Services Employment and Reemployment Rights and Veterans Preference Rights – The Uniformed

Services Employment and Reemployment Rights Act (USERRA) of 1994, codified at 38 U.S.C. Chapter 43,

protects civilian job rights and benefits for veterans, members of the National Guard and Reserves.  Veterans

Preference for Federal Employment is codified in 5 U.S.C. 2108.    VETS promotes a productive relationship

between employer and employee by educating both on the employment rights of the individual veterans.

Homeless Veterans and Veterans’ Workforce Investment Programs

 Homeless Veterans Reintegration Project (HVRP) – The HVRP, codified at 38 U.S.C. 2021, provides employment

assistance to homeless veterans through grants to States or other entities in both urban and rural areas to

operate employment programs to reach out to homeless veterans and help them become employed.
Annual Financial Statements

REQUIRED SUPPLEMENTARY STEWARDSHIP INFORMATION

(Unaudited)

 FY 2008 Performance and Accountability Report   253

 Veterans Workforce Investment Program (VWIP) ‐ The VWIP, {38 U.S.C. 2913}, provides competitive grants for

training and retraining of veterans to create high skilled employment opportunities for targeted veterans.

Program Costs and Outputs

The full cost of VETS programs is presented in the Statement of Net Costs.  The costs of VETS investments in human

capital, and the participants served by this investment, are presented below, by major program.

VETS Investments In Human Capital

Program Costs and Participants Served (in Thousands)

For The Five Year Period 2004 Through 2008

 

2008 2007 2006 2005 2004

Program Costs

Part.

Served Costs

Part.

Served Costs

Part.

Served Costs

Part.

Served Costs

Part.

Served

DVOP

   

$86,844 373.5 $86,667 363.4 $86,153 398.1 $86,104 342.8 $85,151 507.2

LVER

   

80,028 468.6 80,000 400.6 79,526 429.3 79,481 330.0 78,601 529.9

TAP

   

6,898 150.0 7,704 151.3 4,792 139.5 4,919 134.3 4,684 130.0

USERRA

   

9,100 93.0 9,170 70.8 8,819 109.9 9,123 126.9 9,506 80.5

HVRP

   

27,620 14.0 27,504 12.8 26,975 13.8 24,883 13.8 21,821 12.5

VWIP

   

7,651 3.3 7,667 3.6 9,123 3.8 7,966 4.3 9,444 3.5

   TOTAL

   

$218,141 1,102.4 $218,712 1,002.5 $215,388 1,094.4 $212,476 952.1 $209,207 1,263.6

Program Outcomes

The performance of VETS programs towards the achievement of DOL’s strategic goals is discussed in the

Performance Section of this report.  Outcomes for 2008 are summarized below:

Strategic Goal 1 – A Prepared Workforce

 Performance Goal 07.1C (VETS) – PY 2007

Improve employment outcomes for veterans receiving One‐Stop Career Center and veteran’s program services.

This goal was achieved.  VETS met targets for all four performance indicators.

Strategic Goal 3 – Safe and Secure Workplaces

 Performance Goal 08.3C (VETS) – FY 2008

Reduce employer‐employee employment issues originating from service members’ military obligations

conflicting with their civilian employment.

This goal was not achieved.  VETS fell short of their target for the performance indicator.
Required Supplementary Information
Annual Financial Statements

REQUIRED SUPPLEMENTARY INFORMATION

(Unaudited)

 FY 2008 Performance and Accountability Report   255

DEFERRED MAINTENANCE

The U.S. Department of Labor (DOL) maintains one hundred twenty‐two (122) Job Corps centers located throughout

the United States.  Periodic maintenance is performed to keep these centers in acceptable condition, as determined

by Job Corps management.  Maintenance requirements are stratified by management into critical and non‐critical

projects.    Critical maintenance involves life, safety, health, and environmental issues, as well as building code

compliance deficiencies.  Critical maintenance projects are funded and performed in the year they are identified.

Non‐critical maintenance projects are performed each year to the extent that funding constraints allow.  Non‐critical

maintenance projects that cannot be funded when scheduled are deferred to a future period.   

Condition Assessment Surveys

Condition assessment surveys are conducted every three years at each Job Corps center to determine the current

condition of buildings and structures (constructed assets) and the estimated maintenance cost to correct

deficiencies.  Surveys conducted during years one and two of this three year cycle are updated annually to reflect

maintenance performed, and rolled up with current assessments to provide a condition assessment for the entire

Job Corps portfolio of constructed assets.    Condition assessment surveys are based on methods and standards

consistently applied, including:

      ‐  condition descriptions of facilities  ‐  recommended maintenance schedules

      ‐  estimated costs of maintenance actions  ‐  standardized condition codes

Asset Condition

Condition assessment surveys are used to estimate the current plant replacement value and deferred maintenance

repair backlog for every constructed asset at each Job Corps center.  Plant replacement value and repair backlog are

used to calculate a Facilities Condition Index (FCI) for each building and structure. The chart below ranks each asset

within one of five categories of asset condition, based on the assets FCI score, for the previous five year period.  

Job Corps Center Constructed Assets  

Ranking of Individual Asset Condition By FCI Scores(1)

For the Years Ended 2004 – 2008

 

2008 2007* 2006* 2005* 2004*

Asset

Condition FCI Score

No. of

Assets

Asset

%

No. of

Assets

Asset

%

No. of

Assets

Asset

%

No. of

Assets

Asset

%

No. of

Assets

Asset

%

Excellent 90‐ 100% 2,878 81.9 2,966 80.9 2,665 75.1 2,507 74.8 2,244 72.1

Good 80‐ 89% 311 8.9 338 9.2 433 12.2 412 12.3 286 9.2

Fair 70‐ 79% 115 3.3 126 3.4 145 4.1 151 4.5 274 8.8

Poor 60‐ 69% 89 2.5 98 2.7 135 3.8 120 3.6 146 4.7

Very Poor < 60% 118 3.4 136 3.8 170 4.8 161 4.8 162 5.2

   

3,511 100.0 3,664 100.0 3,548 100.0 3,351    100.0 3,112    100.0

(1)   FCI = 1 – (Repair Backlog / Plant Replacement Value).  An FCI closer to 100 % indicates better asset condition.   

*        Distribution of FCI for 2004 – 2007 was estimated, based on the trend in asset condition established in 2008, when      

modifications to the calculation were newly implemented. 
Financial Section

REQUIRED SUPPLEMENTARY INFORMATION

(Unaudited)

256     United States Department of Labor

Portfolio Condition and Deferred Maintenance Cost Estimates

The FCI assessments by building and structure are consolidated to calculate an FCI score for the entire portfolio of

constructed assets, which is used to evaluate the overall asset condition of the Job Corps portfolio.  Job Corps has

set the goal of achieving and maintaining an FCI of 90% or greater (the standard used by the National Association of

College and University Business Offices) for its portfolio of constructed assets. In 2008, the portfolio’s aggregate FCI

score for 3,511 constructed assets was 92.2%, and deferred maintenance costs to return the portfolio to an

acceptable condition were estimated at $71.9 million, as shown in the table below. The final graph juxtaposes

deferred maintenance cost estimates with the FCI trend line for the five year period ending in 2008.

Job Corps Center Constructed Assets

Portfolio Condition and Deferred Maintenance Cost Estimates at

September 30, 2004 ‐ 2008

 

Constructed Assets ‐ FY

Number of

Constructed

Assets

Portfolio Condition

Based on

Aggregate FCI Score

Deferred Maintenance

Costs to Return Assets

To Acceptable Condition

Buildings and structures ‐ 2008 3,511 Excellent  ‐  92.2%    $71,901,425

Buildings and structures ‐ 2007 3,664 Excellent  ‐  90.8%       $87,372,700

Buildings and structures ‐ 2006 3,548 Excellent  ‐  96.3%       $92,100,000

Buildings and structures ‐ 2005 3,351 Excellent  ‐  97.0%       $94,800,000

Buildings and structures ‐ 2004 3,112 Excellent  ‐  97.0%       $95,500,000

  

Deferred Maintenance & FCI

$0.00

$20,000,000.00

$40,000,000.00

$60,000,000.00

$80,000,000.00

$100,000,000.00

$120,000,000.00

2004 2005 2006 2007 2008

Fiscal Years

Deferred 

Maintenance

86.00%

88.00%

90.00%

92.00%

94.00%

96.00%

98.00%

100.00%

Facilities Condition 

Index

DM FCI Log. (FCI)
Annual Financial Statements

REQUIRED SUPPLEMENTARY INFORMATION

(Unaudited)

 FY 2008 Performance and Accountability Report   257

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% (0.6% starting January 1, 2009).  Federal unemployment taxes are collected by the Internal Revenue

Service.  
Financial Section

REQUIRED SUPPLEMENTARY INFORMATION

(Unaudited)

258     United States Department of Labor

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.   
Annual Financial Statements

REQUIRED SUPPLEMENTARY INFORMATION

(Unaudited)

 FY 2008 Performance and Accountability Report   259

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.

