U.S. Department of Labor 

FY 2004 Performance and Accountability Report
2 United States Department of Labor 

Table of Contents 

Management’s Discussion and Analysis ..................................................................................................5

Secretary’s Message ............................................................................................................................................ 6

Mission, Vision and Organization....................................................................................................................... 9

Executive Summary........................................................................................................................................... 13

Introduction................................................................................................................................................. 13

Performance Section ................................................................................................................................... 14

Financial Section......................................................................................................................................... 21

Management and Performance Challenges................................................................................................. 28

The President’s Management Agenda ........................................................................................................ 32

Performance Section................................................................................................................................34

Strategic Goal 1: A Prepared Workforce.......................................................................................................... 35

Outcome Goal 1.1 – Increase Employment, Earnings, and Assistance ...................................................... 37

Outcome Goal 1.2 – Increase the Number of Youth Making A Successful Transition to Work................ 61

Outcome Goal 1.3 – Improve the Effectiveness of Information and Analysis On The U.S. Economy...... 71

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

Outcome Goal 2.1 – Increase Compliance with Worker Protection Laws ................................................. 78

Outcome Goal 2.2 – Protect Worker Benefits ............................................................................................ 85

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

Outcome Goal 3.1 – Reduce Workplace Injuries, Illnesses, and Fatalities ................................................ 99

Outcome Goal 3.2 – Foster Equal Opportunity Workplaces .................................................................... 112

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

Strengthen Labor Markets......................................................................................................................... 120

Strategic Goal 4: A Competitive Workforce .................................................................................................. 129

Outcome Goal 4.1 – Equip Workers to Adapt to the Competitive Challenges of the 21st Century.......... 130

Outcome Goal 4.2 – Promote Job Flexibility and Minimize Regulatory Burden..................................... 132

Departmental Management ............................................................................................................................. 137

Outcome Goal HR – Establish DOL as a Model Workplace.................................................................... 139

Outcome Goal PR – Improve Procurement Management......................................................................... 147

Outcome Goal FM – Enhance Financial Performance through Improved Accountability....................... 152

Outcome Goal IT – Provide Improved, Secure IT Service to Citizens, Businesses, Government, and DOL 

Employees to Improve Mission Performance........................................................................................... 156

Financial Section ....................................................................................................................................163

Chief Financial Officer’s Letter ...................................................................................................................... 164

Independent Auditor’s Report ......................................................................................................................... 166

Annual Financial Statements........................................................................................................................... 175

Principal Financial Statements and Notes................................................................................................. 177

Required Supplementary Stewardship Information.................................................................................. 237

Required Supplementary Information....................................................................................................... 260

Management and Performance Challenges.........................................................................................273

Inspector General’s Statement......................................................................................................................... 274

Management’s Response................................................................................................................................. 282

Appendices..............................................................................................................................................291

1. Performance Goal Details............................................................................................................................ 292

2. Significant FY 2004 Audits and Evaluations .............................................................................................. 315

3. Improper Payments Information Act Reporting Details.............................................................................. 330

4. Acronyms .................................................................................................................................................... 339

5. Internet Links .............................................................................................................................................. 341
FY 2004 Performance and Accountability Report 3

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’ websites 

mentioned in this Report or its views, or contents; nor does it vouch for the accuracy of the information contained 

on other organizations’ websites. 

The following companies were contracted to assist preparation of the FY 2004 DOL Annual Report: 

Accounting services − Martin and Yarbrough, Joint Venture 

Graphic design – Grafik Industries, Ltd. 
4 United States Department of Labor 
Management’s Discussion and Analysis 
Management’s Discussion and Analysis 

6 United States Department of Labor 

Secretary’s Message 

November 15, 2004 

Publication of the Fiscal Year 2004 Annual Performance and Accountability Report is the 

culmination of an important process — it makes us pause, look back, consider how our 

accomplishments bettered the American workforce and determine what needs to be done 

to make further improvements. Every year brings its share of challenges, and this past 

year was no exception. In keeping with our theme for this report — Serving the Needs of a 

Changing 21st Century Workforce — we are reporting for the first time on our new fourth 

strategic goal, A Competitive Workforce. It complements our three other strategic goals of 

A Prepared Workforce, A Secure Workforce, and Quality Workplaces. In addition to 

producing positive results for the Nation’s workers through our program activities, we 

have strengthened our support functions under the President’s Management Agenda. 

President’s Management Agenda 

In August 2001, President George W. Bush sent to Congress his President’s Management Agenda (PMA), a 

strategy for improving the management and performance of the Federal government. The agenda called for 

focused efforts in the following five government-wide initiatives aimed at improving results to citizens: Strategic 

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

Government, and Budget and Performance Integration. DOL is also responsible for one of the PMA components 

found in selected departments: Faith-Based and Community Initiatives. In the fourth quarter of 2004, DOL 

began working in earnest on another selected PMA component, Real Property. On the basis of its favorable 

ratings for progress and status in implementation of these initiatives, DOL is recognized as one of the best 

managed Cabinet agencies. 

Keeping our commitment to veterans 

With so many of our nation’s military service members actively engaged in the global war on terrorism, we are 

constantly mindful of our responsibilities to them, to our nation’s veterans and to their families; and our 

commitment is unwavering. The men and women of the National Guard and Reserve must be assured that they 

will have their former or comparable jobs upon return. In addition, transitioning service members, veterans and 

disabled veterans deserve the best possible assistance in obtaining meaningful and rewarding employment. 

Veterans are also a key resource in our strategy to maintain a competitive workforce; to meet the productivity and 

hiring demands of high-growth business sectors, DOL is encouraging employers to leverage the technical 

knowledge, discipline and training of veterans, military spouses and transitioning service members. 

Training for high-growth industries 

A Departmental priority is to help workers acquire the skills they need for the new jobs being created in highgrowth industries. As part of the President’s High-Growth Job Training Initiative, the Department of Labor has 

identified twelve sectors where rapid growth or transformation of business processes has created a shortage of 

skilled workers, and we have built partnerships to help American workers access job-specific training. Our 

partners include employers, industry associations, labor-management organizations, community colleges, and the 

public workforce system. We promote this demand-driven workforce investment strategy by awarding grants in 

such areas as innovative health-care and biotechnology training programs across the country. As we match 

skilled workers with willing employers, we expect that more workers will obtain quality jobs that pay higher 

wages and feature career ladders. 

Regulatory reform 

Another way we have been Serving the Needs of a Changing 21st Century Workforce is through regulatory reform. 

We need to ensure that the Department’s regulations are still relevant and effective so that labor in both the public 

and private sectors is not wasted on unnecessary bureaucratic processes or frivolous litigation. We are 

concentrating on regulatory activities that actually protect workers, particularly those who are economically 

disadvantaged or vulnerable. For example, one of the Department's most important regulatory reforms in recent 

years was an update of the white-collar overtime regulations that were first created in 1938 and were so outdated 

that they created a legal nightmare. The Department's belief is that most employers want to protect their workers. 
Secretary’s Message 

FY 2004 Performance and Accountability Report 7

Our strategy is to target enforcement resources on the relatively few "bad actors" and help the majority of 

employers understand and comply with the Department's standards. 

Expanding our focus on workplace protections 

Every year, millions of teenagers work in part-time and summer jobs. Employment helps them appreciate the 

value of work and our free enterprise system. Through the Department’s YouthRules! initiative we promote 

positive, safe working experiences for teenage workers. The initiative educates employers, teenagers, parents, 

teachers and the general public about child labor laws through our YouthRules! website, pocket guides and 

posters. We have also sponsored youth rallies, training seminars and other activities to boost understanding of the 

rules. 

OSHA has mounted a significant effort to reach out to Spanish-speaking workers and their employers. The 

agency formed a special task force in October 2001 to examine the issue of Hispanic worker fatalities and what 

we should do to address the problem. The task force is looking at three areas: sharing best practices, expanding 

outreach, and determining where more information is necessary. OSHA’s current outreach efforts to the Hispanic 

Community include a Spanish-language page on OSHA’s web site, a Spanish-language option on OSHA’s toll 

free number, numerous Spanish translations, including Todo Sobre la OSHA (All About OSHA), and much more. 

Retirement security remains a high priority 

The last couple of years have seen the very public and visible collapse of several major companies with grievous 

consequences for workers’ retirement security. Rising health care costs have made obtaining secure and 

affordable health coverage increasingly challenging for employees. Strong oversight and protecting workers’ 

retirement and health benefits are among the Department’s highest priorities. We take great pride at the 

Department of Labor in our enforcement record and results, but in the course of recovering workers’ benefits, we 

have seen in some employers a clear lack of understanding or appreciation of their responsibilities under the 

Employee Retirement Income Security Act (ERISA). Our compliance assistance efforts focus on educational 

campaigns that reach out to the regulated communities, educate them on what the law requires, and help prevent 

problems from occurring in the first place. The nation’s workers deserve nothing less than the high standards set 

by ERISA – that the benefit promises made to our nation’s workers are kept. 

Program Data and Financial Performance 

DOL managers routinely use the performance and financial data summarized in this report to improve the quality 

and cost effectiveness of services to the public. Given its importance for purposes of accountability, we must 

have confidence in the validity of such information. Several procedures are used routinely to verify data quality; 

findings for the current fiscal year are described below. 

Performance information presented in this report is complete and reliable as defined by the Office of Management 

and Budget (OMB) in Circular A-11, with one exception. Data for Performance Goal 1.2C (Youth Opportunity 

Grants) are considered incomplete because older youth employment and retention rates are available for 

participant outcomes associated with only half of the grantees. A more complete explanation of this issue appears 

in the Management Issues section of the performance goal narrative. 

The Federal Financial Management Improvement Act of 1996 (FFMIA) requires agencies to implement and 

maintain financial management systems that are in substantial compliance with OMB Circular A-127, Joint 

Financial Management Improvement Program (JFMIP) requirements, Federal accounting standards, and the 

United States Government Standard General Ledger (SGL) at the transaction level. All Department of Labor 

financial management systems substantially comply with FFMIA. 

The Federal Managers' Financial Integrity Act of 1982 (FMFIA) requires the Secretary to report to the President 

and the Congress on the adequacy of management controls in safeguarding resources. Based on the unqualified 

opinion, audit results and quarterly and year-end assurances given by the agency officials and other pertinent 

information, the Department of Labor's accounting systems and internal controls comply with the provisions of 

the FMFIA. 
Management’s Discussion and Analysis 

8 United States Department of Labor 

Conclusion 

Once again, I am proud to submit an Annual Report on Performance and Accountability that I hope will provide a 

useful overview of this Department’s core missions and a clear assessment of our program and financial results. 

The employees of the Department of Labor are dedicated to keeping the American workforce strong and 

competitive through these rapidly changing and often uncertain economic times. We will continue to strive to 

provide programs and services to assist people to find rewarding work at good pay; foster and protect health and 

pension benefits; and ensure that workplaces are safe and healthful and free from discrimination. 

Elaine L. Chao 

Secretary of Labor 
Mission, Vision and Organization 

FY 2004 Performance and Accountability Report 9

Mission, Vision and Organization 

Mission 

The Department of Labor promotes the welfare of the job seekers, wage earners, and retirees of the United States 

by improving their working conditions, advancing their opportunities for profitable employment, protecting their 

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

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

Vision 

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

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

healthful workplaces that are free from discrimination. 

Organization 

The Department of Labor is organized into major component agencies, each headed by an Assistant Secretary or 

Commissioner who administers the various statutes and programs for which the Department is responsible. These 

programs are carried out through a network of regional offices and smaller field, district, and area offices, as well 

as through grantees and contractors. The largest program agencies are Employment and Training Administration 

(ETA), Employee Benefits Security Administration (EBSA), Pension Benefit Guaranty Corporation (PBGC), 

Employment Standards Administration (ESA), Occupational Safety and Health Administration (OSHA), Mine 

Safety and Health Administration (MSHA), and Bureau of Labor Statistics (BLS). An organization chart and 

agency mission statements appear on the following pages. 
Management’s Discussion and Analysis 

10 United States Department of Labor 

DOL Organization Chart 

Agency Missions 

Bureau of Labor Statistics (BLS) 

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

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

 

Employee Benefits Security Administration (EBSA) 

To protect the retirement, health, and other benefits of over 150 million participants and beneficiaries in private 

sector employee benefit plans. 

 

Employment Standards Administration (ESA) 

To protect the welfare and rights of, and generate equal employment opportunity for, American workers by 

promoting compliance with the various laws that it administers; and to provide the best possible program for 

income replacement, medical treatment, and rehabilitation for injured Federal workers, longshore workers, and 

miners. 

Employment and Training Administration (ETA) 

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

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

workforce development systems. 

Bureau of International Labor Affairs (ILAB) 

To carry out the Secretary's international responsibilities, develop Departmental policy and programs relating to 

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

Government agencies, intergovernmental organizations, and non-governmental organizations. 

EMPLOYMENT

& TRAINING 

ADMINISTRATION 

(ETA)

EMPLOYEE 

BENEFITS 

SECURITY 

ADMINISTRATION 

(EBSA)

BUREAU OF 

INTERNATIONAL 

LABOR AFFAIRS 

(ILAB)

OCCUPATIONAL 

SAFETY & 

HEALTH 

ADMINISTRATION 

(OSHA)

EMPLOYMENT 

STANDARDS 

ADMINISTRATION 

(ESA)

VETERANS’

EMPLOYMENT 

AND

TRAINING 

SERVICE (VETS)

SECRETARY OF LABOR

DEPUTY SECRETARY

OF LABOR

CHIEF OF 

STAFF

OFFICE OF THE 

ASSISTANT SECRETARY 

FOR ADMINISTRATION &

MANAGEMENT 

(OASAM)

OFFICE OF 

CONGRESSIONAL &

INTERGOVERNMENTAL 

AFFAIRS

(OCIA)

OFFICE OF THE 

SOLICITOR 

(SOL)

OFFICE OF

PUBLIC AFFAIRS 

(OPA)

OFFICE OF THE 

ASSISTANT 

SECRETARY FOR 

POLICY

(OASP)

BUREAU OF 

LABOR 

STATISTICS 

(BLS)

WOMEN’S 

BUREAU

(WB)

MINE SAFETY

& HEALTH 

ADMINISTRATION 

(MSHA)

OFFICE OF THE 

CHIEF 

FINANCIAL 

OFFICER

(OCFO)

OFFICE OF 

INSPECTOR 

GENERAL

(OIG)

OFFICE OF 

DISABILITY 

EMPLOYMENT 

POLICY

(ODEP)

PENSION 

BENEFIT 

GUARANTY 

CORPORATION

(PBGC)

SCHEDULING AND ADVANCE

EXECUTIVE SECRETARIAT

OFFICE OF SMALL BUSINESS 

PROGRAMS

OFFICE OF THE 21ST CENTURY 

WORKFORCE

OFFICE FOR FAITH BASED AND 

COMMUNITY INITIATIVES

OFFICE OF ADMINISTRATIVE LAW 

JUDGES (ALJ)

BENEFITS REVIEW BOARD (BRB)

EMPLOYEES’ COMPENSATION 

APPEALS BOARD (ECAB) 

ADMINISTRATIVE REVIEW BOARD 

(ARB) 
Mission, Vision and Organization 

FY 2004 Performance and Accountability Report 11

Mine Safety and Health Administration (MSHA) 

To protect the safety and health of the Nation's miners by assuring compliance with Federal safety and health 

standards through inspections and investigations and working cooperatively with the mining industry, labor, and 

the States to improve training programs aimed at preventing accidents and occupationally caused diseases. 

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

To develop and promulgate policies, standards, procedures, systems, and materials related to the resource and 

administrative management of the Department and ensure execution of such policies and directives at 

Headquarters and in the field. OASAM provides leadership and policy guidance in support of the President's 

Management Agenda, including the Department's progress to achieve "green " scores on the Office of 

Management and Budget's Scorecard, and the Department's Strategic Plan and Annual Performance and 

Accountability Report. 

Office of the Assistant Secretary for Policy (OASP) 

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

development, regulations, program implementation, program evaluations, research, budget and performance 

analysis, and legislation. 

Office of the Chief Financial Officer (OCFO) 

To provide high integrity financial information, policy, services, and products in support of the Department's 

mission to prepare and protect American workers. 

Office of Congressional and Intergovernmental Affairs (OCIA) 

To provide direction and coordination for congressional and intergovernmental liaison and outreach activities for 

the Department of Labor. OCIA assists the Secretary, Deputy Secretary, agency heads, and departmental staff to 

develop effective programs and strategies to promote the Department's goals and objectives on Capitol Hill as 

well as among state and local officials. 

Office of Disability Employment Policy (ODEP) 

To provide leadership to increase employment opportunities for adults and youth with disabilities on both the 

supply and demand sides of the labor market, by expanding access to training, education, employment supports, 

assistive technology, integrated employment, entrepreneurial development, and small-business opportunities; and 

by building partnerships with employers and State and local agencies to increase awareness of the benefits of 

hiring people with disabilities, and to facilitate the use of effective strategies related to employment of people 

with disabilities. 

Office of Inspector General (OIG) 

To serve the American worker and taxpayer by conducting audits, investigations, and evaluations that result in 

improvements in the effectiveness, efficiency, and economy of Departmental programs and operations; prevent 

fraud and abuse in DOL programs and labor racketeering in the American workplace; and provide advice to the 

Secretary and the Congress on how to attain the highest possible program performance.

Occupational Safety and Health Administration (OSHA) 

To assure so far as possible for every working man and woman in the Nation safe and healthful working 

conditions. This includes such strategies as rulemaking, enforcement, compliance assistance, outreach, and 

partnerships to enable employers to maintain safe and healthful workplaces. 

Pension Benefit Guaranty Corporation (PBGC) 

To protect retirement-plan participants' pension benefits and support a healthy retirement plan system by 

encouraging the continuation and maintenance of private pension plans; protecting pension benefits in ongoing 

plans; providing timely payments of benefits in the case of terminated pension plans; and making the maximum 

use of resources and maintaining premiums and operating costs at the lowest levels consistent with statutory 

responsibilities. 
Management’s Discussion and Analysis 

12 United States Department of Labor 

Office of the Solicitor (SOL) 

To ensure that the Nation's labor laws are forcefully and fairly applied in implementing the priority enforcement 

initiatives of and defending the actions taken by the Department; and to advise agency officials on legal matters, 

including the development of regulations, standards, and legislation. 

Veterans' Employment and Training Service (VETS) 

To help Veterans, Reservists, and National Guard members in securing and maintaining employment and the 

rights and benefits associated with employment. 

Women's Bureau (WB) 

To promote profitable employment opportunities for women, to empower them by enhancing their skills and 

improving their working conditions, and to provide employers with more alternatives to meet their labor needs. 
Executive Summary 

FY 2004 Performance and Accountability Report 13

Executive Summary 

Introduction 

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

Department of Labor’s (DOL) program and financial performance for FY 2004. It is divided into four sections: 

Management’s Discussion and Analysis begins with the Secretary’s Message, introduces the Department’s 

mission, vision and organization, summarizes the other three sections (beginning immediately following this 

introduction) and includes a brief report on DOL’s progress in implementing the President’s Management 

Agenda. 

The Performance Section conveys, through data, analyses and examples, progress in achieving the Department’s 

goals as presented in the Department’s Strategic Plan and Annual Performance Plans. The two appendices provide 

additional details. 

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

carry out the mission of the Department, including compliance with relevant financial management legislation. It 

includes the Principal Financial Statements and Notes and the Independent Auditor’s Report – an independent 

opinion on the Financial Statements provided by the Department’s Office of Inspector General. 

The Management and Performance Challenges section presents the top management issues identified by the 

Office of Inspector General and the Department’s progress and plans to meet these challenges. 

This year, DOL will publish in print form a summary version of the report for public consumption, aptly titled FY 

2004 Summary Performance and Accountability Report. Although format differs, content is identical to 

corresponding sections of the full “official” report. The summary version includes: the full Management’s 

Discussion and Analysis; Strategic Goal introductions and Outcome Goal summaries from the Performance 

Section; the CFO letter; a summary of the Inspector General’s internal control and compliance reports; a summary 

of the independent financial audit; condensed Financial Statements; the complete Management and Performance 

Challenges section; and Acronyms and Internet links appendices. Both versions of the report are online at 

http://www.dol.gov/_sec/media/reports.
Management’s Discussion and Analysis 

14 United States Department of Labor 

Performance Section 

FY 2004 marks the sixth year that the Department of Labor has reported program results under the Government 

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

Departmental strategic and outcome goals as presented in the FY 2003-2008 Strategic Plan1

 were selected for 

inclusion in the Department’s annual plans. These performance goals and their indicators provide the basis for 

assessments of the Department’s effectiveness in this section. 

This report includes performance goals from two different annual plans2

 because some programs administered by 

the Employment and Training Administration are “forward-funded,” meaning that their spending and 

performance goals are tracked on a cycle that lags the Federal fiscal year (FY) by nine months. This period is 

referred to as a Program Year (PY); such goals being reported on in this document cover July 1, 2003 to June 30, 

2004 (PY 2003). PY 2004 goals will appear in the FY 2005 report. 

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

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

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

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

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

Program Performance Overview 

Of the 42 performance goals DOL is reporting on in FY 2004 (30 program goals plus 12 management goals), the 

Department achieved 25, substantially achieved five and did not achieve 12. The percentage achieved or 

substantially achieved totals 71 percent. In FY 2003, the Department achieved or substantially achieved 66 

percent of its goals. The assessment category of substantially achieved recognizes results that were very close 

(i.e., 80 percent of targeted year-on-year improvement). 

Goals and Results 

The table below presents each performance goal for which results are being reported in this document. It 

includes the goal number, responsible agency, goal statement, result and period covered. Two versions of Goal 

1.1F appear because ETA moved its dislocated worker goals from Outcome Goal 2.3 before VETS changed its 

goal to a program year basis, deferring it to this year’s report. Goal 3.1D (OSHA) appears three times because 

prior year results were not reported on schedule. 

Goal # 

Agency Performance Goal Result Period 

1.1A 

ETA 

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

Workforce Investment Act adult program. Achieved PY 2003

1.1B 

ETA 

Improve the outcomes for job seekers and employers who receive public labor 

exchange services. Achieved PY 2003

1.1C 

ETA 

Strengthen the registered apprenticeship system to meet the training needs of 

business and workers in the 21st Century. Achieved FY 2004

1.1D 

ODEP 

Provide national leadership to increase access and employment opportunities for 

youth and adults with disabilities receiving employment, training, and employment 

support services by developing testing, and disseminating effective practices. 

Achieved FY 2004

1.1E 

VETS 

Increase the employment and retention rate of veteran job seekers registering for 

public labor exchange services. Achieved PY 2003

 

1

 http://www.dol.gov/_sec/stratplan/main.htm 

2

 Revised Final FY 2003 Annual Performance Plan dated December 31, 2002 and the Revised Final FY 2004 Annual 

Performance Plan dated January 27, 2004. The FY 2004 plan is available online: 

http://www.dol.gov/_sec/Budget2004/2004app-toc.htm. 
Executive Summary 

FY 2004 Performance and Accountability Report 15

Goal # 

Agency Performance Goal Result Period 

1.1F 

VETS 

Veterans enrolled in Homeless Veterans’ Reintegration Program (HVRP) enter 

employment. Achieved PY 2003

1.1F 

ETA 

Increase the employment, retention, and earnings replacement of individuals 

registered under the Workforce Investment Act Dislocated Worker Program. 

Not 

Achieved PY 2003

1.1G 

ETA 

Increase the employment, retention, and earnings replacement of workers dislocated 

in important part because of trade and who receive trade adjustment assistance 

benefits. 

Not 

Achieved FY 2004

1.2A 

ETA 

Increase entrance and retention of youth registered under the WIA youth program in 

education or employment. Achieved PY 2003

1.2B 

ETA 

Improve educational achievements of Job Corps students, and increase participation 

of Job Corps graduates in employment and education. 

Not 

Achieved PY 2003

1.2C 

ETA 

Increase entrance and retention of Youth Opportunity Grant participants in education 

or employment. 

Not 

Achieved PY 2003

1.3A 

BLS 

Improve information available to decision-makers on labor market conditions, and 

price and productivity changes. 

Not 

Achieved FY 2004

2.1A 

ESA 

Covered American workplaces legally, fairly, and safely employ and compensate 

their workers. 

Substantially 

Achieved FY 2004

2.1B 

ESA 

Advance safeguards for union financial integrity and democracy and the 

transparency of union operations. Achieved FY 2004

2.2A 

ETA 

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. 

Not 

Achieved FY 2004

2.2B 

EBSA Enhance pension and health benefit security. Achieved FY 2004

2.2C 

ESA 

Minimize the human, social, and financial impact of work-related injuries for 

workers and their families 

Substantially 

Achieved FY 2004

2.2D 

PBGC 

Improve customer satisfaction according to the American Customer Satisfaction 

Index (ACSI). 

Not 

Achieved FY 2004

3.1A 

MSHA 

Reduce the mine industry fatal injury incidence rate and the mine industry all-injury 

incidence rate. 

Not 

Achieved FY 2004

3.1B 

MSHA Reduce respirable coal dust, silica dust, and noise exposures. Achieved FY 2004

3.1C 

OSHA Reduce occupational fatalities. Not 

Achieved FY 2004

3.1D 

OSHA 

Reduce injuries and illnesses by 10 % annually in four industries characterized by 

high hazard workplaces. 

Not 

Achieved CY 2002

3.1D 

OSHA 

Reduce the days away from work case rate per 100 workers by 2% from CY 2000 

baseline. Achieved CY 2003

3.1D 

OSHA 

Reduce the days away from work case rate per 100 workers by 4% from CY 2000 

baseline. Achieved CY 2004

3.2A 

ESA Federal contractors achieve equal opportunity workplaces. Achieved FY 2004

3.2B 

OASAM 

States that receive financial assistance under the Workforce Investment Act provide 

benefits and services to persons with disabilities in a non-discriminatory manner. Achieved FY 2004
Management’s Discussion and Analysis 

16 United States Department of Labor 

Goal # 

Agency Performance Goal Result Period 

3.2C 

VETS 

Reduce employer-employee employment issues originating from service members’ 

military obligations conflicting with their civilian employment. Achieved FY 2004

3.3A 

ILAB Contribute to the elimination of the worst forms of child labor internationally. Achieved FY 2004

3.3B 

ILAB Improve living standards and conditions of work internationally. Achieved FY 2004

4.2A 

OASP 

Maximize regulatory flexibility and benefits and promote flexible workplace 

programs. 

Not 

Achieved FY 2004

HR1 

OASAM 

The right people are in the right place at the right time to carry out the mission of the 

Department. 

Substantially 

Achieved FY 2004

HR2 

OASAM 

Reduce the rate of lost production days due to work related injuries and illnesses by 

two percent. Achieved FY 2004

HR3 

OASAM 

Reduce the total case rate for injuries and illnesses for DOL employees by three 

percent. Achieved FY 2004

HR4 

OASAM 

Reduce the lost time case rate for injuries and illnesses for DOL employees by three 

percent. Achieved FY 2004

HR5 

OASAM 

Improve the timeliness of filing notices of injuries and illnesses with the Office of 

Workers’ Compensation Programs. Achieved FY 2004

PR1 

OASAM 

Complete competitions on not less than 15 percent of the FTE listed on DOL’s 2000 

Federal Activities Inventory Reform (FAIR) Act inventory. 

Substantially 

Achieved FY 2004

PR2 

OASAM 

Award contracts over $25,000 using Performance-Based Service Contracting 

techniques for not less than 40 percent of total eligible service contracting dollars. Achieved FY 2004

FM1 

OASAM Improve the accuracy and timeliness of financial information. Substantially Achieved FY 2004

FM2 

OASAM 

Integrate financial and performance management to support day-to-day operations 

across DOL. Achieved FY 2004

IT1 

OASAM E-Government - Utilize technology to improve service and efficiency. Not Achieved FY 2004

IT2 

OASAM 

Improve the performance of Department’s Cyber Security Program in accordance 

with the Federal Information Security Management Act (FISMA). Achieved FY 2004

IT3 

OASAM 

Improve organizational performance and effective information management through 

the use of the Departmental IT Capital Planning Investment Control process. Achieved FY 2004

Goals Reporting in FY 2005 

This table lists goals that appeared in DOL’s FY 2004 Revised Final Annual Performance Plan for which results 

will be reported in the FY 2005 Performance and Accountability Report. All apply to ETA’s forward-funded 

Program Year 2004 (July 1, 2004 – June 30, 2005). 

Goal# 

Agency Performance Goal Reason Delayed Period 

1.1A 

ETA 

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

Workforce Investment Act adult program. 

Forward 

Funded PY 2004

1.1B 

ETA

Improve the outcomes for job seekers and employers who receive public labor 

exchange services. 

Forward 

Funded PY 2004
Executive Summary 

FY 2004 Performance and Accountability Report 17

Goal# 

Agency Performance Goal Reason Delayed Period 

1.1F 

ETA 

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

under the Workforce Investment Act dislocated worker program. 

Forward 

Funded PY 2004

1.2A 

ETA 

Increase placements and educational attainments of youth. Forward 

Funded PY 2004

1.2B 

ETA 

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

Corps graduates in employment and education. 

Forward 

Funded PY 2004

4.1A 

ETA 

Analyze information collection and research programs for relevance. Forward 

Funded PY 2004

4.1B 

ETA 

Address worker shortage. Forward 

Funded PY 2004

4.1C 

ETA 

Build a demand-driven workforce system. Forward 

Funded PY 2004

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

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

efforts on the links between activities and their higher purpose. The table below indicates FY 2004 program 

performance goal achievement by strategic goal. 

DOL Strategic Goal Achieved Substantially 

Achieved 

Not 

Achieved Total 

Goal 1 – A Prepared Workforce 

Enhance Opportunities for America’s Workforce 7 0 5 12 

Goal 2 – A Secure Workforce 

Promote the Economic Security of Workers and Families 2 2 2 6 

Goal 3 – Quality Workplaces 

Foster Quality Workplaces that are Safe, Healthy and Fair 8 0 3 11 

Goal 4 – A Competitive Workforce 

Maintain Competitiveness in the 21st Century Economy 0 0 1 1 

Total 17 2 11 30 

Costs devoted toward achieving the Department’s strategic goals (see table below) are dominated by the second 

goal, A Secure Workforce, for which net costs in FY 2004 amounted to $47.0 billion. Ninety-seven percent 

($45.6 billion) of this amount is accounted for by benefit payments to unemployed workers or workers disabled as 

a result of work-related injuries or illnesses. The first goal, A Prepared Workforce, required $8.7 billion (15 

percent of total net costs), spent mostly in the form of grants to States and other organizations to offer job training 

and a host of employment-related services to assist workers to improve their skills and obtain productive, longterm employment. Approximately $1 billion (less than 1 percent) went toward the third goal, Quality 

Workplaces, to fund direct services (such as salaries of Federal employees) aimed at improving safety and health 

in the workplace. The fourth goal, A Competitive Workforce, is new; moreover, most of its programs expend 

funds on a Program Year that lags the fiscal year by nine months. Its costs were the lowest, at just $6 million.3

 

3

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

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

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

18 United States Department of Labor 

DOL Program Costs (Millions of Dollars) 

Goal FY 

2002 

FY 

2003 

FY 

2004 

Strategic Goal 1: A Prepared Workforce $6934 $6923 $8654

Outcome Goal 1.1 – Increase Employment, Earnings, and Assistance 3596 3433 5412

Outcome Goal 1.2 – Increase the Number of Youth Making A Successful Transition to 

Work 

2829 2957 2703

Outcome Goal 1.3 – Improve the Effectiveness of Information and Analysis On The U.S. 

Economy 

509 533 539

Strategic Goal 2: A Secure Workforce 57,005 59,969 46,957

Outcome Goal 2.1 – Increase Compliance With Worker Protection Laws 350 273 296

Outcome Goal 2.2 – Protect Worker Benefits 54,993 57,718 46,661

Outcome Goal 2.3 – Increase Employment and Earnings for Retrained Workers 1662 1978 0

Strategies Goal 3: Quality Workplaces 949 991 1021

Outcome Goal 3.1 – Reduce Workplace Injuries, Illnesses, and Fatalities 781 815 812

Outcome Goal 3.2 – Foster Equal Opportunity Workplaces 117 118 112

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

Workers, and Strengthen Labor Markets4

51 58 97

Strategies Goal 4: A Competitive Workforce 0 0 6

Outcome Goal 4.1 – Equip Workers to Adapt to the Competitive Challenges of the 21st

Century 

0 0 0

Outcome Goal 4.2 – Promote Job Flexibility and Minimize the Regulatory Burden 0 0 6

Costs Not Assigned to Goals 48 44 38

Total (may not be equal to sum of individual goal totals due to rounding) $64,936 $67,927 $56,676

Charts that display net costs from FY 1999-FY 2004 to illustrate trends are provided in each outcome goal 

summary; brief explanations of significant changes since FY 2003 are provided, as well. In future reports DOL 

plans a more robust discussion of cost information, eventually at the performance goal level. This will be 

facilitated by full cost information provided by the new managerial cost accounting system, Cost Analysis 

Manager (CAM), which is described in more detail in the Outcome Goal FM summary and the Performance Goal 

FM2 narrative. Cost models that describe relationships between resources, activities, outputs and outcomes have 

been completed and will be populated with data in FY 2005. Reports from this system will inform management 

how much it costs to provide the Department’s major services, thereby supporting sound decision making and 

accountability for results. 

Below is a breakdown, by strategic goal, of FY 2004 achievements and developments deemed most significant in 

terms of outcomes.5

 A tally of goals achieved, while providing a quick indication of whether DOL is on schedule 

with its plan, does not convey any actual performance information. To understand what was achieved in terms of 

benefits to the public, it is necessary to look not just at whether targets were reached but also at whether observed 

results indicate positive program impacts. The following summaries focus on significant trends that have 

continued or have become apparent in the past year and what they mean in terms of DOL’s past performance and 

future strategies.

 

4 The figures for FY 2002 and FY 2003 do not match those in the annual Consolidated Statements of Net Costs by Outcome 

Goal because they reflect correction of an overstatement of grant costs in FY 2002 and corresponding understatement in FY 

2003 that were considered non-material and therefore not corrected in the financial statements. 5

 Not included are the twelve departmental management goals, of which DOL achieved eight, substantially achieved three 

and did not achieve one. 
Executive Summary 

FY 2004 Performance and Accountability Report 19

Strategic Goal 1 – A Prepared Workforce 

As indicated in the Program Performance Goal Achievement table above, DOL had 12 performance goals under 

this strategic goal in FY 2004. The Department achieved seven (58 percent) and did not achieve five (42 percent). 

This achievement percentage is below the Department wide average of 71 percent. 

In FY 2004, positive trends included: employment, retention, and earnings improved for Workforce Investment 

Act (WIA) adult programs; the number of disabled workers served in pilots funded by the Office of Disability 

Employment Policy nearly tripled; homeless veterans’ employment rate exceeded 60% (well above target) for the 

second year in a row; and diploma attainment for younger youth (14-18) and entry to employment and retention 

for older youth (19-21) increased substantially. WIA Dislocated Worker and Trade Adjustment Assistance 

programs obtained disappointing results, both having difficulty assisting workers affected by mass layoffs in 

replacing their income in new jobs.

Further improvement in the preparedness of America’s workforce will be promoted by DOL’s demand-driven 

strategy of identifying employers’ needs and using that information to identify skilled workers and to develop 

suitable training programs. In response to recommendations from the Administration’s Program Assessment 

Rating Tool (PART) reviews of the Trade Adjustment Assistance program, new agreements between the 

Secretary of Labor and the States’ Governors will include performance expectations to encourage better results. 

DOL’s Workforce Investment Act reauthorization proposal places emphasis on serving out-of-school youth, the 

special population DOL is uniquely qualified to serve. 

Strategic Goal 2 – A Secure Workforce 

Of six performance goals, DOL achieved two (33 percent), substantially achieved two (33 percent), and did not 

achieve two (33 percent). The total achieved and substantially achieved (67 percent) is slightly below the 

Departmental average. 

The Department reached targets for increasing compliance with the Fair Labor Standards Act (FLSA) in 

industries with the worst violation records, but failed to reach its targets for reducing recidivism of prior violators 

in those same industries. Labor unions’ financial integrity and transparency indicators improved by targeted 

quantities. The Unemployment Insurance program reached its target for recovery of estimated overpayments 

while maintaining its high level of administrative efficiency and building its capacity to facilitate reemployment. 

Employee benefit security programs reached all targets, including those for successful conduct of civil and 

criminal cases against benefit plan malfeasance, and customer satisfaction with participant assistance received. 

Federal workers’ compensation results were positive, overall; while lost production days rose, medical costs rose 

less than the national healthcare inflation rate and claims processing improved significantly. Finally, the Pension 

Benefit Guaranty Corporation did not reach its targets for customer satisfaction. 

In FY 2005, DOL will continue its targeted compliance assistance programs for employers with respect to wage 

and working condition standards, including detailed agreements and reinvestigation plans; support an amendment 

to the Labor-Management Reporting and Disclosure Act authorizing civil monetary penalties for delinquent union 

reports; and improve processing of workers’ compensation claims through greater Internet access. 

Strategic Goal 3 – Quality Workplaces 

Of 11 performance goals, DOL achieved eight (73 percent) and did not achieve three (27 percent), for an 

achievement ratio above the Departmental average. 

In FY 2004, mine fatality and all-injury incidence rates reached the lowest levels recorded in over a quarter 

century. Other evidence of improved mine safety is the further reduction in coal dust, silica dust and noise 

overexposures observed at inspected mine sites during the past year. Fatalities in all workplaces actually rose 

slightly, according to DOL estimates; safety in its broader definition improved in all occupations, as measured by 

the estimated rate of days away from work resulting from workplace injuries. Equal opportunity to work 

advanced, as incidence of discrimination among evaluated Federal contractors was just one percent, and 

compliance with all other workplace standards rose sharply to 91 percent. Veterans’ employment and 

reemployment rights were further protected by rulemaking (clarification of procedures that implement the Act of 

Congress) and by collaboration with the Department of Defense on an annual survey to identify the issues most 

troublesome for service members returning to the civilian workforce. 
Management’s Discussion and Analysis 

20 United States Department of Labor 

Evolving strategies for safety and health regulatory activity include enforcement, training and delivery systems 

that address workplace demographic trends such as increasing age of workers and likelihood that employees may 

not speak English. Meanwhile, DOL continues to increase outreach, assistance, and cooperative programs to 

complement enforcement activity. 

Strategic Goal 4 – A Competitive Workforce 

The one performance goal being reported on this year was not achieved. Nevertheless, the Department has made 

progress implementing plans to focus its programs’ strategies on winning strategies in a global economic 

environment. To better build a demand-driven workforce system, DOL implemented the President’s High 

Growth Job Training Initiative and the Career Voyages WebSite, and began implementing the ETA Management 

Information and Longitudinal Evaluation (EMILE) reporting system. In the regulatory arena, all targets for 

increased flexibility and reduced burden were not reached, but the important step of incorporating cost/benefit 

analysis in all impact evaluations is proceeding according to schedule. Next year’s report will report on the first 

results of investments made in support of Goal 4 – the High Growth Job Training Initiative (HGJTI) Grants 

awarded in PY 2003.

Reporting Performance Results 

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

section is introduced by an overview of the goal, its component outcome goals, results for FY 2004 and near term 

plans for improvement. Each outcome goal section similarly begins with a summary of results, adds net cost 

information and highlights and concludes with a brief discussion of future plans. Finally, within each outcome 

goal section are individual performance goal narratives that introduce the indicators and discuss the program 

perspective, present results, analysis and future plans and disclose management issues such as data quality and 

program evaluations that have implications regarding impact or effectiveness. Appendix 1 contains performance 

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

FY 2004 that have implications for performance goals in this report. 
Executive Summary 

FY 2004 Performance and Accountability Report 21

Financial Section 

Sound financial management is the keystone of the Federal Government’s efforts to improve accountability and 

deliver better results. Decision makers at all levels need timely, accurate and useful financial management 

information and user-friendly, state-of-the-art tools to facilitate and enhance decision-making. In keeping with 

the President’s goals, the Department of Labor continued to enhance its performance in financial management. 

This year, DOL successfully reached green on the President’s Financial Management Agenda scorecard for 

financial management. All financial systems at the Department maintained substantial compliance with the 

Federal Financial Management Improvement Act of 1996 (FFMIA), assuring that the systems support full 

disclosure of the costs of the Department’s programs and activities. In addition, the Department continued to 

comply with the Federal Managers’ Financial Integrity Act (FMFIA), indicating that the Department’s accounting 

systems and internal controls were sufficient to safeguard the resources entrusted to the Department. No material 

weaknesses were found in the audit of the Department’s financial statements. 

Financial Management Scorecard (as of 9/30/04) 

Current Status 

• Unqualified and timely audit opinion on annual financial statements; no material internal 

control weaknesses. 

• Produced accurate and timely financial information that is used by management to inform 

decision-making and drive results in key areas of operations. 

• Integrated financial and performance management systems to support day-to-day operations.

• FFMIA compliant.

Continued 

Progress 

To implement a new financial management information system: 

• Objective 2 – begin design stage involving mapping business processes, change management, 

testing, and interface development.