The Federal Employees Compensation Account (FEC) 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 non‐repayable 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.  
Financial Section

REQUIRED SUPPLEMENTARY INFORMATION

(Unaudited)

260     United States Department of Labor

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.

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.  
Annual Financial Statements

REQUIRED SUPPLEMENTARY INFORMATION

(Unaudited)

 FY 2008 Performance and Accountability Report   261

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 began in July

2008, authorized under the Supplemental Appropriations Act, 2008.    Before this fiscal year, 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, 2008, total assets within the UTF exceeded liabilities by $72.1 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, including interest

receivable, at September 30, 2008 was $73.3 billion.    This interest is distributed to eligible State and Federal

accounts within the UTF.   Interest income from these investments during FY 2008 was $3.6 billion.  Federal and

State UI tax and reimbursable revenues of $39.4 billion and regular, extended and emergency benefit payment

expense of $42.5 billion were recognized for the year ended September 30, 2008.

As discussed in Note 1.L.1 to the consolidated financial statements, DOL recognized a liability for regular, extended

and emergency unemployment benefits to the extent of unpaid benefits applicable to the current period and for

benefits paid by States that have not been reimbursed by the UTF.  Accrued unemployment benefits payable at

September 30, 2008 were $1.2 billion.   
Financial Section

REQUIRED SUPPLEMENTARY INFORMATION

(Unaudited)

262     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 2008 Performance and Accountability Report   263

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 5.58% during FY 2009,

decreasing to 4.80% in FY 2013 and thereafter.  Total cash inflows exceed total cash outflows for all years

projected after FY 2009.  The net inflow increases from $3.5 billion in FY 2010 to $10.5 billion in FY 2013,

leveling off at the $7.1 billion to $10.2 billion range after that, indicating that most States have replenished

their funds to desired levels.    The net inflow is sustained by the excess of Federal tax collections over

Federal expenditures.   

These projections, excluding interest earnings, indicate increasing net cash inflows from FY 2010 to FY 2013,

then net cash inflows at varied levels through 2018.   

Chart I

Unemployment Trust Fund 

Cash Inflow and Outflow

35

40

45

50

55

60

65

70

75

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Excludes the Federal Employee Compensation Account

$ - Billions

Total Cash Inflows Cash Inflow Excluding Interest Total Cash Outflow
Financial Section

REQUIRED SUPPLEMENTARY INFORMATION

(Unaudited)

264     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, 2018.  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 after FY 2009, with this excess peaking in FY

2013.  Starting at $64.7 billion in FY 2009, net UTF assets increase by 114.7% over the next nine years to

$138.9 billion by the end of FY 2018.

Chart II

Unemployment Trust Fund 

Effect of Net Cash Flow on Net Assets

30

50

70

90

110

130

150

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Excludes the Federal Employee Compensation Account

$ - Billions

Total Cash Inflows Total Cash Outflows Net Assets
Annual Financial Statements

REQUIRED SUPPLEMENTARY INFORMATION

(Unaudited)

 FY 2008 Performance and Accountability Report   265

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, 2018, 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 2011, net cash outflows

including projected interest earnings and expenses from Federal sources are projected in FY 2009 through

FY 2012.    Net cash inflows are reestablished in FY 2013 and peak in FY 2016 with a drop in the

unemployment rate to 5.11%.  Net assets never fall below $32.4 billion and are within $32.4 billion of the

balance under expected economic conditions by 2018.    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

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Excludes the Federal Employee Compensation Account

$ - Billions

Total Cash Inflows Total Cash Outflows Net Assets
Financial Section

REQUIRED SUPPLEMENTARY INFORMATION

(Unaudited)

266     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 2012.  Under this scenario, net

cash outflows including projected interest earnings and expenses from Federal sources are projected in FY

2009 through FY 2013, with the fund in a deficit situation from 2012 to 2016.  The net assets of the UTF

decrease from $62.6 billion in FY 2009 to negative $45.2 billion in 2013, a decline of $107.8 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 following

discussion of State solvency measures.)  

Net cash inflows are reestablished in FY 2014, with a drop in the unemployment rate to 7.26%.  By the end

of FY 2018, this positive cash flow has replenished UTF account balances to $22.0 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 $117.0 billion less than under expected economic conditions.

Chart IV

Unemployment Trust Fund 

Effect of Net Cash Flow on Net Assets

(60)

(40)

(20)

0

20

40

60

80

100

120

140

2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Excludes the Federal Employee Compensation Account

$ - Billions

Total Cash Inflows Total Cash Outflows Net Assets
FY 2008 Performance and Accountability Report     267

(Dollars in thousands) 2009 2010 2011 2012 2013 2014 2015 2016 Balance, start of year $ 72,100,304 $ 64,661,399 $ 68,131,002 $ 74,717,426 $ 82,808,250 $ 93,269,206 $ 102,651,295 $ 112,059,861 $ Cash inflow

State unemployment taxes 38,072,000 41,417,000 43,096,000 44,132,000 46,577,000 46,653,000 47,430,000 47,778,000 

Federal unemployment taxes 6,172,000 5,878,000 6,146,000 6,576,000 7,447,000 7,503,000 8,205,000 7,237,000 

Interest on loans 45,000 103,000 138,000 146,000 107,000 80,000 59,000 101,000 

Deposits by the Railroad Retirement Board 95,800 108,600 123,600 125,000 119,800 120,800 124,200 127,800 

Total cash inflow excluding interest 44,384,800 47,506,600 49,503,600 50,979,000 54,250,800 54,356,800 55,818,200 55,243,800 

Interest on Federal securities 3,239,026 3,059,153 3,258,347 3,559,654 4,029,380 4,704,935 5,256,206 5,636,059 

Total cash inflow 47,623,826 50,565,753 52,761,947 54,538,654 58,280,180 59,061,735 61,074,406 60,879,859 

Cash outflow

State unemployment benefits 51,028,000 43,930,000 43,042,000 43,317,000 44,697,000 46,570,000 48,568,000 50,714,000 

State administrative costs 3,721,505 2,847,000 2,807,000 2,799,000 2,786,000 2,769,000 2,753,000 2,735,000 

Federal administrative costs 203,453 202,847 205,365 207,938 210,568 212,256 214,003 216,811 

Interest on tax refunds 3,188 2,973 3,082 3,270 3,743 3,932 4,388 3,925 

Railroad Retirement Board withdrawals 106,585 113,330 118,076 120,622 121,913 124,458 126,449 128,695 

Total cash outflow 55,062,731 47,096,150 46,175,523 46,447,830 47,819,224 49,679,646 51,665,840 53,798,431 Excess of total cash inflow excluding

interest over total cash outflow (10,677,931) 410,450 3,328,077 4,531,170 6,431,576 4,677,154 4,152,360 1,445,369 

Excess of total cash inflow over

total cash outflow (7,438,905) 3,469,603 6,586,424 8,090,824 10,460,956 9,382,089 9,408,566 7,081,428 

Balance, end of year $ 64,661,399 $ 68,131,002 $ 74,717,426 $ 82,808,250 $ 93,269,206 $ 102,651,295 $ 112,059,861 $ 119,141,289 $ 

Total unemployment rate 5.58% 5.35% 5.03% 4.85% 4.80% 4.80% 4.80% 4.80% 

FOR THE TEN YEAR PERIOD ENDING SEPTEMBER 30, 2018

(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
268     United States Department of Labor (Dollars in thousands) 2009 2010 2011 2012 2013 2014 2015 2016 

Balance, start of year $ 72,100,304 $ 64,174,037 $ 54,659,117 $ 38,450,008 $ 32,406,538 $ 39,908,254 $ 52,395,150 $ 65,089,586 $ Cash inflow

State unemployment taxes 38,098,000 41,900,000 46,799,000 51,051,000 54,622,000 54,928,000 54,763,000 54,758,000 

Federal unemployment taxes 6,159,000 5,796,000 5,978,000 7,173,000 9,124,000 10,380,000 11,210,000 11,107,000 

General revenue appropriation 414,000 51,000 109,000 57,000                      ‐      1,000                          ‐                               ‐                               

      

Interest on loans 44,000 169,000 636,000 1,192,000 1,343,000 1,181,000 1,052,000 917,000 

Deposits by the Railroad Retirement Board 95,800 108,600 123,600 125,000 119,800 120,800 124,200 127,800 

Total cash inflow excluding interest 44,810,800 48,024,600 53,645,600 59,598,000 65,209,800 66,609,800 67,149,200 66,909,800 