To integrate financial/performance management: 

• Expand access and update cost models for DOL Agencies.

• Complete documentation and develop additional reporting capabilities to include automation 

of data into cost model.

To reduce erroneous payments: 

• Complete and present to OMB recommendations to measure improper payments for 

susceptible non-direct grant programs through changes to the Single Audit Act Compliance 

Supplements. 

• Integrate IPIA efforts with the Department’s initiatives to bring internal control improvements 

of the Sarbanes-Oxley Act to its operations to improve the Department’s accountability. 

The Office of the Chief Financial Officer (OCFO) has begun replacing DOL’s core accounting system with a 

financial management information system using a JFMIP-compliant COTS package. DOL’s current accounting 

system has enabled the Department of Labor to achieve unqualified audit opinions and has provided accurate 

financial information over the past 14 years. However, advances in technology, opportunities arising from EGovernment initiatives and the Department’s need to better integrate financial and performance information with 

a broader user-based support the need for a new system. 

On a Government wide perspective, OCFO is co-chairing the Financial Management Line of Business (FMLOB) 

initiative. This initiative seeks to establish a Government-wide financial management solution that is efficient and 

improves business performance while ensuring integrity in accountability, financial controls and mission 

effectiveness. Standardization of business processes and data definitions across the Government will allow 

consistent reporting of inter-agency accounting events and aid in the reconciliation of inter-agency transactions – 

providing better accountability. 

OCFO also participates in the E-Payroll initiative, which involves consolidation of Federal payroll operations to 

three providers. Cost savings will result from standardizing policies affecting payroll process and the elimination 

of duplicative IT investments across the Government. The Department has begun the process of migrating its 

payroll operations to the National Finance Center (NFC) run by the Department of Agriculture. DOL’s goal is to 

complete the transition to NFC in FY2005. Going forward, the Department plans to continue its migration efforts 
Management’s Discussion and Analysis 

22 United States Department of Labor 

placing emphasis on refining interfaces to the NFC system environment to support on-line time and attendance 

entry as well as human resource functions. 

DOL has embarked upon a department-wide managerial cost accounting initiative called Cost Analysis Manager 

(CAM). CAM provides expenditure information to managers, analysts, and other decision-makers to help them 

better understand operational costs. CAM’s costing methodology is consistent with the Statement of Federal 

Financial Accounting Standards (SFFAS) No.4, which provides the guidance for full cost of federal programs. It 

answers the question of what are the full costs of a program and raises additional cost-based questions that help 

managers improve program performance. CAM provides these improvements through the delivery of timely and 

frequent information regarding program costs, analyzing program efficiencies and effectiveness through “what if” 

scenarios, and determining whether its spending reflects an agency’s priorities. Furthermore, CAM will provide 

Departmental management with cost information to evaluate past performance and guide future decision-making. 

The OCFO intends to enhance its efforts to monitor the Department’s internal control structures and procedures 

and alert management of potential financial issues. This initiative will allow OCFO to assess the efficiency and 

effectiveness of financial operations, the reliability of financial reporting, and compliance with applicable Federal 

laws and requirements. This will also provide DOL with the financial management information needed to support 

its quarterly process to attest to the existence and effectiveness of internal controls throughout the organization to 

ensure compliance with FMFIA and FFMIA requirements. 

Analysis of Financial Position 

The Department’s financial statements received an unqualified or “clean” audit opinion for the eighth consecutive 

year. The independent CPA firm of R. Navarro & Associates, Inc. issued reports for Fiscal Years 2004 and 2003. 

This independent assessment provides assurance that the money managed by the Department is accounted for 

properly. 

The principal financial statements in this report summarize DOL’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 fiscal years 2004 and 2003. Highlights of the financial information 

presented in the principal financial statements are shown below: 

Financial Position 

DOL’s Balance Sheet presents its financial position through the identification of agency assets, liabilities and net 

position. Over 99 percent of DOL’s investments are Unemployment Trust Fund investments. DOL total assets 

decreased from $64.8 billion at the end of FY 2003 to $62.4 billion in FY 2004. Seventy three percent of DOL 

assets are invested in U.S. Government securities, compared to 75 percent in FY 2003. Liabilities totaled $15.0 

billion and $13.9 billion at the end of FY 2004 and FY 2003 respectively, leaving a difference, or net position, of 

$47.4 billion and $50.8 billion at the end of each year. 

 

Net Cost of Operations 

The total net cost of DOL operations in FY 2004 was $56.7 billion, a 16 percent decrease from the prior year. 

The major portion of DOL costs comprise of Income Maintenance programs. Income maintenance expense 

includes costs such as unemployment checks paid to individuals who are laid off or out of work and seeking 

employment as well as payments to individuals who qualify for disability payments due to injury or illness 

suffered on the job. 

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

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

new job or make long-term career plans. DOL’s remaining costs fund programs to protect worker safety, health, 

and employment standards; to safeguard pension and health plan benefits; to provide statistical information; and 

to support departmental management and infrastructure. 
Executive Summary 

FY 2004 Performance and Accountability Report 23

Financing 

The Statement of Financing reconciles the net cost of operations with the obligation of budgetary resources for the 

Department. DOL’s operations are funded primarily by Unemployment Program employer taxes, appropriations 

received, and investment interest earned from various trust funds. 

Statement of Budgetary Resources 

This statement reports the amount of resources received to effectively carry out the activities of the Department as 

well as the status of those resources at the end of the fiscal year. DOL had direct obligations of $61 billion in FY 

2004, a decrease of $10 billion from FY 2003. 

Limitations on the Principal Financial Statements 

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

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

from the books and records of DOL in accordance with formats prescribed by the Office of Management and 

Budget (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. 

Improper Payments Information Act Compliance 

Identifying and reducing improper payments continues to be a major financial management focus for the Federal 

Government in FY 2004. A key component of the President’s Management Agenda is to improve agency 

financial performance through reductions in improper payments. The Office of Management Budget (OMB) 

originally provided Section 57 of Circular A-11 as guidance for Agencies to identify and reduce improper 

payments for selected programs.6

 The Improper Payments Information Act of 2002 (IPIA) broadened the original 

erroneous payment reporting requirements to programs and activities beyond those originally listed in Circular A11. The IPIA requires Agencies to report annually on the extent of improper payments and the actions taken to 

increase the accuracy of payments. 

The Department has historically been engaged in efforts to reduce improper payments, as shown by the Agency’s 

commitment to the Benefit Accuracy Measurement (BAM) program, which statistically quantifies and reports the 

Unemployment Insurance Program’s erroneous payment performance. This measurement program has been in 

place for more than 15 years and includes sampling activities to identify errors, fraud, and abuses. To coordinate 

and facilitate the Department’s efforts under the IPIA, the Chief Financial Officer (CFO) was designated as the 

Erroneous Payment Reduction Coordinator for the Department in FY 2004. The Office of the Chief Financial 

Officer (OCFO) worked with program offices to develop a coordinated strategy to perform annual reviews for all 

programs and activities susceptible to improper payments. This cooperative effort included developing actions to 

reduce improper payments, identifying and conducting ongoing monitoring techniques, and establishing 

appropriate corrective action initiatives. 

Methodology 

To identify Agency programs that meet IPIA reporting requirements, the Department established an inventory of 

existing programs and conducted an initial risk assessment. This risk assessment identified those programs and 

activities with potential improper payments exceeding both 2.5% of outlays and $10 million. The Department 

then conducted statistical sampling for any program or activity meeting the initial risk assessment thresholds, 

except for certain grant programs, which are discussed in the paragraph below. To produce timely and accurate 

results, the Department conducted the sampling using FY 2004 data. Agency programs and activities with an 

estimated annual amount of improper payments in excess of $10 million, and those required by Section 57, were 

identified as meeting the threshold for reporting. 

 

6

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

Investment Act (WIA) as programs required to report annual erroneous payments 
Management’s Discussion and Analysis 

24 United States Department of Labor 

Challenges of Grant Programs for IPIA Compliance 

To achieve compliance for susceptible grant programs, the Department faces challenges similar to those of many 

other Federal Agencies. Often, grant programs are structured to provide Federal funds that empower local entities 

to operate programs based on local need. The Federal Government provides the monies to States, cities, counties, 

private non-profits, and other organizations to distribute these Federal funds. The Federal Government relies on 

single audit report findings from the Single Audit Act to monitor the recipients of these Federal funds. However, 

the single audits do not always contain the details necessary to meet the reporting requirements of the IPIA. 

Specifically, single audits do not have the detailed testing criteria or sufficient reporting requirements to provide 

the data necessary to statistically estimate improper payments within the grant programs. This limits access to the 

data needed to estimate aggregate Federal error rates. 

Accomplishments and Plans for the Future 

In FY 2004, the Department conducted the required initial risk assessment, statistically sampling all programs 

deemed susceptible and established appropriate reduction targets (save for the grant programs). The initial 

assessment identified 12 programs “susceptible” to improper payments. The Department conducted statistical 

sampling for 7 of these 12 programs. The remaining five programs, for which statistical sampling was not feasible 

for FY 2004, were grant programs. Only two of the seven programs (Unemployment Insurance and Federal 

Employees Compensation) met the IPIA reporting requirement thresholds. 

Using analysis of the sampling data, the Department developed corrective action initiatives for the programs 

reporting in the Performance and Accountability Report (PAR). During the past year, many UI initiatives in 

particular delivered results. Specifically, access to the National Directory of New Hires and the Social Security 

Administration Data Exchange will enable States to reduce payments to ineligible recipients, a significant source 

of improper payments. Additionally, the Department is developing an approach to evaluate UI’s corrective action 

initiatives through a performance measurement metrics pilot. This pilot will enable the sharing of best practices 

and comparative performance metrics among States by quantifying the successes associated with each initiative. 

Such data will allow States to direct funding to the initiatives with the most powerful effect on improper 

payments. 

To address the challenges of grant programs the Department co-chaired the government-wide CFO Council’s 

Erroneous and Improper Payments Grants Subcommittee. The Department made significant contributions to 

multiple recommendations that contemplate various solutions for grant programs. In FY 2004, the OCFO 

analyzed the Department’s single audits to determine how modifications to the Circular A-133 Compliance 

Supplements will help to achieve IPIA compliance. The analysis confirmed that the most efficient means to gather 

data regarding Federal grant programs is to use the existing infrastructure provided by the Single Audit Act. The 

Department’s grant analysis also produced recommended changes to testing and reporting requirements of 

Circular A-133 that are necessary to statistically estimate error rates. To further enhance these modifications, the 

Department intends to conduct a pilot for a selected grant program. The pilot would gather data using the single 

audits for a selected grant program and allow the Department to refine its initial Circular A-133 recommendations 

on how to better achieve estimates of improper payment rates at the Federal level. 

Finally, the Department believes that IPIA implementation requires concerted support from component Agencies 

to realize significant results. As such, the Department’s OCFO has initiated the development of assistance 

activities that, while focused on improving financial management and internal controls, will also coordinate 

program Agency efforts to achieve compliance with the IPIA. To ensure accountability for achieving real 

reductions, the Department will integrate IPIA efforts into the existing quarterly financial certification meetings 

with Agency heads. The development of this infrastructure is an important step in supporting the environment of 

accountability. 
Executive Summary 

FY 2004 Performance and Accountability Report 25

Other Significant Information 

Audit Follow up 

The Inspector General Act Amendments of 1988 require explanations for all audit reports with recommendations 

open for more than one year. DOL management and audit communities agree that some of these audit resolutions 

will require several years to complete the corrective action. As of September 30, 2004, 158 audit reports have 

been open for over one year. The total value of open audits of $236 million covers 739 separate 

recommendations. 

DOL agencies and the OIG jointly manage and update an audit tracking system where the current status of each 

open audit is maintained. Final closure of the audit is determined only by final decisions of the reviewing 

officials. Many of these decisions take years before being rendered and the audit closed. 

The most significant of the non-monetary open audit findings are discussed in this report. A listing of all open 

audits is available upon request from the Department’s Office of the Chief Financial Officer. 

2004 Audit Summary as of 9/30/2004 ($ in thousands)

Affected accounts in 158 audits with 739 recommendations over one year old... $236,169 

Less: 

 Value of 18 open recommendations Under administrative law or Federal 

 Court Appeal... $ 14,211 

 Funds put to better use... $ 12,794 

 Amounts referred or in process of referral to the Department of Treasury $ 2,726 

Balance of 158 open audits... $206,438

Debt Management 

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

agency for collection of Federal debts over 180 days delinquent, and DOL cross services all delinquent debts in 

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

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

enforcement programs. During FY 2004, the Department improved its compliance with DCIA and referred $79 

million, which represents 96% of all eligible delinquent debt, to Treasury for collection. The amount of debt 

referred to Treasury in FY2003 was 92%.

User Charges - Policy Review Process 

In accordance with the CFO Act and OMB Circular A-25, department wide guidance has been developed to 

establish policy, procedures, and responsibility for implementing and managing user charges in DOL. The 

guidance includes the biennial review requirements of the CFO Act. DOL continues to review and adjust user 

fees in programs to reflect current costs and market value of these services. 

Prompt Payment Act 

The Prompt Payment Act requires Executive agencies to pay commercial obligations within discreet time periods 

and to pay interest penalties when those time constraints are not met. In FY 2004, of approximately $1.2 billion 

in gross payments, $115,452 was paid in interest fees and penalties. Additionally, during FY 2004, there were 

over 66,000 payments made to vendors and travelers. Of this amount, 1,451 invoices were paid late resulting in 

only 2% of the total payments made during FY 2004 incurred interest penalties. 
Management’s Discussion and Analysis 

26 United States Department of Labor 

Electronic Fund Transfer (EFT) 

On average, DOL made approximately 82 percent of its salary, awards, travel and miscellaneous payments 

electronically in FY 2004. The Department continues to lag behind Government averages due to the low EFT 

participation and the heavy volume in ESA’s medical and benefits programs. These ESA programs account for 

over 71 percent of DOL’s total payment volume. 

DOL EFT Payments 

 FY00 FY01 FY02 FY03 FY04 

Administrative Vendors 64% 69% 74% 96% 78% 

Travel & Miscellaneous 99% 99% 99% 99% 99% 

Salary & Awards 97% 96% 98% 99% 99% 

ESA Programs 27% 26% 28% 53% 44% 

Total 41% 38% 39% 65% 53% 

Source: DOL DOLAR$ and Payroll System EFT reports. 

Management’s Discussion and Analysis 

28 United States Department of Labor 

Management and Performance Challenges 

DOL’s Inspector General identified nine areas considered to be the most serious management challenges facing 

the Department: 

• Reducing Improper Payments 

• Safeguarding Unemployment Insurance 

• Integrity of Foreign Labor Certification Programs 

• Financial and Performance Accountability 

• Systems Planning and Development 

• Information Systems Security 

• Security of Employee Benefit Plan Assets 

• Accounting for Real Property 

• Workforce Investment Act Reauthorization 

Each issue is discussed briefly below, along with Departmental management’s responses. Detailed descriptions 

of the challenges identified by the Office of Inspector General and the Department’s responses are in the 

Management and Performance Challenges section of this report immediately following the Financial Section. 

Reducing improper payments 

Reducing improper payments in DOL administered benefit programs, including Unemployment Insurance (UI) 

and the Federal Employee Compensation Act (FECA) program, is a challenge to the Department. Improper 

payments include those made in the wrong amount, or to an ineligible recipient, or improperly used by the 

recipient. The need for Federal agencies to take action to eliminate overpayments is recognized by the President’s 

Management Agenda (PMA) and the Improper Payments Information Act of 2002. UI overpayments by the 

states are projected by DOL at about $4 billion annually. The Department’s estimate for FECA overpayments, 

which we consider conservative, is $10 million annually. 

DOL response

ETA was very pleased with the enactment of a law based on draft legislation proposed by the Department that 

gives State UI agencies access to the National Directory of New Hires. This will enhance states’ ability to detect 

unreported work violations by UI claimants working in other states or for certain multi-state employers who may 

be all new hires to only one state. ETA is working with the Department of Health and Human Services on the 

details of implementation and will encourage states to use the directory when it becomes accessible. ETA 

continues to promote activities to prevent and detect overpayments. In FY 2004, $2.3 million is being made 

available to states that submitted acceptable proposals to implement or enhance benefit payment control activities 

such as computer cross-matches to detect overpayments, for example, through the use of the states’ Directories of 

New Hires as well as through an electronic data exchange between State UI agencies and the Social Security 

Administration. 

Safeguarding Unemployment Insurance 

Improving the integrity and solvency of the UI program to better serve qualified recipients is a challenge for the 

Department of Labor. During FY 2003, the UI program paid over $53 billion in income maintenance benefits to 

American workers. Among the difficulties faced by the program are inadequate Unemployment Trust Fund 

(UTF) reserves, overcharges for UTF administration, and the program’s susceptibility to fraud schemes involving 

identity theft and organized crime. 

DOL response 

ETA again notes that there is no Federal solvency standard. There is nothing wrong from ETA’s standpoint if a 

state must borrow from the fund. In fact, the greater the drawdown in states’ solvency positions during a 

downturn, the greater the system would impact as an automatic economic stabilizer. 

Integrity of Foreign Labor Certification Programs 

Reducing the susceptibility of DOL foreign labor certification programs to abuse remains a challenge to the 

Department. These programs allow U.S. employers to hire foreign workers when their admission does not 

adversely impact the job opportunities, wages, and working conditions of citizens and legal residents. DOL 

received almost 400,000 employer applications for foreign workers through these programs in FY 2003. 

Problems with the integrity of the labor certification process and fraud against the program persist. This may 
Executive Summary 

FY 2004 Performance and Accountability Report 29

result in economic hardship for American workers, the abuse of foreign workers, and may have national security 

implications when applications are not adequately screened before being certified. 

DOL response 

ETA seeks to add clarification to the observations of the OIG. Our authority is not to investigate aliens for 

possible security risks, but rather to ascertain whether the area of intended employment has been adequately tested 

such that there are no available, willing, able, and prepared U.S. workers for the position being proposed by an 

employer. 

Financial and Performance Accountability 

In order to manage DOL programs for results and fully integrate budget and performance, the Department needs 

timely financial data, a managerial cost accounting system that matches cost information with program outcomes, 

quality performance data, and useful information from single audits that cover 90 % of its expenditures. While 

DOL has received high marks on the President’s Management Agenda scorecard for financial performance and 

budget and performance integration, it faces challenges in fully implementing improvements undertaken in these 

areas. 

DOL response 

OCFO recognizes effective project management as a significant factor affecting the eventual success of the New 

Core Financial Management System Project (NCFMS). Effective and responsive project monitoring, oversight 

and controls, clear and effective direction, and governance systems can mitigate the risk of missing the intended 

end result. Project risks for NCFMS are managed through detailed project plans and resourced work breakdown 

structures (WBS). The project plan and WBS enable effective management of project tasks to be performed at the 

activity level, monitoring resource and time consumption, and comparing baseline estimates with actual costs and 

schedule. The project plan also includes activities associated with testing various software deliveries against 

DOL requirements documents and responding to regulatory requirements and changes. OCFO’s partnership with 

the OIG will help ensure that all Federal financial system requirements and user needs are met. 

Systems Planning and Development 

Developing efficient and effective systems to perform the day-to-day business of DOL is also a challenge to the 

Department. Judicious planning and program management are critical to the implementation of new systems. 

Enduring problems in existing systems must also be addressed in a timely, effective manner. The OIG has 

concerns about insufficient planning for new DOL information technology and other systems. Lack of progress in 

addressing longstanding concerns in established programs like the Davis-Bacon prevailing wage determination 

process are also of concern. 

DOL response 

The Office of Chief Information Officer (OCIO) continues to implement a comprehensive project management 

structure that employs a rigorous system development life-cycle management process. This process includes 

checks and balances to ensure projects are executed according to plan, within budget, and meeting performance 

expectations. Systematic quarterly reviews are conducted during which the OCIO and the Departmental Budget 

Center evaluate the progress of information technology (IT) projects against a range of parameters, including: 

cost, schedule and performance; enterprise architecture alignment; and compliance with security requirements. IT 

development projects are then rated on quarterly review “scorecards” in each of these categories. The OCIO has 

also established policy for and implemented an earned value management system (EVMS) for major IT 

investments in FY 2004, which allows the cost, schedule and performance of major IT investments to be 

monitored over time. 

Information Systems Security 

As is the case for all government agencies, information technology security is an ongoing challenge for the 

Department of Labor because of new threats and increased automation through E-Government initiatives. 

Keeping up with these developments, and providing assurances that DOL systems will function reliably and 

safeguard information assets in an E-government environment require a sustained effort. The security of DOL IT 

systems and data is vital, since it relates to key economic indicators and the payment of billions of dollars to 

workers. 
Management’s Discussion and Analysis 

30 United States Department of Labor 

DOL response 

The OCIO performed a comprehensive review of the Department’s Security Program to measure its efficiency 

and effectiveness. This review included a broad assessment of security vulnerabilities identified by the OIG, as 

well as applicable Departmental IT security policies and procedures. Based on this review, a DOL Plan of actions 

and Milestones (POA&M) was developed which mapped out a strategy to mitigate the identified security 

vulnerabilities, including other program areas needing improvement. Agency senior management were advised 

by the Chief Information Officer to give priority and resources to their agency-specific vulnerabilities prior to 

funding new IT investments. Agencies were also advised to ensure these vulnerabilities and their corrective 

actions were documented in their Plans of Actions and Milestones (POA&Ms). In addition, the OCIO established 

several focus groups comprised of representatives from multiple Departmental agencies to leverage agency 

expertise and assistance in enhancing the Department’s Cyber Security Program. 

Security of Employee Benefit Plan Assets 

Protecting the benefits of American workers, including pensions and health care, remains a significant challenge 

to the Department. DOL is responsible for overseeing and protecting the interests of participants in about 730,000 

private pension plans and six million health and welfare plans covered by the Employee Retirement Income 

Security Act (ERISA). These pension plans hold over $4.8 trillion in assets and cover more than 150 million 

workers. Recent failures in corporate financial management and reporting, as well as in the auditing and 

oversight of these activities, show the need to enhance worker pension and healthcare security by expanding 

safeguards and improving benefit plan regulatory enforcement. 

DOL response 

The Department has responded to the challenge of pension plan fraud and mismanagement with a strong 

enforcement program accomplished through civil and criminal investigations of plans, plan sponsors, fiduciaries, 

and service providers. During FY 2004, the Department’s Employee Benefits Security Administration (EBSA) 

achieved more than $3.1 billion in monetary results and 121 criminal indictments. Further, the Department 

continues to take steps to improve the financial audit process established by the Employee Retirement Income 

Security Act (ERISA). In February 2003, EBSA initiated its second nationwide review to assess the quality of 

employee benefit plan audits using a statistical sample of 300 plan audits, to assess compliance with professional 

accounting and auditing standards; a report of findings is pending. EBSA is also fully committed to enhancing 

health care security by putting an end to the fraudulent and abusive practices of corrupt Multiple Employer 

Welfare Arrangements (MEWAs) and their operators with a three-pronged approach: (1) emphasizing prevention 

by educating employers and consumers; (2) aggressively pursuing civil and criminal enforcement actions to shut 

down scams; and (3) supporting legislation to establish a secure and affordable alternative for small businesses 

looking to purchase health insurance for their workers – Association Health Plans (AHPs). 

Accounting for Real Property 

The Department is challenged to improve accountability for and management of millions of dollars worth of real 

property. The GAO designated Federal real property as a high-risk area in January 2003, and in February 2004 

the position of Senior Real Property Officer for Federal Agencies was established by Executive Order. The 

President’s Management Agenda also includes a government-wide initiative aimed at improving stewardship of 

Federal real property assets. With respect to the DOL, OIG audits have highlighted opportunities for improvement 

in real property management. 

DOL response 

ETA’s Office of Financial Administration Services (OFAS) completed its first annual (physical) inventory of Job 

Corps capitalized real property in January 2004, which effectively resolved differences between Job Corps site 

survey data and the Capitalized Assets Tracking and Reporting System (CATARS). Procedures are in place to 

ensure that OFAS and Job Corp coordinate effectively to ensure future land acquisitions are entered within the 

ETA database in a timely manner. ETA generally agrees with the OIG that an accurate, up-to-date inventory and 

valuation of State Workforce Agency (SWA) real property must be maintained. Currently, ETA sends a letter to 

SWA Administrators every two years asking that ETA property records be reviewed and updated. ETA also has a 

Training and Employment Guidance Letter (TEGL) on SWA real property in the final clearance process, which 

requires states to report changes and/or updates to their real property data by November 30, 2004. States are also 

required to remit the proceeds from real property sales to DOL. 
Executive Summary 

FY 2004 Performance and Accountability Report 31

Workforce Investment Act Reauthorization 

The Department also faces the challenge of improving Workforce Investment Act (WIA) programs through the 

WIA reauthorization process. To date Congress has not reauthorized the WIA legislation. Prior OIG audits 

identified areas in which WIA could be improved to better achieve its goals. Based on our audit work, the 

recommended changes are: increase training provider participation, improve dislocated worker program services 

and outcomes, improve documentation of youth program outcomes, and better assess states’ current WIA funding 

availability. DOL has agreed to most of our recommendations, but many have yet to be implemented. 

DOL response 

As of September 2004, the House and Senate WIA reauthorization bills that were passed in 2003 are still awaiting 

conference. As noted in the examples from specific ETA Program Offices, the Department has taken numerous 

steps to address the concerns outlined in the OIG findings, even while we await further action on WIA 

reauthorization. In addition to the specific steps referenced above, ETA convened two Federal/State Policy 

Forums in 2004 to discuss high-level policy issues such as those identified by the OIG. The continued 

implementation of the President’s High-Growth Job Training Initiative is also helping to address these key issues 

by funding innovative partnerships between the workforce investment system, business and training providers to 

train adults and young people for jobs that are in demand. 
Management’s Discussion and Analysis 

32 United States Department of Labor 

The President’s Management Agenda 

In August 2001, President Bush called for a government that is: 

• Citizen-centered, not bureaucracy-centered; 

• Results oriented, not output oriented; and 

• Market based, actively promoting rather than stifling innovation through competition. 

Together, initiatives created to achieve these goals are referred to as the President’s Management Agenda (PMA). 

The five government wide initiatives are: Strategic Management of Human Capital, Competitive Sourcing, 

Improved Financial Performance, Expanding Electronic Government, and Budget and Performance Integration. 

In addition, DOL is responsible for two of the PMA components found in selected departments: Faith-Based and 

Community Initiatives and Federal Real Property Asset Management. The latter was just added in June 2004. 

The Office of Management and Budget (OMB) regularly assesses all Federal agencies’ implementation of the 

PMA, issuing an Executive Branch Management Scorecard rating of green, yellow or red for both status and 

progress on each initiative. The breakdown by initiative, comparing last year’s ratings with those for FY 2004, is 

indicated in the table below. Under the OMB-led Proud to Be campaign, DOL set ambitious goals, demonstrated 

measurable progress and in just nine months elevated five of its status scores. The Department continues to be 

rated among the best Cabinet agencies in overall implementation of the PMA. Highlights of achievements 

associated with each initiative follow the table. 

Executive Branch Management 

Scorecard 

September 2003 

Status 

September 2004 

Status 

Human Capital 

Yellow Green 

Competitive Sourcing 

Red Yellow 

Financial Performance 

Yellow Green 

E-Government Yellow Green 

Budget & Performance Integration 

Yellow Green 

Faith-Based and Community 

Initiatives 

Yellow Yellow 

Real Property NA 

Red 

Strategic Management of Human Capital 

Competency models are the main criteria for rating candidates and for conducting skills assessments for 

development. Managerial and employee performance plans are being reviewed for clear links to outcome goals. 

A recent survey indicated a time-to-hire of 41days. 

Competitive Sourcing 

DOL has an ambitious plan to compete designated commercial functions by the end of FY 2007. In FY 2005, the 

plan includes 377 FTE – approximately half in Finance and Accounting and over 100 in Education and Training 

functions. 
Executive Summary 

FY 2004 Performance and Accountability Report 33

Improved Financial Performance 

DOL earned elevation in the last quarter of FY 2004 by improving data integration practices. In FY 2005, the 

new Cost Analysis Manager tool will capture and report data that will achieve operational and program 

efficiencies. Improper payments identification and mitigation activity has moved beyond the sampling stage; a 

key priority for FY 2005 is development of approved plans for measurement of error rates and dollar amounts for 

remaining programs. 

Expanding Electronic Government (E-government) 

DOL achieved green status by developing acceptable business cases for all major systems in FY 2004 and by 

reaching other ambitious milestones. In FY 2005, DOL plans release of a Technical Security Manual and 

completion of a revised Capital Investment Plan. 

Budget and Performance Integration 

DOL earned a Green status score on this initiative by improving PART scores, creating efficiency measures for 

all programs, developing capabilities of full and marginal costing of performance goals and institutionalizing use 

of performance results to inform funding and strategic decisions. 

Faith-Based and Community Initiatives 

Since 2001, DOL has awarded 417 grants totaling $140.5 million as part of its ongoing efforts to implement the 

President’s Faith-Based and Community Initiative. The Department is working with workforce boards 

nationwide to increase partnerships with faith-based and community organizations that help transition hard-toserve individuals into employment. DOL recently invested $10 million in the Ready4Work Offender Reentry 

Program to enhance training and employment services at 18 reentry sites nationwide. The Department also 

published two final regulations in July 2004 designed to ensure the equal treatment of faith-based and community 

groups that partner with DOL. 

Federal Real Property Asset Management 

DOL’s priorities for FY 2005 are development of an Asset Management Plan and performance measures for 

operational costs consistent with Federal Real Property Council standards. 
34 United States Department of Labor 

Performance Section 
FY 2004 Performance and Accountability Report 35

Strategic Goal 1: A Prepared Workforce 

Enhance Opportunities for America’s Workforce

A strong national economy depends, in part, on preparing workers to be qualified job candidates possessing skills 

that are relevant to the needs of today’s employers. In addressing this challenge, the Department must work with 

a wide spectrum of job seekers, including those with special needs such as the disadvantaged, people with 

disabilities, veterans, disadvantaged youth, and those who have lost their jobs due to foreign competition. 

Addressing the job seekers’ needs is further complicated by the dynamics of the changing workplace. New 

technologies, increased competition, and changing labor markets have prompted employers to downsize, change 

employment patterns, and seek alternative labor sources such as qualified foreign workers. 

 

While employers and workers bear ultimate responsibility for adapting to these challenges, the Department has a 

leadership responsibility to support the needs of the changing workforce and position the U.S. for continued 

economic development and growth. This aspect of our mission is captured by the first strategic goal – A 

Prepared Workforce. Agencies with programs supporting this goal are the Employment and Training 

Administration (ETA), Veterans’ Employment and Training Service (VETS), the Bureau of Labor Statistics 

(BLS), and the Office of Disability Employment Policy (ODEP). 

The Department’s performance in achieving this goal is determined by accomplishments organized at the outcome 

goal level and measured at the performance goal level. Three broad objectives – Outcome Goals 1.1, 1.2 and 1.3 

– support Strategic Goal 1, and they contain twelve performance goals (see table below). In FY 2004, the 

Department made further progress in positively impacting employment outcomes for Americans – despite the 

challenge of a persistently sluggish economy and its disproportionate effect on DOL target populations. Although 

just half of the performance goals were achieved, most targets were reached and all programs documented 

improved results. 

Outcome Goal 1.1 − Increase Employment, Earnings, and Assistance 

6 performance goals achieved & 2 not achieved 

WIA Adult (1.1A) – achieved Employment, retention, and earnings improved. 

Employment Service (1.1B) – 

achieved 

All five targets were reached, including entry, retention, job listings and job 

searches. 

Apprenticeship (1.1C) – achieved Targets for new apprentices and new programs were both reached. 

Disability Employment Policy 

(1.1D) – achieved 

People served and the entered employment rate exceeded targets; baselines 

were established for retention rate and effective practices identified. 

Veterans’ public labor exchange 

(1.1E) – achieved Both employment and retention rate targets were reached. 

Homeless veterans’ program (1.1F) 

– achieved The single indicator target (entered employment rate) was reached. 

Dislocated workers (1.1F) – not 

achieved 

Employment and retention targets were both reached, but the earnings 

replacement target was not. 

Trade Adjustment Assistance 

(1.1G) – not achieved 

The retention target was reached. Entered employment and earnings 

replacement targets were not reached.

Outcome Goal 1.2 – Increase the Number of Youth Making A Successful Transition to Work 

1 performance goal achieved & 2 not achieved

WIA Youth (1.2A) – achieved Diploma attainment for younger youth and entry to employment and 

retention for older youth all increased substantially. 

Job Corps (1.2B) – not achieved Targets for diplomas and average hourly wages were reached, while 

retention fell short. 

Youth Opportunity Grants (1.2C) – 

not achieved 

Diploma attainment and entry to employment saw healthy gains despite 

failing to reach targets but employment retention declined significantly. 
36 United States Department of Labor 

Outcome Goal 1.3 – Improve the Effectiveness of Information and Analysis On The U.S. Economy 

1 performance goal not achieved

Bureau of Labor Statistics (1.3A) – 

not achieved 

Targets were reached or substantially reached for seven of the eight 

performance indicators. 

The following charts illustrate DOL’s strategic goal net costs in FY 2004, with A Prepared Workforce shares set 

apart. The first allocates total Departmental costs of $56.676 billion; the second allocates an adjusted net cost of 

$11.102 billion that excludes major non-discretionary items associated with Strategic Goal 2.7

 Net costs of this 

goal in FY 2003 were $6.923 billion. The increase occurred in large part because of relocation of the WIA 

Dislocated Worker and TAA programs to this goal from Goal 2; together, these two programs cost approximately 

$2 billion annually. 

FY 2004 Strategic Goal 1

Percent of Net Cost not including Income 

Maintenance 

3-Quality

9%

1-Prepared

78%

2-Secure

13%

The outcome goals and programs listed above, along with their results, costs, and future challenges are discussed 

in more detail on the following pages. 

 

7

 The excluded costs are referred to as Income Maintenance – unemployment benefit payments to individuals who are laid off 

or out of work and seeking employment ($41.424 billion) plus disability benefit payments to individuals who suffered injury 

or illness on the job ($4.150 billion). 

FY 2004 Strategic Goal 1 - $8.654 billion

Percent of DOL Net Cost

3-Quality

2%

1-Prepared

15%

2-Secure

83%
Outcome Goal 1.1 

FY 2004 Performance and Accountability Report 37

Outcome Goal 1.1 – Increase Employment, Earnings, and Assistance 

America’s engine of prosperity is its skilled workforce. The Department assists workers and employers with 

valuable information and specific training to help them take full advantage of the constantly changing demands 

and resources in the labor market. Central to this effort is a nationwide network of approximately 2,000 DOLfunded One-Stop Career Centers which assist communities to match adults to work and skill enhancement 

opportunities. This comprehensive workforce development system also helps businesses meet their ongoing 

recruitment and human services needs. For those with disabilities, the One-Stop Centers have improved access to 

their facilities and services by installing assistive technologies. DOL is also making a special effort to help our 

nation’s military service members adjust to and re-enter the civilian workforce, largely by providing priority 

services at all One-Stop Centers pursuant to the Jobs for Veterans Act of 2002. 

The Employment and Training Administration (ETA) and the Veterans’ Employment and Training Service 

(VETS), with support from the Women’s Bureau, the Office of Faith-Based and Community Initiatives and the 

Office of Disability Employment Policy (ODEP), operate a number of programs that provide the information, 

assistance, and skill-building opportunities that lead to increased employment and earnings. In the first column of 

the table below appear the numbers, agencies, reporting periods8

, goal statements, and achievement for DOL 

performance goals associated with this outcome goal. The second column presents a summary of targets reached, 

substantially reached, and not reached for the indicators associated with each performance goal and the most 

significant result(s) for this past year. 

Goal (Agency) – Period 

Goal Statement [Achievement] Performance Summary 

1.1A (ETA) – PY 2003 

Increase the employment, retention, and earnings of 

individuals registered under the Workforce Investment Act 

Adult program. [Achieved]

The WIA Adult program reached all three targets 

(employment, retention, and earnings). Average earnings 

change improved 12% over PY 2002. 

1.1B (ETA) – PY 2003 

Improve the outcomes for job seekers and employers who 

receive public labor exchange services. [Achieved]

All five targets were reached by the Employment Service. 

Job openings listed rose by over two million (23%) from PY 

2002. 

1.1C (ETA) – FY 2004 

Strengthen the registered apprenticeship system to meet the 

training needs of business and workers in the 21st Century. 

[Achieved]

Both Apprenticeship program targets were reached; new 

programs in High Growth Job Training Industries rose 32% 

to 526. 

1.1D (ODEP) – FY 2004 

Provide national leadership to increase access and 

employment opportunities for youth and adults with 

disabilities receiving employment, training, and employment 

support services by developing testing, and disseminating 

effective practices. [Achieved]

ODEP reached all four of its targets. The number of people 

served nearly tripled (from 2391 to 6397) and the entered 

employment rate at pilot sites rose to 19.2%. Baselines were 

established for the retention rate and for effective practices 

identified. 

1.1E (VETS) – PY 2003 

Increase the employment and retention rate of veteran job 

seekers registering for public labor exchange services. 

[Achieved]

Both targets (employment and retention rates for veterans 

receiving public labor exchange services) were reached – the 

latter by a margin of seven percentage points. 

1.1F (VETS) – PY 2003 

Veterans enrolled in Homeless Veterans’ Reintegration 

Program (HVRP) enter employment. [Achieved]

The homeless veterans’ program’s single indicator target 

(entered employment rate) was reached, exceeding 60% for 

the second year in a row. 

 

8

 Those applying to a Program Year (PY) are reporting on the period from July 1, 2003 to June 30, 2004 due to the forward 

funding mechanism of the Workforce Investment Act (WIA) of 1998. 
Performance Section 

38 United States Department of Labor 

Goal (Agency) – Period 

Goal Statement [Achievement] Performance Summary 

1.1F9 (ETA) – PY 2003 

Increase the employment, retention, and earnings 

replacement of individuals registered under the WIA 

Dislocated Worker program. [Not Achieved]

Dislocated workers’ employment and retention targets were 

both reached, but the earnings replacement target was not. 

Trends in entry and retention are positive but earnings are 

not keeping up. 

1.1G (ETA) – FY 2004 

Increase the employment, retention, and earnings 

replacement of workers dislocated in important part because 

of trade and who receive trade adjustment assistance 

benefits. [Not Achieved]

Only the retention target for Trade Adjustment Assistance 

was reached. Entered employment and earnings 

replacement targets were not reached. All three trends are 

still down, with entry and retention only slightly so but 

earnings on a steady slide.

Net Cost of Programs 

FY 2004 program costs of $5.4 billion supported Employment and Training Administration programs to provide 

employment and training for adults through formula grants to States, registered apprenticeship, and employment 

services; programs for dislocated workers; Veterans’ Employment and Training Service assistance to veterans, 

including those who are homeless; Office of Disability Employment Policy efforts to develop, evaluate, and 

disseminate strategies to improve employment outcomes for job seekers with disabilities; Office of Faith Based 

and Community Initiatives contracting outreach; and Women's Bureau efforts to increase job opportunities for 

women. 

The $2 billion increase in costs for Outcome Goal 1.1 resulted almost entirely from moving the Dislocated 

Worker Program and Trade Adjustment Act performance goals from Strategic Goal 2 (Outcome Goal 2.3 in the 

DOL FY 2003 Performance and Accountability Report) and into Outcome Goal 1.1 in Strategic Goal 1. 

Therefore, these costs do not represent an increase in DOL costs but a shift of costs from one strategic goal to 

another. 

Outcome Goal 1.1

Net Costs ($Billions)

3.0 3.1 3.2

3.6 3.4

5.4

0

1

2

3

4

5

6

1999 2000 2001 2002 2003 2004

Fiscal Year

 

9 Listed as Performance Goal 2.3A in DOL FY 2003 Annual Performance Plan
Outcome Goal 1.1 

FY 2004 Performance and Accountability Report 39

Results Summary 

Of the eight performance goals listed, DOL achieved six and did not achieve two. Overall, these programs 

reached targets for placing participants in the right jobs. However, due to continued challenging economic 

conditions, improvement of earnings was once again elusive for many of our programs. 

Performance for most of DOL’s employment and training programs is measured by entered employment – the 

percentage of participants who obtain jobs subsequent to receipt of services – and by retention – the percentage of 

those who obtained jobs who are still employed six months later. Earnings are another important indicator but 

until very recently, such data were not collected by all grantees, nor were the measures uniform. The charts below 

plot, for each program that tracks employment and retention rates, the result for the previous year (if available), 

the target for the reporting period and its actual (or estimated) result. 

There are significant differences in entry and retention rates between programs; this can be explained by the types 

of services offered and the populations they serve. But year-on-year entry rates did not change significantly; in 

fact, they were unchanged for three of the five programs with data, increased slightly for one and declined slightly 

for another. This lack of progress was not entirely surprising; given the slow economic recovery, several targets 

were below prior year actual levels. The trend in retention rates is more positive. For the three programs with 

prior year data, one held steady, another increased slightly and a third went up by several percentage points. This, 

too, is consistent with what we know about the economic environment. Workers tend to hold on to positions 

when growth is less robust. Strategies that made positive contributions were: enhanced use of technology to 

provide universal access and target job search and training; further integration of the workforce development 

system via co-enrollment; expanded outreach to businesses (especially in high growth industries); and increased 

use of competitive grant processes. 