Interest on Federal securities 3,234,152 2,710,589 2,033,730 1,928,307 2,086,383 2,476,850 2,900,983 3,441,133 

Total cash inflow 48,044,952 50,735,189 55,679,330 61,526,307 67,296,183 69,086,650 70,050,183 70,350,933 

Cash outflow

State unemployment benefits 51,924,000 56,898,000 68,416,000 64,126,000 56,445,000 53,348,000 54,147,000 52,702,000 

State administrative costs 3,734,000 3,033,000 3,146,000 3,111,650 3,012,400 2,909,600 2,862,300 2,791,700 

Federal administrative costs 203,453 202,847 205,365 207,938 210,568 212,256 214,003 216,811 

Interest on tax refunds 3,181 2,932 2,998 3,567 4,586 5,440 5,995 6,024 

Railroad Retirement Board withdrawals 106,585 113,330 118,076 120,622 121,913 124,458 126,449 128,695 

Total cash outflow 55,971,219 60,250,109 71,888,439 67,569,777 59,794,467 56,599,754 57,355,747 55,845,230 Excess of total cash inflow excluding

interest over total cash outflow (11,160,419) (12,225,509) (18,242,839) (7,971,777) 5,415,333 10,010,046 9,793,453 11,064,570 

Excess of total cash inflow over

total cash outflow (7,926,267) (9,514,920) (16,209,109) (6,043,470) 7,501,716 12,486,896 12,694,436 14,505,703 

Balance, end of year $ 64,174,037 $ 54,659,117 $ 38,450,008 $ 32,406,538 $ 39,908,254 $ 52,395,150 $ 65,089,586 $ 79,595,289 $ 

Total unemployment rate 5.71% 6.62% 7.43% 7.09% 6.35% 5.61% 5.47% 5.11% 

FOR THE TEN YEAR PERIOD ENDING SEPTEMBER 30, 2018

(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 2008 Performance and Accountability Report     269

(Dollars in thousands) 2009 2010 2011 2012 2013 2014 2015 2016 Balance, start of year $ 72,100,304 $ 62,558,151 $ 45,279,776 $ 3,870,099 $ (43,717,343) $ (45,231,242) $ (38,241,644) $ (29,140,004) $ Cash inflow

State unemployment taxes 38,120,000 42,420,000 48,765,000 56,504,000 62,206,000 63,818,000 63,952,000 63,098,000 

Federal unemployment taxes 6,145,000 5,751,000 5,849,000 6,941,000 8,938,000 11,391,000 13,742,000 14,989,000 

General revenue appropriation 427,000 89,000 148,000 174,000 44,000 4,000                     ‐      4,000                         

       

Interest on loans 45,000 247,000 1,187,000 2,868,000 3,744,000 3,783,000 3,728,000 3,574,000 

Deposits by the Railroad Retirement Board 95,800 108,600 123,600 125,000 119,800 120,800 124,200 127,800 

Total cash inflow excluding interest 44,832,800 48,615,600 56,072,600 66,612,000 75,051,800 79,116,800 81,550,200 81,788,800 

Interest on Federal securities 3,214,259 2,429,111 1,628,097 1,024,369 784,924 829,732 1,050,141 1,312,417 

Total cash inflow 48,047,059 51,044,711 57,700,697 67,636,369 75,836,724 79,946,532 82,600,341 83,101,217 

Cash outflow

State unemployment benefits 53,522,000 64,864,000 94,933,000 109,606,000 70,933,000 66,671,000 67,554,000 63,424,000 

State administrative costs 3,754,000 3,140,000 3,551,000 3,685,800 3,280,650 3,143,250 3,096,900 2,988,300 

Federal administrative costs 203,453 202,847 205,365 207,938 210,568 212,256 214,003 216,811 

Interest on tax refunds 3,174 2,909 2,933 3,451 4,492 5,970 7,349 8,129 

Interest on General Fund advances                         ‐      ‐      300,000 1,600,000 2,800,000 2,800,000 2,500,000 2,100,000 

Railroad Retirement Board withdrawals 106,585 113,330 118,076 120,622 121,913 124,458 126,449 128,695 

Total cash outflow 57,589,212 68,323,086 99,110,374 115,223,811 77,350,623 72,956,934 73,498,701 68,865,935 Excess of total cash inflow excluding

interest over total cash outflow (12,756,412) (19,707,486) (43,037,774) (48,611,811) (2,298,823) 6,159,866 8,051,499 12,922,865 

Excess of total cash inflow over

total cash outflow (9,542,153) (17,278,375) (41,409,677) (47,587,442) (1,513,899) 6,989,598 9,101,640 14,235,282 

Balance, end of year $ 62,558,151 $ 45,279,776 $ 3,870,099 $ (43,717,343) $ (45,231,242) $ (38,241,644) $ (29,140,004) $ (14,904,722) $ 

Total unemployment rate 5.86% 7.30% 9.10% 10.14% 7.81% 7.26% 7.05% 6.43% 

FOR THE TEN YEAR PERIOD ENDING SEPTEMBER 30, 2018

(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)

270     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.    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, 2008 in descending order by ratio.  As

the table below illustrates, 29 state funds were below minimal solvency ratio at September 30, 2008.

Chart V

Minimally Solvent Not Minimally Solvent

State Ratio State Ratio

Wyoming   2.99 West Virginia 0.99

New Mexico 2.90 Delaware 0.93

Mississippi 2.84 Alabama 0.89

Utah 2.69 Maryland 0.89

Louisiana 2.59 Florida 0.88

Montana 2.49 Virginia 0.83

Oklahoma 2.42 Tennessee 0.72

Oregon 2.01 South Dakota 0.66

Washington 1.98 Illinois 0.64

Nebraska 1.95 Minnesota 0.57

Iowa 1.67 Texas 0.54

Maine 1.66 Idaho 0.53

North Dakota 1.62 Massachusetts 0.53

Hawaii 1.59 Virgin Islands 0.53

Arizona 1.54 Connecticut 0.51

Kansas 1.54 Pennsylvania 0.45

Alaska 1.47 Arkansas 0.39

District of Columbia 1.47 Wisconsin 0.37

Nevada 1.25 North Carolina 0.34

Puerto Rico 1.21 Kentucky 0.32

Vermont 1.19 Missouri 0.28

New Hampshire 1.14 New Jersey 0.28

Georgia 1.11 Rhode Island 0.28

Colorado 1.00 California 0.22

South Carolina 0.20

Ohio 0.19

New York 0.16

Indiana 0.12

Michigan 0.00
Annual Financial Statements

REQUIRED SUPPLEMENTARY INFORMATION

(Unaudited)

 FY 2008 Performance and Accountability Report   271

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, 2008, total liabilities of the Black Lung Disability Trust Fund exceeded assets by $10.4 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, 2008 were $10.5 billion, bearing interest rates ranging from 4.250 to 13.875

percent.  Excise tax revenues of $652.6 million, benefit payment expense of $267.0 million and interest expense of

$739.5 million were recognized for the year ended September 30, 2008.  

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, 2008 were $19.5 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‐two 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 $14.1 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‐two periods included in the projections.    Net cash

outflows after interest payments are projected to reach $53.1 billion by the end of the year 2040, increasing the

BLDTF’s deficit to $49.4 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, 2008, 2007, 2006, 2005, and 2004 are presented in the

Statement of Social Insurance.
Financial Section

REQUIRED SUPPLEMENTARY INFORMATION

(Unaudited)

272     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

2009 2013 2017 2021 2025 2029 2033 2037

$ - 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‐one 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 $11.9 billion by the year 2040.

        

Yearly cash inflows and outflows are presented in the table on the following page.

The Energy Improvement and Extension Act of 2008, enacted on October 3, extended the higher coal excise tax

rates for an additional five years from January 1, 2014 to December 31, 2018.    The Act also authorized the

refinancing of high interest rate Advances to U.S. Treasury and replaced them with lower interest rate zero coupon

bonds.  Additional income from the extension of the higher excise tax amounted to $1.8 billion.  The decrease in

effective interest payments amounted to $11.121 billion.  These changes resulted in a zero fund balance at the end

of the projection period.

Refer to Note 23 in the Notes to Consolidated Financial Statements for additional discussion regarding the effects of

the Act on the Trust Fund and the Statement of Social Insurance.
FY 2008 Performance and Accountability Report     273

(Dollars in thousands) 2009 2010 2011 2012 2013 2014 - 204Balance, start of year $ (10,439,186) (10,853,741) $ (11,266,163) $ (11,663,387) $ (12,051,321) $ (12,439,9

$ 

Cash inflow

Excise taxes 653,000 661,000 681,000 696,000 702,000 10,747,2

 

Total cash inflow 653,000 661,000 681,000 696,000 702,000 10,747,2

 

Cash outflow

Disabled coal miners benefits 253,173 236,527 220,378 204,798 189,845 2,066,6

 

Administrative costs 57,683 59,716 59,716 59,716 59,716 1,048,6

 

Cash outflows before interest payments 310,856 296,243 280,094 264,514 249,561 3,115,2

 

Cash inflow over cash outflow  before interest payments 342,144 364,757 400,906 431,486 452,439 7,631,9

 

Interest on advances 756,699 777,179 798,130 819,420 841,105 44,571,5

 

Total cash outflow 1,067,555 1,073,422 1,078,224 1,083,934 1,090,666 47,686,8

 

Total cash outflow over total cash inflow (414,555) (412,422) (397,224) (387,934) (388,666) (36,939,5

 

Balance, end of year $ (10,853,741) (11,266,163) $ (11,663,387) $ (12,051,321) $ (12,439,987) $ (49,379,5

$ 

U.S. DEPARTMENT OF LABOR

SUPPLEMENTARY SOCIAL INSURANCE INFORMATION

CASH INFLOW AND OUTFLOW OF THE BLACK LUNG DISABILITY TRUST FUND

FOR THE THIRTY-TWO YEAR PERIOD ENDING SEPTEMBER 30, 2040

Annual Financial Statements

REQUIRED SUPPLEMENTARY INFORMATION

(Unaudited)

 FY 2008 Performance and Accountability Report   275

STATEMENT OF BUDGETARY RESOURCES

The principal Statement of Budgetary Resources combines the availability, status and outlay of DOL’s budgetary

resources during FY 2008 and 2007.    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)

276     United States Department of Labor

COMBINING STATEMENT OF BUDGETARY RESOURCES

For the Year Ended September 30, 2008

Employment Employment Office

and Training Standards of 

(Dollars in thousands) Administration Administration Job Corps

BUDGETARY RESOURCES

Unobligated balance, brought forward, October 1 2,403,760 $ 1,837,745 $ $ - 

Recoveries of prior year unpaid obligations 358,350 11,401 - 

Budget authority

Appropriations received 52,202,263 3,075,668 1,626,855 

Borrowing authority 426,000 - - 

Spending authority from offsetting collections

Earned

Collected 2,645,916 74,527 371 

Change in receivables from Federal sources (844) - - 

Change in unfilled customer orders

Advance received 1,531 - - 

Without advance from Federal sources - - - 

Expenditure transfers from trust funds 3,436,272 34,783 - 

Total budget authority 55,713,062 6,183,054 1,627,226 

Nonexpenditure transfers, net (7,200) (674) (13,215) 

Temporarily not available pursuant to Public Law (62,962) (135,595) - 

Permanently not available (766,612) (11,546) (28,421) 

Total budgetary resources $ 57,638,398 7,884,385 $ 1,585,590 $ 

STATUS OF BUDGETARY RESOURCES

Obligations incurred

Direct $ 3,183,078 56,045,818 $ 1,026,949 $ 

Reimbursable 32,032 2,719,549 317 

Total obligations incurred 56,077,850 5,902,627 1,027,266 

Unobligated balances available

Apportioned 1,411,223 524,223 558,324 

Exempt from apportionment 239,306 - - 

Total unobligated balances available 524,223 1,650,529 558,324 

Unobligated balances not available 1,036,325 331,229 - 

Total status of budgetary resources $ 57,638,398 7,884,385 $ 1,585,590 $ 

CHANGE IN OBLIGATED BALANCE

Obligated balance, net 

Unpaid obligations, brought forward, October 1 8,370,953 $ 292,207 $ $ - 

Less uncollected customer payments from Federal sources, 

 brought forward, October 1 (1,242,900) (1,027) - 

Total unpaid obligated balance, net 7,128,053 291,180 - 

Obligations incurred, net 56,077,850 5,902,627 1,027,266 

Less gross outlays (55,951,639) (5,892,378) (755,877) 

Less recoveries of prior year unpaid obligations, actual (358,350) (11,401) -

Change in uncollected customer payments from Federal sources 66,456 844 -

Obligated balance, net, end of period

Unpaid obligations 8,138,814 291,055 271,389 

Less uncollected customer payments from Federal sources (1,176,444) (183) - 

Total unpaid obligated balance, net, end of period 6,962,370 $ 290,872 $ 271,389 $ 

NET OUTLAYS

Gross outlays 55,951,639 $ 5,892,378 $ 755,877 $ 

Less offsetting collections (3,577,254) (2,682,231) (371) 

Less distributed offsetting receipts (736,291) (4,589) - 

Net outlays 51,638,094 $ 3,205,558 $ 755,506 $ 
Annual Financial Statements

REQUIRED SUPPLEMENTARY INFORMATION

(Unaudited)

   

 FY 2008 Performance and Accountability Report   277

Occupational Bureau of Mine Safety Employee Benefits Veterans' Other

Safety and Health Labor and Health Security Employment Departmental

Administration Statistics Administration Administration and Training Programs Total

$ 9,060 16,286 $ 1,271 $ 16,976 $ 5,521 $ 21,162 $ 4,311,781 $ 

 7,506 8,309 5,719 1,797 989 24,124 418,195 

 476,861 494,641 339,862 141,790 31,522 394,540 58,784,002 

 - - - - - 426,000 - 

 5,584 2,354 1,408 12,460 124 204,692 2,947,436 

 14 - - - (3,166) - (3,996) 

 - - - - 781 - 2,312 

 - - - - - - -

 75,120 - - 195,247 - 30,965 3,772,387 

 557,565 497,009 341,270 154,250 226,893 627,812 65,928,141 

 (514) (1,035) (2,182) (177) 15,247 - (9,750) 

 - - - - - (198,557) - 

 (13,484) (11,090) (6,382) (3,334) (754) (11,283) (852,906) 

$ 562,527 507,085 $ 339,696 $ 169,512 $ 232,649 $ 677,062 $ 69,596,904 $ 

$ 547,532 491,592 $ 337,062 $ 154,382 $ 228,869 $ 442,017 62,457,299 $ 

 5,565 1,483 1,169 12,130 209,932 - 2,982,177 

 553,097 493,075 338,231 166,512 228,869 651,949 65,439,476 

 15 29 - 33 49 5,376 2,499,272 

 - - - - 93 - 239,399 

 15 29 - 33 49 5,469 2,738,671 

 13,995 9,430 1,436 2,967 3,731 19,644 1,418,757 

$ 562,527 507,085 $ 339,696 $ 169,512 $ 232,649 $ 677,062 $ 69,596,904 $ 

$ 75,289 95,692 $ 48,610 $ 40,172 $ 56,100 $ 390,505 $ 9,369,528 $ 

 (8,099) - - - (9,342) - (1,261,368) 

 75,289 87,593 48,610 40,172 56,100 381,163 8,108,160 

 553,097 493,075 338,231 166,512 228,869 651,949 65,439,476 

 (546,931) (493,520) (346,743) (154,261) (222,385) (663,876) (65,027,610) 

 (7,506) (8,309) (5,719) (1,797) (989) (24,124) (418,195) 

 (14) - - - 10,731 - 78,017 

 73,949 86,938 34,379 50,626 61,595 354,454 9,363,199 

 (8,113) - - - 1,389 - (1,183,351) 

$ 73,949 78,825 $ 34,379 $ 50,626 $ 61,595 $ 355,843 $ 8,179,848 $ 

$ 546,931 493,520 $ 346,743 $ 154,261 $ 222,385 $ 663,876 $ 65,027,610 $ 

 (80,704) (2,354) (1,408) (12,460) (195,370) (236,438) (6,788,590) 

 - - - - - (740,880) - 

$ 466,227 491,166 $ 345,335 $ 141,801 $ 27,015 $ 427,438 $ 57,498,140 $ 
Financial Section

REQUIRED SUPPLEMENTARY INFORMATION

(Unaudited)

278     United States Department of Labor

COMBINING STATEMENT OF BUDGETARY RESOURCES

For the Year Ended September 30, 2007

Employment Employment Occupational

and Training Standards Safety and Health

(Dollars in thousands) Administration Administration Administration

BUDGETARY RESOURCES

Unobligated balance, brought forward, October 1 2,387,191 $ 1,715,502 $ 21,835 $ 

Recoveries of prior year unpaid obligations 160,292 9,100 8,739 

Budget authority

Appropriations received 52,188,334 2,903,394 486,925 

Borrowing authority 426,000 - - 

Spending authority from offsetting collections

Earned

Collected 74,576 2,501,508 2,766 

Change in receivables from Federal sources (1) (2,564) (1,027) 

Change in unfilled customer orders

Advance received 2,907 - - 

Without advance from Federal sources - - - 

Expenditure transfers from trust funds 3,328,586 35,620 - 

Total budget authority 56,017,495 5,440,865 488,664 

Nonexpenditure transfers, net (822,728) 425,460 (1,589) 