Entry to Employment

40%

45%

50%

55%

60%

65%

70%

75%

80%

85%

Adult

Employment Service

VETS Labor Exchange

HVRP

Dislocated Worker

Trade Adjustment

DOL Program

Prior Year Target Result

Retention in Employment

50%

55%

60%

65%

70%

75%

80%

85%

90%

95%

Adult

Employment Service

VETS Labor Exchange

Dislocated Worker

Trade Adjustm ent

DOL Program

Prior Year Target Result
Performance Section 

40 United States Department of Labor 

Thanks to a Tennessee Customized Employment 

Partnership (TCEP) program funded in part by 

DOL’s Office of Disability Employment Policy 

(ODEP), Brandi recently started work with 

Community Kids Child Care. She really enjoys 

interacting with the children and their families and 

appreciates the respect they show her. She also 

appreciates her higher salary. When she received 

her first paycheck, she tearfully told her Career 

Specialist “WOW! I think I’ll take my mom out to 

dinner and give my tithes to my church.” Brandi 

exited high school at age 22 with a special 

education diploma and was referred to TCEP two 

years later by a Vocational Rehab Counselor who 

worked with students transitioning out of high 

school. At that time, Brandi was working part-time 

but unhappy with her job because it featured very 

little social interaction. Brandi participated in a 

self-determination workshop series at a Career 

Center. Following the workshop, a Career Specialist helped Brandi develop an employment plan. As part of her plan, Brandi 

participated in National Disability Mentoring Day. The Career Specialist knew that Brandi enjoyed children and discovered 

the teacher’s aide opportunity at Community Kids The Career Specialist also helped her learn how to use mass transit 

(buses), including transfers and various routes, to commute to and from work. 

Photo credit: Valarie Bouchard 

Future Challenges 

One lesson from the first four years of WIA is that separate funding streams for services can have a negative 

impact on program performance due to duplication of the services and additional administrative support. The 

President proposed to consolidate funding streams for adult, dislocated worker, labor exchange and youth services 

when WIA is reauthorized. DOL will further implement its demand-driven strategy of identifying employers’ 

needs and using that information to identify skilled workers and to develop suitable training programs. This 

includes expanded outreach to employers through the Business Relations Group (BRG), which encourages highgrowth industries to list jobs with the one-stop delivery system. In addition, the Department is attempting to 

leverage its resources wherever possible by taking advantage of other workforce investment system services and 

focusing DOL efforts on core employment and training services. Another effort aims at providing an integrated 

service system for trade workers; alignment of Federal and State processes will enhance program results. 

Management challenges include fully implementing the Jobs for Veterans Act of 2002, which calls for 

consideration and accommodation in integrating services for veterans at the State and local levels. An older 

challenge is data availability and timeliness, which received attention by the Government Accountability Office 

(GAO) in its June 2004 report States and Local Areas Have Developed Strategies to Assess Performance, but 

Labor Could Do More to Help (see Study 9 in Appendix 2). Similarly, the Department’s Office of Inspector 

General has questioned whether data reported by States for WIA performance were accurate and supportable. In 

response, DOL developed a data validation methodology, and provided handbooks, user guides, and software for 

all State workforce agencies. States were required to validate their PY 2003 WIA performance data reports using 

this methodology.

The Trade Adjustment Assistance (TAA) program has struggled with performance issues for several years, but is 

taking remedial action. In response to recommendations from the Program Assessment Rating Tool (PART) 

reviews in recent years, new agreements between the Secretary of Labor and the States’ Governors will include 

performance expectations to encourage better results. Additionally, TAA will adopt the common measures for 

Federal employment and job training programs, with implementation complete by late FY 2005 or early FY 2006. 

Use of common measures will align Trade Act program measures with those for the WIA Dislocated Worker 

program and promote the goals of co-enrollment and coordination between the two programs. Also, DOL is 

conducting a five-year impact evaluation of the TAA program (final report in FY 2010). Recommendations will 

be used to improve performance, to assess implementation of the Trade Reform Act and to inform the TAA 

reauthorization process. 
Outcome Goal 1.1 

FY 2004 Performance and Accountability Report 41

Increase Employment, Retention, and Earnings for Qualified Adults 

Performance Goal 1.1A (ETA) – PY 2003 

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

Adult program. 

Indicators 

71 percent will be employed in the first quarter after program exit; 

82 percent of those employed in the first quarter after program exit will be employed in the third quarter after 

program exit; and 

The average earnings change will be $3,100 for those who are employed in the first quarter after program exit and 

are still employed in the third quarter after program exit. 

Program Perspective 

The Workforce Investment Act (WIA) Adult program is designed to help adult participants acquire the skills and 

jobs that they need to compete in a global economy. Funds are provided by formula to states and local 

communities allowing them to operate statewide networks of One-Stop Career Centers, which provide core, 

intensive, training, and supportive services to workers and employers. DOL uses three indicators to evaluate the 

success and effectiveness of WIA employment and training services for adults: entered employment, retention 

and earnings change. A high entered employment rate indicates that participants have improved financial 

security. A high retention rate indicates stability of participants’ new positions. Higher earnings reflect effective 

assistance, especially of training services. 

National labor market conditions strongly influence the WIA Adult program outcomes. In periods of economic 

expansion, as experienced in the late 1990s, outcomes met or exceeded targets. In recent years, as the economy 

began to recover from the recession of 2001, further improvement in employment and retention rates and earnings 

change has been more difficult. Despite this challenge, DOL continued to improve its integrated one-stop 

delivery system, thereby allowing the program to raise standards for performance beyond FY 2000 baselines. 

Over the past four years, targets for entered employment and retention increased a total of six and seven 

percentage points, respectively. The earnings change target has been adjusted to more accurately reflect the 

current economic operating context. 

Results, Analysis and Future Plans 

Performance Goal 1.1A (ETA) was achieved. 

• 74 percent were employed in the first quarter after program exit. 

• 85 percent were employed in the third quarter after program exit. 

• $3,260 was the increased average earnings for those employed in the third quarter after program exit. 

The entered employment rate of 74 percent and the 

employment retention rate of 85 percent exceeded the 

targets by three percentage points, respectively. The 

earnings change of $3,260 exceeded the target by $160. 

As illustrated in the charts, conditions are generally 

improving. The entered employment and retention 

outcomes have remained above the targets, while the 

outcomes for earnings increase rose significantly from 

$2,900 in PY 2002 to $3,260 in PY 2003. 

Entered Employment

60%

65%

70%

75%

80%

2000 2001 2002 2003 2004

Program Year

Result Target
Performance Section 

42 United States Department of Labor 

The demand for goods and services over the past year, 

as indicated by the major economic indicators, has a 

positive effect on the people served by the Adult 

program. The drop in the unemployment rate from 6.3 

percent last year (CY 2003) to 5.6 percent gave a boost 

to the program outcome and partially accounts for the 

gains in earnings above the target. 

To continuously improve the outcomes of WIA 

participants, the Department is producing new tools, 

creating incentives, and simplifying the coordinating 

process. Key strategies include: 

Strengthening business relationships to assure 

demand-driven services and to better identify and fill 

jobs in growth occupations. The intent is to focus the 

workforce investment system on the President’s High 

Growth Job Training Initiative. The purpose of which 

is to serve America’s growing industries and to match 

workers with jobs in demand. 

Assuring universal access to the workforce 

investment system with emphasis on targeted 

outreach. DOL continues to provide incentives for 

state and local program operators to increase the 

number of qualified referrals to growth occupations from traditionally underutilized labor pools. 

Leveraging WIA resources to increase total resources available to prepare the workforce. DOL will work with 

other Federal agencies to set optimum conditions allowing for co-enrollment in programs without creating 

negative consequences for performance levels.

Craig has good reason to be a big believer in the 

public workforce investment system. In 2002, 

shortly after learning of his infant daughter’s 

serious illness, Craig received the difficult news 

that he would be losing his job. The months ahead 

proved strenuous, as his family of four fought to 

meet their most basic needs. After a futile job 

hunt, Craig learned about Job Training for Beaver 

County, Inc. (JTBC) at the Beaver County 

CareerLink of Pennsylvania. He was able to take 

courses in A+ and Network+ Computer Training 

and received a graduating certificate in August 

2002. His case manager referred him to the Job 

Search Training Program (JSTP) sponsored by 

JTBC. JTBC staff helped build Craig’s 

interviewing skills and gave him the confidence to 

land a computer Network Administrator job with 

Challenges: Options in Aging – a Catholic 

Charities program operated through the Diocese of 

Pittsburgh. Currently, Craig is the troubleshooter 

for a six county area. With the training he received from JTBC, he has been able to go from a minimum wage job with no 

future to a job that gives him a stable career ladder and yearly wage increases. Craig and his family are grateful to the Job 

Training for Beaver County, Inc. and now believe the sky is the limit! 

Photo credit: Jarod McDowell 

Retention

76%

78%

80%

82%

84%

86%

2000 2001 2002 2003 2004

Program Year

Result Target

Earnings Replacement

$2,500

$2,700

$2,900

$3,100

$3,300

$3,500

$3,700

$3,900

2000 2001 2002 2003 2004

Program Year

Result Target
Outcome Goal 1.1 

FY 2004 Performance and Accountability Report 43

Management Issues 

In response to recent concerns raised by the Office of Inspector General regarding whether data reported by States 

for WIA performance were accurate and supportable, DOL developed a data validation methodology, and 

provided handbooks, user guides, and software for all State workforce agencies. States were required to validate 

their PY 2003 WIA performance data using this methodology.

One lesson from the first four years of WIA is that separate funding streams for services can have a negative 

impact on program performance because of the duplication of the services and additional money spent on 

administrative support. The Department proposes to address this barrier by consolidating these funding streams 

when WIA is reauthorized. 

The Government Accountability Office (GAO) released a report on WIA in June 2004: States and Local Areas 

Have Developed Strategies to Assess Performance, but Labor Could Do More to Help (Study 9 in Appendix 2). 

The report examined data availability and timeliness issues. ETA also contracted with an independent research 

team to conduct an evaluation of the Workforce Investment Act of 1998. The study, The Workforce Investment 

Act in Eight States: State Case Studies from a Field Network Evaluation (Study 21 in Appendix 2), examined 

national goals and the roles of Federal, State, and local partners in implementing the law in eight states. Another 

independent study, Creating Partnerships for Workforce Investment: How Services are Provided Under WIA

(Study 20 in Appendix 2), presents findings from case studies of sixteen local boards across eight states that may 

help other local boards in developing local systems.
Performance Section 

44 United States Department of Labor 

Improve Employment for Public Labor Exchange Users

Performance Goal 1.1B (ETA) – PY 2003 

Improve the outcomes for job seekers and employers who receive public labor exchange services. 

Indicators 

58 percent of job seekers who register with the public labor exchange will enter employment with a new employer 

by the end of the second quarter following registration; 

72 percent of job seekers will continue to be employed two quarters after initial entry to employment with a new 

employer; 

The number of job openings listed with the public labor exchange (with State workforce agencies and America’s 

Job Bank (AJB) will increase 1% over PY 2002, as adjusted for economic fluctuation. PY 2002 result was 10.2 

million (6.1 million listed with State workforce agencies and 4.1 million listed with AJB); 

The number of job searches conducted by job seekers from America’s Job Bank will be collected to determine a 

baseline for setting future performance targets; and 

The number of resume searches conducted by employers from America’s Job Bank will be collected to determine 

a baseline for setting future performance targets. 

Program Perspective 

The purpose of the public labor exchange is to match labor market demand with supply by providing businesses 

that have employment openings with appropriate job seekers to fill their vacancies. As part of this process, the 

public labor exchange system receives and publishes job openings, either through businesses posting their 

openings with State workforce agencies, or through America’s Job Bank, a national Internet site that provides 

another access point to the public labor exchange system. 

The public labor exchange system’s effectiveness is measured by the success of job seeker customers in finding 

and retaining employment. The performance of the public labor exchange is largely a function of the labor 

market – the number and quality of jobs and workers available. For example, during Program Year 2003 (July 

2003 to June 2004), the nation’s unemployment rate dropped from 6.2 percent to 5.6 percent. In this period, ETA 

saw an increase in the number of job openings posted with State workforce agencies and America’s Job Bank, in 

particular in the information, professional and transportation industries. Second, ETA encouraged States to 

register job seekers that receive automated, self-directed and/or staff-assisted services. Job seekers using selfservice tools have been shown to have a positive impact on the entered employment rate, since they are generally 

more job ready than other (traditional) customers of the public labor exchange. 

Results, Analysis and Future Plans 

Performance Goal 1.1B (ETA) was achieved; all indicator targets were reached. 

• 61 percent of job seekers registered with the public labor exchange entered employment with a new 

employer by the end of the second quarter following registration. 

• 80 percent of the job seekers that entered employment continued to be employed two quarters after initial 

entry to employment with a new employer. 

• 6.6 million job openings were listed with the State workforce agencies and 5.9 million were listed with 

America’s Job Bank for a total of 12.5 million openings in PY 2003. 

• A baseline of 169 million job searches conducted by job seekers on America’s Job Bank was established 

in PY 2003 and will be used to set future performance targets. 

• A baseline of 8 million resume searches conducted by employers on America’s Job Bank was established 

in PY 2003 and will be used to determine a baseline for setting future performance targets. 

The reports submitted by the States for the quarter ending June 30, 2004 served as the first set of reports reflecting 

a complete program year (PY 2002) of entered employment outcome data on job seekers registered with the 
Outcome Goal 1.1 

FY 2004 Performance and Accountability Report 45

public labor exchange. These reports also contained two quarters of employment retention data on a subset of PY 

2002 labor exchange registrants for whom retention outcomes using wage record matches are available. The 

number of job openings in PY 2003 represents a roughly 22.5 percent increase over the PY 2002 level. The 

entered employment rate and the retention rate together function as true indicators of the labor exchange’s 

success. The entered employment rate points to the ability of the workforce system to meet the employment 

needs of workers, the majority of whom are unemployed, in an efficient and cost effective manner. The retention 

rate outcome shows registrants are being placed in jobs that match employers’ needs and the individuals’ 

interests. Among strategies to continually improve performance, DOL has aggressively expanded outreach efforts 

to employers through the Business Relations Group (BRG) which has worked to partner high-growth industries to 

list jobs with the one-stop delivery system. This dialogue is helping to match willing jobseekers with willing 

employers. 

In PY 2004, the Employment Service will actively participate in DOL efforts to research statistical models for 

goal setting purposes and implement a pilot with the Veterans Employment and Training Service to move toward 

an earnings gain measure for the public labor exchange. 

 

Electronic tools are changing the way the public 

workforce system does business by making 

important employment services just a “click” 

away. The Employ Kentucky Operating System 

(EKOS), a new electronic self-registration 

system for employers and job seekers, is helping 

match qualified job seekers to employers’ 

needs. Employers can register jobs and search 

for qualified applicants using the system’s userfriendly features while job seekers receive 

phone calls and e-mails alerting them to job 

openings that fit their occupation criteria. 

Currently, there are over 500,000 job titles listed 

in the system. Employers who place job orders 

in EKOS have exposure to over 200,000 

registered applicants. The goal remains simple: 

Help American workers with the right skills find the right jobs. 

Photo credit: Corlene Schnitzen and Darnell Nunnery 

Management Issues 

The Employment Service (ES) is a participant in ETA’s data validation initiative which ensures the reliability of 

performance data submitted to ETA from state partners. A significant number of states are using the ES Report 

Validation Software and/or the Data Analysis and Reporting Tool (DART) software, both of which have been 

validated as accurate by ETA. In addition, a data warehousing project was recently completed at the America’s 

Job Bank Service Center against which queries can now be run to provide more accurate counts of the number of 

job openings received and job and resume searches conducted on America’s Job Bank. 

The primary management issue facing the Employment Service is accomplishing closer integration of the 

program with the Workforce Investment Act (WIA) Adult and Dislocated Worker programs, either through 

reauthorizing the WIA and possibly consolidating all adult services into a single funding stream or through policy 

guidance and administrative and/or regulatory action. The implementation of the common measures initiative and 

its associated single data collection and reporting system to capture outcomes will also be a major activity for the 

Employment Service over the coming year.
Performance Section 

46 United States Department of Labor 

Satisfy High Growth Industry Labor Needs via Apprenticeships 

Performance Goal 1.1C (ETA) – FY 2004 

Strengthen the registered apprenticeship system to meet the training needs of business and workers in the 21st

Century. 

Indicators 

Increase the number of new programs registered by OATELS staff in industries that comprise High Growth Job 

Training Industries from the FY 2003 result of 359 to 366; and 

Increase the number of new apprentices registered by OATELS staff over the established baseline from 67,401 to 

68,592. 

Program Perspective 

Registered Apprenticeship combines on-the-job learning and related technical and theoretical instruction in a 

skilled occupation. Industries develop Apprenticeship programs based on the skills and knowledge that these 

industries require of their employees. Sponsors voluntarily operate and cover costs of the programs that are 

registered with the DOL or a federally approved State Apprenticeship Council (SAC) or Agency. Registered 

Apprenticeship program provides positive returns on investment, as it requires a formal employer-employee 

relationship, including provision of incremental wage gains during the instruction period. At the successful 

completion of the instructional training and on-the-job learning, apprentices receive Certificates of Completion 

from DOL that are portable and recognized nationally. 

The President’s High Growth Job Training Initiative (HGJTI) identified the following as growth industries: 

aerospace; automotive; biotechnology; energy; geospatial; health care; high-technology manufacturing; 

hospitality; information technology; retail trade; and transportation. DOL seeks to strengthen the National 

Registered Apprenticeship System to provide more opportunities for workers to find jobs requiring recognized 

credentials. It allows employees to get the skilled workers that they need to stay competitive and keep the 

economy growing. 

Results, Analysis and Future Plans 

Performance Goal 1.1C (ETA) was achieved. The number of new apprenticeship programs in industries that 

comprise the HGJTI was 526, exceeding the target of 366, and the number of new apprentices registered by 

ETA’s Office of Apprenticeship Training, Employer and Labor Services (OATELS) staff was 69,597, compared 

to its target of 68,592 apprentices. 

OATELS has promoted, marketed, and provided technical assistance to new and existing sponsors to develop, 

register, and maintain apprenticeship programs and apprentices, and provided technical assistance to SAC staff. 

Consultative sales techniques have been instrumental in the program’s success. Since the initial 

Consultative/Solutions Sales Techniques training began in June 2003, the number of programs and apprentices in 

new and emerging High Growth Jobs Training Initiative (HGJTI) industries has grown significantly. Activities in 

HGJTI are thriving throughout the country. Employers in new and emerging industries are becoming increasingly 

interested in using the apprenticeship concept to develop professional workers. 

DOL mounted several pilot programs to improve OATELS. President Bush showcased the National Information 

Technology Apprenticeship System project at a community college in Arizona. This pilot is designed to improve 

the productivity of American information technology (IT) workers, lower the cost of hiring and training for 

American employers and provide a structured approach to IT career development throughout the national 

workforce investment system. Another pilot, the National Institute for Metalworking Skills (NIMS), has designed 

the National Competency Based Apprenticeship System. This new system of training and credentialing 

fundamentally changes and dramatically improves the way that skilled workers are trained in the American 

metalworking industry. Key to the new system is the integration of standards-based credentialing assessments 

linked with relevant on-the-job-training. This provides maximum flexibility for apprentices and employers alike, 
Outcome Goal 1.1 

FY 2004 Performance and Accountability Report 47

increases precision and productivity through the introduction of technology as part of the skill standards, and 

opens career ladders through the metalworking industry. 

Charles had his dreams of becoming a world-class 

athlete come to fruition the day he was drafted by 

the Los Angeles Rams in 1993. Charles had 

graduated with a Bachelor of Arts degree from the 

University of Wisconsin at Madison, earlier that 

same year. He continued this dream until an 

injury ended his professional football career in 

1997. Unwilling to be discouraged, Charles set out 

on a new path to further his skills and find new 

success. In 1999, Charles registered as an 

Electrician Apprentice where he has worked his 

way up to Journeyperson Electrician this past June 

2004. He has had the opportunity to work on high 

profile assignments such as the Center for the Arts 

Project in Madison, Wisconsin. Though his salary 

is less than his football playing days, his current 

yearly earning is a competitive $52,300. Charles 

credits his apprenticeship experience with giving 

him the skills to remain self-sufficient and the 

opportunity for new found job success. According to Charles, football and apprenticeship are similar. In football, there is a

start and finish process (touchdown). In apprenticeship, you need to keep learning and honing skills, troubleshoot, and train 

other apprentices as you pass on the skills. He has his eyes set on a new prize, Master Electrician! 

Photo credit: Debra J. Schanke and Mary C. Harrington 

Management Issues 

During FY 2004, modifications to the Registered Apprenticeship Information System (RAIS) were made. RAIS 

provides extensive data regarding the Apprenticeship system itself, participants, programs, and demographics. 

Some mandatory fields for reporting were instituted as well as restrictions on reported values. These changes 

have made RAIS a more reliable database that is easier to use for detailed analysis. As part of the OATELS 

performance management process, each region was required to conduct an audit of 80 percent of all existing 

Apprenticeship programs to insure that all data and fields were complete and correct. Preliminary reports from 

the regions indicate that over 70 percent of the RAIS data has been reviewed. While the Apprenticeship program 

has made significant progress in improving data quality over the past years, there is still a need to continue to 

improve data quality through ongoing data validation. Efforts continue to obtain more participation by SAC 

States to make RAIS a reliable database of the National Registered Apprenticeship System. 

Expansion of new Registered Apprenticeship programs is dependent upon economic conditions. If certain 

industries are downsizing their workforce, they are less likely to institute new Registered Apprentice programs. 

Conversely, as success in the new and emerging high growth jobs and industries demonstrates, there are 

opportunities to expand the Apprenticeship programs. 

FY 2005 will be a transitional year for evaluating performance in the Apprenticeship program. This will be the 

first year that the program will be using measures of employment, retention, wage gain, and efficiency. However, 

due to data limitations, the program will not be able to calculate outcomes based on the Common Measures 

methodology. Rather, the program will have proxy measures that resemble the Common Measures. This first step 

will allow the program to collect valuable data that will help inform the establishment of baselines. Actions to 

resolve data issues will continue to be pursued in FY 2006 to enable ETA to use the Common Measures for the 

Apprenticeship program. 
Performance Section 

48 United States Department of Labor 

Increase Employment for Persons with Disabilities

Performance Goal 1.1D (ODEP) – FY 2004 

Provide national leadership to increase access and employment opportunities for youth and adults with 

disabilities receiving employment, training, and employment support services by developing testing, and 

disseminating effective practices. 

Indicators 

Increase by 5% the number of people with disabilities served through ODEP projects. 

Increase by 5% the entered employment rate at pilot sites. 

Increase by 10% the 3-month and 6-month retention rates for people with disabilities served by the pilots; and 

Increase by 10% effective practices identified through pilot projects and other research-related initiatives. 

Program Perspective 

The Office of Disability Employment Policy (ODEP) provides national leadership on disability employment 

policy to the Department of Labor (DOL) and other Federal agencies. ODEP develops and influences disability 

employment policy through reviewing legislation and policies; collaborating on inter- and intra-agency Federal 

efforts; partnerships with State, local, and non-governmental stakeholders; designing and conducting research 

studies and pilot projects; and promoting policies, practices and initiatives that increase the employment of people 

with disabilities. ODEP implements the employment-related goals of President Bush's New Freedom Initiative. 

This initiative expands research in and access to assistive and universally designed technologies, further integrates 

Americans with disabilities into the workforce and helps remove barriers to participation in community life. 

According to the U.S. Census Bureau, among the non-institutionalized population aged 16-64 in the United 

States, 33 million people have disabilities. Of this group, 18.6 million people with disabilities, or 56 percent, are 

employed. According to the Department of Labor’s Bureau of Labor Statistics (BLS), projections for 

employment between 2002 and 2012 show an increase of 21.3 million jobs, about 600,000 more jobs than were 

added in the previous decade. This presents a unique opportunity to promote disability employment policies and 

practices that will most effectively reach into the untapped pool of people with disabilities. 

Nineteen year-old Martin came to the Tennessee Career Center 

to find a job. After meeting with Martin and learning about his 

experience and interests, a customized employment Career 

Specialist provided Martin with more intensive assistance. 

Martin had no prior work experience, but he cared for a 

miniature horse and pygmy goats at home and was very 

interested in working with animals. Martin and the Career 

Specialist determined that Martin would benefit from having an 

opportunity to observe work with animals. The Career Specialist 

placed Martin at a local farm where he assisted with the care and 

training of horses, but he soon discovered that he was better 

suited to working with small animals. The Career Specialist 

identified the John Sevier Animal Clinic, which hires kennel 

workers who aspire to become veterinary technicians, as having 

a need for part-time assistance. The supervisor arranged an 

“observation day” for Martin at the clinic. Martin greatly 

enjoyed his observation and soon started work there. Martin is 

successfully completing his kennel worker duties and performing 

some veterinary technician duties. 

Photo credit: Tennessee Customized Employment Partnership
Outcome Goal 1.1 

FY 2004 Performance and Accountability Report 49

Results, Analysis and Future Plans 

ODEP achieved its goal. In FY 2004 ODEP adopted a new goal and four new indicators that measure increases in 

the number served, employed, retained (at three and at six months), and in the number of effective practices 

identified through ODEP pilot projects. ODEP was able to use data from pilot projects implemented in FY 2003 

to compile results for indicators one and two (number served and number employed). Based on available data 

through the end of the 3rd quarter, performance has surpassed expectations. For indicators three and four, ODEP 

established baselines. 

In FY 2004, a total of more than 6,000 people were served through the various pilot projects administered by 

ODEP. More than 900 participants (19.2 percent) entered employment through the pilot sites. Retention 

baselines were established at 12.3 percent at three months and 6.9 percent at six months. The baseline for 

effective practices is ten. Based on results of rigorous evaluations and periodic employment outcome analysis, 

ODEP will continue to refine, modify and adjust the figures for these indicators 

In FY 2005 the Department will continue evaluating workforce development system practices through pilot and 

research projects and programs. These activities develop effective practices and policies for dissemination to the 

workforce development system and partners providing employment, training, and employment support services to 

adults and youth with disabilities. 

Keith, an amiable young man with Cerebral Palsy, 

was one of the first referrals to ODEP’s 

Customized Employment project in Hempstead, 

NY. The search for competitive employment has 

been a long road. Keith is a wheelchair user, has 

limited use of his hands, and his speech can be 

difficult to understand. Through grant funding, we 

were able to assess his skills, interests and assistive 

technology needs. Keith revealed during a 

planning meeting that he had very limited work 

experience and was willing to explore any 

available opportunities. With all this in mind, the 

Placement Specialist developed an individualized 

employment plan and negotiated a clerical job tryout at a local church. DOL staff had an idea of 

what he was capable of doing, however on the first 

day he accomplished things we had not even 

considered. His job tasks include photocopying 

documents and stuffing envelopes. With help from 

an Occupational Therapist at Abilities’ Kornreich Technology Center, Staff designed a device to hold envelopes upright and 

to facilitate the insertion of papers with greater ease. Keith is doing well with the job try-out, and the employer has indicated 

that they may be interested in hiring him on a part-time basis. 

Photo credit: Abilities, Inc. 

Management Issues 

ODEP’s pilot projects collect data to determine the effectiveness of disability employment strategies evaluated in 

ODEP pilot projects for dissemination throughout the workforce development system. Data are collected and 

assessed internally and externally. ODEP requires quarterly project reports, visits project sites, and holds regular 

conference calls with project staff. ODEP also contracts with an external evaluator to independently verify data 

collected in pilot project reports, review project documents and activities, and visit project sites. 

ODEP’s multi-year external evaluation of pilot projects assess the nature and extent of systems change to 

determine the effectiveness of strategies employed for expanding and strengthening the capacity of the workforce 

development system to respond to the needs of people with disabilities. Findings thus far include: (1) the 

capacity of the workforce development system has expanded and is strengthened to better serve people with 

disabilities; (2) people with disabilities are moving from low-skill, minimum wage work to higher-paid jobs in 

technical or other new career fields; (3) attitudes at One-Stop Centers regarding the provision of services to 

people with disabilities are changing; and (4) governmental agencies are now working together to share 

information and leverage resources to better serve people with disabilities. 
Performance Section 

50 United States Department of Labor 

ODEP’s multi-year case study examines strategies implemented to serve the employment needs of persons with 

disabilities and the supports needed to provide efficient and universal access to the services of the workforce 

development system at 12 WIA-assisted locations (six adult and six youth). Findings thus far include the needs: 

(1) to enhance physical accessibility to service centers; (2) to increase staff familiarity with assistive technology; 

(3) to integrate mandated and non-mandated disability partners into the overall services of the One-Stop Centers 

such as Vocational Rehabilitation; (4) to train and educate staff to work with individuals with a disability; (5) to 

centralize data banks and standardize data collection techniques; and (6) for cross-agency training. 
Outcome Goal 1.1 

FY 2004 Performance and Accountability Report 51

Help Veterans Get and Keep Jobs 

Performance Goal 1.1E (VETS) – PY 200310 

Increase the employment and retention rate of veteran job seekers registering for public labor exchange services 

Indicators 

58% of veteran job seekers will be employed in the first or second quarter following registration; and 

72% of veteran job seekers will continue to be employed two quarters after initial entry into employment with a 

new employer. 

Program Perspective 

VETS delivers employment services to veterans through grants to State Workforce Agencies (SWAs), so that 

unemployed and underemployed veterans receive the assistance needed to obtain suitable employment. These 

grants fund positions for Disabled Veterans’ Outreach Program (DVOP) specialists and Local Veterans’ 

Employment Representatives (LVER), who are assigned to public labor exchange offices nationwide. The DVOP 

and LVER staff cadre focuses the resources of the public labor exchange on veterans’ specific employment needs. 

VETS currently measures entry to employment and retention in employment as fundamental outcomes of public 

labor exchange services. Because results through June 30, 2004 represent the first year’s outcomes under a new 

reporting system, comparable historical results are not available. A key strength of the new reporting system is 

that it links delivery of services with the earnings of the veterans served, as documented in Unemployment 

Insurance (UI) wage records. 

Results, Analysis and Future Plans 

Performance Goal 1.1E (VETS) was achieved. Targets for Entered Employment Rate and Employment Retention 

were reached, as 58 percent of veteran job seekers were employed in the first or second quarter following 

registration and 79 percent of veteran job seekers continue to be employed two quarters after initial entry into 

employment with a new employer. 

The reports submitted for the quarter ending June 30, 2004 provide the first entered employment outcomes for 

veteran job seekers reported over a full Program Year (PY), based upon the new UI wage record reporting system. 

These reports also provide the first employment retention outcomes for veterans using the UI reporting system, 

including data from the first two quarters of PY 2003. These first outcomes represent the fulfillment of a longterm process of development, initial implementation, and transition of the new reporting system. During that 

same time period, in partnership with ETA, VETS has been developing and implementing new performance 

measures. VETS conducted pilot data collection initiatives applying the new reporting procedures to Program 

Years 1999, 2000, and 2001 in order to establish baseline measures under the new system. For PY 2002-2003 

VETS field staff and staff affiliated with State Workforce Agencies in every State negotiated performance 

measures for veterans served by the public labor exchange. Extensive coordination with program stakeholders 

likely played a key role in the success of the public labor exchange in reaching this first set of targeted outcomes 

for veterans under the new reporting and measurement conditions. 

Entry to employment for veterans served by the public labor exchange was applied as an indicator under the prior 

system of measurement and reporting. However, PY 2003 marked the first time retention in employment was 

applied. The successful outcomes attained during this first year of experience with this target provide a basis for 

VETS to adjust future performance targets. For PY 2004, an Entered Employment Rate target for disabled 

veterans has been added. In addition to these enhancements to VETS’ performance measurement systems, which 

are scheduled for implementation during PY 2004 and PY 2005, VETS and ETA will collaborate to establish 

baseline values for measures of Earnings Gain and Efficiency, in accord with the Common Measures. 

 

10 This goal appeared in the DOL FY 2003 Annual Performance Plan as a fiscal year goal. Due to the data system transition 

described in this narrative, it was converted to a Program Year 2003 goal. Accordingly, results presented are for the period 

July 1, 2003 to June 30, 2004. 
Performance Section 

52 United States Department of Labor 

Donald was wounded in combat during Operation 

Desert Shield in 1990. His wounds resulted in the 

loss of an arm below the elbow and the loss of a leg 

below the knee. Keeping a positive attitude 

throughout this ordeal, Donald was determined that 

his disabilities would not keep him from leading a 

productive life. In 1992, he was honorably 

discharged from the Army and received a 100% 

service connected disability rating from the US 

Department of Veterans Affairs. Donald started his 

own excavating and snow plowing business and 

wanted to expand. He contacted the Erie 

CareerLink because his disability precluded him 

from obtaining the commercial driver’s license he 

needed to expand his business. The veterans staff 

helped him with enrollment and funding assistance 

for a training program that led to acquisition of the 

license. Because of his persistence and dedication, 

the Erie CareerLink nominated Donald for the 

Disabled Veteran of the Year award. 

Photo credit: VETS

Management Issues 

Limitations of the new performance data reporting system include: a) not all types of earnings are captured by UI 

wage records; b) the types of earnings captured by UI wage records vary across States; and, c) the linkage 

documented between the receipt of public labor exchange services and the receipt of earnings captured by UI 

wage records cannot be assumed to establish a causal connection between these two events. 

Early in FY 2004, Battelle Memorial Institute completed a long-term policy research project examining the needs 

of unemployed veterans, and the extent to which those needs are met by the public labor exchange (Study 25 in 

Appendix 2). The study indicated that traditional labor exchange services, such as job search and referral, were 

associated with the most favorable outcomes for young, recently separated veterans. Case management, which is 

an intensive service typically provided by VETS funded staff, was associated with the most favorable outcomes 

for older, recently separated veterans. An implication of these results is that further exploration is called for to 

identify a service delivery approach that would improve outcomes for veterans who are not recently separated. 

With the advent of UI wage record based reporting, lag time in reporting outcomes has become a major concern. 

A study conducted during FY 2004 by Bradson Corporation identified two potential supplementary measurement 

strategies (Study 26 in Appendix 2). The first involves an application of unemployment data to identify those 

States in which veteran unemployment is high relative to non-veteran unemployment. The second calls for 

enlisting selected States to apply Report of Hires data to provide an early indication of expected outcomes based 

on subsequent application of UI wage records. VETS is confirming the technical feasibility of the first strategy, 

and the operational feasibility of the second strategy. 

The Jobs for Veterans Act, passed late in 2002, established a new statutory requirement that veterans be accorded 

priority of service in all Department of Labor training programs. The impact of this new provision falls primarily 

upon workforce development programs funded by ETA. In response to the new mandate, DOL funded a study, 

conducted by the Urban Institute, to identify strategies that could be applied to implement this requirement (Study 

27 in Appendix 2). The study examined procedures applied in One-Stop Career Centers, as well as options 

offered by electronic resources, and recommended a) establishment of performance goals for priority of service; 

b) refinements in office operations; and c) enhancements to electronic resources. 

An urgent financial management issue involving the DVOP/LVER grants – VETS’ contribution to the public 

labor exchange – has arisen in connection with recent legislative changes that expanded permissible expenses. 

Open questions include expense categories to be applied to direct and indirect charges and the acceptable ratio of 

indirect to direct charges. VETS has launched an initiative to resolve this issue in consultation with 

representatives of the SWAs.
Outcome Goal 1.1 

FY 2004 Performance and Accountability Report 53

Homeless Veterans Are Assisted to Obtain Employment 

Performance Goal 1.1F (VETS) – PY 200311 

Veterans enrolled in Homeless Veterans’ Reintegration Program (HVRP) enter employment 

Indicator 

At least 54.5 percent of veterans enrolled in Homeless Veteran Reintegration Project grants enter employment. 

Program Perspective 

The Homeless Veterans’ Reintegration Program focuses on the provision of employment and training services to 

homeless veterans to enable their successful reintegration into the workforce. This program also funds provision 

of or referral to related support services such as medical treatment, temporary and/or permanent housing, 

counseling, and transportation. Organizations receiving grants under this program typically provide job search, 

counseling, placement assistance, remedial education, classroom training, on-the-job training, and supportive 

services such as transportation and transitional housing. These services are often provided in concert with HUD, 

VA, HHS, and other service providers. Grantees are also strongly encouraged to collaborate with rehabilitation 

agencies for other services such as drug and alcohol counseling. 

Entry to employment has been emphasized as the most appropriate outcome indicator, and for the last two years, 

the entry rate has averaged at or above 60 percent. Recently, however, VETS has communicated clearly to all 

HVRP grantees that retention in employment is the most significant outcome indicator. We intend to continue 

this emphasis on retention for the foreseeable future, since stabilizing the earning capacity is a prerequisite to 

stabilizing the living situation of homeless veterans. 

Results, Analysis and Future Plans 

Performance Goal 1.1F (VETS) was achieved. The target rate of 54.5 percent entry to employment was 

exceeded, as 61 percent of veterans enrolled in Homeless Veterans’ Reintegration Program grants entered 

employment. In PY 2003, 13,094 homeless veterans enrolled as HVRP participants and 8,027 of these 

participants entered employment. 

The high rate of success achieved by HVRP grantees in serving this subset of the veteran population, which 

typically is characterized as having multiple barriers to employment, is attributable, in part, to the program design 

established by VETS. That design calls for a network of community-based organizations, including faith-based 

grantees, which focus their limited fiscal resources on the delivery of customized employment services. These 

grantees are to achieve integration of the required services by closely coordinating their efforts with other local 

providers in order to provide participants with a full range of specialized services. 

HVRP grants are awarded on a competitive basis and are limited to a three-year performance period. Award of 

annual funding increments for the second and third (option) years within the three-year cycle is based upon 

satisfactory achievement of the performance goals set forth in the grant application. The combination of limited 

grant duration and ongoing competitive awards lead to greater effectiveness. 

 

For PY 2004, we will measure retention in employment, with a target of 55 percent of HVRP participants 

maintaining employment six months following entry to employment. To maintain the entry to employment rate 

accomplishments while improving employment retention rates, VETS will continue to provide guidance to the 

HVRP grantee network, sharing best practice experiences. 

 

Management Issues 

The HVRP grantee network consists predominantly of locally-based organizations, widely dispersed across the 

nation, with limited management resources. The network of VETS staff members who serve as Grant Officer’s 

Technical Representatives (GOTRs) mirrors this pattern. The HVRP GOTRs typically are stationed at State 

 

11 This goal appeared in the DOL FY 2003 Annual Performance Plan as a fiscal year goal. Later, it was converted to a 

Program Year 2003 goal to fund and measure HVRP grantee performance on a schedule consistent with other DOL 

employment and training programs. Accordingly, results presented are for the period July 1, 2003 to June 30, 2004. 
Performance Section 

54 United States Department of Labor 

Capitals and major cities across the nation. VETS recently sponsored a conference attended by staff members 

from all HVRP grantees, and by VETS staff members serving as GOTRs. It was the consensus that improved 

integration of the technical, contractual, and financial aspects of the management of HVRP grants is a clear need. 

The distribution of management responsibility for this program is consistent with the need expressed by grantee 

staff and GOTRs. VETS plays a lead role regarding the Special Provisions; the DOL procurement unit plays a 

lead role regarding the General Provisions; and the Department of Health and Human Services (HHS) plays a lead 

role regarding financial operations (because of the program’s reliance upon the Payment Management System 

administered by HHS. To improve the integration of the requirements and procedures in this shared management 

arrangement, VETS intends to apply contractor support during FY 2005 to prepare two management manuals. 

One version of the manual will be oriented to grantee staff and the other version will be oriented to VETS staff 

serving as GOTRs. In addition to improving integration, it is hoped that this initiative also will promote improved 

consistency in program operations and closer headquarters-field coordination. 
Outcome Goal 1.1 

FY 2004 Performance and Accountability Report 55

Assist Dislocated Workers

Performance Goal 1.1F12 (ETA) – PY 2003 

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

Investment Act Dislocated Worker Program. 

Indicators 

78 percent will be employed in the first quarter after program exit; 

88 percent of those employed in the first quarter after program exit will be employed in the third quarter after 

program exit; and 

Those who are employed in the first quarter after program exit and are still employed in the third quarter after 

program exit will have 93 percent of their pre-dislocation earnings. 

Program Perspective 

The Dislocated Worker program aims to quickly reemploy laid off workers and preferably to enhance their 

employability and earnings by increasing occupational skills. The Department allocates 80 percent of the funds 

by formula to the States. The Secretary may use the remaining 20 percent for discretionary activities specified in 

the Workforce Investment Act (WIA), including assistance to localities that suffer plant closings, mass layoffs or 

job losses due to natural disasters. State dislocated worker funds support One-Stop Career Center Services (as 

described under Performance Goal 1.1A) and “Rapid Response” assistance to plan services for employers and 

workers who are expecting mass layoffs. 