Temporarily not available pursuant to Public Law (8,454,205) (19,799) - 

Permanently not available (105,951) (2,804) (7,243) 

Total budgetary resources $ 7,568,324 49,182,094 $ 510,406 $ 

STATUS OF BUDGETARY RESOURCES

Obligations incurred

Direct 46,722,026 $ 3,108,239 $ 492,669 $ 

Reimbursable 56,308 2,622,340 1,451 

Total obligations incurred 46,778,334 5,730,579 494,120 

Unobligated balances available

Apportioned 1,000,005 1,414,932 58 

Exempt from apportionment 178,811 - - 

Total unobligated balances available 1,000,005 1,593,743 58 

Unobligated balances not available 1,403,755 244,002 16,228 

Total status of budgetary resources $ 7,568,324 49,182,094 $ 510,406 $ 

CHANGE IN OBLIGATED BALANCE

Obligated balance, net 

Unpaid obligations, brought forward, October 1 8,004,128 $ 295,434 $ 85,115 $ 

Less uncollected customer payments from Federal sources, 

 brought forward, October 1 (1,208,324) (5,618) (9,126) 

Total unpaid obligated balance, net 6,795,804 289,816 75,989 

Obligations incurred, net 46,778,334 5,730,579 494,120 

Less gross outlays (46,251,217) (5,724,706) (474,804) 

Less recoveries of prior year unpaid obligations, actual (160,292) (9,100) (8,739) 

Change in uncollected customer payments from Federal sources (34,576) 4,591 1,027 

Obligated balance, net, end of period

Unpaid obligations 8,370,953 292,207 95,692 

Less uncollected customer payments from Federal sources (1,242,900) (1,027) (8,099) 

Total unpaid obligated balance, net, end of period 7,128,053 $ 291,180 $ 87,593 $ 

NET OUTLAYS

Gross outlays 46,251,217 $ 5,724,706 $ 474,804 $ 

Less offsetting collections (3,368,584) (2,542,063) (2,766) 

Less distributed offsetting receipts (761,562) (6,388) (170) 

Net outlays 42,121,071 $ 3,176,255 $ 471,868 $ 
Annual Financial Statements

REQUIRED SUPPLEMENTARY INFORMATION

(Unaudited)

   

 FY 2008 Performance and Accountability Report   279

Bureau of Mine Safety Employee Benefits Veterans' Other

Labor and Health Security Employment Departmental

Statistics Administration Administration and Training Programs Total

$ 22,740 9,057 $ 2,077 $ 2,848 $ 35,036 $ 4,196,286 $ 

 2,971 7,130 2,798 4,428 25,215 220,673 

 301,570 471,056 141,573 29,244 399,705 56,921,801 

 - - - - 426,000 - 

 1,322 6,636 11,142 65 189,572 2,787,587 

 (15) - - (1,687) - (5,294) 

 - - - (3,126) - (219) 

 - - - - - -

 75,930 - 193,945 - 31,461 3,665,542 

 302,877 553,622 152,715 223,254 615,925 63,795,417 

 (147) (244) 6,849 2,772 - (389,627) 

 - - - - (8,474,004) - 

 (628) (2,505) (1,163) (1,334) (10,563) (132,191) 

$ 567,060 327,813 $ 163,276 $ 229,196 $ 668,385 $ 59,216,554 $ 

$ 325,427 551,634 $ 135,303 $ 223,675 $ 461,098 $ 52,020,071 $ 

 1,115 6,366 10,997 186,125 - 2,884,702 

 326,542 558,000 146,300 223,675 647,223 54,904,773 

 170 305 14,098 677 10,744 2,440,989 

 - - - 137 - 178,948 

 170 305 14,098 677 10,881 2,619,937 

 1,101 8,755 2,878 4,844 10,281 1,691,844 

$ 567,060 327,813 $ 163,276 $ 229,196 $ 668,385 $ 59,216,554 $ 

$ 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 

 326,542 558,000 146,300 223,675 647,223 54,904,773 

 (299,028) (549,681) (147,149) (223,258) (665,173) (54,335,016) 

 (2,971) (7,130) (2,798) (4,428) (25,215) (220,673) 

 15 - - 4,427 - (24,516) 

 48,610 75,289 40,172 56,100 390,505 9,369,528 

 - - - (9,342) - (1,261,368) 

$ 48,610 75,289 $ 40,172 $ 56,100 $ 381,163 $ 8,108,160 $ 

$ 299,028 549,681 $ 147,149 $ 223,258 $ 665,173 $ 54,335,016 $ 

 (1,322) (82,566) (11,142) (194,010) (217,907) (6,420,360) 

 (49) (12) (24,168) (2,662) - (795,011) 

$ 467,103 297,657 $ 111,839 $ 29,248 $ 444,604 $ 47,119,645 $ 

 FY 2008 Performance and Accountability Report   281

Other Accompanying Information
Other Accompanying Information

282     United States Department of Labor

Summary of Financial Statement Audit and Management Assurances

The following tables provide a summary on the Department’s financial statement audit and its management

assurances.

Summary of Financial Statement Audit

Audit Opinion Unqualified

Restatement   No

Material Weaknesses   Beginning

Balance

New Resolved Consolidated Ending

Balance

Total Material Weaknesses   0 0 0 0 0

Summary of Management Assurances

Effectiveness of Internal Control over Financial Reporting (FMFIA § 2)

Statement of Assurance   Unqualified

Material Weaknesses   Beginning

Balance  

New   Resolved   Consolidated   Reassessed   Ending

Balance  

Total Material Weaknesses   0 0 0 0 0 0

Effectiveness of Internal Control over Operations (FMFIA § 2)

Statement of Assurance   Unqualified

Material Weaknesses   Beginning

Balance  

New   Resolved   Consolidated   Reassessed   Ending

Balance  

FISMA access control and

information security 1

   

1

    

Total Material Weaknesses   1 0 1 0 0 0

Conformance with financial management system requirements (FMFIA § 4)

Statement of Assurance   Systems conform to financial management system requirements  

Non‐Conformances   Beginning

Balance  

New   Resolved   Consolidated   Reassessed   Ending

Balance  

Total non‐conformances   0 0 0 0 0 0

Compliance with Federal Financial Management Improvement Act (FFMIA)

Agency Auditor  

Overall Substantial Compliance   Yes   Yes  

     1. System Requirements   Yes Yes  

     2. Accounting Standards   Yes Yes  

     3. USSGL at Transaction Level   Yes Yes  
Improper Payment Information Act Reporting Details

 FY 2008 Performance and Accountability Report   283

Improper Payments Information Act Reporting Details

The Improper Payments Information Act (IPIA) of 2002, as implemented by OMB Circular A‐123, Appendix C,

Requirements for Effective Measurement and Remediation of Improper Payments, requires federal agencies to

review their programs and activities annually, identify programs that may be susceptible to significant improper

payments, perform testing of programs considered high risk, and develop and implement corrective action plans for

high risk programs.   

The Department’s risk assessment for FY 2008 identified one program—the Unemployment Insurance (UI) benefit

program—to be at risk of significant improper payments in accordance with OMB criteria (programs with annual

improper payments exceeding both $10 million and 2.5 percent of annual program payments). However, two other

programs, the Federal Employees’ Compensation Act (FECA) benefit program, and the Workforce Investment Act

(WIA) grant program, were classified as high risk in former Section 57 of OMB’s Circular A‐11 (now A‐123, Appendix

C), although the Department’s risk assessment did not support such a high risk designation.  

In FY 2008, the Department performed detailed testing for the UI, FECA and WIA programs, to identify improper

payments and their major causes. The Department has corrective actions to address the causes and reduce

improper payments in each of these programs and has established improper payment reduction targets in

accordance with OMB guidance. Additionally, in FY 2008 a recovery audit was performed to identify FY 2007

improper contractor payments.  The recovery audit did not disclose any improper payments.

The Department met its improper payments reduction targets.  The table below provides the resulting improper

payments error rates based on the detailed testing for the three programs designated as high risk.

Table 1: Estimated Improper Payments Rates for the Department’s At Risk Programs  

DOL Program FY 2006 FY 2007 FY 2008

Unemployment Insurance 10.7% 10.3% 10.0%

Federal Employees’ Compensation Act .03% .01% 0.02%

Workforce Investment Act .17% .08% .07%

I. Risk Assessment

The Department’s FY 2008 risk assessment of its various programs included the following:

• Reviewed prior three year’s results of IPIA risk assessments and detailed tests.  In addition to testing the

three programs designated as high risk (UI, FECA, and WIA), DOL performed detailed testing on all its other

significant programs in each of last 4 years. These programs included Black Lung Disability Trust Fund,

Energy Employees Occupational Illness Compensation Program, State Unemployment Insurance and

Employment Service Operations, Payroll Costs and Non Payroll Costs.  The results of this detailed testing

showed that these programs were low risk.

• Reviewed DOL OIG and Government Accountability Office (GAO) audit reports issued for DOL programs to

determine whether the reports indicate that control weaknesses or other issues could potentially impact

the amount improper payments for DOL programs.

• Reviewed results of the Department’s OMB Circular A‐123 internal control assessment to determine

whether control weaknesses were identified that could potentially impact the amount of improper

payments for DOL programs.  

• Reviewed DOL programs’ funding levels for FY 2008 for significant changes in program funding that may

impact the amount of improper payments.
Other Accompanying Information

284     United States Department of Labor

As noted previously, the risk assessment for FY 2008 identified the Unemployment Insurance benefit program to be

at risk of significant improper payments.  The Federal Employees’ Compensation Act benefit program and the

Workforce Investment Act grant program are also classified as high risk because they were designated as high risk

in former Section 57 of OMB’s Circular A‐11 (now A‐123, Appendix C).

Table 2: Department of Labor's High Risk Programs

DOL Program Risk Reason for High Risk Classification

Unemployment Insurance High Exceeds OMB Threshold; Designated High Risk

Program by former Section 57  

Federal Employees’ Compensation Act High Designated High Risk Program by former Section 57

Workforce Investment Act High Designated High Risk Program by former Section 57

II. Statistical Sampling

The following sampling was performed for the three programs designated as high risk:  

Unemployment Insurance

Sampling Methodology:  Improper payment rates are obtained from the Benefit Accuracy Measurement (BAM)

program.  BAM 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)2

,

Unemployment Compensation for Federal Employees (UCFE), and Unemployment Compensation for Ex‐Service

Members (UCX).  The Department reports two overpayment rates, as well as an underpayment rate from the BAM

results.  The Annual Report Overpayment Rate is a comprehensive estimate of those UI payments that were either

paid the wrong amount or were improperly paid based on UI eligibility provisions in state law and policy.  The

second overpayment rate, the Operational rate, includes only those overpayments that states are most likely to

detect and establish for recovery and return to the Unemployment Trust Fund through ordinary improper payment

detection and recovery procedures, known as Benefit Payment Control (BPC).   

BAM reconstructs the UI claims process for randomly selected weekly samples of paid and denied claims through

original fact finding conducted 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.  Effective January 2008, all paid

claims sampled for BAM investigation must be matched with the National Directory of New Hires (NDNH) database

to improve the ability to detect overpayments due to individuals who claim benefits after returning to work, the

largest single cause of UI overpayments.

Using the same methodology applied to paid claims, BAM Denied Claim Accuracy assesses the accuracy of decisions

to deny eligibility for UI that were made at the monetary, separation, and continuing eligibility levels of the claims

taking process.

 

2 Included in the UI program are the 50 states and Puerto Rico, US Virgin Islands and the District of Columbia (referred to as

states/areas).  The US Virgin Islands does not participate in BAM.   
Improper Payment Information Act Reporting Details

 FY 2008 Performance and Accountability Report   285

Sample Selection:  The universe (population) includes paid and denied claims under the State UI, UCFE, and UCX

programs, which collectively account for approximately 95 percent of the outlays of the permanent UC programs in

an average year.  Data on overpayment and underpayment rates for FY 2008 shown in the Improper Payment

Reduction Outlook Table are for the period July 1, 2007, to June 30, 2008.  Data are shown for this period rather

than the Fiscal Year because a higher percentage of BAM investigations have been completed and will, therefore,

produce more accurate estimates.  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 at least 95 percent of the cases

within 90 days. For the period July 1, 2007, to June 30, 2008 state agencies completed audits for over 24,600 paid

claims cases, a completion rate of 99.8 percent.  For Denied Claims Accuracy (DCA) over the same period, states

completed audits for 23,500 denied UI claims, a completion rate of 99.8 percent.

Workforce Investment Act  

Sampling Methodology:  The Department used a separate methodology to assess the risk of improper payments in

the WIA grant program because grant programs are administered differently than benefit programs.  Unlike the

benefit programs, data are not readily available to allow the Department to directly sample grant payments to

develop a statistically valid estimate of improper payments.  This is because the grant programs’ funding stream

makes it very difficult to assess the improper payment rate on payments to final recipients.  The Department

provides grants to states, cities, counties, private non‐profits, and other organizations to operate programs, and

relies significantly on Single Audit Act Reports (as required by the Single Audit Act of 19963

) to monitor funding to

all grant recipients.  Based on a review of the definition of questioned costs in OMB Circular A‐133 and OMB's IPIA

implementation guidance, the Department determined that questioned costs can be used as a proxy for improper

payments.  Therefore, these Single Audit Act Reports were utilized to determine the improper payment rate for the

WIA grant program.  

  

The Department reviewed FY 2006 Single Audit Act Reports with Department of Labor‐related findings from the

Federal Audit Clearinghouse (which is the national repository of Single Audit Act Reports) and identified all WIA

program questioned costs included in such reports.  FY 2006 reports were the most recent reports available for

review.  As additional evidence that no other audit reports included questioned costs for the DOL grants programs,

the Department selected and reviewed random samples of audit reports classified in the Clearinghouse database as

not having any questioned costs.  To determine an approximate rate of improper payments for the grant programs,

the Department divided the amount of questioned costs by the direct program outlays from the FY 2006 Single

Audit Act Reports.  The resulting improper payment rate (assumed to be representative of the FY 2008 rate) was

applied to the WIA program outlays for FY 2008 to determine the estimated improper payment amount for FY

2008.

  

Sample Selection:  The universe consisted of all FY 2006 Single Audit Act Reports covering DOL’s grants from the

Census Bureau’s Federal Audit Clearinghouse. The Department stratified this universe of audit reports into four

strata or categories based on criteria contained in the Clearinghouse database. The four strata were:

• Stratum #1: Audit reports in which the WIA grant program was audited as a major program and the report

identified questioned costs for one or more federal programs (not necessarily the WIA grant program).

• Stratum #2: Audit reports in which the WIA grant program was audited as major program and the report

identified a reportable condition but no questioned costs for one or more federal programs (not necessarily

the WIA grant program).

 

3 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.
Other Accompanying Information

286     United States Department of Labor

• Stratum #3: Audit reports in which the WIA grant program was audited as major program and the report

identified no questioned costs or reportable conditions for any federal program, including the WIA grant

program.

• Stratum #4: Audit reports in which the grants programs were audited as a non‐major program.  

For strata #1, the Department reviewed 100 percent of the audit reports from the Clearinghouse database to

determine whether the WIA grant program was among those reported to have questioned costs. For strata #2, #3

and #4, the Department reviewed random samples of the audit reports from the Clearinghouse database.

Federal Employees' Compensation Act

Sampling Methodology:  A Monetary Unit Sampling approach was applied to estimate improper payments for both

medical bill payments and compensation payments.  For medical payments, sampling was designed to test payment

issues such as duplicate payments, appropriate receipts, consistency with regional allowances, payments made for

appropriate procedures, and eligibility at date of service.  The compensation payment sampling was designed to

test payment issues such as consistency with identified injury, current medical evidence supporting continued

compensation payments, eligibility requirements, and calculations of compensation amounts.

Sample Selection:  The population of the FECA compensation and medical payments from which the sample was

selected included payments made during the period July 1, 2007 through June 30, 2008.  The population was

stratified for compensation payments and medical payments.  A sample of 264 items was selected and tested.

III. Corrective Actions

Unemployment Insurance

The Department's analytical studies indicate that earlier detection of recoverable overpayments is the most cost‐

effective way to address improper payments.  The leading cause of overpayments is claimants who have returned

to work and continue to claim UI benefits.  Early detection of these overpayments ‐‐ which represented over 30

percent of all overpayments in FY 2008 ‐‐ allows agencies to stop payments sooner and to recover these

overpayments more readily.  Matching the Social Security Numbers (SSNs) of UI claimants with the National

Directory of New Hires (NDNH) database is the most effective tool in identifying these improper payments.  All

states/areas were required to use NDNH crossmatches as part of their BAM programs by January 1, 2008.  As of

September 30, 2008, 48 states/areas have implemented NDNH matching, and three others have signed the

computer‐matching agreement with the Department of Health and Human Services (HHS), which maintains the

NDNH database and are in the process of completing the work required to connect with the NDNH.  The

Department has requested that the remaining two state agencies complete their computer‐matching agreements

and provide a plan of action to meet the NDNH matching requirements.   The Department estimates that the 48

states/areas matching UI beneficiaries with the NDNH, together with the four states/areas matching with their

State Directory of New Hires (SDNH), prevented approximately $93 million of overpayments in the current fiscal

year.   