Three key indicators are used to assess the program’s success. The entered employment rate indicates how 

quickly participants’ incomes (hence family security) are restored and whether they maintain continuous 

attachment to the labor force with minimal disruption. Retention rate and earnings replacement indicators 

demonstrate the program’s effectiveness at matching and/or enhancing participants’ skills and abilities to 

maximize their opportunities. 

Labor market conditions have a major influence on the Dislocated Worker program outcomes. During the last 

few years beginning with the recession of 2001, improving performance has proven more difficult than in times of 

economic boom. Despite external economic forces, DOL has consistently looked for ways to increase targets 

while improving program management. 

Results, Analysis and Future Plans 

Performance Goal 1.1F (ETA) was not achieved. Of those registered under the WIA Dislocated Worker program: 

• 82 percent of individuals registered who were 

not employed at registration were employed in 

the first quarter after program exit. 

• 90 percent of those employed in the first quarter 

after program exit were employed in the second 

and in the third quarters after program exit. 

• Of those participants employed in the first 

quarter after program exit, average earnings in 

the third quarter after program exit were 91 

percent of pre-dislocation earnings. 

Although the indicators for entered employment rate and 

retention rate exceeded performance targets by four and 

 

12 This goal appeared in the Department’s FY 2003 Annual Performance Plan as Performance Goal 2.3A. It has been 

renamed to be consistent with the FY 2004 plan, which moved this program to Outcome Goal 1.1. 

Entered Employment

65%

70%

75%

80%

85%

2000 2001 2002 2003 2004

Program Year

Result Target
Performance Section 

56 United States Department of Labor 

two percentage points, respectively, the earnings 

replacement rate was two percentage points below the 

target. 

Even with successes in employment and retention, the 

continuing decrease in post-dislocation earnings measure 

may reflect the broader economic conditions. First, 

employers have a more qualified worker pool from 

which to select, as there has been an increase in the 

number of Americans obtaining high school diplomas 

and bachelor’s degrees over the past year. Second, there 

was an increase in the supply of labor relative to the 

demand, putting downward pressure on wages. Third, 

displaced workers who experience lengthy periods of unemployment typically become increasingly willing to 

take jobs paying less than their previous jobs. In sum, while employment and retention rates remain fairly steady 

as dislocated workers more readily accept lower-paying jobs and stay with them until periods of growth, their 

post-dislocation earnings have continued to decline. 

During Program Year 2003, DOL held six regional 

forums focused on providing an integrated service 

system for dislocated workers. This is part of the 

Department’s effort to improve the alignment of federal 

and state processes and response times, and to maximize 

funding allocations to reach more customers and 

enhance program results. 

 

To continuously improve the outcomes of dislocated 

workers, the Department is producing new tools, 

creating incentives, and simplifying the coordinating 

process. Key strategies include: 1) Strengthening 

business relationships to assure demand-driven services 

and to better identify and fill jobs in growth occupations; 2) Assuring universal access to the workforce 

investment system with emphasis on targeted outreach; and 3) Using non-WIA resources wherever possible, 

thereby leveraging WIA resources committed to core functions necessary to prepare the workforce. 

With implementation of the common measures for employment and training programs and with reauthorized 

WIA, the workforce investment system can better integrate the Adult and Dislocated Worker formula programs 

and the labor exchange functions under the Wagner-Peyser Act. Combined with enhanced use of technology that 

will inform adult customers about the labor market, job opportunities, and services, this integrated workforce 

system will increase efficiencies and performance. 

Retention

75%

80%

85%

90%

95%

2000 2001 2002 2003 2004

Program Year

Result Target

Earnings Replacement

80%

85%

90%

95%

100%

105%

2000 2001 2002 2003 2004

Program Year

Result Target
Outcome Goal 1.1 

FY 2004 Performance and Accountability Report 57

The importance of advancing occupational skills in 

an ever changing economy is something that Fritz, 

a former dislocated worker, can attest to. After 

graduating with a bachelor’s degree in Computer 

Information Systems, Fritz thought his career was 

set in stone until the local economy took a 

downturn and he became an out-of-work 

Information Technology (IT) professional. Not to 

be deterred, he visited his local One Stop Career 

Center at Richard J. Daley College in Chicago, 

Illinois and enrolled into the new a 10-week 

Advanced Manufacturing/Integrated Systems 

Technology (AM/IST). Adding to his technology 

skill base, Fritz hit the ground running as he was 

quickly hired as a Mechanical Technician at Corn 

Products International, Inc., one of the world’s 

largest corn refiners. Making a higher wage than 

he originally earned as an IT professional, Fritz 

concluded that “there are a lot of opportunities out 

there for someone with Integrated Systems Technology skills. This is a new type of training and not many people know 

about it, but the skills learned during the training are definitely in high demand.” As a lesson learned, Fritz’s has decided to 

take advantage of his company’s tuition reimbursement program as he continues to exemplify the goal of being equipped 

with the skills of the 21st century workplace! 

Photo credit: Jim Wenzelman 

Management Issues 

In response to recent concerns raised by the Office of Inspector General regarding whether data reported by States 

for WIA performance were accurate and supportable, DOL developed a validation methodology, and provided 

handbooks, user guides, and software for all State workforce agencies. States were required to validate their PY 

2003 WIA performance data reports using this methodology. 

One lesson from the first four years of WIA is that separate funding streams for services can have a negative 

impact on program performance because of duplication of services and redundant administrative cost. The 

Department proposes to address this barrier by consolidating these funding streams when WIA is reauthorized. 

The Government Accountability Office (GAO) released a report on WIA in June 2004: States and Local Areas 

Have Developed Strategies to Assess Performance, but Labor Could Do More to Help (Study 9 in Appendix 2). 

The report examined data availability and timeliness issues. ETA also contracted with an independent research 

team to conduct an evaluation of the Workforce Investment Act of 1998. The study, The Workforce Investment 

Act in Eight States: State Case Studies from a Field Network Evaluation (Study 21 in Appendix 2), examined 

national goals and the roles of Federal, State, and local partners in implementing the law in eight states. Another 

independent study, Creating Partnerships for Workforce Investment: How Services are Provided Under WIA

(Study 20 in Appendix 2), presents findings from case studies of sixteen local boards across eight states that may 

help other local boards in developing local systems.
Performance Section 

58 United States Department of Labor 

Help Trade-Affected Workers Find New Jobs

Performance Goal 1.1G (ETA) – FY 2004 

Increase the employment, retention, and earnings replacement of workers dislocated in important part because of 

trade and who receive trade adjustment assistance benefits. 

Indicators 

70% of individuals registered who are not employed at registration will be employed in the first quarter after 

program exit; 

88% of those employed in the first quarter after program exit will be employed in the second and third quarters 

after program exit; and 

Those who are employed in the third quarter after program exit will earn, on average, 90% of their pre-separation 

earnings. 

Program Perspective 

DOL’s Trade Adjustment Assistance (TAA) program provides reemployment services to workers who lose their 

jobs due to increased imports or due to shifts of production to foreign countries. TAA’s goal is to return workers 

to suitable employment as quickly as possible. The readjustment services and benefits offered by the program 

include occupational, on-the-job and remedial training, job search and relocation assistance, and income support 

for eligible workers in training. TAA’s success is measured by the extent to which it serves the individuals to 

achieve economic self-sufficiency by quickly securing and maintaining employment with wages that are close to 

those earned prior to lay-off. As such, employment, employment retention, and earnings replacement are 

appropriate indicators. Targets were selected by first assessing prior experience, and then projecting reasonable 

performance under anticipated labor market conditions. In this way, allowance is made for the effect of economic 

forces external to the program.

Results, Analysis and Future Plans 

Data for the first three quarters of FY 2004 (ending June 30, 2004) indicate that two of the three indicators were 

not reached.13 Thus, the goal was not achieved: 

• 63 percent employed in the first quarter after exit; 

• 89 percent of those still employed in the third quarter after exit; and 

• 72 percent wage replacement for the third quarter after exit. 

Performance for the above measures is for 

individuals served under the trade program 

prior to the Trade Act of 2002 amendments. 

Performance outcomes for individuals served 

under the Trade Act of 2002 will not begin to 

be reported until the fourth quarter of 2004. 

Reported outcomes will not substantially 

reflect individuals served under these 

amendments until FY 2006. 

The Department is concerned that the 63 

percent reported as employed in the first 

quarter after exit may not reflect actual outcomes for three reasons: 

 

• States may not be fully utilizing the Wage Record Interchange System (WRIS), which is used to capture 

employment information across state borders; 

 

13 Performance results for this goal are estimated. The estimating methodology has been reviewed by the Department of 

Labor’s Office of Inspector General. The actual performance results for this goal will be published in the FY 2006 Budget. 

Entered Employment

50%

60%

70%

80%

90%

2001 2002 2003 2004 to Q3

Fiscal Year

Result Target
Outcome Goal 1.1 

FY 2004 Performance and Accountability Report 59

• States may be capturing entered employment data for the first quarter after individuals complete training but 

before they finish receiving reemployment services under the Workforce Investment Act (WIA), and 

therefore, have not yet entered employment; 

• States are not required to use supplemental data to capture individuals who have entered employment but do 

not show up in the wage records. Preliminary results in one state from a related program indicate that the use 

of supplemental data resulted in an increase in the entered employment level by 18 percentage points. The 

state intends to replicate the supplemental data process with trade participants. 

The Department is issuing a directive to States 

that will provide guidance on these issues and 

has begun preliminary discussions with the 

National Dislocated Worker workgroup on 

methods to follow up with individuals who are 

not reported as entering employment. 

The continuing decreased post-dislocation 

earnings measure may reflect broader 

economic conditions. First, employers have a 

larger qualified worker pool from which to 

select, as there has been an increase in the 

number of Americans obtaining high school 

diplomas and bachelor’s degrees over the past 

year. Second, there was an increase in the 

supply of labor relative to the demand, putting 

downward pressure on wages. Third, 

displaced workers who experience lengthy 

periods of unemployment typically become 

increasingly willing to settle for jobs paying 

less than their previous jobs. In sum, while 

employment and retention rates remain fairly 

steady, dislocated workers have been more 

ready to accept lower-paying jobs and stay 

with them until their prospects improve; this 

has contributed to the decline in the wage replacement performance measure. 

 

During Program Year 2003, DOL held six regional forums focused on providing an integrated service system for 

trade workers. This is part of the Department’s effort to improve the alignment of Federal and State processes 

and response times, and to maximize funding allocations to reach more customers and enhance program results. 

Currently, DOL is reengineering the process of integrating three programs- National Emergency Grant (NEG), 

Trade, and Dislocated Worker- to ensure more effective and efficient operations and higher performance 

outcomes. 

Retention

60%

70%

80%

90%

100%

2001 2002 2003 2004 to Q3

Fiscal Year

Result Target

Earnings Replacement

60%

70%

80%

90%

100%

2001 2002 2003 2004 to Q3

Fiscal Year

Result Target
Performance Section 

60 United States Department of Labor 

John had worked at the Segri Great Lakes Carbon plant in Charlotte, North Carolina 

until he was laid off on November 16, 2001. His job as steel furnace electrodes 

inspector, which earned John $15.03 per hour, was nonexistent anywhere else in the 

area. “On the day I was laid off, one door shut and another one opened. The one that 

was opened was our petition for Trade Act opportunity.” With help from the Trade Act 

program, John began training in Medical Lab Technology in May 2002. He was always 

prompt with his appointments and worked hard to keep his grades up. He got a job on 

May 4, 2004 at Broughton Hospital as a Medical Lab Technician, earning $16.75 per 

hour. On May 12, John graduated from a local community college with a degree in 

Medical Lab Technology. 

Photo credit: John Lundlam

Management Issues 

The Government Accountability Office (GAO) released a report on TAA in 

September 2004: Reforms Have Accelerated Training Enrollment, but 

Implementation Challenges Remain (Study 11 in Appendix 2). The GAO raised 

two concerns: first, that the deadlines for enrollment in training may not leave 

enough time to assess a TAA worker’s needs, especially if there is a large layoff 

or higher demand for TAA training; and second, the wage insurance provision that requires the program to serve 

workers who lack easily transferable skills yet expects them to find employment within 26 weeks of layoff. ETA 

shares GAO’s concerns and intends to work closely with states in the coming months to assess the need for 

legislative remedies. 

The Department continues to improve the accuracy, timeliness, and reliability of TAA data. In an effort to obtain 

more current data about the effect of the program on trade affected workers, DOL has initiated a five-year study 

designed to fully evaluate the implementation of the new provisions of the Trade Reform Act of 2002, as well as 

the overall effectiveness of the Trade program using the independent services of Social Policy Research. ETA 

will also consider whether concerns in the GAO report can be examined in this TAA evaluation study. A final 

study report is expected to be available in FY 2010. DOL will use recommendations of this five-year study to 

improve future performance and to assess success in implementing the provisions of the Trade Reform Act. The 

results of this study will also inform the TAA reauthorization process. 

In response to recommendations from the Program Assessment Rating Tool (PART) review conducted for the FY 

2004 budget and updated for the FY 2005 budget, the TAA program will include performance expectations in the 

agreements between the Secretary of Labor and the States’ Governors to encourage better results. Additionally, 

TAA will adopt the common measures for Federal employment and job training programs, with implementation 

complete by late FY 2005 or early FY 2006. Use of common measures will align Trade Act program measures 

with those for the WIA Dislocated Worker program and promote the goals of co-enrollment and coordination 

between the two programs. 
Outcome Goal 1.2 

FY 2004 Performance and Accountability Report 61

Outcome Goal 1.2 – Increase the Number of Youth Making A Successful Transition 

to Work 

Even though the median age of the workforce is rising, the percentage of workers between the ages of 16 and 24 

is expected to grow more rapidly than the overall labor force for the first time in 25 years. The majority of jobs 

will continue to require workers who have acquired knowledge and skills via two-year colleges, vocational 

training, moderate to long-term on-the-job training and real work experience. High school drop-outs are three to 

four times more likely to be unemployed than college graduates. These statistics help to explain why an 

important part of DOL’s mission is to help disadvantaged youth prepare for competition in a 21st century work 

environment. 

DOL administers three programs designed specifically to serve youth: the WIA Youth formula grant program, 

which provides comprehensive services through local workforce investment areas; Job Corps, an intensive 

residential training and support program; and the Youth Opportunity Grant demonstration program, which focuses 

on out-of-school youth in high-poverty communities. Services to in-school youth help them remain in and 

complete secondary school, move into post-secondary education or advanced training, and ultimately transition 

into successful careers. Out-of-school youth receive services that provide them with the necessary skills to attain 

educational credentials (i.e., high school diploma or GED), participate in vocational and post-secondary training 

opportunities, and transition into gainful employment or a career. Through these programs, our nation makes the 

type of meaningful investment in at-risk teenagers and young adults that is necessary to help them become 

productive and self-sufficient members of the nation’s workforce. 

Three performance goals measure DOL’s progress in helping youth prepare for entry to the workforce. All three 

are administered by the Employment and Training Administration (ETA) under the Workforce Investment Act of 

1998 (WIA). Funding and reporting are on a Program Year basis, e.g., PY 2003 is July 2003-June 2004. 

Performance Summary 

Diploma 

attainment* 

Entry to 

employment

Employment 

retention 

Average 

hourly 

wage** 

Retention 

 at 6 

months 

Result 63% 71% 81% NA NA 

Target 52% 65% 78% NA NA 

WIA Youth (1.2A) – PY 2003 

Increase entrance and retention of youth 

registered under the WIA youth program in 

education or employment. [Achieved]

PY 2002 55% 67% 80% NA NA 

Result 8003 NA NA $8.95 63% 

Target 7658 NA NA $8.20 65% 

Job Corps (1.2B) – PY 2003 

Increase participation, retention, and earnings 

of Job Corps graduates in employment and 

education. 

[Not Achieved] PY 2002 6381 NA NA $8.03 63% 

Result 51% 60% 73% NA NA 

Target 52% 65% 78% NA NA 

Youth Opportunity Grants (1.2C)14

Increase retention of Youth Opportunity 

Grant participants in education or 

employment. [Not Achieved] PY 2002 46% 50% 78% NA NA 

*For Job Corps, # students 

**In PY 2002, earnings were measured at placement; in PY 2003, they were measured six months later. 

 

14 Due to limited access to State Unemployment Insurance (UI) wage records, data for the older youth entered employment 

rate and older youth employment retention rate could only be obtained from approximately half of the Youth Opportunity 

Grantees. The diploma attainment rate, however, includes data from all grantees. 
Performance Section 

62 United States Department of Labor 

Net Cost of Programs 

FY 2004 program costs of $2.7 billion supported ETA programs providing employment and training assistance to 

youth through formula grants to States, and Job Corps. After three years of costs that trended upward, FY 2004 

saw a $254 million (approximately 10 percent) decline from FY 2003. Decreased costs in this area resulted 

largely from the phase-out of the Youth Opportunity Grant Program (FY 2002: $225 million v. FY 2004: $0) and 

reduced funding for WIA Youth Activities (FY 2002: $1.13 billion v. FY 2004: $995 million). 

Outcome Goal 1.2

Net Costs ($Billions)

2.5 2.3

2.7 2.8 2.9 2.7

0

1

2

3

4

1999 2000 2001 2002 2003 2004

Fiscal Year

Results Summary 

One of the three goals was achieved. As indicated in the table, WIA Youth program participants enjoyed healthy 

increases in all three indicators – diploma attainment for younger youth, entry to employment, and retention for 

older youth. Job Corps reached its targets for diplomas and average hourly wages while falling short of its 

retention target. In its final year, the Youth Opportunity Grant demonstration project failed to reach any of its 

three targets; diploma attainment and entry to employment saw healthy gains over PY 2002 despite failing to 

reach targets but employment retention declined significantly. 

Overall, actual PY 2003 performance was better than the goal achievement count alone would indicate. Results in 

seven of the nine indicators increased – most of them substantially. The WIA Youth program’s success in raising 

all three indicator levels is attributed to extensive technical assistance targeting local performance management 

issues. Job Corps’ diploma attainment rate increase resulted in part from a renewed focus on academic 

achievement and aggressive new strategies. Hourly wage performance may have been aided by a change in the 

basis for calculation of wages from initial placement to six months after placement. Youth Opportunity Grant 

performance was improved by numerous technical assistance strategies that focused on improving long-term 

employment and education placements. 

Phyllis is a Clinical Instructor and Director of the School Nurse 

Program at the University of Illinois at Chicago (UIC) College of 

Nursing who volunteered her time and expertise to educate high 

school students on public health care concepts. She spoke at a 

Women’s Bureau Group E-Mentoring in Nursing (GEM-Nursing) 

event promoting nursing careers. Co-sponsored by the UIC College 

of Nursing, this event is part of a larger web-based project 

connecting young adults with mentors who are professionals in the 

nursing field. Phyllis’ lesson on the “Web of Causation,” aided by 

her web model (pictured), outlined the complex relationships 

among environmental, economic, and social causes contributing to 

public health. Her high school students developed a greater 

appreciation for how nurses contribute to the health of the 

community. The GEM-Nursing project includes over 500 

registered students and over 150 mentors from 16 different fields.

Photo credit: UIC Photographer Mark Mershon 
Outcome Goal 1.2 

FY 2004 Performance and Accountability Report 63

Future Challenges 

The delay of reauthorization of the Workforce Investment Act poses management challenges for the WIA Youth 

program. The Department of Labor’s proposed legislation places emphasis on serving out-of-school youth, and 

DOL has begun developing strategies to do so. However, the law currently requires grantees to spend only 30 

percent of funds on out-of-school youth. Because this group is more difficult and expensive to serve, few elect to 

allocate more than the statutory minimum – especially given greater pressure to meet employment, retention, 

earnings and efficiency targets. 

The Government Accountability Office (GAO) conducted a study entitled Labor Actions Can Help States 

Improve Quality of Performance Outcome Data and Delivery of Youth Services (Study 10 in Appendix 2). The 

report recommended that DOL and the US Department of Education coordinate efforts to connect school dropouts to local WIA youth programs and to establish standard monitoring procedures to improve the quality of data 

reported by states. DOL is implementing these recommendations. 

The Program Assessment Rating Tool (PART) review of the WIA Youth program, conducted for the FY 2004 

budget, recommended an impact evaluation of the WIA Youth program. ETA will commission such a study upon 

reauthorization, as knowledge of the program’s new direction will be critical to the design of any meaningful 

study. DOL is conducting an impact evaluation of the Youth Opportunity Grant program that is scheduled for 

completion in 2005. 
Performance Section 

64 United States Department of Labor 

Assist Youth in Making a Successful Transition to Work 

Performance Goal 1.2A (ETA) – PY 2003 

Increase entrance and retention of youth registered under the WIA youth program in education or employment. 

Indicators 

52 percent of the 14-18 year-old youth who enter the program without a diploma or equivalent will attain a 

secondary school diploma or equivalent by the first quarter after exit; 

65 percent of the 19-21 year-old youth will be employed in the first quarter after program exit; and 

78 percent of the 19-21 year-old youth employed in the first quarter after exit will be employed in the third 

quarter after program exit. 

Program Perspective 

The Workforce Investment Act authorizes services to low-income youth (age 14-21) who have barriers to 

employment. Eligible youth are deficient in basic skills or are homeless, are a runaway, are pregnant or parenting, 

are offenders, school drop-outs, or foster children. The program also serves youth with disabilities and other 

youth who may require additional assistance to complete an educational program or to secure and hold 

employment. Programs and services are offered to both in and out-of-school youth. Service providers prepare 

youth for post-secondary education by stressing strong linkages between academic and occupational learning, and 

preparing youth for employment. Local communities create opportunities for youth by providing required 

program elements, including tutoring, alternative schools, summer employment, occupational training, work 

experience, supportive services, leadership development, mentoring, counseling, and follow-up services. 

The three performance indicators were selected from seven WIA youth measures as most appropriate for both inschool and out-of-school youth. For the older youth population, entrance into and retention in employment are 

the most appropriate indicators of success because services are focused on preparation for and success in the 

workforce. For the younger youth population, where services are geared toward academic achievement as a 

means of career preparation, achievement of a diploma or its equivalent is the most meaningful indicator of future 

success in the workforce. External factors outside of the workforce system, such as secondary school quality and 

the advent of state standards of learning, have the potential to impact the diploma attainment rate. However, a 

two year trend shows that the program is making steady progress against its indicators. Strategies and 

partnerships are continually reviewed to ensure the best service delivery is provided. 

Results, Analysis and Future Plans 

The goal was achieved. 

• 63 percent of the 14-18 year-old youth who entered the program without a diploma or equivalent attained a 

secondary school diploma or equivalent by the first quarter after exit. 

• 71 percent of the 19-21 year-old youth were employed in the first quarter after program exit. 

• 81 percent of the 19-21 year-old youth employed in the first quarter after exit were employed in the third 

quarter after program exit. 

These results for Program Year 2003 (ending June 

30, 2004) continue an upward trend that began 

with WIA implementation in 1998, and are 

significant. Most important is the continued 

increase in high school diploma attainment, given 

the strong statistical correlation between 

educational attainment and success in the labor 

market. 

During PY 2003, DOL provided extensive 

technical assistance to those states struggling to 

WIA Youth

0%

20%

40%

60%

80%

100%

PY 2000 PY 2001 PY 2002 PY 2003

Diploma Attainment

Entered Employment

Employment Retention
Outcome Goal 1.2 

FY 2004 Performance and Accountability Report 65

meet performance goals. This strategy has resulted in improved performance and has yielded valuable 

information on the specific challenges with which local areas continue to struggle. One example of technical 

assistance is the Performance Enhancement Project (PEP), which offers a mechanism to identify and address local 

performance management issues. DOL has also continued to emphasize performance and accountability, 

including extensive work developing the Common Performance Measures and collaboration with the US 

Department of Education and with State and local practitioners in developing guidance for their implementation. 

DOL continues its program of conducting on-site assessments of State and local workforce investment areas to 

determine the effectiveness of local youth programs and to help regional offices develop strategies to improve 

program outcomes. 

DOL will continue its performance improvement efforts by working with its partners to increase emphasis on 

alternative education, business demands (especially in high-growth industries and occupations), and at-risk youth, 

including those in foster care, those attached to the juvenile justice system, and migrant youth. 

Robert embodies all the qualities that 

make an individual an achiever. At birth, 

he was diagnosed with Cerebral Palsy, 

which hindered his educational progress 

and his social and psychological 

development. When he was referred to the 

WIA-funded Goodwill Workforce 

Development Center in Virginia as a high 

school senior, he felt he had a new chance 

at a life of independence. He credits 

Goodwill Industries of the Valleys, part of 

a world-wide network of 207 communitybased organizations, for providing him 

with the skills to become a disc jockey 

(DJ). Working with Goodwill’s staff, a 

local radio station made accommodations 

to enable Robert to participate in a work 

experience. Benefiting from a tutor and 

job coach assigned by Goodwill, Robert 

learned the skills needed in his chosen career and improved his math and reading. Working as a DJ, Robert became a 

celebrity and the station gave him his own Saturday program. Robert was selected by Goodwill Industries as the 2003 

“Achiever of the Year” and credits the assistance he received for the direction his life has taken. Robert wrote: “In addition

to furnishing me with financial support, Goodwill’s Workforce Development was very timely in providing me with guidance 

and advice on coping with the everyday workforce.” Robert now attends the American Broadcasting School in Oklahoma 

City and will return home to pursue his disc jockey career. 

Photo credit: Robert Martin

Management Issues 

The reliability of administrative data for non-employment measures, such as diploma attainment, has been 

questioned in the past by the Office of Inspector General (OIG). In response, DOL implemented a data validation 

initiative during PY 2002. Data quality and reliability has improved as a result of this initiative. States will 

continue to conduct both report validation and data element validation for the current year’s data, thereby 

ensuring the completeness and reliability of performance data. 

The delay of reauthorization of the Workforce Investment Act poses management challenges for the WIA Youth 

program. The Department of Labor’s proposed legislation places emphasis on serving out-of-school youth, and 

DOL has begun developing strategies to do so. However, because the law currently requires spending just 30 

percent of funds on these traditionally expensive to serve out-of-school youth, it will be difficult to implement the 

new strategies absent reauthorization. 
Performance Section 

66 United States Department of Labor 

The Government Accountability Office (GAO) conducted a study entitled Labor Actions Can Help States 

Improve Quality of Performance Outcome Data and Delivery of Youth Services (Study 10 in Appendix 2). The 

report recommended that DOL and the US Department of Education coordinate efforts to connect school dropouts to local WIA Youth programs and to establish standard monitoring procedures to improve the quality of data 

reported by states. DOL is implementing these recommendations. 

The Program Assessment Rating Tool (PART) review of the WIA Youth program, conducted for the FY 2004 

budget, recommended adoption of common performance measures for Federal job training programs and 

recommended an impact evaluation of the WIA Youth program. In response, ETA has adopted the four youth 

common measures in subsequent Performance Budgets and issued guidance to grantees to manage to these goals 

and measures. States will begin reporting on common measures in November 2005. The impact evaluation will 

be commissioned upon reauthorization, as knowledge of the program’s new direction will be critical to the design 

of any meaningful study.
Outcome Goal 1.2 

FY 2004 Performance and Accountability Report 67

Increase Placements and Educational Attainments of Youth

Performance Goal 1.2B (ETA) – PY 2003 

Improve participation, retention and earnings of Job Corps graduates in employment and education 

Indicators 

The number of students who attain high school diplomas while enrolled in Job Corps will increase by 20% from 

Program Year 2002; 

65% of graduates will continue to be employed or enrolled in education six months after their initial placement 

date; and 

Graduates with jobs at six months after initial placement will earn average hourly wages of $8.20. 

Program Perspective 

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 occupational skills, 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 and are 

operated by large and small companies under performance-based contracts. 

Job Corps centers provide services tailored to each student’s needs to help them achieve the skills and credentials 

required to be successful, productive citizens and to obtain work opportunities that lead to long term employment. 

DOL uses three performance indicators for this program: earning a diploma or its equivalent is the most 

meaningful indicator of preparedness, while entry to employment and employment retention are appropriate 

indicators of success in the workforce. Targets are selected by assessing prior experience, and then projecting 

reasonable performance under anticipated labor market conditions.

Results, Analysis and Future Plans 

The goal was not achieved. Two of three indicator targets were reached. In PY 2003, participants earned 8003 

high school diplomas vs. a target of 7,658 – a 25 percent increase over PY 2002. The target average hourly wage 

rate of $8.20 at six months after employment was reached, with an actual rate of $8.95. The six-month retention 

rate was 63 percent, nearly reaching the 65 percent target. From PY 2001-2003, the retention rate remained level. 

However, the average hourly wage at six months and diploma attainment rate increased during that period. 

Job Corps’ high school diploma attainment rate 

increased by 25 percent in PY 2003. This 

outcome is attributed to a renewed focus on 

academic achievement and new strategies 

designed to facilitate students’ successful 

completion of diploma requirements. In PY 2003, 

while the average hourly wage goal of $8.20 per 

hour for Job Corps remained the same as PY 

2002, the basis for calculation of wages changed 

from initial placement to six months later. As in 

past years, the average hourly wage for Job Corps 

graduates continues to increase. Average hourly 

wages at six months for Job Corps graduates were solid, given economic conditions. Moreover, 63 percent were 

still employed or enrolled in advanced education programs six months later. 

HS Diploma Attainment

0

2000

4000

6000

8000

10000

PY 2002 PY 2003

result target
Performance Section 

68 United States Department of Labor 

Job Corps’ success in meeting its diploma target is 

due in large part to numerous partnerships with 

other youth and adult serving programs: the 

Department of Education’s High School initiative, 

the former School-to-Work initiative, 

AmeriCorps, Head Start, Youth Challenge, Youth 

Build, America’s Promise, the Center for 

Workforce Preparation, and the military. A 

significant number of the Job Corps centers have 

also entered into partnerships with local school 

districts to enable students to earn diplomas. To 

assist career transition, Job Corps centers are 

represented on local workforce investment boards 

and youth councils. 

Regional assessments and annual contract reviews 

of center operators and career transition service 

contractors include compliance measures for 

operations and performance measures related to 

student outcomes. Performance based contracting 

for center operators and career transition service 

contractors links performance on specific 

measures of student success to center operators’ 

and contractors’ revenues. Implementation of 

such provisions, for example incentive fees for 

contractors, has led to improved student outcomes. 

In addition to improving student outcomes, Job Corps continues to focus on customer needs by maintaining safe 

and healthy environments at all Job Corps centers by working with other DOL agencies to conduct safety and 

health inspections. 

Evelyn saw a better future unfold after catching a 

television ad for Job Corps. Evelyn grew up in a very 

poor area of Milwaukee, Wisconsin. Faced with limited 

employment opportunities because she dropped out of 

high school in the 11th grade to help support her family, 

she knew that education would free her from poverty. 

In July 2001, at age 18, she enrolled at the Hubert H. 

Humphrey Job Corps Center in St. Paul, MN. Evelyn 

completed the Business Technologies and Health 

Occupations career training programs and obtained her 

GED. Soon afterward, she got a job as Student Intake 

Coordinator at Alternative Learning Center High 

School. Evelyn is a full-time student and through a 

partnership with the Humphrey Job Corps Center has 

entered the Advanced Career Training program in Child 

Development at St. Paul Technical College. She will 

graduate in December 2004. She also works part-time 

at the University of Minnesota College of Agriculture, 

Food and Environmental Sciences where she received an outstanding employee award. Evelyn plans to attend Metropolitan 

State University to pursue a Bachelor’s Degree in social work or child psychology. 

Photo credit: Katherine Limon, Renee Peek, Melanie Leary 

Management Issues 

Job Corps uses comprehensive data to measure program performance results. To maintain data integrity, 

independent data analysts scrutinize performance details. Job Corps also utilizes feedback from annual 

independent audits of system security and business policies and procedures to improve oversight and management 

of its performance data systems.

6 Month Retention

58%

60%

62%

64%

66%

68%

70%

72%

PY 2000 PY 2001 PY 2002 PY 2003

result target

Average Hourly Wage at 6 months

$0.00

$2.00

$4.00

$6.00

$8.00

$10.00

PY 2000 PY 2001 PY 2002 PY 2003

result target
Outcome Goal 1.2 

FY 2004 Performance and Accountability Report 69

Increase Opportunities for Severely Disadvantaged Youth

Performance Goal 1.2C (ETA) – PY 2003 

Increase retention of Youth Opportunity Grant participants in education or employment. 

Indicators 

52 percent of the 14-18 year-old youth who enter the program without a diploma or equivalent will attain a 

secondary school diploma or equivalent by the first quarter after exit; 

65 percent of the 19-21 year-old youth will be employed in the first quarter after program exit; and 

78 percent of the 19-21 year-old youth employed in the first quarter after exit will be employed in the third 

quarter after program exit. 

Program Perspective 

Youth Opportunity Grants (YOGs), a demonstration program which began operation in 2000 and ends with 

Program Year 2004, has aimed to increase the long-term employment of youth who live in Empowerment Zones, 

Native American reservations, Enterprise Communities, and other high-poverty areas. Although the focus has 

been to increase youth employment, especially for out-of-school youth, YOGs also aimed to reduce dropout rates 

and teen pregnancy, increase enrollment in post-secondary education, decrease crime, and improve existing 

systems in poor communities for serving at-risk youth. 

For the older youth population, services have focused on preparation for and success in the workforce. For the 

younger youth population, services were geared toward academic achievement as a means of career preparation. 

Factors such as secondary school quality and the advent of state standards of learning can impact the diploma 

attainment rate. Many enrollees are high school drop-outs with limited prospects for attaining a high school 

diploma or long term employment. Another challenge was the program design; YOG was an open enrollment 

program that accepted any youth willing to enroll. This helped target youth most in need of services, which may 

have affected completion rates, though results did show improvement from last year. 

Results, Analysis and Future Plans 

Performance Goal 1.2C (ETA) was not achieved. 

• 51 percent of the 14-18 year-old youth who entered the program without a diploma or equivalent attained a 

secondary school diploma or equivalent by the first quarter after exit; 

• 60 percent of the 19-21 year-old youth were employed in the first quarter after program exit; and 

• 73 percent of the 19-21 year-old youth employed in the first quarter after exit were employed in the third 

quarter after program exit. 

Data from State Unemployment Insurance (UI) wage records for the older youth entered employment rate and 

older youth employment retention rate could only be obtained from approximately half of the Youth Opportunity 

Grantees. The diploma attainment rate, however, includes data from all grantees. 

Although the diploma attainment rate and entered employment rate improved markedly from the prior year, all 

three performance indicators fell short of their targets. Performance targets were set using baseline data from the 

WIA Youth formula-funded program and goals were identical to that program despite this program’s focus on the 

harder to serve out-of-school youth population. YOGs were able to significantly improve results in diploma 

attainment and entered employment from the prior year. The diploma attainment improvement is significant 

given that academic advancement is strongly linked to improved employment opportunities and outcomes, both 

key long term goals of DOL youth programs. The improvement in placing out of school youth in jobs is also a 

significant achievement in that youth tend to be harder to employ as the economy begins to recover. Although the 

employment retention rate decreased from the prior year, performance was slightly below target. 
Performance Section 

70 United States Department of Labor 

During Program year 2003, DOL focused efforts on a 

number of technical assistance strategies. DOL 

conducted training sessions on literacy, job 

development, and homeless and runaway youth. 

DOL-sponsored Youth Development Practitioner’s 

Institute trained hundreds of front-line YOG staff in 

areas such as bi-level case management and data 

management. DOL also convened a strategic 

planning session and several director meetings that 

focused on improving areas of performance, 

especially long-term employment and education 

placements. Such efforts – coupled with on-site 

support, regional calls, and other technical assistance 

– have served to both inform and focus providers on 

developing effective alternative education and literacy teaching strategies and programs. 

Through DOL’s assistance, YOG-funded programs focused on key progress measures including youth 

participation, successful completion of goals, and placements in employment and post-secondary education. 

 

Seaman Felisicia, a member of the Albany Youth Opportunity Center, recently 

graduated with honors from basic training at the Naval Training Center in Great 

Lakes, Illinois. She used her exceptional physical fitness to distinguish herself from 

the other recruits during the nine weeks of strenuous basic naval training. Her athletic 

performance, which earned her selection as an honor graduate, also earned her the 

treasured assignment to the Naval Base in Sasebo, Japan, where she will serve a threeyear tour as a fireman. Before she graduated from Westover High School in 2003, 

Felisicia served as a member of the marching band, toured with the chorus and served 

as a state delegate for the 4-H program. While she was in the Youth Opportunity 

program, Felisicia participated actively at Boys and Girls Club, Inc., where she 

received the Outstanding Achievement award. She also was an active member at 

Unity Church of Albany’s youth program. Furthermore, she worked with the Albany 

Police Department as a part of the Communities in School Summer Youth Job 

Program and volunteered in several other community service projects. Her earlier 

experiences serving her community continue to motivate her to serve the nation. 

Photo credit: Felisicia Flood 

Management Issues 

Approximately half of the grantees were unable to report on the older youth employment indicators due 

to limited access to State Unemployment Insurance (UI) wage records, the data source necessary to 

calculate the measures. Delinquent grantees continue to work with their respective States and ETA 

anticipates late receipt of some data. ETA is confident the data that has been submitted is reliable and 

accurate. Though this is the last year of YOGs, ETA is addressing this issue for future discretionary 

grant programs by ensuring better access to data. Fortunately, these problems have been limited to the 

employment indicators; additional measures, such as participation and completion rates, have been 

timely and invaluable for management purposes. DOL is currently conducting an impact evaluation of 

the YOG program, and will complete it in 2005.

Youth Opportunity Grants

0%

20%

40%

60%

80%

100%

PY 2002 PY 2003

Diploma Attainment

Entered Employment

Employment Retention
Outcome Goal 1.3 

FY 2004 Performance and Accountability Report 71

Outcome Goal 1.3 – Improve the Effectiveness of Information and Analysis On The 

U.S. Economy 

America’s changing 21st Century workforce needs to know what employment opportunities are emerging to make 

better informed decisions for their future. This critical information, as well as other information pertaining to the 

broad field of labor economics and statistics, is available from the Department of Labor’s Bureau of Labor 

Statistics (BLS). BLS provides private citizens, business owners, and public officials with timely and accurate 

information that assists in making decisions on careers, staffing, and public policy. For example, in FY 2004, 

BLS released projections to 2012 on future job growth by industry and occupation and on the likely composition 

of the workforce pursuing those jobs. BLS produces some of the Nation’s most sensitive and important economic 

indicators to serve the needs of the 21st Century workforce. 

Net Cost of Programs 

FY 2004 program costs of $539 million support BLS programs to produce and disseminate timely, accurate, and 

relevant information on the economy. The Bureau’s budget and costs grew incrementally from 1999 to 2004. 

This trend is attributed primarily to mandatory cost increases; the creation of new programs, such as the American 

Time Use Survey; and important improvements to the Consumer Price Index (CPI), Producer Price Index (PPI), 

and Employment Cost Index (ECI). 

Outcome Goal 1.3

Net Costs ($Millions)

400 420 463

509 533 539

0

100

200

300

400

500

600

1999 2000 2001 2002 2003 2004

Fiscal Year

Goal Number (Agency) – Period 

Goal Statement [Achievement] Performance Summary 

1.3A (BLS) – FY 2004 

Improve information available to 

decision-makers on labor market 

conditions, and price and productivity 

changes. [Not Achieved]

BLS reached targets for customer satisfaction measurement, PPI and productivity 

coverage increases, ECI response rate, and the conversion of four data series to 

NAICS. Due to the delayed conversion of the PPI to NAICS, BLS missed several 

targets for PPI data release dates and for a PPI system modernization 

project. BLS also missed several ambitious survey response rate targets. 
Performance Section 

72 United States Department of Labor 

Software publishers top the list of the ten 

fastest growing detailed-level industries in 

the U.S., all of which are in the serviceproviding sector. Health and computer 

occupations account for nine of the ten 

fastest growing occupations, according to 

the 2002-12 Employment Projections data 

produced by DOL’s Bureau of Labor 

Statistics. Private citizens, businesses, 

and public policy officials require 

information on high-growth industries and 

high-demand occupations to make career 

and staffing decisions and to plan 

programs on education and training. 

Michael Horrigan, BLS Assistant 

Commissioner for the Office of 

Occupational Statistics and Employment 

Projections, presented projections 

information at the 20th annual BLS Labor 

Market Information Conference in Omaha, Nebraska. The conference provided the opportunity for BLS, its State partners, 

and its customer community to share views on data usage and future information needs. Employment projections 

information can be found on the BLS website at http://www.bls.gov/emp. 

Photo credit: Scott Hunzeker, Nebraska Workforce Development – Department of Labor 

Future Challenges 

Substantial challenges face BLS, including the changing economy, maintaining sufficient response levels, and 

evolving technology. BLS uses various strategies to address these challenges, which include the following: 

To respond to the changing economy:

• BLS continued to provide information that informs the public of our changing economy. BLS published the 

 first annual estimates from the American Time Use Survey, providing a wealth of information on the way 

 Americans spend their time, such as paid work, childcare, volunteering, commuting, and socializing. 