The second largest cause of overpayments is errors in handling separation issues, which represented nearly 25

percent of all overpayments in FY 2008.  To reduce improper payments due to separation issues, the Department

has two efforts underway.  First, the Department is working closely with a five‐state consortium and its contractor

to facilitate the design and implementation of the Separation Information Data Exchange System (SIDES) ‐‐ an

automated employer response system to standardize the collection of information on employee separations from

employers and third‐party administrators (TPAs) to improve the accuracy of claimant eligibility determinations.  

Currently, system development is underway and is scheduled for testing in mid‐FY 2009.  Second, funding has been

provided to states to support the training of approximately 400 state adjudicators.  These training sessions are

designed to improve claimant eligibility determinations and thus reduce improper payments that result from
Improper Payment Information Act Reporting Details

 FY 2008 Performance and Accountability Report   287

nonmonetary determination errors.  Through the third quarter of FY 2008, 360 staff have been trained, and an

additional 40 staff will be trained at the session to be conducted before the end of calendar year 2008.  

Most of the improper UI payments not caused by benefit year earnings or separation errors are due to the claimant

not meeting one or more of the continued eligibility requirements, including conducting an active work search,

registering with the state employment service, and being able and available for work.   In FY 2005, the Department

began providing states funds to conduct Reemployment and Eligibility Assessment (REAs) with UI beneficiaries to

reduce improper payments both by speeding claimants' return to work and by detecting and preventing eligibility

violations.  For FY 2008, the original 19 participating states received REA grants, funded at the previous fiscal year

level.  Because additional funds requested were not appropriated, the number of states receiving REA grants could

not be expanded.

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, including

pharmaceuticals, 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.  

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 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.

 

4 OWCP oversees the administration of the Federal Employees' Compensation program.
Other Accompanying Information

288     United States Department of Labor

• 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. That percentage is expected to grow in the

future. To improve the quality of the claims record which is the basis for payment calculation, employing

agency access to claims information was enhanced so they can access the details of a payment on‐line and

discover any flaws in the data they submitted.

• The FECA program samples compensation and medical payments during biennial accountability reviews to

minimize erroneous payments and identify potential program weaknesses.  Regular reviews of the accounts

receivable system are conducted to ensure that debt collection efforts are maximized.  Medical bill

payment reports and reviews of the utilization of high‐cost/high‐incidence medical services for

appropriateness are conducted by the program.  The program also makes use of the Periodic Entitlement

Review (PER) system in iFECS to review and track long‐term disability cases.

• The FECA program is pursuing improved safeguards against improper payments with ongoing

enhancements to its IT system, iFECS.  The program has instituted advanced edit checks and certification

processes in the Compensation and Case Management applications that will minimize the FECA program’s

improper payments.  Beginning in FY 2008, a new quarterly performance measure was established to track

timely debt identification and processing and elevated the review of district office overpayment

performance to the FECA National Office.  

• The program continues to develop and promote technology adoption by the employing agencies to

improve and speed data sharing that will help reduce the incidence of improper payments when claimants

return to work. The program is in the process of developing a number of new data sharing ventures that

will help agencies verify payment information to ensure accuracy of those payments. The program

continues to pursue expanded statutory authority for employment and benefit data matching

arrangements.   

• The program is developing new training capacities to reduce and minimize the impact of improper

payments by improving claims adjudication and compensation payment performance across the program,

as well as providing claims examiner training that targets improved improper payment identification,

processing and collection.

  

Workforce Investment Act

The improper payment rate estimate work indicated that the major types of errors found in the WIA program are

non‐compliance with WIA regulations and internal control weaknesses.  The grant management and monitoring

processes focus on both of these items.  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 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 three 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 activities 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
Improper Payment Information Act Reporting Details

 FY 2008 Performance and Accountability Report   289

catalogued in the GEMS system.  ETA now has the capability to review trends or issues that arise in a more

comprehensive and consistent 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.

The ETA Division of Policy Review and Resolution processes each grant at closeout, reviewing final grantee reports, the

grant closeout package, FPO recommendations, and other documents available to them to determine whether the

objectives of the grant were accomplished and that all funds were expended as authorized.  Any expenditures which are

questioned are resolved through the normal determination process and disallowed costs are forwarded for collection.  

The Audit Resolution staff receives grantee A‐133 audit reports which report questioned costs and/or administrative

weaknessesin need of correction.  These items are followed up using the same determination process noted above,

disallowed costs are forwarded for collection, and resolution reported back to the OIG.  In addition, these units

participate in special grantee reviews and provide fiscal policy training for grantee and federalstaff.

IV. Improper Payment ReductionOutlook FY 2007– FY 2011 ($ in millions)   

Program FY 2007 FY 2008 FY 2009 FY 2010 FY 2011

Outlays % $ Outlays % $ Est

Outlays

% $ Est

Outlays

% $ Est

Outlays

% $

Unemployment

Insurance $31,530

    

$39,123 $45,508

  

$44,374

    

$43,686

Operational Rate    5.95% $1,876 5.49% $2,148 5.5% $2,503 5.4% $2,396 5.3% $2,315

Annual Report Rate

Over‐ payment

    

9.71%

  

$3,062 9.25% $3,619 9.25% $4,209

    

9.15% $4,060 9.05% $3,954

         Underpayment    0.59% $186 0.71% $278 0.71% $323 0.71% $315 0.71% $310

          

Federal Employees

Compensation Act

$2,654 0.1% $2.6 $2,737 0.02% $0.5 $2,732 0.02% $.5 $2,792 0.02% $.6 $2,854 0.02% $.6

        

Workforce

Investment Act

$3,606 0.08% $2.9 $3,547 0.07% $2.5 $3,551 0.07% $2.5 $3,017 0.07% $2.1 $2,954 0.07% $2.1

Note:  The rates were determined as described in the preceding pages and applied to the outlays for the fiscal year.

Recovery of Improper Payments

State Benefit Payment Control operations identify UI overpayments for recovery through such methods as

crossmatching claimant SSNs with State and National Directories of New Hires, wage record files submitted each

quarter by employers, matches with other databases, such as Workers Compensation and State Corrections, and

other sources such as appeals, reversals and tips and leads.  States collect overpaid claims through offsets of UI

benefits, state income tax offsets, and direct cash reimbursement from the claimant.  The FECA program identifies

overpayments for recovery through such methods as crossmatching claimant SSNs with Social Security

Administration databases, beneficiary or survivor reporting, and internal reviews of payments.  The identification of

overpayments for recovery for the WIA program is primarily done through the Single Audit Act reports and Office of

Inspector General (OIG) and Government Accountability Office (GAO) program audits  From FY 2004 through FY

2008 approximately $2,627 million has been recovered.
Other Accompanying Information

290     United States Department of Labor

V. Recovery Auditing  

Recovery auditing is a control technique to identify improper contractor payments and initiate recovery actions

where appropriate.  Recovery auditing involves data analysis and detailed reviews of the documentation supporting

contract payments, including purchase orders, invoices, vendor statements/correspondence, procurement records,

contracts, contract modifications, payment transaction records, etc.  

Prior to FY 2008 the Department performed statistical sampling of non‐payroll costs consisting of department

expenses, including contract payments, related to the operation and administration of programs' and headquarters'

activities.  Such testing found no improper payments among the contract payments.  In FY 2008, the department

performed a recovery audit of the contract payments made during FY 2007.  The work was performed by an

independent contractor under a contingency fee arrangement.  The contract auditor performed an analysis of the

payment database and reviewed supporting documentation for various selected payments.  The contract auditor

examined over 80,000 payments covering approximately $1.75 billion.  Excluded from the contractors review were

payments to other Federal departments and payments for travel reimbursements to and on behalf of employees.  

The contract auditor did not identify any improper payments. The auditor made several suggestions regarding

future recovery audits which management will evaluate.

    (in millions)

Agency Amount Subject to

Review  

Actual Amount

Reviewed  

Amounts Identified

for Recovery  

Amounts

Recovered  

DOL $1,751 $1,751 $0 $0

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

supports 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.  

Employment and Training Administration (ETA), is responsible for Federal oversight of state unemployment

insurance (UI) programs, including oversight of state activities to reduce and recover improper UI benefit payments.  

ETA has taken/continues to take the following steps to hold Federal managers accountable for reduction and

recovery of improper UI payments by states.   

• ETA requires states to measure and report the percent, dollar amount, and reasons for improper payments.  

These data are derived from investigations of a statistically valid sample of payments using Federally

prescribed procedures. ETA reviews these data for validity, analyzes data for each state, and makes the

data available publicly.  Data review, analysis and publication are included in the performance plan of the

Administrator of ETA’s Office of Workforce Security (OWS) and in the elements and standards of numerous

staff in that office.  