• BLS released official estimates of the Job Openings and Labor Turnover Survey (JOLTS) which includes the 

 number and rate of job openings, hires, and separations, which yields better information on the nature and 

 function of the job market. Previously, JOLTS data were released as a developmental series. 

• As the last phase of a comprehensive overhaul of its compensation surveys, BLS published new data on the 

 incidence and characteristics of employee benefit plans. The new publications initiate a regular program of 

 reports that will be issued much more quickly than in the past. They will include new data breakouts by 

 employee and establishment characteristics, and allow for the simultaneous analysis of wages, employee 

 benefit plan costs, and employee benefit plan details together for the first time. 

To maintain a high level of response for its voluntary surveys: 

• BLS continued to develop strategies that address the causes of nonresponse. During FY 2004, BLS 

distributed to respondents 14 program-related brochures that provide visual step-by-step guidance on 

developing customized data tables from the BLS website. Respondents use the tool to extract information 

that meets their unique needs. Thus, respondents better understand the importance of the data that they 

provide to BLS and the importance of their continued voluntary response. 

To meet the challenges of evolving technology: 

• BLS continued to expand the use of Internet data collection in order to provide respondents with quick and 

easy-to-use data reporting options. In FY 2004, over 29,000 respondents to the Survey of Occupational 

Injuries and Illnesses selected the BLS Internet data collection option to report their information, accounting 

for approximately 14.5 percent of the total respondents pool. Additionally, the U.S. Import and Export Price 

Indexes initiated Internet data collection for their respondents; other BLS programs are analyzing 

opportunities to provide the option. 
Outcome Goal 1.3 

FY 2004 Performance and Accountability Report 73

Timely, Accurate, and Relevant Economic Information 

Performance Goal 1.3A (BLS) – FY 2004 

Improve information available to decision-makers on labor market conditions, and price and productivity 

changes. 

Indicators 

Improve relevancy 

Improve data relevance by reflecting changes in the economy, as measured by the number of series (e.g., 

Current Employment Statistics, Employment Cost Index, etc.) converted to the North American Industry 

Classification System (12 series in total); 

Improve accuracy (Coverage) 

Improve coverage by increasing the percent of domestic output of in-scope services included in the Producer 

Price Index; 

Improve coverage by increasing the percent of in-scope industries in the labor productivity measures; 

Improve accuracy (Response) 

Improve the response to the Employment Cost Index; 

Enhance information technology 

Lessen the likelihood of major systems failures that could affect the PPI's ability to release data on time, as 

measured by the percent of the components of the new repricing system completed; 

Other measures 

Raise customer satisfaction with BLS products and services (e.g. the American Customer Satisfaction Index); 

Deliver economic data on time (Percent of scheduled releases issued on time); and 

Percent of accuracy measures met (e.g., revision, response rates, etc.). 

Program Perspective 

BLS reports performance for this goal by producing timely and accurate data that meet customer needs. 

Improvements to the data are measured through increases in the relevancy, coverage, and response of the 

statistics. BLS revised its FY 2004 performance goal to focus more on outcomes and be more transparent to the 

general user. This new framework and the indicators presented here represent the various dimensions of BLS 

products and services that are important to our customers. The targets chosen balance respondent burden and data 

user needs, while supporting continuous improvement of our programs and products. BLS continuously improves 

its statistical processes and products to ensure that decision-makers have available information that is useful and 

relevant. 

Results, Analysis and Future Plans 

The goal was not achieved. However, targets were exceeded, reached, or substantially reached for seven of the 

eight performance indicators. 

BLS reached its target for converting four data series from the SIC system to the North American Industry 

Classification System (NAICS) in FY 2004; however, the release of the PPI using the NAICS was delayed. The 

release of January data, planned for February, took place in March. The Occupational Employment Statistics 

Survey, Industry Productivity statistics, and the Census of Fatal Occupational Injuries data were converted to 

NAICS. 

 

Targets were reached for improving data coverage in the PPI and in labor productivity measures as BLS 

continued to improve the accuracy of its data. While the PPI measures average changes in selling prices received 

by domestic producers for their output, labor productivity is the ratio of the output of goods and services to the 

labor hours devoted to the production of that output. BLS improved data coverage for calculating the PPI by 

increasing the percent of service industries covered in the PPI from 38.8 percent (1997 baseline) to 59.2 percent in 

FY 2004. BLS reached the target, 58 percent, for improving data coverage in labor productivity measures. 
Performance Section 

74 United States Department of Labor 

Additionally, BLS reached the target, 78 percent, for improving response of the ECI initiation indicator. The ECI 

represents employers’ costs for employee compensation, including wages, fringe benefits, and bonuses for U.S. 

employees in all industries. 

The NAICS conversion effort of the PPI required a temporary diversion of resources from a systems 

modernization project, causing BLS to miss its target for completing components of the new repricing system. 

Seventeen percent of the components were completed as compared to a target of 33 percent. A replanning effort 

is currently under way to identify and implement strategies to minimize the disruptions. 

The BLS website receives an average of about 2.5 million user sessions each month, with over half of those 

sessions directed to the BLS Occupational Outlook Handbook (OOH) website. The OOH is the Bureau’s 

nationally recognized source of career information. Using the American Customer Satisfaction Index (ACSI) 

survey, the OOH website received a score of 82 in the third quarter of 2004, placing the website in the top 10 

percent of government agencies. The aggregated Federal government score for this time period was 71.2. 

BLS met the timeliness indicator for 104 out of 108 (96 percent) scheduled releases. The four untimely releases 

were in the PPI program and were caused by above mentioned difficulties with the NAICS conversion. 

Additionally, BLS met the established accuracy target for 35 out of 42 (83 percent) measures. Targeted response 

rates were missed for the American Time Use Survey, Current Population Survey, Job Openings and Labor 

Turnover Survey, U.S. Import and Export Price Indexes (two separate rates), ECI (repricing), and the Employee 

Benefits Survey. BLS uses various strategies to maintain a high level of cooperation for its voluntary surveys and 

continues to conduct research studies to better understand the causes of nonresponse. 

 

How can a business maximize its competitive advantage with manufacturing 

productivity gains averaging 9.2 percent in the U.S. (2002) versus 2.7 percent in 

France and Japan (2002)? What is the impact of an hourly employer labor cost 

per manufacturing worker of $21.33 in the U.S. (2002) versus $2.38 in Mexico 

(2002)? At Stanford Graduate School of Business, Professor Robert Flanagan 

cites these and other BLS statistics on comparative manufacturing productivity 

and labor costs, as well as employment and unemployment statistics, challenging 

his students to consider how their own work would change in different economic 

environments. Professor Flanagan, the Konosuke Matsushita Professor of 

International Labor Economics and Policy Analysis at Stanford, teaches 

economics in the Executive Education and MBA programs. His classes use BLS 

data to examine recent economic trends and to discuss broad differences in 

economic outcomes among countries. International comparison data can be found 

at http://www.bls.gov/fls/home.htm. 

Photo Credit: Visual Arts Services

Management Issues 

BLS is confident that the performance data collected and reported are 

complete, accurate, and reliable. 

BLS programs are evaluated both internally and externally to ensure that they provide taxpayer value. As 

required by OMB Statistical Policy Directive #3, the seven statistical series designated as Principal Federal 

Economic Indicators are evaluated on a three-year schedule. In FY 2004, BLS completed the performance 

evaluation for the Current Population Survey. 

In response to the Program Assessment Rating Tool (PART) findings, BLS developed an efficiency measure and 

revised its performance goals to focus more clearly on outcomes and increase transparency. The BLS PART 

score improved to 88, receiving an effective rating, the highest rating category. 

During FY 2004, BLS responded to the Office of the Inspector General (OIG) Government Information Security 

Reform Act (GISRA) Review of the Current Population Survey (CPS). Findings were related to the CPS 

Continuity of Operations Plan, CPS System Security Plan, security controls of the CPS, and a Bureau-wide 

Uninterruptible Power Supply system. The review is described in Appendix 2 of this report (Study 1). 
FY 2004 Performance and Accountability Report 75

Strategic Goal 2: A Secure Workforce 

Promote the Economic Security of Workers and Families

Protecting workers’ wages and working conditions, providing unemployment compensation and other benefits 

when workers are unable to work, and retirement and health benefit security are central to the DOL mission. This 

strategic goal captures these priorities and consists of two outcome goals: Increase Compliance With Worker 

Protection Laws, which focuses on safeguarding employees’ wages, working conditions, and union democracy 

and financial integrity; and Protect Worker Benefits, which deals with relief in the form of unemployment, 

disability, and pension and health care insurance benefits. Agencies supporting this strategic goal are the 

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

Employee Benefits Security Administration (EBSA), and the Pension Benefits Guaranty Corporation (PBGC). 

Outcome goals 2.1 and 2.2 contain six performance goals (see table below), of which two were achieved, two 

substantially achieved and two not achieved in FY 2004. The Department performed well, with significant 

progress in improving worker protection and union compliance, recovery of erroneous payment of unemployment 

benefits, improved effectiveness of pension and health benefit plan enforcement and workers’ compensation 

program administration. Results for several performance indicators were shy of their targets but there were no 

major disappointments or reversals in our workforce security performance this past year. 

Outcome Goal 2.1 − Increase Compliance With Worker Protection Laws 

1 performance goal achieved & 1 substantially achieved 

ESA Wage and Hour Division 

(2.1A) – substantially achieved 

The Department reached targets for increasing compliance with the Fair Labor 

Standards Act (FLSA) in the chronically delinquent garment manufacturing, longterm health care, and agricultural commodities industries. The target to reduce 

recidivism of prior FLSA violators was not reached, however. 

ESA Office of Labor Management 

Standards (2.1B) – achieved 

The Department reached targets to increase unions’ financial integrity and 

transparency. 

Outcome Goal 2.2 – Protect Worker Benefits 

1 performance goal achieved, 1 substantially achieved & 2 not achieved

ETA Unemployment Insurance 

(2.2A) – not achieved 

ETA reached targets for recovery of estimated overpayments, facilitating 

reemployment and establishing tax accounts but failed to reach its target for 

timeliness of first payments. 

EBSA Pension and Health Benefit 

Security (2.2B) – achieved 

EBSA reached all targets, including those for successful conduct of civil and 

criminal cases against benefit plan malfeasance, and customer satisfaction with 

participant assistance received. 

ESA Office of Worker 

Compensation Programs (2.2C) – 

substantially achieved 

ESA reached nine of ten targets. ESA reduced the lost production days for USPS 

employees, but failed to do so across the Government. ESA also kept Federal 

Employee Compensation Act medical costs inflation below the national healthcare 

inflation rate and reached targets for the timeliness of processing Energy Employees 

Occupational Illness Compensation initial claims. 

PBGC Pension Plan customer 

satisfaction (2.2D) – not achieved 

PBGC reached its target for customer satisfaction of participants in trusteed plans but 

not for sponsors of covered plans. 
Performance Section 

76 United States Department of Labor 

The following charts illustrate DOL’s strategic goal net costs in FY 2004, with A Secure Workforce shares set 

apart. The first allocates total Departmental costs of $56.676 billion; the second allocates an adjusted net cost of 

$11.102 billion that excludes major non-discretionary items associated with this goal.15 Net costs of this goal in 

FY 2003 (less Income Maintenance) were $1.969 billion. The decrease occurred in part because of relocation of 

the WIA Dislocated Worker and TAA programs from Goal 2 to Goal 1; together, these two programs cost 

approximately $2 billion annually. 

FY 2004 Strategic Goal 2 - $1.383 billion

Percent of Net Cost not including Income 

Maintenance

2-Secure

13%

1-Prepared

78%

3-Quality

9%

The outcome goals and programs listed above, along with their results, costs, and future challenges are discussed 

in more detail on the following pages. 

 

15 The excluded costs are referred to as Income Maintenance – unemployment benefit payments to individuals who 

are laid off or out of work and seeking employment ($41.424 billion) plus disability benefit payments to 

individuals who suffered injury or illness on the job ($4.150 billion). 

FY 2004 Strategic Goal 2 - $46.957 billion

Percent of Net Cost

2-Secure

83%

1-Prepared

15%

3-Quality

2%

Performance Section 

78 United States Department of Labor 

Outcome Goal 2.1 – Increase Compliance with Worker Protection Laws 

In a global economy, the Employment Standard Administration’s (ESA) primary challenge in building a 

competitive workforce is to ensure that protections for workers are appropriate for – and keep pace with – the 

changes occurring in the American workforce. Virtual workplaces, aging workers, more women and minorities in 

the workforce, immigration, organized labor, the growth of small businesses, and the ongoing shift from a 

manufacturing to a service economy will all be important factors as U.S. businesses strive to comply with worker 

protection laws in the future. 

Under the Fair Labor Standards Act, the Migrant and Seasonal Agricultural Worker Protection Act, the Family 

and Medical Leave Act and the Service Contract Act, ESA’s Wage and Hour Division (WHD) administers 

standards for wages and working conditions: the minimum wage, overtime, youth employment, and field 

sanitation standards in the agriculture industry. Under the Davis-Bacon Act, WHD determines prevailing wages 

in the construction industry. The key to ensuring worker protections is to focus on industries and employers with 

the most persistent and serious violations; to quickly resolve employee complaints; and to ensure accuracy in 

established wage rates. ESA's Office of Labor-Management Standards (OLMS) ensures union transparency, 

financial integrity, and democracy by administering and enforcing the Labor-Management Reporting and 

Disclosure Act (LMRDA). OLMS responsibilities under the Act include compliance assistance; civil and 

criminal investigations and enforcement; union compliance audits; and reports/public disclosure administration. 

OLMS’ strategies are aimed at improving timeliness and quality of union reports filed for public disclosure and 

strengthening LMRDA compliance through union audits and outreach efforts. 

Goal (Agency) – Period 

Goal Statement [Achievement] Performance Summary 

2.1A (ESA) – FY 2004 

Covered American workplaces legally, 

fairly, and safely employ and compensate 

their workers. 

[Substantially Achieved] 

The Department reached targets for customer service and for 

increasing compliance with the Fair Labor Standards Act (FLSA) 

in the garment manufacturing, long-term health care, and 

agricultural commodities industries – industries with chronic FLSA 

violations. DOL did not reach its targets for reduction of FLSA 

recidivism and for increasing the percent of nursing home workers 

employed in compliance. The target for timely and accurate 

prevailing wage determinations was reached. 

2.1B (ESA) – FY 2004 

Advance safeguards for union financial 

integrity and democracy and the 

transparency of union operations. 

[Achieved]

The Department reached targets increasing union financial integrity 

and for increasing union transparency. 

Net Cost of Programs 

FY 2004 program costs of $296 million supported ESA's Wage and Hour Division (WHD) and Office of LaborManagement Standards (OLMS) programs. This is an increase of 8% ($23 million) over FY 2003. The WHD 

budget increased to cover operating expenses. Approximately 75 percent of WHD's resources are devoted to 

complaint investigations and resolution. The success of this effort is reflected in the FY 2004 performance results 

that show ESA decreased the average number of days to conclude a complaint from 108 to 92 days. 

Outcome Goal 2.1

Net Costs ($Millions)

260 290 299

350

273 296

0

100

200

300

400

500

1999 2000 2001 2002 2003 2004

Fiscal Year
Outcome Goal 2.1 

FY 2004 Performance and Accountability Report 79

Results Summary 

DOL achieved one performance goal and substantially achieved the other. WHD decreased the average number 

of days to conclude a complaint from 108 days to 92 days, greatly improving performance, and also increased 

compliance in industries with chronic violations in the garment manufacturing, long-term health care, and 

agricultural commodities industries. A FY 2004 survey found 55 percent of nursing homes in compliance and 90 

percent of industry employees paid in compliance with the FLSA. WHD added ten compliance assistance 

programs to the three previous ones, affecting over 900,000 agricultural employers. Following WHD 

investigations 335 agricultural housing providers corrected violations, an increase from 256 in FY 2003. WHD 

did not reach its target for reduction of employer FLSA violation recidivism. The Davis-Bacon Act (DBA) wage 

determination program reached targets to establish a wage determination processing baseline and to issue 80 

percent of all survey-based DBA wage determinations within 60 days. 

DOL reached both of its union financial integrity targets. OLMS established a fraud baseline of nine percent of 

those unions filing reports under LMRDA; and the percentage of union reports meeting standards of acceptability 

increased in to 92 percent. Better union public disclosure reports resulted from agency compliance assistance 

efforts and increasing use of electronic reporting formats. 

 

"A new way of doing business, where government goes directly to the people in an 

effort to better serve and protect." This is how operation COACH (Compliance 

Outreach to Asian Communities and Hispanics) has been described by northern 

New Jersey local media. This innovative program has also sparked positive 

response from community groups. The Wage and Hour Division (WHD) 

instituted this program in December 2003 to promote awareness of WHD laws and 

programs in the Asian and Hispanic communities, and to work directly with 

employers and workers who traditionally have been reluctant to seek WHD’s 

services. Under COACH, WHD investigators have visited over 650 businesses 

that employ more than 4,540 workers. Seventy-four percent of the businesses 

reached were either Asian or Hispanic owned. Fifty-nine percent of all the 

businesses visited indicated that prior to COACH, they had no knowledge of or 

experience with WHD. Over ninety-five percent offered that they did not know 

how to reach the local WHD office or even how to access the DOL web page. 

Much of the operation’s success is attributed to a non-adversarial compliance 

assistance based strategy that emphasizes face–to-face contact and bilingual 

investigators. 

Photo credit: Nancy Vazquez-Gunatilaka, DOL Investigator 

Future Challenges 

ESA faces many challenges to meeting its goal of achieving compliance with worker protection laws. In FY2005, 

WHD will continue working within established employer partnerships; seeking new such agreements; and 

continuing compliance assistance to employers and employees. WHD will also transition to goals and measures 

that more fully capture compliance in a broad spectrum of low-wage industries; continue its targeted compliance 

assistance programs; continue self-directed investigations in industries with chronic violations; and reinvestigate 

employers where future compliance is uncertain. 

Performance success in the wage determination program depends on upgrades in information technology. WHD 

is working to combine the DBA Wage Determination Generation and Automated Survey Distribution Systems 

into one automated data processing system that should greatly enhance the program’s ability to obtain, store and 

distribute construction wage determinations. 
Performance Section 

80 United States Department of Labor 

Protect Workers’ Wages 

Performance Goal 2.1A (ESA) – FY 2004 

Covered American workplaces legally, fairly, and safely employ and compensate their workers. 

Indicators 

Ensuring continued customer service by maintaining the average number of days to conclude a complaint; 

Reducing employer recidivism by increasing the percentage of prior violators who achieved and maintained 

FLSA compliance following a full FLSA investigation; 

Increasing compliance in industries with chronic violations; and 

Ensuring timely and accurate prevailing wage determinations. 

Program Perspective 

ESA’s Wage and Hour Division (WHD) enforces laws establishing minimum standards for wages and working 

conditions. These include the minimum wage, overtime and youth employment provisions of the Fair Labor 

Standards Act; the Migrant and Seasonal Agricultural Worker Protection Act; and the Family and Medical Leave 

Act. WHD is also responsible for enforcing field sanitation standards in agriculture, and administers wage 

determination provisions of the Davis-Bacon Act. 

The key to ensuring worker protections is to focus on industries and employers with the most persistent and 

serious violations; to resolve employee complaints expeditiously; and to ensure that established wage rates are 

accurate. By focusing compliance efforts in low-wage industries like agriculture, health care, and garment 

manufacturing, WHD seeks to protect those low-wage workers most likely to be paid less than legally required or 

unsafely housed. By reducing repeat violations, WHD can achieve lasting compliance on behalf of many 

employees. WHD ensures responsiveness by reducing the time it takes to resolve employee complaints. Timely 

and accurate prevailing wage determinations encourage efficiency and help ensure government contract workers 

receive the wages to which they are entitled. 

A number of external factors influence WHD’s program outcomes. As the supply of vulnerable immigrant 

workers increases, the potential for violations increases. Compliance levels in many low-wage industries are also 

heavily influenced by competitive pressures and by subcontracting arrangements in which smaller companies 

have little opportunity to influence market prices. 

Results, Analysis and Future Plans 

The goal was substantially achieved. Eight of ten targets were reached. The average number of days to conclude 

a complaint declined from 108 days to 92 days, reaching the complaint response target. DOL did not reach its 

target to reduce recidivism of prior violators; compliance for this group fell by two percentage points from the FY 

2003 baseline of 73 percent. WHD reached all but one of the targets associated with increasing compliance in 

industries with chronic violations: garment manufacturing, long-term healthcare, and agricultural commodities. 

In the health care industry, WHD increased the percent of workers employed in compliance by 1.2 percentage 

points – just under the 2 percentage point target. Targets and results appear in the table below. 
Outcome Goal 2.1 

FY 2004 Performance and Accountability Report 81

Industry Action Target Performance Achieved?

Garment Increase employees "on the payroll" in 

NYC 1 Percentage Point 6 Percentage Points Y 

Garment Increase manufacturers’ monitoring of 

their Southern CA shops 2 Percent 2 Percent Y 

Long-term Health Care Increase nursing home FLSA 

compliance 5 Percentage Points 15 Percentage Points Y 

Long-term Health Care Increase employees paid in compliance 

with FLSA 2 Percentage Points 1.2 Percentage Points N 

Agricultural 

Commodities 

Increase compliance among employers 

subject to DWHaT 2 Percent Result are nearly 200 times baseline Y 

Agricultural 

Commodities 

Increase corrected housing violations 

after intervention 1 Percent 31 Percent Y 

WHD also reached its timely and accurate prevailing wage determinations targets, establishing a baseline of 1491 

wage determination data submission forms processed per 1,000 hours, and issuing 86 percent (13 of 15) wage 

surveys within 60 days, against a target of 80 percent. 

WHD improved customer service responsiveness by updating complaint intake procedures, regular review of 

complaint inventories, streamlining procedures to ensure early contact with complainants, and through good fact 

development. WHD has established three key effective strategies to increase compliance in industries with a 

history of chronic FLSA violation: compliance assistance, enforcement and collaborative partnerships. In 

garment manufacturing, monitoring through unannounced visits, payroll record and timecard reviews, employee 

interviews have all proven effective. In the long-term care industry, compliance assistance, partnerships and 

enforcement have been effective in increasing FLSA compliance. Across the board, compliance assistance has 

been effective – dissemination of industry-specific fact sheets and employee rights cards, face-to-face employer 

consultations, and entering into compliance partnerships with several major nursing homes. In the agricultural 

industry, targeted compliance assistance and compliance partnerships have worked especially well. A FY 2004 

partnership with the Tennessee Farm Bureau accounts for the greatest increase of employers impacted by a 

compliance partnership, with just over 500,000 members. 

Over the last several years, the DBA wage determination program took steps to improve the accuracy and 

timeliness of prevailing wage determinations for the construction industry. Following OMB’s PART review of 

the DBA wage determination program, WHD added timeliness and accuracy performance indicators – the two 

aspects of the DBA wage survey program that significantly impact wage determination performance. 

WHD is using a new complaint indicator in FY 2005 and will concentrate on the number of days it takes to 

resolve violation complaints. This will prevent any unintentional emphasis on speed at the cost of finding and 

correcting violations. To reduce FLSA violation recidivism, WHD will promote long-term compliance among 

employers through detailed compliance agreements outlining agreed-upon steps for compliance; and 

reinvestigating cases where future compliance is uncertain. WHD will continue its transition to goals and 

measures that more fully capture compliance in a broad spectrum of low-wage industries. As a result, there will 

not be specific indicators for the health care and agriculture industries. However, WHD will continue its targeted 

compliance assistance programs and enforcement activities to promote housing and transportation compliance. 

Performance success in the wage determination program depends on upgrades in information technology. WHD 

is working to combine the DBA Wage Determination Generation and Automated Survey Distribution Systems 

into one automated data processing system. This software development will greatly enhance the program’s ability 

to obtain, store and distribute construction wage determinations. 
Performance Section 

82 United States Department of Labor 

Management Issues 

Data used in reporting performance against goals are derived largely from the WHD Investigative Support and 

Reporting Database (WHISARD). An independent analysis conducted by the University of Tennessee this year 

found high levels of consistency between WHISARD data and case file information, with 90% or greater 

consistency on 25 of the 33 data elements. Other performance data sources are Wage Hour’s statistically valid 

investigation-based compliance surveys, which are tabulated and reviewed by independent sources to ensure 

accuracy and completeness. 

WHD has undertaken four program evaluations in FY 2004 focusing on: (1) identifying new compliance 

measures in low-wage industries; (2) integrating budget and performance information ; (3) conducting a 

cost/benefit analysis of recommendations to update the Youth Employment Hazardous Occupations rules; and (4) 

an assessment of WHD compliance assistance efforts. WHD will undertake two new evaluations next year: 1) the 

development of models to employ common compliance strategies across low-wage industries; and 2) an 

evaluation of the agency’s compliance assistance web information. 

In the spring of 2004, the Office of Inspector General issued a final report on WHD’s Davis-Bacon Act wage 

determination program. A summary of the findings is included in Appendix 2 (Study 5). In the spring of 2003, 

WHD’s Davis Bacon wage determination program was assessed through a Program Assessment Rating Tool 

(PART) review. The assessment found that the program did not demonstrate results. In response, WHD has 

developed overarching goals to ensure program performance improvements in determining and issuing prevailing 

wage rates with specific numeric targets. In addition, WHD contracted with an outside company to evaluate the 

Davis Bacon wage survey process. 

 
Outcome Goal 2.1 

FY 2004 Performance and Accountability Report 83

Union Financial Integrity and Transparency 

Performance Goal 2.1B (ESA) – FY 2004 

Advance safeguards for union financial integrity and democracy and the transparency of union operations. 

Indicators 

Increasing union financial integrity: Baseline information on unions with fraud will be developed and 

performance targets will be established; and 

Increasing union transparency. The percentage of union reports meeting standards of acceptability for public 

disclosure will increase to 75%. 

Program Perspective 

OLMS ensures union transparency, financial integrity, and democracy by administering and enforcing the LaborManagement Reporting and Disclosure Act (LMRDA). The Act requires annual publicly available union 

financial reports; establishes standards for union officer elections; and imposes criminal sanctions for union fund 

embezzlement. OLMS assists union compliance; conducts civil and criminal investigations, and compliance 

audits; and administers public disclosure of required reports. Improving the timeliness and quality of union 

reports filed for public disclosure and strengthening compliance through audits and outreach efforts are key 

strategies. 

Results, Analysis and Future Plans 

DOL reached both indicator targets for this performance goal. 

Union Financial Integrity 

OLMS audited a randomly selected sample of reporting unions to establish a baseline measure of union fraud. 

The survey established that fraud is indicated in nine percent of unions subject to the LMRDA. An audit finding 

of a criminal LMRDA violation, predominantly union funds embezzlement, was counted as an indicator of fraud. 

OLMS will seek to reduce the percentage of unions with fraud to 7.5 percent in FY 2005. Strategies to achieve 

the goal are union outreach, a visible audit presence, and a strong criminal enforcement program. 

Union Transparency

Union reports meeting standards of acceptability increased to 92 percent. This resulted from agency compliance 

assistance efforts and increasing use of electronic reporting formats, which include error checks and report 

validation to assist filers in preparing complete and accurate reports. Increased union transparency is critical to 

promoting union democracy and financial integrity. In FY 2005, OLMS will increase compliance rates to 95 

percent by continuing outreach and compliance assistance efforts, and increasing use of electronic forms. 
Performance Section 

84 United States Department of Labor 

When major revisions of annual reporting 

requirements for labor unions were 

announced on October 9, 2003, DOL’s 

Office of Labor-Management Standards 

(OLMS) took extraordinary steps to make 

sure union officials would clearly 

understand the changes. OLMS hosted 

155 seminars in 44 states, explaining to 

more than 5,000 union representatives the 

changes designed to promote union 

democracy and financial safeguards for 

millions of American union members. 

OLMS also issued 10,000 compliance 

guides; hosted a seminar in Washington, 

D.C. for 130 certified public accountants; 

held 29 special briefings for international 

unions; set up dedicated sections on its 

web site where unions can download 

reporting software and PowerPoint 

presentations, and find answers to frequently asked questions (FAQs). OLMS has established an e-mail message service to 

notify interested subscribers of new FAQs, compliance assistance materials, and other developments. The photo was taken at 

an OLMS seminar in May for members of the Transport Workers Union (TWU) at The George Meany Center for Labor 

Studies in Silver Spring, Md. 

Photo credit: Jerry Frishman 

Management Issues 

Performance data comes from two systems. The Case Data System includes comprehensive information about 

OLMS investigations, audit findings, and subsequent enforcement actions. The labor organization report system 

(e.LORS) includes timeliness and LMRDA union report sufficiency information. 

Maintaining effective union outreach and a visible audit presence will be essential to increasing union financial 

integrity. Timely, accurate union financial reports are essential to promoting union democracy and financial 

integrity. Completeness and accuracy of union reports are markedly increasing as a result of compliance 

assistance efforts and increasing use of the electronic union annual reporting. Timely public disclosure reporting 

remains a continuing challenge in spite of OLMS’ comprehensive program efforts to correct a persistent 

delinquent report problem. To address this challenge, DOL supports amendment of the LMRDA to authorize 

civil monetary penalties for late filing.
Outcome Goal 2.2 

FY 2004 Performance and Accountability Report 85

Outcome Goal 2.2 – Protect Worker Benefits 

Protecting the benefits earned and promised to U.S. workers is a central feature of DOL’s secure workforce 

strategic goal. DOL helps increase the economic security of America's working families by temporary protecting 

wages for the unemployed; protecting private employee pension plans, health plans and other benefits plans 

against fraud and abuse; protecting Federal and certain other workers from the economic effects of work-related 

injuries and illness; and protecting against lost or interrupted pension payments of workers whose companies 

terminate their defined benefit plan. Three DOL agencies and one government corporation chaired by the 

Secretary of Labor create a more secure U.S. workforce by protecting worker benefits – the Employment and 

Training Administration (ETA), the Employee Benefits Security Administration (EBSA), the Employment 

Standards Administration (ESA), and the Pension Benefit Guaranty Corporation (PBGC). 

 

ETA temporarily replaces the wages of the unemployed through the Unemployment Insurance (UI) program, 

which provides grants to State-operated programs and manages the Unemployment Trust Fund. ETA ensures that 

States’ programs are administered efficiently according to Federal standards and requirements, and manages the 

trust fund to provide a buffer to volatile cycles in tax revenues and benefit claims. EBSA protects private 

employee pension plans, health plans and other benefits plans against fraud and abuse by enforcing Title I of the 

Employee Retirement Income Security Act of 1974, as amended (ERISA); through compliance assistance, and 

through education. Where there has been malfeasance, EBSA restores benefits and assets by bringing civil and 

criminal cases. 

 

ESA protects Federal and certain other workers from the economic effects of work-related injuries and illness’s 

through the Office of Workers’ Compensation Programs’ (OWCP) four disability compensation programs. 

OWCP provides wage replacement and cash benefits, medical treatment, vocational rehabilitation, and other 

benefits to covered workers, their dependents and survivors. PBGC protects the pension benefits of participants 

in defined benefit plans that have been terminated, usually due to the sponsoring employer’s bankruptcy, by 

serving as both insurer and administrator. As an insurer, PBGC collects insurance premiums from employers that 

sponsor insured pension plans. As an administrator, PBGC pays monthly retirement benefits to the participants in 

terminated plans. 

Goal (Agency) – Period 

Goal Statement [Achievement] Performance Summary 

2.2A (ETA) – FY 2004 

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. 

[Not Achieved]

ETA reached targets for recovery of estimated overpayments, 

facilitating reemployment and establishing tax accounts. 

ETA failed to reach its target payment timeliness for first 

payments. 

2.2B (EBSA) – FY 2004

Enhance pension and health benefit security. 

[Achieved]

EBSA reached all targets, including those for successful 

conduct of civil and criminal cases against benefit plan 

malfeasance, and customer satisfaction with participant 

assistance received. 

2.2C (ESA) – FY 2004 

Minimize the human, social, and financial 

impact of work-related injuries for workers and 

their families. 

[Substantially Achieved]

ESA reached nine of ten targets. Lost production days fell 

for USPS employees, but not for all other agencies. ESA 

also kept Federal Employee Compensation Act medical costs 

inflation below the national healthcare inflation rate. 

2.2D (PBGC) – FY 2004 

PBGC will improve customer satisfaction 

according to the American Customer Satisfaction 

Index (ACSI). [Not Achieved]

PBGC reached its target for customer satisfaction of 

participants in trusteed plans, but not for sponsors of covered 

pension plans. 
Performance Section 

86 United States Department of Labor 

Net Cost of Programs 

FY 2004 program costs of $46.7 billion supported ETA's unemployment insurance and foreign labor certification 

programs, EBSA efforts to ensure that individuals receive promised benefits, and ESA programs to reduce the 

consequences of work-related injuries. PBGC is not included in the Consolidated Statement of Net Costs, hence 

the costs of its programs are not reflected here. 

FY 2004 program costs decreased by approximately $11 billion, or 20%, from FY 2003. Unemployment 

Insurance program costs account for the entire decrease in costs and account for 93 percent of FY 2004 

expenditures for this outcome goal. UI Program costs are largely driven by average weekly insured 

unemployment (AWIU) − the average number of people filing claims for continuing UI benefits each week. The 

AWIU figure decreased from 3.646 million in FY 2003 to an estimated 3.167 million in FY 2004. UI benefits 

paid decreased from $54.0 billion in FY 2003 to an estimated $42.1 billion in FY 2004.

The considerable decreased costs for Outcome Goal 2.2 were minimally offset by increased costs to ESA’s Black 

Lung program. In FY 2004, the Special Benefits for Disabled Coal Miners was transferred to ESA from the 

Social Security Administration. The amount apportioned for this account in FY 2004 is $403 million. 

Outcome Goal 2.2

Net Costs ($Billions)

25 25

34

55 58

47

0

10

20

30

40

50

60

70

1999 2000 2001 2002 2003 2004

Fiscal Year

Results Summary 

ETA did not meet its UI performance goal, which saw its intrastate first payment timeliness (within three weeks) 

fall from 88.9% to a projected 88.7%. However, ETA did improve payment accuracy, facilitation of 

reemployment, and quick determination of UI claimants’ tax liability. Of particular importance is the improved 

detection of overpayments, which is crucial to the integrity of UI administration. ESA substantially achieved its 

goal for Office of Workforce Compensation Programs’ four disability compensation programs. ESA successfully 

placed 62 injured USPS employees who were vocational rehabilitation program participants with new employers 

and produced $23.4 million in savings by carefully reviewing cases for continued disability status, and 

reemployment potential. The savings resulted from benefit adjustment and roll reduction. ESA also become 

more efficient in resolving disputed Longshore and Harbor Workers’ program cases and in processing Initial 

claims of the Energy Employees Occupational Illness Compensation claims. 

Meeting its performance goal, EBSA saw its ratios for successful civil and criminal cases improve. Success in the 

case ratio indicators demonstrates EBSA’s improved selection and conduct of investigations. A successful closed 

civil investigation is one in which rightful assets are protected or returned to plans and participants. A successful 

criminal investigation is one that is referred for prosecution. While PBGC managed to improve its customer 

service score for participants in trusteed plans, it did not reach its target for improving customer service to plan 

sponsors. 
Outcome Goal 2.2 

FY 2004 Performance and Accountability Report 87

The Oregon Employment Department is making life easier for its unemployment 

insurance customers through its new debit card option. The ReliaCard Visa functions 

like a debit card and allows recipients a new level of security in obtaining their benefits 

by avoiding the possibility of stolen, lost, or destroyed checks – another initiative to 

guard the Unemployment Insurance program against fraud. This new option has 

benefited both the state and unemployment insurance recipients. Oregon has saved a 

considerable amount of money on the printing, mailing, and processing costs associated 

with payment by paper checks. In addition, customers benefit from faster, easier access 

to benefits. One happy customer noted, “I have done my banking at U.S. Bank for many 

years, and when the Oregon Employment Department offered the opportunity to receive 

my benefits by debit card, I jumped at the chance. It is very convenient.” 

Photo credit: Craig Spivey 

Future Challenges 

Many of the challenges the Department faces in protecting worker benefits are 

associated with the dynamic nature of the 21st Century workforce. UI program 

administration must maintain its integrity by preventing tax avoidance and 

reducing overpayments. In FY 2005, ETA will focus on reducing UI tax 

avoidance and benefit overpayments, and EBSA will make programmatic adjustments to achieve the right mix of 

targeted enforcement, compliance assistance, and education in protecting nearly 7,000,000 employee pension, 

health, and other benefit plans. 

Other challenges for DOL’s workforce compensation programs include increasing medical costs and a large 

expected influx of claimants. As general medical costs continue to rise in line with expanding medical 

technologies, the compensation programs’ medical costs will also rise. DOL strives to ensure that the inflation 

rate for these medical costs increases more slowly than the comparable national healthcare rate. The number of 

Defense Base Act Longshore claims from injured civilian contractors in Iraq and Afghanistan is increasing, and 

could increase dramatically should the potentially large pool of Iraqi civilians employed by American contractors 

begin to file claims. PBGC continues to face an unprecedented influx of terminated plans. Meanwhile, 

participants’ and practitioners’ expectations for speed and accuracy of services continue to rise, specifically in the 

demand for electronic transactions and information. PBGC will identify opportunities to improve customer 

service in the face of an increased customer base that demands improved speed, accuracy, and information. 
Performance Section 

88 United States Department of Labor 

Pay Unemployment Insurance Claims Accurately and Promptly 

Performance Goal 2.2A (ETA) – FY 2004 

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

Insurance (UI) claimants, and set up unemployment tax accounts promptly for new employers. 

Indicators 

Payment Timeliness: 89.2% of all intrastate first payments will be made within 14/21 days; 

Payment Accuracy: Establish for recovery at least 59% of the amount of estimated overpayments that the States 

detect; 

Facilitate Reemployment: A method for establishing an entered-employment rate for UI claimants was pilot tested 

in FY 2003, and a baseline will be established using pilot data; and 

Establish Tax Accounts Promptly: 82.2% of determinations about Unemployment Insurance tax liability of new 

employers will be made within 90 days of the end of the first quarter they become liable for the tax. 

Program Perspective 

By temporarily replacing part of lost wages, the Federal-State Unemployment Insurance (UI) system ameliorates 

personal financial hardship due to unemployment and stabilizes the economy during economic downturns. For 

both workers and employers, the program’s success depends upon: timely payment of benefits; prevention or 

prompt detection of erroneous payments; timely establishment of new employers’ tax accounts to ensure the 

reporting of workers’ wages and payment of taxes to fund benefits; and promoting and facilitating workers’ return 

to suitable work. States operate their own programs under their own laws. As the Federal partner, DOL provides 

program leadership, allocates administrative funds, provides technical assistance, and exercises performance 

oversight to help ensure that the system efficiently provides the greatest security to workers and that States meet 

requirements of federal UI laws and regulations. 

Economic conditions and the resulting program workloads affect many aspects of UI performance. For example, 

when unemployment rises, more claims are filed, and UI payment timeliness generally declines. On the other 

hand, slower new business creation reduces the number of new employer tax accounts, and the timeliness of tax 

liability determinations generally goes up. Higher levels of claims and payments tend to increase the 

number/dollar amount of overpayments – often temporarily outpacing detection and recovery efforts.

Results, Analysis and Future Plans 

The goal was not achieved, but three of the four targets were reached: 

• Payment Timeliness: 88.7 percent of first payments were made within three weeks, just short of the target of 

89.2 percent. 

• Payment Accuracy: States established for recovery 61 percent of the estimated amount of overpayments they 

could detect and recover. 

• Facilitate Reemployment: After completion of a successful 6-state pilot and establishment of a baseline of 

51.5 percent based on pilot results, DOL began to seek Office of Management and Budget (OMB) approval to 

collect data from all states on re-employment of UI claimants. States’ reporting would begin no earlier than 

the first quarter of FY 2006. 

• Establish Tax Accounts Promptly: 83 percent of determinations establishing employers as newly liable for 

filing UI reports and paying UI taxes were made within 90 days of the end of the quarter they became liable. 

The UI system performed extremely well in the face of high claims workloads. The number of beneficiaries, 8.7 

million, was lower than in FY 2003 (10.3 million), but one million of them received over $4 billion in extended 

benefits – mostly Temporary Extended Unemployment Compensation – as well as regular benefits. Benefit 

payments totaled $40.8 billion, down from $53.3 billion in FY 2003. States maintained first payment and new 

employer status determinations timeliness at a high level and improved detection of overpayments. 
Outcome Goal 2.2 

FY 2004 Performance and Accountability Report 89

ETA continues to emphasize payment 

integrity. In March, 2004, ETA signed a 

memorandum of understanding with the Social 

Security Administration (SSA) to allow State 

Workforce Agencies (SWAs) and SSA to 

exchange data in real time. SWAs that have 

met the system security requirements and have 

established a data-sharing agreement will have 

access to SSA data to verify personal 

information, such as name, social security 

number, and date of birth for those applying 

for unemployment benefits. In August, the 

President signed a law giving States access to 

the National Directory of New Hires, an 

additional tool for swiftly detecting and 

preventing payments to claimants who have 

returned to work. For FY 2005, targets for all 

indicators will be raised. 

Management Issues 

DOL is seeking authorization to collect data for the Facilitate Reemployment indicator for reporting in FY 2006. 

Because of established reporting schedules, 4th quarter data for the Payment Accuracy and Establish Tax Accounts 

Promptly indicators were not available in time for publication in this report. The results reported are projections 

of fiscal year performance using regression models that incorporate the latest available performance data and 

reflect OMB’s mid-FY 2004 economic assumptions. 

In its FY 2004 report listing DOL’s top management challenges, the Office of Inspector General (OIG) listed 

identity theft, UI overpayments, and State UI trust fund solvency. OIG recommended that ETA enhance 

investigative training for State UI personnel to focus on fraud prevention and detection. ETA provided funding to 

States to: (1) implement data exchanges with the Social Security Administration for the purpose of matching 

Social Security Numbers to identify false numbers; and (2) access data from other States to verify identities. ETA 

also provided States with a written alert suggesting action that States could take to combat identity theft problems. 

A recent OIG study found that the new hire detection method is better for establishing UI overpayments than the 

wage/UI benefit cross-match (Study 6 in Appendix 2). In response to OIG’s recommendation, ETA provided 

funds and encouraged States to access their new hire directories and other State databases. In August 2004, the 

President signed into law a bill giving States access to the National Directory of New Hires, thereby removing a 

critical barrier to improved overpayment detection. ETA is pilot testing cross-matching of its Benefit Accuracy 

Measurement (BAM) investigation case database against State wage records to more completely detect 

overpayments. If this process proves cost-effective, it will be incorporated into the BAM methodology. 

OIG remains concerned that States’ trust funds may not have adequate reserves to meet projected UI 

compensation demands. ETA has developed and regularly publishes various measures of State solvency to help 

inform and guide State decisions on tax rates. In the short term, the system loans funds to States that have 

encountered serious cash flow problems, thus enhancing UI’s impact as an automatic economic stabilizer. 

DOL also commissioned a study, Internet Initial Claims Evaluation (Study 22 in Appendix 2) that evaluated 

service delivery; security; fraud and abuse controls; and cost effectiveness, and concluded that Internet initial 

claims filing is a convenient and cost-effective method of claims taking, and that there is no evidence that this 

method leads to increased erroneous payments or system security breaches. In its 2003 Program Assessment 

Rating Tool (PART) review, the Administration concluded that the UI program is effectively managed. Among 

recommendations was completion of efforts to reduce the overpayment rate. As noted above, the Department has 

made significant progress in this area. 

UI Indicators and Total Unemployment Rate

50%

55%

60%

65%

70%

75%

80%

85%

90%

95%

1999 2000 2001 2002 2003 2004

Fiscal Year

UI Indicators

3.5%

4.0%

4.5%

5.0%

5.5%

6.0%

6.5%

7.0%

7.5%

Unemployment Rate

Intrastate First Payments New Status Determinations

Detection of Overpayments Total Unemployment Rate
Performance Section 

90 United States Department of Labor 

Provide for Secure Pension and Health Plans 

Performance Goal 2.2B (EBSA) – FY 2004 

Enhance Pension and Health Benefit Security 

Indicator 

Enforcement 

Achieve greater than a 50% ratio of closed civil cases with corrected violations to civil closed cases; 

Achieve greater than a 25% ratio of criminal cases referred for prosecution to total criminal cases; and 

Participant Assistance 

Achieve a Customer Satisfaction Index of 61, or comparable measurement, for participants and beneficiaries who 

have contacted EBSA for assistance. 

Program Perspective 

EBSA is responsible for enforcing the Employee Retirement Income Security Act (ERISA), and the main 

challenge is to maintain trust and confidence in the employee benefits system. By achieving successful civil and 

criminal case closure and referral rates, DOL shows its success in targeting wrongdoers. DOL also combines an 

aggressive outreach and education program with a highly motivated and trained staff of customer assistance 

experts in the field of pension and health laws. By directly assisting plan participants and beneficiaries in 

understanding their rights and protecting their benefits, we help workers monitor their own benefit rights. 

EBSA has steadily improved its performance in the respective areas improving from a civil ratio of 46 percent in 

FY 1999 to 69 percent in FY 2004, a criminal ratio of 26 percent in FY 2001 to a 45 percent in FY 2004 and a 

customer satisfaction baseline of 53 in FY 2001 to a satisfaction score of 62 in FY 2004. 

EBSA oversees benefit security for nearly seven million plans, 150 million participants and beneficiaries, and in 

excess of $4 trillion in assets. Externalities, such as the economy and tax policy, have a significant impact on 

whether employers opt to offer benefits, and whether employees choose to participate and to what extent. 

After receiving a telephone call from a worker alleging that a Connecticut employer had failed to credit him with years of 

service toward his pension, DOL investigated the participant’s retirement plan and determined that the participant’s 

complaint was valid and that other workers were improperly excluded from the plan for an assortment of invalid reasons. As 

a result of this intervention, the company agreed to increase the pensions of 101 employees by more than $63,000. 

Results, Analysis, Future Plans 

The goal was achieved. The Department achieved a civil ratio of 69 percent and a criminal ratio of 45 percent 

while receiving a customer satisfaction score of 62 percent from the Gallup Organization.

Civil Ratio - cases with corrected 

violations

46% 50% 69%

FY 1999-2001

Baseline

FY 2004 Target FY 2004 Result

Criminal Ratio - cases referred for 

prosecution

23% 25%

45%

FY 1999-2001

Baseline

FY 2004 Target FY 2004 Result
Outcome Goal 2.2 

FY 2004 Performance and Accountability Report 91

DOL obtained monetary results of over 

$3.1 billion as a result of its investigative 

and participant assistance activities; a 

record year. While monetary results can 

fluctuate significantly from year to year, 

monetary results have followed an 

upward trend over the past several years. 

DOL investigated a number of high 

profile, resource intensive cases with far 

reaching effects on the participant 

benefits community. Benefit Advisors 

responded to over 99 percent of all 

written inquiries within 30 days of receipt and responded to over 99 percent of telephone inquiries by the close of 

the next business day. 

In addition to long-term targets for our civil and criminal ratios, we have added annual targets to reflect our 

success with respect to national enforcement initiatives, consistent with national priorities, which may change 

from year-to-year, taking into account new enforcement problems. EBSA has worked with Gallup to refine the 

long-term target consistent with other industry standards and experience. EBSA also added a internal compliance 

assistance measure that will demonstrate success in voluntary compliance programs such as the Voluntary 

Fiduciary Correction Program and our Delinquent Filer Voluntary Correction Program. EBSA has also developed 

an efficiency measure that will provide, as a ratio, costs per enforcement result. 

A plan participant needed a lung transplant and filed a pre-service claim to determine if the transplant would be approved. If

approved, he would be first on the transplant list. Without the approval, his prognosis was not good. After being told that it 

might take several weeks to receive a response, the participant contacted DOL. We explained to the employer that the law 

requires a response within 72 hours for urgent or emergency requests. The employer quickly reviewed the claim and 

determined that the transplant procedure was covered. As a result, the participant was placed at the top of the waiting list. 

Management Issues 

EBSA’s Enforcement Management System (EMS) provides the data used to measure the enforcement ratios. 

EMS and EBSA continually receive high marks from the Office of Inspector General for data integrity and 

quality. 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 

reviews on randomly selected closed cases. In the participant assistance area, The Gallup Organization performed 

the customer satisfaction evaluation and provided the customer satisfaction score. 

EBSA has acted on recommendations from its PART assessments in FY 2004 and FY 2005 by establishing 

proactive evaluation initiatives and a regulatory review program. Specifically, EBSA is conducting a follow-up 

of its FY 1995 audit quality study to determine the level of compliance of pension plan audits to professional 

accounting standards. In FY 2005, EBSA expects results from the investigative portion of a baseline compliance 

study being conducted to measure ERISA compliance in contributory pension plans, focusing on the timeliness 

and remittance of employee contributions. 

In FY 2004, OIG completed audits of EBSA’s participant and compliance assistance program and of the process 

used by EBSA to identify and correct substandard audits of employee benefit plans (Studies 2 and 3 in Appendix 

2). Also, EBSA concluded program evaluations of its participant assistance and enforcement programs with the 

assistance of The Gallup Organization and Mathematica Policy Research, respectively (Studies 16 and 17 in 

Appendix 2). In FY 2005 Gallup will perform a follow-up study of EBSA’s participant assistance program. 

EBSA is establishing a regulatory review program that will: (a) set forth a process for identifying initiatives for 

review, (b) provide for cost and benefit evaluation of identified regulations and exemptions and, (c) explore 

modifying or eliminating those rules for which costs and administrative burdens outweigh benefits. EBSA and 

DOL’s Assistant Secretary for Policy are developing a Departmental Federal Register notice to seek public input 

on which pension and benefit regulations should be reviewed. 

Customer Satisfaction

61

53

62

FY 2001 Baseline FY 2004 Target FY 2004 Result
Performance Section 

92 United States Department of Labor 

Reduce the Consequences of Work-Related Injuries 

Performance Goal 2.2C (ESA) – FY 2004 

Minimize the human, social, and financial impact of work-related injuries for workers and their families. 

Indicators 

For Federal Employees’ Compensation Act (FECA) cases of the United States Postal Service, reduce the lost 

production days rate (LPD per 100 employees) by 1% from the FY 2003 baseline; 

For FECA cases of All Other Governmental Agencies, reduce the lost production days rate (LPD per 100 

employees) by 1% from the FY 2003 baseline; 

Increase FECA Vocational Rehabilitation placements with new employers for injured USPS employees by 15% 

over FY 2002; 

Through use of Periodic Roll Management, produce $38 million in cumulative (FY 2003-FY 2004) first-year 

savings in the FECA program; 

The trend in the indexed cost per case of FECA cases receiving medical treatment will remain below the 

comparable measure for nationwide health care costs; 

Meet 60% of the annual targets for five communications performance areas; 

Reduce by 4% over the FY 2002 established baseline the average time required to resolve disputed issues in 

Longshore and Harbor Worker’s Compensation Program contested cases; 

Increase by 8% over the FY 2001 established baseline the percentage of Black Lung benefit claims filed under the 

revised regulations for which, following an eligibility decision by the district director, there are no requests for 

further action from any party pending one year after receipt of the claim; 

77% of Initial Claims for benefits in the Energy Program; and 

77% of Final Decisions in the Energy Program are processed within standard timeframes 

Program Perspective 

ESA protects Federal and certain other workers from the economic effects of work-related injuries and illness’s 

through OWCP’s four disability compensation programs. OWCP accomplishes this by providing wage 

replacement and cash benefits, medical treatment, vocational rehabilitation, and other benefits to covered workers, 

their dependents and survivors. These programs are: 

• Federal Employees’ Compensation for civilian Federal workers; 

• Longshore and Harbor Workers’ Compensation for private-sector maritime workers; 

• Black Lung Benefits program for coal miners; 

• Energy Employees Occupational Illness Compensation for nuclear weapons employees of the Department 

of Energy or its contractors. 

Results, Analysis and Future Plans

The performance goal was substantially achieved. Discussion of results at the performance indicator level is 

organized into three categories: Returning Injured Federal Employees to Work, Reducing Program Expenses and

Customer Service. 

Returning Injured Federal Employees to Work 

OWCP continued to reduce average time loss in cases receiving FECA benefits through its early intervention 

strategy, Quality Case Management and active partnerships with postal and other government employers. Despite 
Outcome Goal 2.2 

FY 2004 Performance and Accountability Report 93

this, LPD rates continued to rise.16 The USPS LPD rate rose to 148 days against a target of 146 days. Declining 

employment and greater challenges on reemploying injured USPS workers remain factors in this result. The 

target for the non-postal agencies also was not reached, as LPD increased by 12 percent to 63, compared to the 

target of 55 days. The Department of Homeland Security accounted for 90 percent of this increase. 

The majority of injured 

workers who return to 

work do so with their 

previous employers, but 

that has been made more 

difficult with declining 

employment levels at 

USPS. So, beginning in 

FY 2003, OWCP began 

emphasizing placement 

of injured postal workers 

with new employers. In 

FY 2004 OWCP reached 

the target for placing 

USPS employees who 

participate in the 

vocational rehabilitation program into new jobs, placing 62 USPS workers compared to a target of 56. The 

emphasis on assistance to Postal Service employees will continue in FY 2005. 

Reducing Program Expenses 

The use of Periodic Roll Management (PRM) to generate savings target was also reached. PRM includes careful 

review of cases to determine if continued disability status is warranted, and to determine the reemployment 

potential of those current 

receiving compensation. 

DOL saved $49 million 

over the two-year period 

(FY 2003 – 2004) 

compared to a target of 

$38 million. FY 2004 

savings from PRM were 

$24.4 million compared 

to a target of $18 million. 

In FY 2005, DOL has set 

a target of achieving an 

additional $17 million in 

PRM savings. 

DOL also reached its target of keeping the inflation of Federal Employees’ Compensation Act (FECA) medical 

costs below the Nation’s rate of healthcare inflation (according to the Milliman USA Health Cost Index, which is 

updated quarterly). FECA experienced a medical cost inflation of 2.4 percent, while the Milliman Index predicts 

a national rate of healthcare inflation of 8.8 percent. Responding to recent medical care cost increases, in August 

2003 FECA converted medical bill processing from district offices to a centralized operation under contract to 

Lockheed Martin. More stringent bill reviews under this system are expected to further reduce average FECA 

medical costs. 

 

16 In FY 2004, OWCP changed the way it measures LPD, and thereby changed its FY 2003 baseline data for the USPS and 

all other government agencies’ lost production days rate measures. LPD’s are now measured in real-time rather than with 

accumulated data, as they were in the past. Please see Appendix 1 for the changes to the baseline data. 

Periodic Roll Management Savings 

(Cumulative Savings in Millions)

$34

$72

$103

$129

$154

$178

$-

$50

$100

$150

$200

1999 2000 2001 2002 2003 2004

Target

Actual

Federal Employees' Lost Production Days 

(per 100 employees)

56

148

55

146

63

148

0

20

40

60

80

100

120

140

160

USPS All Other Agencies

Baseline

FY '04 Target

FY '04 Actual
Performance Section 

94 United States Department of Labor 

Customer Service 

OWCP reached four of the five sub-targets to improve communications with benefit recipients, including 

increased use of electronic services, reducing average caller wait times, increasing response timeliness and 

resolving more inquiries without call-back. OWCP did not reach the communications sub-target for handling 

calls according to program quality standards. OWCP also reached its target to reduce the time required to 

resolve disputed issues in Longshore and Harbor Workers’ Program contested cases. Disputed issues were 

resolved, on average, in 247 days. The target was 273 days. Further, OWCP reached its target to reduce requests 

for further action following Black Lung benefit eligibility decisions (for claims subject to revised regulations). 

Performance for this indicator was 82.2 percent, against a target 74.5 percent. DOL also reached its Energy 

program targets for initial claims processing and for reaching a final decision. This program processed 92 percent 

of initial claims and 99 percent of final decisions within standard time frames, against targets of 77 percent for 

both indicators.

For FY 2005, OWCP will have a more ambitious target for communications with customers: reaching four of the 

five sub-targets. Strategies are in place to improve communications with customers through greater Internet 

access for claims purposes. The indicator for timely Longshore and Harbor Worker’s dispute resolution is 

intended to measure OWCP’s success in serving as mediator injured workers and their employers. To continue 

the positive trend in this indicator, OWCP will provide claims staff with further training to improve mediation 

skills. 

The revised regulations for Black Lung benefit claims did not change eligibility requirements, but were designed 

to produce faster and fairer final benefit determinations. The result has been an increase in the number of 

stakeholders who accept the district director’s initial decision and decide not to pursue the claim further. The Energy 

Program’s success in efficient initial claims processing and final decisions results from attention to customer 

communications, accurate claims processing, and automated data processing. We are committed to improving the 

employment verification process by obtaining access to former worker program records, sharing more data for 

dual claims and enhancing working relationships with DOE facility contacts. Based on performance that far 

exceeded targets, the Energy Program has set more ambitious targets of seven percent increases for both 

indicators in FY 2005. 

Management Issues 

Performance data used for OWCP’s indicators are extracted from the four benefit programs’ automated case 

management systems, benefit payment systems, internal managerial audits or other reviews. OWCP maintains 

strict management oversight of data entry, including regular on-site review by district directors to ensure 

accuracy, and periodic reviews that sample and assess data quality and accuracy. 

A FY 2003 Office of Inspector General financial audit found ineffective medical evidence controls (Study 4 in 

Appendix 2). To remedy this, in December 2004 DOL will begin using an automated tracking mechanism that 

will alert claims staff when medical evaluations are due. ICF Consulting recently completed a broad review of 

the FECA program’s effectiveness (Study 18 in Appendix 2). OWCP is currently reviewing its recommendations. 

Provisions which create disincentives for returning to work as opposed to remaining on full disability are built 

into the Federal Employees’ Compensation Act, which has not been significantly amended in 30 years. DOL has 

developed a legislative proposal which would reform these provisions. 

The number of Defense Base Act Longshore claims from injured civilian contractors in Iraq and Afghanistan is 

increasing, and this trend is projected to continue. There is also a potentially very large pool of Iraqi civilians 

employed by American contractors who may not be reporting injuries or may not be aware they are entitled to 

coverage. Should this group begin to file claims, Longshore cases could increase dramatically.
Outcome Goal 2.2 

FY 2004 Performance and Accountability Report 95

ACSI for Practitioners

70

71

72

69

69

67 68 69 70 71 72 73

2003

2004

2005

Score

Actual

Target 

ACSI for Participants

74

77

78

77

78

72 74 76 78 80

2003

2004

2005

Score

Actual

Target

Provide Timely and Responsive Services to Customers

Performance Goal 2.2D (PBGC) – FY 2004 

PBGC will improve customer satisfaction according to the American Customer Satisfaction Index (ACSI). 

Indicators 

Achieve an ACSI of 71 for sponsors of covered pension plans who have contacted PBGC for assistance 

Achieve an ACSI of 77 for participants in trusteed plans who have contacted PBGC for assistance

Program Perspective 

The Secretary of Labor chairs the Pension Benefit Guaranty Corporation’s Board of Directors, and PBGC 

provides timely and uninterrupted payment of pension benefits to participants whose defined benefit pension 

plans were terminated. Plan termination most frequently results from the sponsoring employer’s bankruptcy. For 

participants in plans for which PBGC has become the trustee, benefit determinations tell them what pension 

benefits they will receive. PBGC pays estimated benefits to all eligible participants retiring prior to the issuance 

of a benefit determination, thus ensuring that retirees receive their benefits when due and without interruption. 

Results, Analysis and Future Plans 

PBGC did not achieve this goal. The overall rating for 

practitioners remained at 69 – only slightly lower than 

the national ACSI of 71 for the Federal government as a 

whole, and higher than other agencies with similar 

financial collection responsibilities. Although 

practitioners are generally satisfied with many aspects of 

the service they receive, PBGC has identified several 

opportunities for improvement: improve written 

communication and handling of calls; and simplify the 

premium payment form and promote use of e-filing. 

Some of these efforts are underway and others will get 

started in 2005. PBGC achieved an ACSI score of 78 

for participants in trusteed plans, exceeding the target of 

77. This is one point higher than the 2003 score of 77 

and seven points higher than the current national ACSI 

of 71 for the Federal government. 

Overall, the scores for components that PBGC has 

tracked in the past three years are all performing very 

well. By using the ACSI, PBGC can identify the service 

elements that have a greater impact on customer 

satisfaction. For example, there is a direct correlation 

between satisfaction and customer complaints, meaning 

that as satisfaction increases, the rate of complaints 

would likely decrease. PBGC experienced a significant 

decrease in complaints in 2004 over the previous two 

years through improved responsiveness to customers. 

Management Issues 

For both indicators, data is collected by the Federal Consulting Group, a franchise of the U.S. Department of 

Treasury. The Federal Consulting Group uses the American Customer Satisfaction Index (ACSI) to determine the 

satisfaction of PBGC plan sponsors and participants. Developed by the University of Michigan, the ACSI is a 

national measure for customer satisfaction, and is recognized as a credible and valid independent, third party 

measure. As mentioned above, PBGC continues to face an unprecedented influx of terminated plans. 

Meanwhile, participants’ and practitioners’ expectations for speed and accuracy of services continue to rise, 

specifically in the demand for electronic transactions and information. 

FY 2004 Performance and Accountability Report 97

Strategic Goal 3: Quality Workplaces 

Foster Quality Workplaces that are Safe, Healthy and Fair

All workers are entitled to safe, healthy, and fair workplace environments. DOL has committed to achieving this 

goal by promoting work sites where safety and health hazards are minimized, and where working people have 

equal opportunities and are treated fairly. 

Significant progress has been made in protecting workers from occupational safety and health threats. In the past 

thirty years, workplace fatalities have been cut in half and occupational injury and illness rates have declined forty 

percent. However, rapid technological advances and dynamic workplace environments have changed the nature 

of work, leading to new health and safety issues. DOL promotes equality and fair play through its administration 

of anti-discrimination and equal employment opportunity regulations that deal with Federal contracting practices, 

jobs and training services for disabled workers, and the employment/reemployment rights of veterans. DOL has 

also recognized and addressed the increasing importance of ensuring respect for internationally recognized core 

labor standards. 

 

Agencies with programs supporting this goal are the Occupational Safety and Health Administration (OSHA), the 

Mine Safety and Health Administration (MSHA), the Employment Standards Administration (ESA), the Office of 

the Assistant Secretary for Administration and Management (OASAM), the Veterans’ Employment and Training 

Service (VETS), and the Bureau of International Labor Affairs (ILAB). 

The Department’s performance in achieving this goal is determined by accomplishments organized at the outcome 

goal level and measured at the performance goal level. Three broad objectives – Outcome Goals 3.1, 3.2 and 3.3 

– support Strategic Goal 3, and they contain eleven performance goals (see table below). In FY 2004, the 

Department achieved eight of these goals, and in so doing marked the following improvements in working 

conditions: mining fatality incidence and the all-injury incidence were the lowest recorded in MSHA’s history; 

occupational fatalities were the lowest ever recorded by the fatality census; evaluated Federal contractors’ 

compliance with non-discrimination laws exceeded 90 percent; and, in developing countries, DOL-funded 

programs protected thousands more children from exploitive labor and introduced HIV/AIDS workplace 

education 

Outcome Goal 3.1 − Reduce Workplace Injuries, Illnesses, and Fatalities 

3 performance goals achieved & 3 not achieved17

MSHA fatality and injury 

reduction (3.1A) – not achieved 

According to estimates using data through the third quarter, MSHA 

reached its fatality incidence rate target, but did not reach its injury incidence 

rate target. However, both the fatal incidence rate and the all-injury incidence 

rate are the lowest recorded in MSHA’s history. 

MSHA dust and noise reduction 

(3.1B) – achieved 

According to estimates using data through the third quarter, MSHA reached 

targets for reductions in coal dust, silica dust and noise overexposures. 

OSHA occupational fatality 

reduction (3.1C) – not achieved 

OSHA did not reach its workplace fatality reduction target. Workplace 

fatalities increased slightly to 1.67 (per 100,000 workers) from the baseline of 

1.62. 

OSHA occupational injury and 

illness reduction (3.1D) – 

achieved in 2003 and 2004, not 

achieved in 2002 

In both FY 2003 and FY 2004, OSHA reached its targeted reductions in the 

rate of days away from work resulting from workplace injuries. In FY 2002, 

OSHA did not reach its target to reduce illnesses and injuries by ten percent 

over the previous year’s rate in four high hazard industries. 

 

17 OSHA is reporting on three years’ performance for its occupational injury and illness goal, 3.1D. Results are combined in 

this table. 
Performance Section 

98 United States Department of Labor 

Outcome Goal 3.2 – Foster Equal Opportunity Workplaces 

3 performance goals achieved

ESA Federal contractors’ 

compliance with equal 

opportunity laws (3.2A) – 

achieved 

Both targets were reached. Incidence of discrimination among evaluated 

contractors was well below target and compliance with all other equal 

opportunity workplace standards was 91 percent - 30 percentage points above 

target. 

OASAM non-discrimination in 

WIA programs (3.2B) – achieved 

All three targets were reached. State and local workforce agencies areas have 

implemented policies and procedures to provide universal access to their 

customer population, including those with disabilities. 

VETS reduce service members’ 

reemployment issues (3.2C) – 

achieved 

The lone target was reached. Four key problem areas with the greatest 

potential for reduction of complaints were identified. 

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

Strengthen Labor Markets 

2 performance goals achieved

ILAB eliminate worst forms of 

child labor internationally (3.3A) 

– achieved 

ILAB reached all four of its targets, which included the prevention or 

withdrawal of more than 80,000 children from exploitive child labor. 

ILAB improve work conditions 

internationally (3.3B) – achieved 

ILAB reached all five of its targets, which included initiating workplace 

education projects in eight countries. 

The following charts illustrate DOL’s strategic goal net costs in FY 2004, with Quality Workplaces shares set 

apart. The first allocates total Departmental costs of $56.676 billion; the second allocates an adjusted net cost of 

$11.102 billion that excludes major non-discretionary items associated with Strategic Goal 2.18 Net costs of this 

goal in FY 2003 were $0.992 billion.

FY 2004 Strategic Goal 3

Percent of Net Cost not including Income 

Maintenance

2-Secure

13%

1-Prepared

78%

3-Quality

9%

The outcome goals and programs listed above, along with their results, costs, and future challenges are discussed 

in more detail on the following pages. 

 

18 The excluded costs are referred to as Income Maintenance – unemployment benefit payments to individuals who 

are laid off or out of work and seeking employment ($41.424 billion) plus disability benefit payments to 

individuals who suffered injury or illness on the job ($4.150 billion). 

FY 2004 Strategic Goal 3 - $1.021 billion

Percent of Net Costs

2-Secure

83%

1-Prepared

15%

3-Quality

2%
Outcome Goal 3.1 

FY 2004 Performance and Accountability Report 99

Outcome Goal 3.1 – Reduce Workplace Injuries, Illnesses, and Fatalities 

The Department strives to help make American workplaces the safest in the world. Through the efforts of the 

Occupational Safety and Health Administration (OSHA) and the Mine Safety and Health Administration 

(MSHA), the Department has sought to instill a commitment to workplace safety and health in both employers 

and the public at large. 

These two DOL agencies are changing their relationships with employers for the better. Building on a foundation 

of strong and fair enforcement, OSHA and MSHA also provide employers with outreach, education and 

compliance assistance, as well as opportunities to join with them in partnerships and other cooperative programs. 

Additionally, they have increased the availability of compliance assistance. OSHA has deployed compliance 

assistance specialists in every area office and funded free onsite consultation to small businesses in every state. 

More compliance assistance resources are available from OSHA than ever before, including a toll-free 

compliance assistance telephone line, training courses, and an award-winning website that includes safety and 

health information bulletins, interactive software packages and two new features that allow visitors to personalize 

the site and navigate more easily. 

 

MSHA now conducts mine inspections with a focus on improving performance and the availability of assistance 

from training specialists and technical support personnel to the mining industry. MSHA has achieved success 

through developing strategic partnerships with unions, associations, and State governments. These partnerships 

foster the sharing of expertise and best practices between MSHA, states, safety professionals, and mine operators. 

Nationwide, mine operators and miners are provided with compliance assistance, accident reduction, and hazard 

recognition training materials during the course of MSHA’s regular inspections. In addition to onsite compliance 

assistance, web-based compliance assistance tools are continually being developed and enhanced. 

DOL’s workplace safety and health agencies continually improve internal efficiency and effectiveness through 

strategic planning that addresses safety challenges of the 21st century workplace. Both agencies have five-year 

strategic plans that institutionalize the methods and processes they will use to move toward further reductions in 

workplace injuries, illnesses and fatalities. Part of their planning is to determine which strategies lead to the 

biggest return on investment to better focus their efforts and their resources. 

The performance goals related to this outcome goal directly measure reductions in workplace injuries, illnesses 

and fatalities, across general industries and specifically within mining. 

Goal (Agency) – Period 

Goal Statement [Achievement] Performance Summary 

3.1A (MSHA) – FY 2004 

Reduce the mine industry fatal injury 

incidence rate by 15% from the FY 2003 

baseline by FY 2008, and reduce the mine 

industry all-injury incidence rate 50% below 

the FY 2000 baseline by FY 2008. 

[Not Achieved]

According to estimates using data through the third quarter, 

MSHA reached its fatality incidence rate target, but did not 

reach its injury incidence rate target. However, both the fatal 

incidence rate and the all-injury incidence rate are the lowest 

recorded in MSHA’s history.
Performance Section 

100 United States Department of Labor 

Goal (Agency) – Period 

Goal Statement [Achievement] Performance Summary 

3.1B (MSHA) – FY 2004

Reduce respirable coal dust, silica dust, and 

noise exposures: 

• Reduce the percentage of respirable coal 

dust samples exceeding the applicable 

standards by 5% for designated 

occupations; 

• Reduce the percentage of silica dust 

samples in metal and nonmetal mines 

exceeding the applicable standards by 5% 

for high-risk occupations; 

• Reduce the percentage of noise exposures 

above the citation level in all mines by 

5%. [Achieved]

According to estimates using data through the third quarter, 

MSHA reached targets for reductions in coal dust, silica dust 

and noise overexposures. 

3.1C (OSHA) – FY 2004

Reduce occupational fatalities by 3% from the 

FY 2000-2002 baseline. [Not Achieved]

OSHA did not reach its workplace fatality reduction target. 

Workplace fatalities increased slightly to 1.67 (per 100,000 

workers) from the baseline of 1.62. This amounts to an increase 

of one fatality for every two million workers. 

3.1D (OSHA) – FY 2004 

Reduce occupational injuries and illnesses 

Reduce the days away from work case rate per 

100 workers by 4% from CY 2000 baseline. 

[Achieved]

OSHA reached its target of a four percent reduction (from CY 

2000 baseline) in the days away from work resulting from a 

workplace injury, by achieving an 11 percent reduction. 

3.1D (OSHA) – FY 2003 

Reduce the days away from work case rate per 

100 workers by 2% from CY 2000 baseline. 

[Achieved]

OSHA reached its target of a two percent reduction (from CY 

2000 baseline) in the days away from work resulting from a 

workplace injury, by achieving a 5.6 percent reduction. 

3.1D (OSHA) – FY 2002 

Reduce injuries and illnesses by 10 % 

annually in four industries characterized by 

high hazard workplaces. [Not Achieved] 

OSHA did not reach its target to reduce illnesses and injuries by 

ten percent over the previous year’s rate in four high hazard 

industries: nursing homes, shipyards, meat products and 

construction. The injury and illness rate increased in nursing 

homes and shipyards and decreased in the meat products and 

construction industries. 

Net Cost of Programs 

FY 2004 program costs of $812 million supported OSHA and MSHA programs to reduce worker fatalities, 

injuries, and illnesses, including the Department's expanded and enhanced efforts in compliance assistance. These 

program costs represent a slight $3 million decline from FY 2003 costs of $815 million. 

Outcome Goal 3.1

Net Costs ($Millions)

636 710 723 781 815 812

0

200

400

600

800

1,000

1999 2000 2001 2002 2003 2004

Fiscal Year
Outcome Goal 3.1 

FY 2004 Performance and Accountability Report 101

Results Summary 

Of the six goals presented in Outcome Goal 3.1—Reduce Workplace Injuries, Illnesses, and Fatalities, three goals 

were achieved and three goals were not achieved. 

In the mining industry, under the mandate of the Mine Safety and Health Act, the fatality and all-injury safety 

goal was not achieved based on FY 2004 third quarter data. While the fatality incidence rate of .0163 per 200,000 

work hours reached the 3.1 percent reduction target, the all-injury incidence rate result of 3.97 per 200,000 work 

hours did not meet the 23.7 percent reduction target. The mining health goal to reduce exposures to coal dust, 

silica dust, and noise was achieved. Coal dust overexposures were reduced to 10.5 percent, silica dust 

overexposures were reduced to 5.9 percent, and noise overexposures were reduced to 4.2 percent. 

For those sectors under the Occupational Safety and Health Act, the fatality rate of 1.67 fatalities per 100,000 

employees did not meet the target rate of 1.57. The results of the goal to reduce occupational injury and illness 

rates that cover three reporting years are presented concurrently in this report due to a data lag. For FY 2004 the 

goal was met with a result of an 11.1 percent rate reduction vs. the target of four percent. The FY 2003 the rate 

reduction of 5.6 percent also exceeded the target of two percent. The FY 2002 goal to reduce injuries and 

illnesses by ten percent from the previous year’s rate in four industries characterized by high hazard workplaces 

was not achieved. 

Historically, one of the leading causes of 

mining fatalities has roof falls in 

underground mines, particularly coal 

mines. Today, better methods of 

controlling mine roofs protect miners 

from the hazard of falling rock. MSHA’s 

Office of Technical Support provides a 

service to mine safety and health by 

evaluating and testing myriad mining 

equipment and products, including roof 

support systems, for use in underground 

mines. The two engineers shown in the 

photo – Raymond on the left and Michael 

on the right – test roof bolts in actual 

mining conditions to ensure these devices 

will actually protect working miners. 

Securing the roof has been and continues 

to be one of the most important 

precautions that MSHA looks for in 

underground mine inspections. 

Photo credit: Paul Tyrna 

Future Challenges 

Understanding and addressing workplace demographic trends is a key element in the Department’s efforts to 

improve the safety and health of the American workforce. An increasing share of the workforce is now made up 

of youthful (16 to 24 year-old) and older (55 and over) workers, with the proportion of older workers growing the 

fastest. Immigrant, non-English speakers, and other “hard-to-reach” workers and employers are becoming more 

prevalent. This means that the Department must continue to seek out enforcement, training and delivery systems 

different from those relied upon in the past. 

The Department is also continuing to focus on the most hazardous industries and occupations and to identify 

emerging safety and health issues. For example, construction and small metal and nonmetal mines have a 

disproportionate rate of accidents and fatalities and new fibers and ultra-fine particulates need to be monitored for 

their health risks. To meet current and future challenges, OSHA and MSHA are looking to increase their 

outreach, assistance, and cooperative programs so that voluntary compliance backed up by strong and fair 

enforcement ensure that each worker returns home safe and healthy at the end of the work day. 
Performance Section 

102 United States Department of Labor 

Reduce Mine Fatalities and Injuries 

Performance Goal 3.1A (MSHA) – FY 2004 

Reduce the mine industry fatal injury incidence rate by 15% from the FY 2003 baseline by FY 2008, and reduce 

the mine industry all-injury incidence rate 50% below the FY 2000 baseline by FY 2008. 

Indicators 

Reduce by 3.2% the fatal incidence rate; and 

Reduce by 24.2% the all-injury incidence rate. 

Program Perspective 

The mission of the Mine Safety and Health Administration (MSHA) is to protect the safety and health of our 

Nation’s miners in accordance with the Federal Mine Safety and Health Act of 1977. Through an effective blend 

of enforcement, technical support, education, compliance assistance, and partnerships with the mining 

community, mining has reduced fatalities and injury rates for the third straight year. Although the trend has been 

declining, the rates remain unacceptably high. MSHA’s aggressive long-term targeted incidence rate reductions 

from recent historical lows reflect a commitment to sending healthy miners home healthy....every shift, every day. 

Results, Analysis and Future Plans 

 The goal was not achieved, according 

to estimates using data through the 

third quarter.19 DOL reached its 

fatality incidence rate target. The 

fatality incidence rate decreased by 

28.8 percent (from .0229 to .0163), 

against a target of a 3.1 percent 

decrease (to .0222). DOL did not 

reach its injury incidence rate target. 

The injury incidence rate has 

decreased by 22.7 percent to 3.97 

(from the FY 2000 baseline of 5.07), 

against a target of a 24.1 percent 

decrease (to 3.85). 

Through the third quarter of FY 2004, 

accidents in the Nation’s mines 

claimed the lives of 35 workers – 17 

coal miners and 18 metal/nonmetal 

miners. In addition, there were 3,644 

injuries in coal mines and 4,889 

injuries in metal/nonmetal mines. In 

terms of overall injury rates, both the 

fatal incidence rate of .0163 and the 

all-injury incidence rate of 3.97 are 

the lowest recorded in MSHA history. 

 Similarly, both coal and 

metal/nonmetal fatality and injury 

rates reached historic lows. 

MSHA’s program strategies for FY 2005 should be viewed within the context of the aggressive nature of our 

goals and record-setting lows for mining deaths and injuries in both FY 2003 and FY 2004. Therefore, MSHA’s 

 

19 Performance results for this goal are estimated. The estimating methodology has been reviewed by the Department of 

Labor’s Office of Inspector General. The actual performance results for this goal will be published in the FY 2006 Budget. 

All Mines -- All Injury Incidence Rates

(per 200,000 hours worked)

5.07 4.86 4.63 4.34

3.97

0.00

1.00

2.00

3.00

4.00

5.00

6.00

2000 2001 2002 2003 2004

Fiscal Year

All Mines -- Fatal Incidence Rates

.0279 (per 200,000 hours worked)

.0229 .0239 .0229

.0163

.0000

.0050

.0100

.0150

.0200

.0250

.0300

2000 2001 2002 2003 2004

Fiscal Year
Outcome Goal 3.1 

FY 2004 Performance and Accountability Report 103

strategies going forward will be a continuation of what has been successful while taking advantage of new 

opportunities to build upon past success. 

Key to further reductions in deaths and injuries will be continued work with the mining industry and safety 

organizations. In this regard, MSHA will continue to leverage and extend its strategic partnerships. For example, 

in FY 2004 MSHA signed two more Alliance Agreements - with the International Union of Operating Engineers 

and with the International Association of Bridge, Structural, Ornamental and Reinforcing Iron Workers. The 

purpose of these agreements is to promote the sharing of expertise and best practices between MSHA, safety 

professionals, and mine operators to foster a culture of accident prevention where safety is embraced as a value. 

MSHA will also continue to work with State governments in partnerships such as the Tri-State Initiative, which 

focuses on Appalachian coal mining areas in West Virginia, Virginia, and Kentucky, which are historically 

responsible for the bulk of coal mining fatalities. The Tri-State Initiative is just one example of MSHA integrating 

its enforcement and compliance assistance activities. Nationwide, mine operators and miners are provided with 

compliance assistance, accident reduction, and hazard recognition training materials during the course of MSHA’s 

regular inspections. In addition to onsite compliance assistance, web-based compliance assistance tools are 

continually being developed and enhanced. These include website links to accident prevention ideas from miners, 

industry, and MSHA officials, and web-based newsletter services for stakeholders which provide instant 

notification of mining fatalities, hazard alerts, and other safety and health related news. 

Efforts to improve safety and health for the 

nation’s 350,000 miners include not only mine 

inspections but a variety of MSHA initiatives and 

programs. That agenda is carried out primarily 

by the agency’s district managers who are 

strategically located in district offices throughout 

the nation’s mining regions. Cheryl , an MSHA 

District Manager, administers coal mine safety 

and health improvement efforts for a large area of 

southern Pennsylvania. She and her 109 

colleagues in the New Stanton office helped 

reduce fatalities and injuries over the last year. 

Pennsylvania had four fatalities in 2001 and in 

2002; Cheryl and her staff helped limit fatalities 

to one during 2003 – a valuable contribution to 

MSHA’s fatality incidence reduction goal. 

Photo credit: Shawn T. Moore 

Management Issues 

Accident and injury data are accurate and reliable. MSHA receives employment, injury, and accident data from 

mine operators and has an audit program in place that verifies the reliability of the data annually. 

Going forward, high costs and limited supplies of oil and natural gas into the foreseeable future will result in a 

higher demand for coal mining. Higher coal prices and increased profit margins will push operators to begin new, 

expand, or resume mining operations and lead to competitive pressures to increase production while containing 

costs, including those costs associated with mine safety. Mines also face an aging workforce and replacement of 

skilled workers with inexperienced workers who are at higher risk of having accidents that cause injury. 

During FY 2004, the General Accounting Office issued its report MSHA Devotes Substantial Effort to Ensuring 

the Safety and Health of Coal Miners, but Its Programs Could Be Strengthened (Study 12 in Appendix 2), which 

comprised a programmatic review of certain MSHA operations and recommendations to improve program 

performance. Also, the Office of Management and Budget (OMB) conducted a Program Assessment Rating Tool 

(PART) review of MSHA in conjunction with the FY 2005 budget. MSHA received a rating of Adequate. 
Performance Section 

104 United States Department of Labor 

Reduce Miners’ Exposure to Health Hazards 

Performance Goal 3.1B (MSHA) – FY 2004 

Reduce respirable coal dust, silica dust, and noise exposures 

Indicators 

Reduce the percentage of respirable coal dust samples exceeding the applicable standards by 5% for designated 

occupations; 

Reduce the percentage of silica dust samples in metal and nonmetal mines exceeding the applicable standards by 

5% for high-risk occupations; and 

Reduce the percentage of noise exposures above the citation level in all mines by 5%

Program Perspective 

In accordance with the Federal Mine and Safety Act of 1977, DOL’s Mine Safety and Health Administration 

(MSHA), through safety and health enforcement and compliance assistance, and in partnership with the mining 

community, works to reduce occupational illnesses and health hazards among our Nation’s miners. 