• In 2005, ETA implemented a core performance measure for detection of overpayments by state UI

programs.  States that fail to meet the performance criterion submit corrective action plans.  Development
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 FY 2008 Performance and Accountability Report   291

and implementation of this measure were included in OWS managers’ performance plans; analysis and

monitoring states’ corrective actions continues to be an evaluation factor.

• ETA has promoted and continues to promote cost effective methods for states to prevent, detect, and

recover improper UI benefit payments.  Development, delivery, and/or successful implementation of these

initiatives by states have been and continue to be factors on which the OWS administrator and managers

are evaluated.  A few of the most noteworthy are described below:

• National Directory of New Hires: Facilitating the state roll‐out of the NDNH crossmatch to address

the largest cause of UI improper payments – earnings while benefits are being paid.  The

Department’s activities are discussed in Section III (Corrective Actions).

• National Integrity Conference:  In order to provide a forum for disseminating successful practices

for preventing, detecting and recovering UI overpayments, the Department in partnership with the

National Association of State Workforce Agencies sponsored the National Unemployment

Insurance Integrity Professional Development Conference in April 2008.

• Adjudication Training Sessions:  In order to improve the quality and accuracy of initial UI eligibility

determinations, five training sessions were completed in 2007 with 200 state staff trained, and an

additional 200 are expected to be trained in 2008.

• Separation Information Data Exchange System: This initiative will improve the accuracy of claimant

eligibility determinations, which is the second largest cause of improper payments by enabling

state agencies to obtain more timely and complete information regarding the reasons that UI

applicants were separated from work.  The Department’s activities are discussed in Section III

(Corrective Actions).  

• Unemployment Compensation Integrity Act of 2008:  A significant provision in this set of legislative

proposals would authorize recovery of improper UI payments from Federal income tax refunds—

increasing recoveries substantially.  A modified version of that provision (limited to certain fraud

improper payments) was enacted on September 30, 2008 in the “SSI Extension for Elderly and

Disabled Refugees Act” (P.L. 110‐328).  Action steps involved in implementation will be included in

managers’ performance standards.

In FY 2009, OWS will also focus on the following integrity related activities and ensure the annual performance

standards for managers include the completion of significant milestones for the projects listed below:

• The Department will continue its outreach efforts and provide technical assistance to the remaining

states/areas not yet matching with NDNH.

• Plan and conduct the FY 2009 Unemployment Insurance National Benefits and Adjudication Forum in

April 2009.  This forum will showcase best practices in UI benefits, management, and training.   

• Contingent on FY 2009 appropriations, expand Reemployment and Eligibility Assessment (REA)

initiatives designed to reduce improper payments of UI benefits and promote quicker reemployment.  

As part of its monitoring and oversight responsibilities of the State's UI operations, the Department takes an

active role in facilitating and promoting strategies to reduce improper payments and meet the payment

accuracy and recovery targets set by the Office of Management and Budget.  However, it should be noted that

these strategies require the cooperation and implementation by individual states, including changes to state

laws and regulations.  The Department has no explicit authority over how states establish priorities in

administering their UI programs and, therefore, can only make recommendations and provide technical

assistance in the use of these strategies.

Beginning in FY 2008, a new FECA quarterly performance measure was established to track timely debt

identification and processing and elevated the review of district office overpayment performance to the FECA

National Office.  The program is also developing new training capacities to reduce and minimize the impact of

improper payments by improving claims adjudication and compensation payment performance across the

program, as well as providing claims examiner training that targets improved improper payment identification,
Other Accompanying Information

292     United States Department of Labor

processing and collection. Managers’ performance standards address meeting quarterly performance

measures, operational plan targets, and implementation of corrective plans to successfully resolve issues,

missed targets, and audit findings pertaining to timely and accurate payments, reduction of improper

payments, and collection and management of debt.

ETA has revised and expanded its training for grant managers and is currently implementing an expansion of its

grant electronic management system (GEMS) to include all WIA grants.  GEMS tracks the grant managers’ grant

review actions and provides the grant manager financial and other information useful in managing the grants.  

The ETA Division of Policy Review and Resolution hasrequirementsin its closeout grant officer performance

standardsrelating to the requirement to follow‐up on Single Audit Act, OIG or GAO audit findings and questioned

costsrelating to WIA grants, and the Director of the Office of Grant and Contract Management has overall

responsibility for ensuring that these procedures are followed.

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 NDNH and the Social Security

Administration.  Forty‐eight states/areas are now using the NDNH; two other state agencies have signed the

computer‐matching agreement with HHS that is the prerequisite to connecting with the NDNH; and the remaining

three states/areas are in the planning stage for implementing NDNH.

Federal Employees' Compensation Act

The Office of Worker's Compensation Programs (OWCP) has deployed an integrated FECA management information

and compensation benefit system that will enhance both compensation payment accuracy and medical bill

processing accuracy.  The FY 2009 budget request for this system includes resources for enhanced tracking of

improper payments that will improve the ability to analyze potential improper payments.

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).  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.  The combination of the two is part of the cradle‐to‐grave E‐grants solution for the entire

Department.  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.  
Improper Payment Information Act Reporting Details

 FY 2008 Performance and Accountability Report   293

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 data 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 on June 2, 2008, as a result of

the President’s 2009 budget request, 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 percent of all recovered overpayments to augment Benefit Payment Control (BPC)

activities, (b) to use up to 25 percent of certain fraud overpayments recovered or delinquent contributions

collected by a collection agency to be retained by that agency, and (c) to use up to 5 percent of delinquent 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 percent 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, missing or

incomplete response — caused an overpayment, and would allow the recovery of benefit overpayments,

delinquent taxes, and associated unpaid penalties and interest by intercept of certain 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.  

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. The 2009 Budget

includes a proposal for legislative reform that would authorize regular database matching with SSA to identify

unreported work earnings and receipt of Federal Employees’ Retirement System (FERS) retirement benefits.

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).  For example, complete and timely information

for some UI claimants is not entered into the Employment Service (ES) database.  Overpayments for these

claimants, who are not considered to be “actively” registered with the ES database, accounted for approximately

0.9 percent of UI payments and nearly 10 percent of all overpayments in FY 2008.  Other eligibility issues were

detected after the period of time permitted by state law to establish an overpayment for recovery.  About one‐

fourth of all UI overpayments are not subject to recovery, a typical criterion in other public programs.  The

Department also regularly monitors the fraud rate which is 2.6 percent of UI benefits paid in FY 2008.

Annual Financial Statements 

REQUIRED SUPPLEMENTARY INFORMATION 

(Unaudited) 

Appendices
Appendices

296     United States Department of Labor

1. Acronyms

ACSI American Customer Satisfaction Index

BLS   Bureau of Labor Statistics

CAM Cost Analysis Manager

CFO   Chief Financial Officer

CY   Calendar Year

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

ERISA   Employee Retirement Income Security

Act

ESA   Employment Standards Administration

ETA   Employment and Training Administration

   

FASAB   Federal Accounting Standards Advisory

Board

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

Program

ILAB   Bureau of International Labor Affairs

IPIA Improper Payments Information Act

IRS   Internal Revenue Service

IT   Information Technology

LMRDA   Labor‐Management Reporting and

Disclosure Act

LPD   Lost Production Days

LVER   Local Veterans’ Employment

Representative

MSHA   Mine Safety and Health Administration

OASAM   Office of the Assistant Secretary for

Administration and Management

OASP Office of the Assistant Secretary for

Policy

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

OPA   Office of Public Affairs

OSHA   Occupational Safety and Health

Administration

OWCP   Office of Workers’ Compensation

Programs

PART Program Assessment Rating Tool

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
Appendices

FY 2008 Performance and Accountability Report     297

2. Internet Links

Employment Information (For Workers and Employers)

America’s Career InfoNet http://www.acinet.org/acinet/

Occupational Outlook Handbook http://www.bls.gov/oco/

Job Corps http://jobcorps.dol.gov/

DOL Jobs http://www.dol.gov/dol/jobs.htm

DisabilityInfo.gov http://www.disabilityinfo.gov/

Job Accommodation Network (JAN) http://www.jan.wvu.edu/

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/contacts/state_of.htm

Minimum Wage Q&A http://www.dol.gov/esa/minwage/q‐a.htm

Fair Labor Standards Act http://www.dol.gov/compliance/laws/comp‐flsa.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 (SIC) 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

MSHA's National Hazard Reporting Page http://www.msha.gov/codeaphone/codeaphonenew.htm

Labor Department History

History at the Dept of Labor http://www.dol.gov/oasam/programs/history/main.htm

Annals of the Dept of Labor http://www.dol.gov/oasam/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/