Major health hazards to miners include black lung disease, and silicosis. These are disabling and eventually fatal 

respiratory diseases caused by exposure to excessive amounts of respirable coal and silica dust. In addition, noise 

exposure above regulatory standards can cause permanent hearing loss. Although the incidence of black lung and 

silicosis disease has declined over the years, the elimination of black lung disease, silicosis, and hearing loss 

remains a Departmental priority. Because these conditions develop gradually after repeated exposures, 

determining the rate at which miners are overexposed to coal dust, silica dust, and noise is a proxy measure of 

future miner health. Reducing miner overexposures therefore contributes to MSHA’s longer term objective of a 

reducing the incidence of black lung disease, silicosis and hearing loss. 

In developing this goal, MSHA targeted five percent annual reductions of overexposures. Experience has shown 

that these five percent reductions per year, from historical baselines, were not aggressive enough – and MSHA 

plans to update baselines in future years so that a five percent target is appropriately ambitious. 

Recognition of good work is positive motivation. 

It’s one of the concepts MSHA uses to promote 

good safety and health practices throughout the 

American mining industry. MSHA officials seek to 

recognize mining operations like Yavapai 

Materials, a sand and gravel mining operation 

situated in the Fort McDowell Yavapai Nation. 

Yavapai Materials logged 58,000 employee hours 

without a single lost-time accident. That was three 

years without an injury on the job! Obviously, this 

company employs both good workers and good 

safety habits—so good that they were asked to 

provide a program of “Best Practices” for 

neighboring mining operations. MSHA’s Assistant 

Secretary David Lauriski (center) took time to go 

out to the Yavapai operation to congratulate 

Steven, general manager of Yavapai Materials 

(left) and President Raphael Bear (right), President 

of Fort McDowell Yavapai Nation, and personally 

tell them what a good job they’ve done for themselves and for the mining industry. Good safety practices being shared 

among neighboring mining operations—another innovative way to reduce mining fatalities and injuries in the nation’s 

mining operations. 
Outcome Goal 3.1 

FY 2004 Performance and Accountability Report 105

Results, Analysis and Future Plans 

The goal was achieved, according to estimates using data through the third quarter. 

• For coal dust, sample overexposures were reduced to 10.5 percent, a reduction of five percent from the prior 

year, and a 30 percent improvement from the FY 2002 baseline. 

• For silica dust, sample overexposures were reduced to 5.9 percent, a reduction of eight percent from the prior 

year, and a 34 percent improvement from the FY 2002 baseline. 

• For noise, sample overexposures were reduced to 4.2 percent, a reduction of 19 percent from the prior year, 

and a 55 percent improvement from the FY 2000-2001 baseline. 

As discussed above, results for all indicators 

have greatly exceeded MSHA’s expectations 

over the last two years for coal and silica dust 

and over the last three years for noise. To 

establish more ambitious targets, new 

baselines will be developed for use in FY 

2005. While targeted reductions for 

overexposures will remain at five percent, 

new baselines will incorporate the substantial 

reductions in overexposures already achieved. 

In addition, MSHA will review sampling 

procedures to ensure that the samples taken by 

inspectors are commensurate with ongoing 

mining activity where miners are normally at 

highest risk of overexposure. 

Management Issues 

MSHA safety and health compliance specialists conduct dust and noise samples following well established 

procedures. A quality control process and edit checks assure the accuracy and reliability of performance data. 

Going forward, high costs and limited supplies of oil and natural gas into the foreseeable future will result in a 

higher demand for coal mining. Higher coal prices and increased profit margins will push operators to begin new, 

expand, or resume mining operations and lead to competitive pressures to increase production while containing 

costs, including those costs associated with mine safety. Mining also faces an aging workforce, and an inadequate 

supply of skilled workers (including an influx of immigrant workers) who are at higher risk of having accidents 

that cause injury. 

During FY 2004, the General Accounting Office issued its report MSHA Devotes Substantial Effort to Ensuring 

the Safety and Health of Coal Miners, but Its Programs Could Be Strengthened (Study 12 in Appendix 2), which 

comprised a programmatic review of certain MSHA operations and recommendations to improve program 

performance.

Coal Dust Samples Exceeding Standard

15.0%

11.0% 10.5%

0%

2%

4%

6%

8%

10%

12%

14%

16%

FY 2002 FY 2003 FY 2004

Samples Exceeding Noise Standard

9.3%

5.8%

5.2%

4.2%

0%

1%

2%

3%

4%

5%

6%

7%

8%

9%

10%

FY 2001 FY 2002 FY 2003 FY 2004

Silica Dust Samples Exceeding 

Standard

9.0%

6.4% 5.9%

0%

1%

2%

3%

4%

5%

6%

7%

8%

9%

10%

FY 2002 FY 2003 FY 2004
Performance Section 

106 United States Department of Labor 

Reduce Workplace Fatalities 

Performance Goal 3.1C (OSHA) – FY 2004 

Reduce occupational fatalities 

Indicator 

Reduce the rate of workplace fatalities by 3% from the baseline of 1.6220. 

Program Perspective 

OSHA's mission is to assure the safety and health of America's workers by setting and enforcing standards; 

providing comprehensive compliance assistance, training, outreach, and education; establishing and maintaining 

partnerships and alliances; providing consultation services and encouraging continual improvement in workplace 

safety and health. OSHA and its State partners have approximately 2,100 inspectors, as well as complaint 

discrimination investigators, engineers, physicians, educators, standards writers, and other technical and support 

personnel throughout the country. 

Nearly every working man and woman in the nation comes under OSHA jurisdiction (with some exceptions such 

as miners, transportation workers, many public employees, and the self-employed). OSHA set a challenging goal 

to reduce workplace fatality rates by 15 percent by 2008. OSHA selected this goal because it exceeds the 

previous five year fatality rate reduction, but is attainable. OSHA helps reduce on-the-job deaths by intervening 

at the workplaces where it has evidence that fatalities are most likely to occur and by responding to reports about 

potentially life-threatening workplace hazards. OSHA uses fatality data from its Integrated Management 

Information System (IMIS) to track fatalities on a monthly basis, looking for emerging fatality patterns (such as 

trenching cave-ins) and taking corrective actions. 

Results, Analysis and Future Plans 

The goal was not achieved. Based on the most recent data, DOL estimates a 3.1 percent increase in the workplace 

fatality rate – to 1.67 from the baseline of 1.62 (per 100,000 workers).21 This amounts to an increase of one 

fatality for every two million workers. The tables below show annual deaths, employment, and fatality rates for 

the construction industry and for all industries for the baseline years and for the current reporting period, and 

illustrate use of a three-year moving average of fatality rates to smooth year-to-year fluctuations. 

Year 

(July-June) 

Construction 

Fatalities 

Construction 

Employment 

Construction 

Fatality Rate 

Total 

Fatalities 

Total 

Employment 

Total 

Fatality Rate 

2000 736 6,704 10.98 1,729 109,989 1.57 

2001 749 6,823 10.98 1,846 111,368 1.66 

2002 744 6,774 10.98 1,772 109,524 1.62 

2000-2002 

BASELINE NA NA 10.98 NA NA 1.62 

2002 744 6,774 10.98 1,772 109,524 1.62 

2003 741 6,692 11.07 1,828 108,519 1.68 

2004 784 6,809 11.51 1,849 108,786 1.70 

2002-2004 

AVERAGE NA NA 11.19 NA NA 1.67 

 

20 For this goal the baseline is the average fatality rate for July 2000 – June 2002 and the result is the average fatality rate for 

July 2002 – June 2004. 

21 Performance results for this goal are estimated. The estimating methodology has been reviewed by the Department of 

Labor’s Office of Inspector General. The actual performance results for this goal will be published in the FY 2006 Budget. 
Outcome Goal 3.1 

FY 2004 Performance and Accountability Report 107

Analysis of the IMIS fatality data suggests that the increase in the fatality rate since FY 2000 may reflect OSHA’s 

improvements in managing fatality data, rather than more dangerous workplaces. In response to OSHA 

initiatives, some states have been entering fatality investigation information into IMIS for an increasing 

proportion of fatalities they inspect. This increases the count of fatalities recorded in IMIS, even though the 

number of inspected deaths in those states has actually decreased. In other states, where the proportion of 

inspected fatalities with entered fatality investigation forms has remained consistent, the fatality rate actually 

declined every year between FY 2000 and FY 2004. 

OSHA is implementing aggressive strategies aimed at preventing future fatalities and achieving the goal of a 15% 

reduction by 2008. The construction fatality rate is more than five times the total fatality rate. OSHA is 

addressing the growth in the construction field of immigrant and non-English speaking workers; and hard-toreach workers. Emerging issues include fall hazards from wireless communications and HDTV tower 

construction, noise in construction, and the expanding population of mobile workers. To achieve the targeted 

reductions in fatalities, OSHA will adopt a dynamic approach to identifying and targeting sectors and hazards that 

require interventions. For example, OSHA’s Construction Directorate analyzed fatalities involving cranes, falls 

from roofs and trenching. The Construction Directorate plans to share their findings with the construction 

industry to assist construction managers and others in identifying and abating potentially fatal situations. The 

Agency is also identifying more effective ways of reaching those construction sites that are likely to have the 

most hazardous conditions. OSHA will take this information to circulate a new construction safety standard for 

construction cranes and derricks. 

OSHA plans to develop Local Emphasis Programs that focus on hazards and industries in specific geographic 

locations. These programs will focus on hazards such as falls and industries such as tower erection and oil and 

gas well drilling. OSHA will continue to implement the Enhanced Enforcement Program, which focuses on those 

employers who have demonstrated a significant disregard for their legal obligation to maintain safe workplaces. 

This program includes follow-up inspections, targeted inspections, increased corporate awareness of OSHA 

enforcement, enhanced settlement provisions, and Federal court enforcement under section 11(b) of the 

Occupational Safety and Health Act. 

This unsafe trench has the potential to cause 

broken bones and severe lacerations from 

slips, trips, and falls and serious injuries or 

even death from being crushed or 

suffocated in a cave-in. In addition to 

enforcing the regulation on trenching, 

OSHA reaches out to employers to prevent 

trenching hazards. OSHA conducts 

outreach programs to local governments 

who contract for much of the trenching 

work in this country. OSHA is working to 

elicit the cooperation of various 

stakeholders, including the Associated 

General Contractors of America, the 

Building and Construction Trades 

Department of the American Federation of 

Labor-Congress of Industrial Organizations, 

the National Utility Contractors 

Association, and the Associated Builders 

and Contractors to develop an industry-wide trenching safety program. OSHA is also developing training and education 

materials in English and Spanish for workers involved in trenching and excavation, including Pocket Guides, Quick Cards, 

posters, and a handbook. 

Photo credit: OSHA 

Management Issues 

OSHA estimates achievement for this goal using data from July of the previous fiscal year to June of the current 

fiscal year. The Agency relies on its IMIS fatality data rather than the data from the Bureau of Labor Statistics 

(BLS) because of the one-year lag in BLS Census of Fatal Occupational Injuries data. However, the trends shown 
Performance Section 

108 United States Department of Labor 

in the BLS data resemble those of the IMIS data. OSHA is exploring changing the denominator (BLS Current 

Employment Survey) used to calculate the fatality rate to be more representative of the actual population that it 

regulates. OSHA IMIS data undergo quality control and edit checking. External risks to accomplishment of this 

goal include natural disasters (e.g., hurricanes and snow storms) and non-work related deaths that occur on the 

job. Internal risks to the attainment of this goal include OSHA’s ability to obtain and use current injury and 

illness data to plan strategies and intervene effectively. 

In response to a March 2004 GAO report, OSHA’s Voluntary Compliance Strategies Show Promising Results, but 

Should be Evaluated before they are Expanded (Study 13 in Appendix 2), which recommended that OSHA 

identify cost-effective methods of assessing the effectiveness of its voluntary compliance programs, OSHA is 

planning to analyze injury and illness data from its VPP sites for the application processing period. 

During FY 2004, GAO also issued reports recommending that OSHA ensure that its area offices follow 

prescribed policies for complaint handling, civil penalty determination and violation abatement (See Studies 14 

and 15 in Appendix 2). OSHA is taking action to ensure that its area offices comply with such policies. 

OSHA was redesigning its IMIS, but suspended further work and contracted for an independent assessment of the 

redesign activities pursuant to recommendations regarding the IMIS redesign efforts in a September 2004 DOL 

Office of Inspector General (OIG) audit report, OSHA’s Future System Development Efforts Require Greater Use 

of Best Practices (Study 7 in Appendix 2). 

The Administration conducted a Program Assessment Rating Tool (PART) review of OSHA for the FY 2004 

President’s Budget. OSHA received a rating of Adequate. Through the OSHA Executive Board, the agency is 

outlining its annual activity plans, including program evaluation, to address the PART recommendation that 

OSHA develop a plan to evaluate the results and cost-effectiveness of regulatory and non-regulatory programs.
Outcome Goal 3.1 

FY 2004 Performance and Accountability Report 109

Reduce Workplace Injuries and Illnesses

Performance Goal 3.1D (OSHA) – FY 2002 - 2004 

Reduce occupational injuries and illnesses 

Indicator 

FY 2004: Reduce the days away from work case rate per 100 workers by 4% from CY 2000 baseline. 

FY 2003: Reduce the days away from work case rate per 100 workers by 2% from CY 2000 baseline. 

FY 2002: Reduce injuries and illnesses by 10 % annually in four industries characterized by high hazard 

workplaces. 

Program Perspective 

OSHA is committed to working with employers and employees to 

reduce the days away from work case rate by 20 percent by FY 

2008. OSHA selected this target because it exceeded the previous 

five year injury and illness rate reductions, yet top managers 

determined that it would be attainable if the Agency successfully 

implemented its goal achievement strategies. Strategies for 

achieving these goals include a balanced use of strong, fair and 

effective enforcement, outreach, education and compliance 

assistance, free and confidential consultation services in all states 

and partnerships and cooperative programs. OSHA managers track 

Federal inspection activity, number of consultation visits, new 

participants in Federal Recognition Programs, and new participants 

in Strategic Partnerships and Alliances. 

OSHA’s Construction Safety and Health Outreach Program provides online 

compliance assistance summaries of various OSHA Construction standards, 

including Welding and Cutting. This outreach document is available on the 

web (http://www.osha.gov/doc/outreachtraining/outreachtraining.html) and 

it explains the provisions of the OSHA Welding and Cutting standards in 

easy to understand language. 

Photo credit: OSHA 

Results, Analysis and Future Plans 

This section includes reporting for 2002, 2003 and 2004 injury and illness performance data. OSHA is reporting 

on 2002 data that were not previously available. Also, in this section, OSHA provides estimates for 2003 and 

2004 performance that were necessitated because of the new annual reporting schedule.22

FY 2003-2004 

The indicator for both years was percent change in the days away from work case rate per 100 workers. Targets 

were a two percent decline from the CY 2000 baseline in FY 2003 and four percent in FY 2004.

FY 2004 Results: The goal was achieved. The days away from work case rate declined 11.1 percent from the 

baseline, compared to the four percent target. OSHA estimated this goal by comparing data from CY 2002, which 

BLS published in December 2003, with a CY 2000 baseline. 

FY 2003 Results: The goal was achieved. The days away from work case rate declined 5.6 percent from the 

baseline. OSHA estimated this goal by comparing data from CY 2001, which BLS published in December 2002, 

with a CY 2000 baseline. 

 

22 The estimating methodology has been reviewed by the Department of Labor’s Office of Inspector General. The actual 

performance results for this goal will be published in the FY 2006 Budget. 
Performance Section 

110 United States Department of Labor 

FY 2002 

Indicator: Reduce injuries 

and illnesses per 100 

workers in four industries 

(shipyards, meat products, 

nursing homes, and 

construction) characterized 

by high hazard workplaces. 

Target: Ten percent 

decline from previous year. 

Results: The goal was not 

achieved. The chart below 

indicates that the nursing 

homes and shipyards 

industries experienced 

increases in their rates of injuries and illnesses of four percent and eight percent, respectively. The meat products 

and construction industries decreased their rates of injuries and illnesses by seven percent and five percent, 

respectively. This goal was not previously reported because of the lag time in Bureau of Labor Statistics data 

availability. This goal was a true “stretch” goal with a higher target (ten percent reduction in one year) than had 

ever been attempted previously. The rates are estimates because CY 2002 data are not comparable to previous 

years, due to changes in recordkeeping requirements that were not anticipated when this goal was developed in 

1997. 

Contributing to success to 

date are OSHA’s 

cooperative programs, such 

as the Voluntary Protection 

Programs (VPP). For 

example, recently the 

International Paper 

Company compared 50 of 

its VPP sites with 124 of its 

sites that were not in the 

VPP. International Paper’s 

VPP sites had a two-year 

lost workday incident rate 

that was 48 percent lower 

than the non-VPP sites and 

workers’ compensation 

costs that were 58 percent 

lower than the non-VPP 

site. International Paper 

estimated that if their non-VPP sites had performed as well as their VPP sites for the two years studied, they 

would have saved over $16 million in workers’ compensation costs. Through 2008, OSHA will focus these 

efforts on decreasing the days away from work (case rate per 100 workers). 

Goal 3.1D Estimated injury/illness rates for private industry, FY 2002-20041

1.0

1.2

1.4

1.6

1.8

2.0

2002 2003 2004

Fiscal year2

Days away from work per 100 workers

1

BLS states that CY 2002 data are not comparable to data from previous years.

2

Data for FY 2002, 2003, and 2004 estimates come from CY 2000, 2001, and 2002, respectively.

Rates* for OSHA Goal 3.1D, CY 1993-2002

0

2

4

6

8

10

12

14

16

1993 1994 1995 1996 1997 1998 1999 2000 2001 2002

Rates*

Meat products

Shipyards

Nursing homes

Construction

*Rates for all industries ex cept construction are injuries and illnesses per 100 w orkers. Rates for construction 

are injuries per 100 w orkers for 1993-2001 and injuries and illnesses per 100 w orkers for 2002. Rates for 1993-

2001 are for lost w orkday s. Rates for 2002 are for day s aw ay from w ork, job transfer, or restriction. BLS states

that 2002 rates are not comparable to prev ious y ears due to changes in OSHA recordkeeping requirements. 
Outcome Goal 3.1 

FY 2004 Performance and Accountability Report 111

OSHA Compliance Assistance 

Specialists (CASs), such as the one 

pictured below, respond to requests for 

help from a variety of groups, including 

small businesses, trade associations, 

union locals, and community and faithbased groups. CASs provide 

information about OSHA standards and 

compliance assistance resources. They 

work with employers and workers in 

OSHA Strategic Partnerships. The 

partners identify safety and health 

problems to address, agree upon 

responsibilities, identify strategies, and 

set goals and performance measures to 

verify results. OSHA also works with 

employers and workers to develop 

Alliances, where OSHA and the 

participating organizations define, 

implement and meet a set of goals. Additionally, CASs speak at seminars, workshops, and other safety events. Each OSHA 

Area Office in states under Federal jurisdiction is staffed with CASs. 

Photo credit: OSHA 

Management Issues 

The BLS data used for performance reporting on this goal provide the most comprehensive and reliable 

information currently available on national levels of injuries and illnesses. However, because there is a one-year 

lag in the availability of BLS injury and illness data, resulting in a two-year lag in reporting for this performance 

report, OSHA is seeking to expand the OSHA Data Initiative to collect data from Federal jurisdiction 

establishments in industries identified in the OSHA Strategic Management Plan. This would allow OSHA to 

calculate injury and illness rates for certain industries for the previous year for the GPRA report. 

A study completed in July 2004, Evaluation of OSHA’s Impact on Workplace Injuries and Illnesses in 

Manufacturing Using Establishment-Specific Targeting of Interventions (Study 23 in Appendix 2), showed that its 

targeted inspections in manufacturing produced an estimated three-year reduction in the number of Lost Workday 

Injury and Illness (LWDII) cases of between 12.0 and 13.8 percent. This reduction is in addition to the industrywide declines in injury and illness rates, since the analysis controlled for these. A comparison between previous 

industry-level targeting and establishment-specific targeting shows that establishment-specific targeting is more 

effective. OSHA is seeking to build on this evaluation to find out more about optimal combinations of 

interventions to maximize reductions in injuries and illnesses. 

In May 2004, OSHA completed Lookback Evaluation of OSHA’s Standard for Presence Sensing Device Initiation 

(PSDI) of Mechanical Power Presses (Study 24 in Appendix 2). The review addressed the continued need for the 

standard, including whether less burdensome alternatives had been developed, the economic effects of the 

standard on the regulated community, and the benefits of the standard, including the impact on improved 

employee safety and health. OSHA concluded that if the benefits OSHA sought in the PSDI standard are to be 

gained (i.e., improved worker safety and employer productivity), the standard needs to be changed. 

OSHA has decided to update its Mechanical Power Presses Standard to the most current version of the industry 

consensus standard or something similar. 

Several other studies performed by the U.S. Government Accountability Office and DOL’s Office of Inspector 

General, as well as the Administration’s Program Assessment Rating Tool (PART) review of OSHA, are briefly 

summarized in this section of the narrative for Performance Goal 3.1C.
Performance Section 

112 United States Department of Labor 

Outcome Goal 3.2 – Foster Equal Opportunity Workplaces 

DOL is committed to fostering workplaces that guarantee equal opportunities and fairness to working Americans. 

Outcome Goal 3.2 addresses the issue of ensuring equal opportunity exists within the American workplace. DOL 

pursues this commitment through three performance goals addressing the needs of workers and promoting 

equality in the workplace. The Employment Standard Administration’s (ESA's) Office of Federal Contract 

Compliance Programs (OFCCP) administers and enforces three equal employment opportunity laws prohibiting 

Federal contractors from discriminating on the basis of race, color, religion, gender, national origin, disability, and 

protected veterans' status. By increasing equal opportunity compliance in companies doing business with the 

Federal government, OFCCP functions to protect the employment rights of thousands of able American workers 

who might otherwise be unfairly excluded from the workplace. 

DOL also works to facilitate the transition of persons with disabilities to the workplace. Although many persons 

with disabilities want to work, they have often been under-represented in the workforce due to attitudinal, 

physical, and institutional barriers that prevent them from full participation. The Office of the Assistant Secretary 

and Management (OASAM) administers Workforce Investment Act (WIA) provisions requiring States to 

establish policies, procedures, and systems reasonably guaranteeing equal opportunity for all in the workplace. 

DOL’s Veterans’ Employment and Training Service (VETS) protects the employment and reemployment rights 

of persons who are current or past members of the uniformed services, and who encounter barriers in civilian 

employment related to their service. The legislative authority for these rights and their corresponding protections 

is established by the Uniformed Services Employment and Reemployment Rights Act (USERRA). VETS 

investigates complaints filed by veterans who believe their rights have been violated. Recently, all three DOL 

programs have undertaken efforts to provide compliance assistance to employers about policies and regulations 

governing equal opportunity workplaces. These activities serve to inform employers about equal opportunity 

workplace regulations and to promote their awareness of willing and available individuals who can become 

valued employees. 

The table below capsulizes performance goals and achievements supporting this outcome goal, and agencies 

responsible. 

Goal (Agency) – Period 

Goal Statement [Achievement] Performance Summary 

3.2A (ESA) – FY 2004 

Federal contractors achieve equal opportunity 

workplaces. [Achieved]

Both targets were reached. Incidence of discrimination among 

evaluated contractors was one percent – well below target. 

Compliance with all other equal opportunity workplace 

standards increased to 91 percent, 30 percentage points above 

the target. 

3.2B (OASAM) – FY 2004 

States that receive financial assistance under 

the Workforce Investment Act provide benefits 

and services to persons with disabilities in a 

non-discriminatory manner. [Achieved]

All three targets were reached. Most States and their local 

areas have established policies and procedures to provide 

universal access to their customer population and 

programmatic access to customers with disabilities. 

3.2C (VETS) – FY 2004 

Reduce employer-employee employment 

issues originating from service members’ 

military obligations conflicting with their 

civilian employment. [Achieved]

The target was reached. Four key problem areas with the 

greatest potential for reduction of complaints were identified. 
Outcome Goal 3.2 

FY 2004 Performance and Accountability Report 113

Net Cost of Programs 

FY 2004 program costs of $112 million supported programs to assure that Federal tax dollars are not used to 

discriminate in the workplace or in the availability of program services. These program costs represent a slight $6 

million decline from FY 2003 costs of $118 million. 

Outcome Goal 3.2

Net Costs ($Millions)

105 100 108 117 118 112

0

20

40

60

80

100

120

140

1999 2000 2001 2002 2003 2004

Fiscal Year

Results Summary 

DOL achieved all three of the three performance goals subsumed under Outcome Goal 3.2. In FY 2004, OFCCP 

completed 6,544 compliance evaluations, focusing on identifying and resolving systemic discrimination 

violations. This emphasis on compliance encourages Federal contractors to examine their own employment 

practices. 

All WIA State recipients evaluated their largest local workforce investment areas. State and Job Corps Center FY 

2003 data show that 1,211 discrimination complaints were filed against the workforce system; of these, 11% were 

filed on the basis of disability relative to wrongful termination and failure to provide reasonable accommodations. 

 

VETS successfully identified a baseline of key problem areas so that future achievement of Performance Goal 

3.2C can be properly assessed. The baseline covers four problem areas that are likely to be the focus of future 

reduction of complaints: (1) provision of refresher/upgrade training required to qualify for reemployment; (2) 

prompt reinstatement; (3) seniority; and (4) pension. These will serve as the focus of future measurement of 

VETS program goals. 

A representative from a global human resources 

outsourcing and consulting firm welcomed 

participants at Flex-Options: Making Them Work 

for You, an event in Chicago, Illinois co-sponsored 

by her firm and DOL’s Women’s Bureau. The 

panel featured nationally recognized experts from 

the workplace flexibility field and Women’s 

Bureau Director Shinae Chun and Region V 

Administrator, Nancy Chen. The Flex-Options 

project connects women business owners with 

corporate executives who provide mentoring on 

how to develop flexible workplace policies. These 

panels provide an educational forum for 

networking among women business owners who 

have expressed interest in developing such policies 

for their companies. A minimum of 80 women 

business owners will develop flexible workplace 

policies by the end of the project. 

Photo credit: Women’s Bureau staff 
Performance Section 

114 United States Department of Labor 

Future Challenges 

OFCCP has introduced a new contractor selection system based upon a recent program evaluation study of the 

effectiveness of its civil rights enforcement. OFCCP will gather performance results from completed FY 2005 

compliance evaluations23 and use these and forthcoming evaluation results to improve its selection and 

investigation techniques in identifying non-compliant contractors. 

In FY 2005, OASAM’s Civil Rights Center will conduct several activities to enhance equal opportunity in the 

workplace, including expanding the directory of Equal Opportunity (EO) Officers to include local workforce 

investment area EO Officers; developing training modules on complaint processing and EO statistical monitoring; 

and providing on-line EO courses for EO Officers and frontline workers. 

VETS’s compliance assistance activities will emphasize areas that may reduce the number and severity of 

USERRA complaints. In September 2004, VETS published a Notice of Proposed Rulemaking (NPRM) under the 

authority of the USERRA statute. Stakeholders were offered an opportunity to comment on the proposed 

regulations prior to publication of a Final Rule that clarifies specific protections, VETS’s role in the process, and 

procedures to be followed to implement the protections of the Act. The regulations that result from this proposed 

rule will, for the first time, provide clear and consistent authoritative guidance to America’s employers on 

USERRA. 

 

23 Data collected from completed compliance evaluations that were scheduled beginning in July 2004. 
Outcome Goal 3.2 

FY 2004 Performance and Accountability Report 115

Foster Equal Opportunity Workplaces 

Performance Goal 3.2A (ESA) – FY 2004 

Federal contractors achieve equal opportunity workplaces 

Indicators 

Reduce the incidence of discrimination among Federal contractors to 9%; and 

Increase compliance among Federal contractors in all other respects of equal opportunity workplace standards to 

61%. 

Program Perspective 

ESA's Office of Federal Contract Compliance Programs (OFCCP) administers and enforces three equal 

employment opportunity laws which prohibit Federal contractors from discriminating on the basis of race, color, 

religion, gender, national origin, disability, and protected veterans' status. Executive Order 11246, as amended; 

Section 503 of the Rehabilitation Act of 1973, as amended; and 38 U.S.C. 4212 of the Vietnam Era Veterans' 

Readjustment Assistance Act of 1974, as amended also require Federal contractors to take steps to ensure equal 

employment opportunities. Based on the principle that employment opportunities generated by Federal dollars 

should be equally available to all Americans, these requirements are an integral part of nearly all Federal contracts 

and the Federal procurement process. By increasing equal opportunity compliance in companies doing business 

with the Federal government, OFCCP will protect the employment rights of thousands of able American workers 

who might otherwise be unfairly excluded from the workplace. 

Results, Analysis and Future Plans

The goal was achieved. The incidence of discrimination found among evaluated contractors was one percentage 

point, or eight percent, below the FY 2004 goal of nine percent. Evaluated contractors’ compliance with all other 

equal opportunity workplace standards increased to 91 percent, 30 percentage points above the FY 2004 goal of 

61 percent. 

OFCCP typically evaluates between four to six percent of the Federal contractor universe each year and focuses 

its enforcement activities on finding and resolving systemic discrimination. OFCCP adopts this strategy to: (1) 

prioritize enforcement resources for the worst offenders; (2) encourage employers to self-audit their employment 

practices; and (3) achieve maximum leverage of resources. OFCCP completed 6,544 compliance evaluations that 

focused on identifying and resolving systemic discrimination violations. While OFCCP is responsible for 

enforcing nondiscrimination and equal opportunity requirements, protection of civil rights and assurances of 

quality workplaces is not solely dependent on finding violations. OFCCP’s compliance emphasis and the 

assistance it provides encourages contractors to examine their own employment practices. More Federal 

contractors are complying with the nondiscrimination laws, and the reduced regulatory burden on contractors has 

paid dividends. 

OFCCP has introduced a new contractor selection system incorporating recommendations from a 2003 study on 

the effectiveness of its civil rights enforcement. OFCCP will gather performance results from completed FY 2005 

compliance evaluations24 and use these results to evaluate the impact of those recommendations. OFCCP will 

also improve its selection and investigation techniques in identifying non-compliant contractors based upon an 

evaluation of the effectiveness of the Equal Opportunity Survey in identifying Federal contractors who may have 

discriminatory practices. 

 

24 Data collected from completed compliance evaluations that were scheduled beginning in July 2004. 
Performance Section 

116 United States Department of Labor 

Secretary Chao uses the Secretary of 

Labor’s Opportunity Award, the 

Exemplary Voluntary Efforts Awards 

(EVE), and the Exemplary Public Interest 

Contributions Awards Program to partner 

with Federal contractors in identifying 

programs of particular merit for achieving 

equal opportunity workplaces, thereby 

encouraging other employers to follow 

suit. The Opportunity Award was given in 

2004 to the SCANA Corporation of 

Columbia, SC, for its consolidated 

employment system that fosters fair 

selection and hiring based on six businessrelated competencies. The EVE Award 

winners for 2004 included The Aerospace 

Corporation of El Segundo, CA, whose 

Aerospace Institute helps all employees 

maintain high competencies in technical 

and professional skills through computer based curricula. Another EVE Award winner, Dell Computer Corporation of 

Austin, TX, was honored for its investment in training designed to foster an inclusive environment. LG&E Energy 

Corporation of Louisville, KY created a Corporate Diversity Council to develop, implement and monitor employment 

opportunity initiatives. The Tice Electric Company of Portland, OR, another EVE Award winner, provides exemplary 

support for all employees through pre-apprenticeship education, training, and networking for those who seek employment in 

the electrical trades. 

Photo credit: Shawn T. Moore 

Management Issues 

The Department continually seeks to simplify regulations and to reduce the regulatory burden on Federal 

contractors. The Abt Associates, Inc. study will evaluate the effectiveness of the Equal Opportunity Survey as an 

instrument for identifying contractors engaged in systemic discrimination. Research results will be used to 

develop and validate a model to identify workplaces where systemic discrimination persists while at the same 

time meet the Department’s goal of reducing regulatory burden. 

Statutory changes stemming from the recent Jobs for Veterans Act affect OFCCP regulations. Prior to this 

legislation, employers with a Federal contract or subcontract of at least $25,000 were required to take affirmative 

action to hire and promote qualified, covered veterans. Because this legislation increased the threshold to 

$100,000, it reduced the Federal contractor universe for veteran coverage. OFCCP will promulgate regulations to 

implement the change in this threshold. 

 

The Program Assessment Rating Tool review of OFCCP for the FY 2004 budget indicated the agency could not 

measure the impact of its civil rights enforcement on the reduction of employment discrimination. As a result, 

DOL asked Westat to evaluate and measure OFCCP’s effectiveness in identifying Federal contractors’ 

discriminatory practices. Westat found that OFCCP’s concentration on targeting larger employers and those more 

likely to discriminate was helpful in enforcing equal employment statutes. Study recommendations outlined 

techniques that could improve employer targeting even more significantly and OFCCP is incorporating these 

techniques within its current enforcement strategy. For more information, see Study 19 in Appendix 2. 

DOL has also secured technical support, beginning in FY 2004, for a feasibility study and design of a secure webbased construction contractor information system using Federal Procurement Data System – Next Generation 

data. This reporting system will allow the agency to better identify, collect and report on construction contract 

awards to both prime contractors and subcontractors. This information system will also allow OFCCP to 

implement OIG recommendations that it design a better system for selecting and scheduling federal construction 

contractors for compliance evaluations. 
Outcome Goal 3.2 

FY 2004 Performance and Accountability Report 117

Promote Equal Opportunity Under the Workforce Investment Act 

Performance Goal 3.2B (OASAM) – FY 2004 

States that receive financial assistance under the Workforce Investment Act provide benefits and services to 

persons with disabilities in a non-discriminatory manner. 

Indicators 

Desk reviews conducted of a representative sample of States using the WIA Section 188 Disability Checklist; 

Initiate technical assistance reviews of the One-Stop Career systems in the cities of Los Angeles, CA and 

Houston, TX; and 

The nature and number of discrimination complaints filed nationwide under Title I of the WIA, Wagner-Peyser 

Act funded programs, the Unemployment Insurance program, and against DOL-operated Job Corps Centers based 

on a longitudinal study spanning FY 2002 through FY 2005. 

Program Perspective 

Historically, people with disabilities have faced attitudinal, physical, and institutional barriers that prevent them 

from full participation in the mainstream of life, particularly employment. Persons with disabilities are one of the 

most under represented groups in the U.S. workforce. A substantial number of disabled persons want to work and 

can greatly benefit from the workforce system in making the transition from government transfer payment 

programs to the world of work. Over the last quarter of a century, Congress has enacted laws designed to break 

down barriers to employing persons with disabilities. Under WIA each Governor is required to establish a 

Methods of Administration, which is the foundation of policies, procedures, and systems that provide a reasonable 

guarantee of equality of opportunity in the workforce for all, including persons with disabilities. 

Results, Analysis and Future Plans 

The goal was achieved. All WIA State-level recipients were required to conduct self-evaluation reviews of their 

largest local workforce investment area, which exceeded the target of conducting only a sampling. The results of 

these self-evaluation reviews indicate that most States and their local areas have put in place policies and 

procedures that provide universal access to their customer population and programmatic access to customers with 

disabilities. This finding is buttressed by the finding from the full technical assistance review of New York and 

Florida and their largest local workforce areas, New York City and Miami, respectively. 

We also initiated disability technical assistance reviews of California and Texas and their largest local areas, Los 

Angeles and Houston, respectively. DOL provided compliance assistance training on the Federal disability 

requirements to key State and local staff and front line workers representing every One-Stop Center in these 

localities. 

States and Job Corps centers complaint log data show that 1,211 discrimination complaints were filed against the 

workforce system. Of the total number of discrimination complaints filed, 137 or 11 percent were filed on the 

basis of disability. The dominant issues in these complaints were wrongful termination and failure to provide 

reasonable accommodations. 

In FY 2005 DOL will (1) establish a repository of promising practices on the Civil Rights Center’s public 

website, (2) expand the directory of Equal Opportunity (EO) Officers to include local workforce investment area 

EO Officers in order to facilitate communication and information sharing, (3) develop training modules on 

complaint processing and EO statistical monitoring, and (4) develop on-line EO courses. 

Management Issues 

The General Accountability Office (GAO) announced and initiated a study of disability compliance in the 

workforce system during FY 2004. In many ways, the GAO study is mirroring the Civil Rights Center technical 

assistance reviews of the One-Stop Career systems. GAO’s study will conclude with a series of 

recommendations, and the final report is expected during FY 2005. 
Performance Section 

118 United States Department of Labor 

Assist Veterans’ Return to Jobs After Military Obligations 

Performance Goal 3.2C (VETS) – FY 2004 

Reduce employer-employee employment issues originating from service members’ military obligations 

conflicting with their civilian employment. 

Indicator 

Establish baseline of key problem areas for reduction in USERRA cases filed by veterans or service members 

Program Perspective 

VETS protects the employment and reemployment rights of persons who are current or past members of the 

uniformed services, and who encounter barriers in civilian employment related to their service. Legislative 

authority for protection of these rights is established by the Uniformed Services Employment and Reemployment 

Rights Act (USERRA). 

 

VETS investigates individuals’ complaints alleging their rights have been violated and provides compliance 

assistance to employers and to protected individuals. Most violations by employers arise from a lack of 

awareness of the rights and protections established by USSERRA. Similarly, most claims that are found to be 

without merit result from a lack of awareness on the part of the claimants regarding the specific dimensions of the 

rights and protections established by USERRA. VETS seeks to reduce both employer violations and the filing of 

meritless complaints by protected individuals. 

Results, Analysis and Future Plans 

This goal was achieved. Using DOD’s annual survey of the actual experiences of members of Military Reserve 

and National Guard units, VETS’ established a baseline of issues that will help focus activities on improving 

employer compliance and reducing USERRA complaints. 

Michael, a Reservist in the United States Army, was deployed in support of 

Operation Iraqi Freedom from February 16, 2003 to November 11, 2003. While 

deployed, Michael became eligible for a career ladder promotion. Upon his return 

to work, Michael inquired about his promotion. His supervisor informed him that 

he would have to wait because he was gone for most of the evaluation period. 

Michael filed a complaint with VETS in February 2004. VETS contacted the 

employer, outlining the complaint and explaining Michael’s rights under USERRA 

concerning promotions while absent. The employer wrote back still insisting that 

they had not had sufficient time to evaluate Michael. DVET explained to the 

employer that they could evaluate him for a short period of time and promote him 

retroactively. Finally, the employer realized how Michael’s career could be 

affected by the delayed promotion. On March 29, 2004 the employer agreed to 

promote Michael retroactively and remit $4,589.60 in back pay. 

Photo credit: Stan Williams 

The first table below summarizes VETS’ baseline analysis. Although the 

2004 percentages are consistently higher than the corresponding 

percentages for 2003, this difference needs to be viewed with considerable 

caution: 1) This question was a “stand-alone” item in the 2003 survey but in the 2004 survey it was the 11th item 

in a series of 20, all dealing with USERRA. Therefore, the higher percentages may reflect a difference in how 

those participating in the 2004 survey responded after being “warmed” to the topic by a series of prior questions, 

as opposed to how those participating in the 2003 survey responded “cold” to a single question. 2) Percentages 

are small, so the statistical error of these estimates is high relative to their values. Averaging the results of the two 

surveys offers a conservative estimate of the overall frequency of these issues, as shown in the last column. The 

second table groups actual complaints by survey categories in the first table. 
Outcome Goal 3.2 

FY 2004 Performance and Accountability Report 119

Results from the 2003 and 2004 DMDC Surveys25

Categories of USERRA-Related Problems Experienced by Survey Respondents 

Percent 

“YES” 

2003 

Percent 

“YES”

2004 

Average

Reemployment Issues: 

Prompt Reemployment: (Failed to receive prompt reemployment upon return from 

military service) 4 6 5 

Skill Upgrade and Refresher Opportunities: (Reasonable efforts not made to refresh 

or upgrade skills to enable you to qualify for reemployment) 6 10 8 

Seniority Issues: (Loss of seniority, seniority-related pay, or seniority-related benefits) 7 12 9.5 

Health Benefits Issues: 

Continuation: (Failed to receive option to continue employer-provided health 

insurance) 6 8 7 

Reinstatement: (Failed to receive immediate reinstatement of employer-provided 

health insurance) 4 7 5.5 

Pensions: (Military service considered a break in employment for pension benefit 

purposes) 10 12 11 

Type of Service: (Employer differentiated between voluntary and involuntary service) 10 12 11 

Prompt reemployment and skill upgrade are key problem areas. Prompt reemployment has long been a priority 

for USERRA compliance assistance and continuing emphasis upon that issue is likely. However, the percentage 

of respondents identifying upgrade/refresher training as an issue is higher. Therefore, the provision of skill 

upgrade/refresher training may be a “sleeper” issue that underlies a number of USERRA reinstatement complaints 

and is not fully appreciated by VETS or employers. 

USERRA Complaints in FY 2003, Grouped by Corresponding Survey Categories 

Primary Issue Codes Associated with USERRA Complaints in FY 2003 Percent of Issue Codes 

Associated with Complaints 

Reinstatement 19% 

Seniority, Status, Promotion, Pay Rate, Vacation 20% 

Pension 4% 

Military Obligations Discrimination, Discrimination as Retaliation for any Action, Initial 

Hiring Discrimination, Layoff 

40% 

Miscellaneous 17% 

Management Issues 

In late FY 2004, VETS published a Notice of Proposed Rulemaking (NPRM) under the authority of the USERRA 

statute. Because the program previously operated without the benefit of regulations, it is expected that a broad 

spectrum of stakeholders will take the opportunity to comment on the proposed regulations. Among these are 

likely to be employer associations, labor unions and other employee associations, veteran service organizations, 

and the Employer Support of the Guard and Reserve, which has a role in providing assistance under USERRA. 

Publishing the NPRM, responding to comments, and publishing a Final Rule will help to clarify issues regarding 

specific protections, issues regarding VETS’s role with respect to interested individuals and organizations, and the 

procedures to implement the protections of the Act. 

 

25 Defense Manpower Data Center (DMDC) 2003 & 2004 surveys’ common question: “In the past 24 months, have you 

experienced any of the following problems despite your protection under USERRA?” 
Performance Section 

120 United States Department of Labor 

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

Workers, and Strengthen Labor Markets 

The continuing evolution of today’s global environment has an ever-increasing impact on the 21st century 

American workforce. The well-being of American workers is increasingly tied to international stability. As our 

country faces unprecedented international security challenges, the need for broad-based economic prosperity, both 

domestically and abroad, has become increasingly apparent. Through its complementary missions of supporting 

the expansion of free and fair trade and providing technical assistance grants to eliminate exploitive child labor 

and promote basic rights of workers around the world, the Department’s Bureau of International Labor Affairs 

(ILAB) strives to secure increased economic well-being both in the United States and abroad. ILAB also 

continues to provide policy guidance on other labor-related issues. 

ILAB-supported international technical assistance programs are unique in that they focus on raising living 

standards around the world through labor and workplace-related interventions. In FY 2004, DOL’s international 

technical assistance programs focused on supporting the Administration’s foreign policy initiatives to combat the 

trafficking and commercial sexual exploitation of children; reduce the impact of HIV/AIDS on children and 

workers; promote educational initiatives in the Middle East; and fulfill the Department’s role in negotiating 

international trade agreements.

ILAB’s FY 2004 performance goals seek to improve workplaces, strengthen training and skills of workers in 

developing and transition countries, and promote core labor standards. As the Administration has worked to 

implement free and open global markets and develop regional and bilateral trade agreements, it has sought to 

work with its trading partners to improve labor policies and conditions. 

Listed in the first column of the table below are the performance goal numbers associated with this outcome goal, 

the periods being reported on, the goal statements, and indication whether or not they were achieved. The second 

column provides a summary of targets reached, substantially reached and not reached for the indicators associated 

with each performance goal, followed by a note of the most significant result(s) for this past year. 

Goal (Agency) – Period 

Goal Statement [Achievement] Performance Summary 

3.3A (ILAB) – FY 2004 

Contribute to the elimination of the 

worst forms of child labor 

internationally. [Achieved]

ILAB reached all four of its targets, which included the 

prevention or withdrawal of more than 90,000 children from 

exploitive child labor, and increasing the capacity of 26 countries 

to address child labor.

3.3B (ILAB) – FY 2004 

Improve living standards and 

conditions of work internationally. 

[Achieved]

ILAB reached all five of its targets, which include the collection 

of analytic data that will help ILAB measure the impact of its 

programs on improving living standards and conditions of work 

internationally. ILAB also began HIV/AIDS workplace 

education projects in eight countries. 
Outcome Goal 3.3 

FY 2004 Performance and Accountability Report 121

Net Cost of Programs 

FY 2004 program costs of $97 million supported the Bureau of International Labor Affairs (ILAB’s) efforts to 

reduce the worst forms of exploitive child labor internationally and to address core international labor standards 

issues. These program costs represent a $47 million (almost 100 percent) increase from the FY 2003 costs of $50 

million 

The difference in costs between FY 2003 and FY 2004 for this outcome goal is attributable to two factors. First, 

in FY 2003, ILAB’s budget included money for grants that could be awarded in either FY 2003 or 2004. 

Approximately $35 million of this grant money was awarded in FY 2004. Second, given the late passage of the 

FY 2003 budget, many of ILAB’s grants were awarded toward the end of FY 2003. The recipients spent little of 

these funds prior to FY 2004. 

Outcome Goal 3.3

Net Costs ($Millions)

25

50 45 51 58

97

0

20

40

60

80

100

1999 2000 2001 2002 2003 2004

Fiscal Year

A three-year USDOL-funded project in Mali and 

Ivory Coast is combating child labor in cocoa 

production. The Child Labor Alternatives through 

Sustainable Systems in Education (CLASSE) 

project promotes training and educational 

alternatives for children. The project provides 

alternative curricula and training for teachers, 

vocational education with an emphasis on 

agriculture, and youth mentoring. Activities 

include public awareness campaigns, community 

focus groups, and interaction with government 

officials, worker groups, and faith-based 

organizations to build support for child labor 

prevention. The photograph pictured here features 

schoolchildren in a village in Ivory Coast where 

the CLASSE project is expanding school access. 

Photo credit: ILAB 

Results Summary 

Both performance goals were achieved. For Performance Goal 3.3A, an estimated 90,200 children were removed 

or prevented from exploitive work in FY 2004. The DOL target was 70,000. ILAB achieved this performance 

goal through the provision of education or training opportunities in ongoing programs operated by the 

International Labor Organization's International Program on the Elimination of Child Labor (ILO-IPEC) with 

oversight and funding by DOL. This year’s target was significantly exceeded due to improved program efficiency 

and larger projects that enrolled greater numbers of children. Since ILAB began tracking this indicator in 2001, 

USDOL-funded ILO-IPEC projects have removed or prevented approximately 250,000 children from exploitive 

work and given them meaningful alternatives to child labor. 
Performance Section 

122 United States Department of Labor 

Secondino, age 14 (pictured ) of 

Constanza in the Dominican Republic, 

had worked in the fields 10 hours a day 

from the age of 8, his hands as callused as 

an old man’s, his back aching from 

bending to cut crops. Secondino began 

“leveling” classes at age 11 in first grade, 

and by summer’s end had progressed to 

4th grade. His mother says, “Now he 

looks healthier, taller, and I have learned 

he is very smart.” Secondino’s younger 

brother, also in school, is one of 

Constanza’s more than 200 at-risk 

children protected by the program from 

entering child labor. 

Photo credit: ILAB 

 

Preventing and withdrawing children from the worst forms of child labor in the long-term also depends on a 

country’s willingness and capacity to address the issue and sustain efforts even after projects end. ILAB 

estimates that 26 countries increased their capacity to address child labor as a result of ILO-IPEC programs 

funded by DOL, exceeding its target of 15. For this measure, capacity is defined as changes to countries’ legal 

frameworks that reflect international child labor standards; the adoption or implementation of programs or 

policies to combat the worst forms of child labor; mainstreaming of child labor concerns into relevant 

development, social, and anti-poverty policies and programs; or the establishment of a child labor monitoring 

mechanism. ILAB’s Education Initiative (EI) funds projects to improve access to basic education in areas where 

there is a high incidence of child labor. Both of ILAB’s EI performance indicators were reached. At least 16 

projects established targets for retention and completion rates for projects funded in 2002 and 2003, exceeding 

ILAB’s target of eight. Eight projects have established baseline rates for enrollment and drop out (school 

retention) of participants for projects funded in 2003, exceeding ILAB’s target of seven. 

For Performance Goal 3.3B, ILAB reached its target by collecting baseline data for indicators measuring the 

impact of DOL programs to improve working conditions around the world. These programs encourage the 

establishment of government regulated pension plans; the adoption of workplace safety and health programs; 

improved economic and working conditions; and the implementation of HIV/AIDS workplace education projects. 

These data will help determine challenging but realistic targets in the future. ILAB also funds HIV/AIDS projects 

in seven countries that include Burkina Faso, China, Cameroon, Gabon, Indonesia, Sri Lanka, and Trinidad and 

Tobago, exceeding its target of five countries. These projects aim to decrease employment discrimination against 

persons affected by HIV/AIDS. 
Outcome Goal 3.3 

FY 2004 Performance and Accountability Report 123

Reduce Child Labor in Developing Countries 

Performance Goal 3.3A (ILAB) – FY 2004 

Contribute to the elimination of the worst forms of child labor internationally 

Indicators 

Number of children prevented or withdrawn from exploitive labor and provided education or training 

opportunities by ILO-IPEC programs funded by DOL in prior fiscal years; 

Number of countries with increased capacities to address child labor as a result of ILO-IPEC programs funded by 

DOL in prior fiscal years; 

Number of Child Labor Education Initiative projects that establish targets for education retention and completion 

rates in project areas; and 

Number of Child Labor Education Initiative projects that establish a baseline for rate of enrollment and drop out 

for targeted children. 

Program Perspective 

ILAB has worked to reduce exploitive child labor worldwide since 1993, funding and overseeing projects that 

combat exploitive child labor in 69 developing countries. ILAB’s activities include research and reporting on 

various aspects of international child labor, increasing public awareness and understanding of the problem, and 

supporting international projects to eliminate exploitive child labor and increase access to quality basic education. 

Many projects are implemented by ILO-IPEC, a worldwide technical assistance program to progressively 

eliminate exploitive child labor. ILAB’s Child Labor Education Initiative (EI), originating in 2000, provides 

funds for international projects focusing specifically on access to and quality of basic education as a means of 

reducing exploitive child labor. A wide variety of organizations implement EI projects. 

With financial support from USDOL, 

children in Ghana who were formerly 

trafficked for exploitive labor are now 

receiving an education at the Kokrobite 

primary school, located an hour outside 

Accra. The DOL project, implemented by 

the International Labor Organization’s 

International Program on the Elimination of 

Child Labor (ILO-IPEC), works with 

government and local non-governmental 

organizations to provide children rescued 

from trafficking with the support they need 

to attend school. The children were 

trafficked hours away from their homes to 

the Volta Lake region to work in the fishing 

industry as divers, net casters and assistants 

to local fishermen. In addition to Kokrobite, 

the project provides education to trafficked 

children in a number of other villages in 

Ghana. In total, the project will assist hundreds of children who have been trafficked or at risk of being trafficked for 

exploitive labor. The project in Ghana is part of a nine-country DOL-funded program in Africa to combat child trafficking for 

exploitive employment. During Secretary Chao's trip to Ghana in December 2003, she visited the Kokrobite school, and met 

with children assisted by the project, as well as with teachers, families, and community members. 

Photo credit: ILAB 
Performance Section 

124 United States Department of Labor 

ILAB measures the progress of its ILO-IPEC projects on two levels: community-based direct interventions 

benefiting individual children and families; and country-level activities to build capacity and institutional 

strengthening. EI indicators focus on start-up activities, such as the establishment of baselines and the 

identification of targets for projects funded in prior fiscal years. For the EI, the indicators will establish baseline 

data to permit ILAB to set targets for education retention and completion, and enrollment and dropout rates 

achieved as a result of DOL-funded projects. ILAB establishes its annual targets for its indicators through close 

consultations with grantees and analysis of baseline information, individual project targets, past performance and 

external factors. 

Various external factors influence ILAB’s targeted outcomes, such as the implementing environment of 

developing countries. ILAB-funded projects work in countries with diverse political, social, and economic 

environments. Civil unrest, natural disasters, economic shocks, frequent changes in governments and poor 

infrastructure may impact the timely progress of project implementation. 

Results, Analysis and Future Plans 

The goal was achieved. ILAB exceeded three out of four performance indicators, and reached the fourth. In 

2004, ILAB funded a total of 28 new projects to combat child labor and to increase access to basic education with 

a special focus on the worst forms of child labor. Many of these projects support the Administration’s foreign 

policy objectives to combat the trafficking and commercial sexual exploitation of children; to reduce the impact of 

HIV/AIDS on children; to promote educational initiatives in the Middle East; and to fulfill DOL’s role in 

negotiating international trade agreements. In 2004, 90,200 children were removed or prevented from exploitive 

work through the provision of education or training opportunities in ongoing ILO-IPEC programs funded by 

DOL, exceeding the target of 70,000 children. Since ILAB began tracking this indicator in 2001, USDOL-funded 

ILO-IPEC projects have removed or prevented approximately 250,000 children from exploitive work and given 

them meaningful alternatives to child labor. In addition, thousands of parents were provided training and 

assistance to meet the basic needs of their families and overcome their reliance on child labor. 

Preventing and withdrawing children from the worst forms of child labor in the long-term depends on a country’s 

willingness and ability to address the issue and sustain efforts even after projects end. In FY 2004, DOL-funded 

ILO-IPEC programs increased the capacity of 26 countries to address child labor, exceeding its target of 15. This 

indicator measures capacity through a standard set of criteria, including: 1) adaptation of a country’s legal 

framework to reflect international child labor standards; 2) formulation of national, sectoral or geographical 

programs or policies to combat the worst forms of child labor; 3) mainstreaming child labor concerns into relevant 

development, social, and anti-poverty policies and programs; or 4) establishment of a child labor monitoring 

mechanism. For example, through DOL funding of the El Salvador Timebound Program, the government 

reformed the Penal Code to provide judicial authority to investigate and prosecute offenders involved in the 

commercial sexual exploitation of children. 

Cumulative Number of Children Prevented or 

Removed from Exploitive Labor (thousands)

28 28 28 28

51 51 51

79 79

90

0

50

100

150

200

250

300

FY 2001 FY 2002 FY 2003 FY 2004

Number of Children Prevented or Removed 

from Exploitive Labor (thousands)

0

20

40

60

80

100

Planned 50,000 50,000 60,000 70,000

Actual 27,773 51,297 79,487 90,198

FY 2001 FY 2002 FY 2003 FY 2004
Outcome Goal 3.3 

FY 2004 Performance and Accountability Report 125

All projects funded under the EI work to identify targets for rates of retention and completion. At least 16

projects established targets for retention and completion rates for projects funded in 2002 and 2003, exceeding 

ILAB’s target of eight. In addition, eight projects have established baseline rates for enrollment and drop out 

(school retention) of participants for projects funded in 2003, exceeding ILAB’s target of seven. Education 

targets and rates for both indicators were set relative to results from baseline data collection and historical 

experience in project implementing areas. 

In the future, ILAB will obtain data relating to program performance, implementation plans, and results. ILAB is 

also working to improve the efficiency of its technical assistance programs. 

Management Issues 

ILAB continues to enhance its program oversight and management responsibilities by regularly collecting timely 

project performance information. ILAB receives primary data from its grantees. ILAB staff review and verify 

the accuracy of the data. Project monitoring systems provide data at the project and country levels. ILAB 

continues to work with grantees to improve the effectiveness and quality of data collection. 

ILAB funds project-specific mid-term and final evaluations for each project. The agency uses the evaluation 

reports to take corrective actions, when necessary, and to inform approaches and management of ongoing and new 

projects. Now that the program has been underway for a significant amount of time and a number of projects are 

being completed, ILAB plans to commission a program-wide independent evaluation in FY 2005. 

Delays in the appropriations process continue to be ILAB’s primary management challenge. These delays 

significantly reduce ILAB’s timeframe for obligating funds, conducting initial needs assessments, performing 

government and interagency consultations, conducting competitive procurements, and reviewing and approving 

grantee proposals. Furthermore one-year obligation authority limits time available for the EI to design complex 

international projects. To address these challenges, ILAB is streamlining its procedures for obligating funds and 

supporting fewer, larger projects. 

In addition, a shorter time-frame for obligating funds may put smaller organizations at a disadvantage in applying 

for grants. Groups that may be capable of implementing projects may not possess the infrastructure required to 

prepare grant applications in short time frames. It remains a challenge for ILAB to obligate funds quickly while 

striving to establish a level playing field for potential grantees.
Performance Section 

126 United States Department of Labor 

Improving Life for Workers Around the Globe

Performance Goal 3.3B (ILAB) – FY 2004 

Improve living standards and conditions of work internationally. 

Indicators 

Number and percent of relevant government officials and members and officials of workers’ and employers’ 

organizations who are influential in determining living standards and working conditions and participating in 

USDOL project activities, who consider the project to have improved their conditions of work; 

Number and percent of individuals whose economic situation has benefited from USDOL project assistance; 

Number and percent of workplaces exposed to USDOL project assistance that have implemented new measures to 

prevent workplace accidents and illnesses; 

Number of workers participating in pension funds that are government regulated by project partner agencies; and 

Number of new countries where HIV/AIDS workplace education projects begin.

Program Perspective 

The Department’s International Cooperation Program seeks to ensure that the greatest possible number of workers 

benefit from a more open world economy. Expanding trade and investment and improving working conditions 

should be understood as mutually reinforcing objectives, not opposing ones – increased trade helps foster 

economic growth and raise living standards while promoting employment in the U.S. The Department also 

believes that the creation of more open, stable economies that increase employment and standards of living for 

people will lead to increased political stability and security. 

DOL has been providing assistance to help support these changes since 1950, when it trained German trade 

unionists to assist with European reconstruction after World War II. The Department has provided technical 

assistance to developing countries by using DOL experts in areas such as labor inspection, statistics, skills 

training, and occupational and mine safety and health. In 1995, the Department began receiving appropriations 

from Congress to fund multi-year projects that provide more focused, intensive assistance to target countries to 

combat child labor and in 1999, began receiving funds to implement other types of labor projects. Since 1999, the 

Department has funded 92 projects in over 90 countries as part of its International Cooperation Program. 

The U.S. Department of Labor is funding a $3 million job skills and small enterprise 

training project to increase incomes and standards of living for the most vulnerable 

segments of the Afghan population. Many project participants are women, including 

widows who have lost husbands and sons during over two decades of warfare. They 

receive literacy and numeracy education; learn marketable job skills; and are trained to 

start and manage their own small business. Some of the women, such as those pictured 

here, have chosen to be trained in trades such as jewelry making, that have traditionally 

been male-dominated areas of work. 

Photo credit: ILAB

Results, Analysis and Future Plans 

The goal was achieved. ILAB met its target by collecting baseline data for 

indicators one through four. This type of longitudinal data collection supports 

managing for results. 

ILAB is funding new HIV/AIDS projects in seven countries that include 

Burkina Faso, China, Cameroon, Gabon, Indonesia, Sri Lanka, and Trinidad 

and Tobago, exceeding its target of five countries. These projects aim to 

reduce employment discrimination against persons affected with HIV/AIDS. 
Outcome Goal 3.3 

FY 2004 Performance and Accountability Report 127

In FY 2004, the Department focused its technical assistance funds on projects supporting the President’s 

international trade and HIV/AIDS initiatives. DOL contributed $2.4 million to projects in the Dominican 

Republic, Panama, Chile, and China aimed at building trade capacity by improving conditions of work in those 

countries. DOL also contributed $9 million to the International Labor Organization (ILO) to fund a number of 

new and continuing workplace-based HIV/AIDS education and prevention projects. 

“Improve living standards and conditions of work” is a very broad goal, but the Department has chosen to target 

its technical assistance to address very specific components of this goal in order to deepen the impact of its 

assistance: 

• Improved implementation of core labor standards 

• Improvement in people’s economic or employment situation 

• Increased efforts to improve safety in the workplace 

• Increased security of pensions 

• Decrease in HIV/AIDS risk behaviors 

• Decrease in employment discrimination against persons living with HIV/AIDS 

ILAB will change its indicators and targets for Goal 3.3B in FY 2005 in response to shifts in the Administration's 

priorities with respect to international labor projects. Indicator five will be replaced in FY 2005 by two outcomeoriented indicators: 1) Reduced HIV/AIDS risk behaviors among targeted workers, and 2) Reduced level of 

employment-related discrimination against Persons Living with HIV/AIDS. Baseline data for these indicators 

will be established by the end of FY 2005. 

Virginia Martínez Orellana is one of thousands 

benefiting from a DOL-funded project to expand 

employment opportunities in El Salvador for 

persons with disabilities. Through a grant to the 

Trust of the Americas, the USDOL provides 

Virginia with training in Information Technology 

and ways to seek and obtain employment. After 

the Center’s training job placement assistance, she 

obtained employment as a Computer Assistant at 

the Cantón Sitio del Niño school. “Because of the 

assistance and training they provided me, I was 

able to obtain a job. It allowed me to grow as a 

person who is able to overcome many obstacles. In 

addition to the Trust and DOL, I would also like to 

thank all the people who trained me to be someone 

in life and be able to evolve in a job environment. 

Thank you all for your help.” 

Photo credit: ILAB 

Management Issues 

DOL used two primary sources to collect information for these indicators: a global survey and projects’ individual 

reports against their Performance Monitoring Plans (PMPs). Project implementers are required to develop a PMP 

for each project. The PMP defines project indicators and identifies data needed to measure progress towards 

achieving those indicators, and are used to track progress toward meeting project goals. An independent 

contractor conducted a worldwide survey of project stakeholders to gain baseline and trend data for Indicator One. 

For Indicators Two, Three, and Four, ILAB collected baseline and trend data through project PMPs. ILAB 

worked with project implementers to develop PMPs in tandem with project designs in order to facilitate the data 

collection process, to ensure comparability of data, and to inform data analysis. Project Managers from DOL 

have an opportunity to verify data when they go on monitoring or evaluation missions.

FY 2004 Performance and Accountability Report 129

Strategic Goal 4: A Competitive Workforce 

Maintain Competitiveness in the 21st Century Economy

This goal was introduced one year ago in the FY 2003 – 2008 DOL Strategic Plan. It addresses the global 

economic issues facing American workers in the 21st Century. Two outcome goals describe strategies the 

Department has conceived to serve the needs of our country’s changing workforce. Outcome Goal 4.1, Address 

demand for new, replacement, and skilled workers, focuses on workforce gaps that are likely to occur, including 

labor shortages for new and replacement workers, with an emphasis on knowledge workers, and on adapting the 

nation’s workforce investment system to match workers and skills with employers’ needs. Outcome Goal 4.2, 

Promote job flexibility and minimize regulatory burden, includes identifying and adopting innovative approaches 

for effective regulation, and expanding workplace flexibility consistent with the changing nature of work in the 

21st Century. 

Implementation of this goal occurs primarily in training and job placement programs administered by the 

Employment and Training Administration (ETA). In addition, the Office of the Assistant Secretary for Policy 

(OASP) conducts oversight of all DOL regulatory functions in connection with the second outcome goal. Since 

creation of Outcome Goal 4.1, ETA has launched several initiatives aimed at gathering information on high 

growth industries, the skills needed by employers in those industries and adapting training programs to equip 

workers – especially underutilized segments of the workforce – to satisfy those requirements. Measurable results 

in connection with this goal are deferred until 2005, however, since the programs associated with this goal are all 

funded and tracked on a Program Year basis.26 A major accomplishment in the first year under Outcome Goal 4.2 

was the addition of net benefit evaluations to all Regulatory Impact Analyses conducted during the year.

Outcome Goal 4.1 − Equip Workers to Adapt to the Competitive Challenges of the 21st Century 

Program Year performance goals – reporting next year 

To help us better understand potential emerging workforce issues, where worker shortages exist and how to tap into 

underutilized labor pools, and the necessary components of building a demand-driven workforce system, DOL introduced 

several new initiatives and enhanced or redirected a number of existing workforce development programs, such as the 

President’s High Growth Job Training Initiative, the Career Voyages WebSite, and the ETA Management Information 

and Longitudinal Evaluation (EMILE) reporting system. 

Outcome Goal 4.2 – Promote Job Flexibility and Minimize Regulatory Burden 

1 performance goal not achieved

OASP flexible regulations 

and workplaces (4.2A) – 

not achieved. 

The target for providing costs, benefits, and net benefits for all Regulatory Impact Analyses 

was reached, but other targets, such as receiving public input to establish regulatory review 

priority, developing a plan to examine regulatory reporting and record-keeping requirements, 

and fully implementing the Flex-Options for Women Project, were not reached. 

The outcome goals and programs listed above, along with their results, costs, and future challenges are discussed 

in more detail on the following pages. 

 

26 Program Year 2004 began on July 1, 2004 and ends on June 30, 2005 
Performance Section 

130 United States Department of Labor 

Outcome Goal 4.1 – Equip Workers to Adapt to the Competitive Challenges of the 

21st Century 

The 21st Century has created new challenges and opportunities for American workers. To better prepare the 

Federal workforce system for the effects of globalization, changing demographics, and advances in technology, 

the Department has included a new strategic goal in the Strategic Plan that covers this report – A Competitive 

Workforce. This outcome goal supports the new strategic goal by employing strategies that target assistance to 

American workers by helping them acquire the skills they need to obtain good jobs as quickly as possible. This in 

turn helps American businesses acquire competitive advantages needed to innovate, grow, and succeed in an 

increasingly global economy.

Through this goal, DOL programs:

• Train knowledge workers for jobs of the new economy; 

• Keep pace with new skill requirements driven by technology and global workforce demands; 

• Utilize the diversity of the American workforce; and 

• Anticipate human capital solutions for employer needs, including our high-growth industries. 

DOL’s Revised Final FY 2004 Annual Performance Plan (dated January 27, 2004) included three performance 

goals in support of this outcome goal: 4.1A – Analyze information collection and research programs for 

relevance; 4.1B – Address worker shortages; and 4.1C – Build a demand-driven workforce system. All three are 

associated with programs administered by ETA. Since all but a few of the programs are forward-funded,27

performance measurement lags funding and the first year’s results will be reported in the DOL FY 2005 

Performance and Accountability Report. 

Strategies aimed at supporting the Department’s goal include: improved communication and collaboration among 

businesses, workers, and training providers; new partnerships with employers in high-growth industries; strategic 

initiatives with other government agencies; leveraging of private investments in training; and outreach to 

underutilized labor pools The discussion below summarizes progress to date in shifting emphasis of employment 

and training programs toward matching undersupplied businesses with underutilized workers and focusing on 

skills needed to keep American labor competitive. 

Results Summary 

DOL undertook a number of foundation building activities that will inform future strategies. These activities have 

helped us to better understand potential emerging workforce issues, where worker shortages exist and how to tap 

into underutilized labor pools, and the necessary components of building a demand-driven workforce system. 

Highlighted below are some of DOL’s programs, research projects, and electronic tools that support Goal 4: 

• The President's High Growth Job Training Initiative (HGJTI) is a strategic effort to prepare workers to take 

advantage of new job opportunities in high-growth sectors of the American economy. Through executive 

forums with leaders of expanding industries, critical workforce gaps and issues are identified. In PY 2003, 

ETA funded 30 High Growth Job Training Initiative pilot and demonstration grant projects totaling $48.7 

million in the following industry areas: advanced manufacturing, biotechnology and health care. 

• America’s Career InfoNet28 offers dynamic labor market-based information for career decisions. The website 

provides access to National, State and local labor market trends, occupational employment and outlook and 

wages, licensing requirements, and information on occupational skills and abilities. This information can help 

workforce staff identify high growth industries and understand their occupational staffing patterns and 

requirements. 

• Career Voyages Web Site promotes high demand occupations to youth. This site uses ETA’s labor market 

information products such as short and long term employment projections, O*NET skills information and 

State gathered data in an interactive Internet website. 

 

27 A mechanism of the Workforce Investment Act of 1998 (WIA) that allows for distribution of grant monies prior to 

measuring outcomes. WIA programs operate on a July-June Program Year (PY). For example, PY 2004 began on July 1, 

2004 and ends on June 30, 2005.

28 http://www.acinet.org/acinet/
Outcome Goal 4.1 

FY 2004 Performance and Accountability Report 131

• ETA launched the Hispanic Initiative this year to help Hispanic Americans exploit job opportunities in high 

growth sectors via special grant projects that define effective strategies. 

• The Asian-American Initiative is a study of Asian-American and Pacific Islander (API) workers that will 

illuminate the demographic and economic characteristics of that diverse population and provide a better 

understanding of the key employment issues facing the most vulnerable API subpopulations. 

• The ETA Management Information and Longitudinal Evaluation (EMILE) reporting system streamlines 12 

ETA program reporting systems into one comprehensive reporting structure that will allow for consistent, 

comparable analysis across ETA funded employment and training programs. Reports will capture critical 

information on individual job seekers as well as business customers served through the federal workforce 

investment system to better match the needs of both groups. 

• ETA’s Business Relations Group created the Partnerships for Jobs Initiative to assist business in utilizing the 

services of the publicly funded workforce system. The BRG collaborates with each national business partner 

to craft an implementation strategy. 

• The O*NET System rates the importance and level of over 200 occupational requirements including 

Knowledge, Skills, Abilities (KSAs), Tasks, Generalized and Detailed Work Activities, and Work Context. 

Organizations that are seeking to close the skills gap can turn to O*NET OnLine (http://online.onetcenter.org) 

to quickly view a profile of the skill requirements of high-growth, in-demand occupations. ETA also has 

documented community college use of O*NET information in the development of competency-based 

curricula. 

Future Challenges 

DOL’s FY 2005 Performance and Accountability Report will mark the first expected results for investments made 

in support of Goal 4 – over $70 million for the High Growth Job Training Initiative (HGJTI) Grants awarded in 

PY 2004. The Department expects to report on the following indicators: 

• Number of industries engaged;

• Number and amount of funded demonstration projects;

• Number of Executive Forums and number of attendees; and

• Number of Workforce Solutions Forums and number of attendees.

For PY 2005, the Department has requested $250 million for the Community Based Job Training Grants. 
Performance Section 

132 United States Department of Labor 

Outcome Goal 4.2 – Promote Job Flexibility and Minimize Regulatory Burden 

Maintaining a growing, vibrant economy requires a competitive economic environment. Such an environment 

can only be achieved through a regulatory structure that assures regulations’ benefits outweigh their burdens. A 

competitive economic environment must also take into account the modern workplace, with its increasingly 

flexible working arrangements. Many employment laws and regulations were written in the 1970’s and were 

based on, among other things, traditional on-site, full-time, long-term employment relationships between workers 

and employers. The foundation and logic for these laws and regulations has changed considerably, yet the laws 

and regulations themselves have not. DOL is systematically reviewing the regulations it is responsible for 

enforcing, to ensure they do not unnecessarily pose barriers to flexible work arrangements. 

Regulatory flexibility, another priority at DOL, is being actively sought via reviews pursuant to the Regulatory 

Flexibility Act of 1980 to determine if regulations have or will have a significant economic impact on a 

substantial number of small entities. These reviews also examine the effect on employers' compliance costs and 

whether the regulatory burdens of all employers, both large and small, are reduced. 

Outcome Goal 4.2 goals and indicators will measure DOL’s success in creating a more competitive economic 

environment through promotion and development of a regulatory structure and workplace arrangements that are 

congruent with the modern workplace. Over the next several years, DOL will conduct a comprehensive review of 

the key laws and regulations governing labor standards, pensions, health care, and worker safety to determine 

their appropriateness in the new workplace. Once the review is complete, DOL will pursue needed changes to 

reduce regulatory burden to improve productivity and competitiveness, while simultaneously protecting worker 

rights, benefits, and safety. DOL has already made strides in modernizing its regulatory approach by 1) shifting 

our emphasis toward compliance assistance through outreach, education, and innovative programs designed to 

prevent violations; 2) targeting our enforcement efforts to address the most egregious problems; and 3) expanding 

electronic options for employers to meet their reporting obligations. Over the next several years, we will analyze 

the effectiveness of this overarching strategy, seek ways to build upon the successes, exploit technology to 

improve our effectiveness, and take other steps necessary to ensure that our regulatory infrastructure is consistent 

with the 21st Century work environment. 

Goal (Agency) – Period 

Goal Statement [Achievement] Performance Summary 

4.2A (OASP) – FY 2004 

Maximize regulatory flexibility 

and benefits and promote flexible 

workplace programs 

 [Not Achieved]

The Department reached its target for providing the costs, benefits, and net 

benefits for all Regulatory Impact Analyses. The Department did not meet 

its target to receive public input to establish regulatory review priority, its 

target to develop an all-encompassing regulatory review plan to examine 

reporting and record-keeping requirements, or its target to fully implement 

the Flex-Options for Women Project. 

Net Cost of Programs 

This goal is new in FY 2004. Associated costs are shared by most DOL agencies but only amounted to $6 million 

for this period – a small fraction (one hundredth of one percent) of the total. 

Results Summary 

In FY 2004, DOL made considerable progress in its efforts to reduce regulatory burden and to promote flexible 

workplace programs. The Department published final overtime rules and is well on the way to modernizing 

regulations governing child labor. Currently in draft rule form, the new child labor regulations reflect changes in 

the workplace and provide the clarity that employers, youths and their parents need to make informed 

employment decisions. The updated overtime rules will reduce confusion and litigation, while continuing to 

protect workers. 

The Department is also reviewing pension plan and benefit plan regulations, as well as workplace safety 

regulations. For pension and benefit plan regulations, DOL is assuring that requirements for seeking exemptions 

from certain prohibited transactions, including loans to benefit plan participants will continue to protect 

beneficiaries while taking into account new forms of pension and benefit plans. The review process for these 
Outcome Goal 4.2 

FY 2004 Performance and Accountability Report 133

proposed regulations allows opportunities for public input, where appropriate, on both the selection of regulations 

for review and the outcomes of reviews. 

Through the Women’s Bureau (WB) Flex-Options for Women and the Office of Disability Employment Policy 

(ODEP) Telework Grants, the Department is making significant strides in creating more opportunities for flexible 

working arrangements. The WB enlisted women-owned businesses and other corporate mentors who developed a 

workplace flexibility policy/program for their workforces. Through the Telework Grants project, ODEP funds 

research examining how telework can be used as an employment option for people with disabilities. 

Future Challenges 

One of the central challenges to regulatory modernization is providing assurances to those protected by 

regulations that providing greater flexibility does not necessarily mean reductions in protections. This requires 

that DOL strive to demonstrate that increasing regulatory flexibility benefits those protected by the regulations. 

For instance, the new overtime rules tripled the salary level under which workers are guaranteed overtime, from 

$8,060 to $23,660, guaranteeing overtime protection to an additional 1.3 million workers. The rule also 

strengthens overtime protection for 5.4 million workers whose right to overtime protection was ambiguous. 

The move toward greater workplace flexibility requires that managers understand that critical planning, employee 

monitoring, teaming and coordination do not necessarily have to suffer due to the added flexibility. It also 

requires that advocates of greater workplace flexibility demonstrate that the ability for workers to spend more 

time with their families will only result from changes to the nation’s labor laws. Many of these laws were 

designed a generation ago, and their provisions do not fit today’s changing workplace. 
Performance Section 

134 United States Department of Labor 

Promote Flexible Workplace Programs 

Performance Goal 4.2A (ASP) – FY 2004 

Maximize regulatory flexibility and benefits and promote flexible workplace programs 

Indicators 

Seek input from the public as part of its decision-making process in determining which regulations or regulatory 

programs should be prioritized for review for their effects on small businesses and entities; 

Ensure that all new regulatory proposals identify monetary costs, benefits, and net benefits, and include a 

summary of this information in all Regulatory Impact Analyses performed by DOL agencies; 

Develop a plan to review all significant regulations for maximum flexibility in their reporting and record keeping 

requirements in order to assess whether DOL agencies are allowing the use of electronic technology by employers 

where practicable; and 

The Flex-Options for Women Project: Women-owned businesses will enhance their work forces/businesses by 

offering flexible workplace policies and programs that encourage a balance between home and work-life. The 

Women’s Bureau will enlist 40 companies as corporate mentors and 80 women-owned businesses as companies 

seeking to establish workplace flexibility policies or programs.

Program Perspective 

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 Plan and the Agendas provide information on all regulatory items 

DOL will act on within the next year and those the agency has either completed action on or withdrawn within the 

past six months. With OASP’s assistance, DOL regulatory agencies prioritize their regulatory initiatives to ensure 

they are in keeping with the Department’s strategic goals. During the reporting period, the Department had 81 

items on its regulatory agenda. Milestones (in the form of notices of proposed rulemakings, final rules, interim 

final rules, etc.) were published for 33 agenda items. 

Results, Analysis and Future Plans 

The goal was not achieved. 

Regulations 

DOL published milestones for 17 regulatory initiatives deemed “major” during the fiscal year, all of which 

contained the required quantitative analyses. ESA’s Wage and Hour Division has completed drafting a final rule 

to clarify and update child labor regulations and reflect changes in the workplace and recent amendments to the 

law. These changes will eliminate confusion about the current law and assist employers, youths and their parents 

understand current federal child labor laws. The Wage and Hour Division also completed an update of the 

overtime regulations covering “white collar” workers, which are intended to reduce confusion and unnecessary 

litigation over the old rules while improving protections for workers. OSHA has begun a long-term effort to 

update standards that either reference or include language from outdated consensus standards. OSHA also 

reviews, at least once every three years, all of their reporting and recordkeeping requirements under the 

Paperwork Reduction Act of 1995. Both EBSA and OSHA are engaged in reviews of the relative benefits and 

burdens of existing regulations in accordance with Executive Order 12886 and section 610 of the Regulatory 

Flexibility Act. OSHA is currently conducting reviews on standards affecting occupational exposure to ethylene 

oxide and excavations. EBSA is also conducting reviews on the benefits and burdens of the procedures required 

before health and pension plan benefit providers are granted exceptions from certain transactions, including loans 

to benefit plan participants. The OSHA and EBSA review items are scheduled for completion in FY 2005. The 

review process allows opportunities for public input, where appropriate, on both the selection of regulations for 

review and the outcomes of reviews. 
Outcome Goal 4.2 

FY 2004 Performance and Accountability Report 135

The Fall Regulatory Agenda, to be published in late November 2004, will have 81 items on it, many of which 

continue agency efforts to meet statutory requirements and update obsolete standards. With input from all the 

DOL agencies, OASP also drafted a Federal Register notice requesting input from the public that can help 

agencies prioritize regulations for review and possible changes. This Notice will be published for a 60-day 

comment period in the fall 2004. 

Women’s Bureau Flex-Options for Women: Approximately 41 women-owned businesses, assisted by 77 

corporate mentors, have developed a workplace flexibility policy/program for their workforces. The target of 

enlisting 40 corporate mentors was exceeded. The target of reaching 80 women-owned businesses has not yet 

been attained. The Bureau is confident that the goal of identifying 80 newly initiated flex-options 

programs/policies will be reached by December 2004. 

ODEP Telework Grants 

ODEP is investigating, developing and validating strategies that may increase the Department's understanding of 

how telework can be used as an employment option for people with disabilities. This will be accomplished by 

issuing grants to research and develop comprehensive telework models. The grant solicitation closed on August 

9, 2004. The projects will have a 36-month period of performance, to investigate, develop, and validate strategies 

likely to yield the largest number of telework positions for people with disabilities. 

Management Issues 

In accordance with the FY 2000 Treasury and General Government Appropriations Act, OMB publishes an 

annual Report to Congress on the Costs and Benefits of Federal Regulations. For the last several years the reports 

have included lists of regulations nominated by the public for their need of reform. Examples of nominated 

regulations enforced by the Department of Labor have been the Wage and Hour Division’s overtime 

compensation regulation, OFCCP’s Equal Opportunity Survey, MSHA’s Explosives standard, and OSHA’s 

Metalworking Fluids initiative. The OMB reports also include each agency’s response to previous nominations. 

Possible responses include: work is already underway; issue will be added to the agenda as resources permit; 

agency is undecided; or agency will not pursue the suggestion. 

MSHA engaged a consultant to conduct an independent evaluation in order to determine how the agency could 

systematically select and prioritize regulations for review. This evaluation, Selecting Regulations for Regulatory 

Review, by ICF Consulting was completed in April 2004. The agency is currently evaluating the 

recommendations. Appendix 2 contains a detailed summary of the evaluation. 

EBSA is establishing a regulatory review program that will set forth a process for identifying initiatives for 

review, for providing for the evaluation of cost and benefits of identified regulations and exemptions and, to the 

extent legally permissible, modifying or eliminating those rules for which the costs and burdens outweigh the 

attendant benefits. Once established, the agency will apply the program’s methodology to its regulations and 

prioritize specific ones for review. 

FY 2004 Performance and Accountability Report 137

Departmental Management 

Maintaining a Strategic Management Focus 

The President's Management Agenda (PMA), announced in 2001, consists of reforms aimed at achieving a 

Government that is citizen-centered, results-oriented, and market-based. The five government-wide initiatives 

included in the agenda are Strategic Management of Human Capital, Competitive Sourcing, Improved Financial 

Performance, Expanded Electronic Government, and Budget and Performance Integration. DOL’s four 

Departmental Management outcome goals correspond to the first four initiatives (see table below). Two DOL 

agencies provide leadership for accomplishing these goals: the Office of the Chief Financial Officer (OCFO) and 

the Office of the Assistant Secretary for Administration and Management (OASAM). However, all DOL 

agencies contribute to overall management performance. 

In FY 2004, the Department achieved eight, substantially achieved three, and did not achieve one of its 

management performance goals. Human Resources and Procurement functions stood out by achieving or 

substantially achieving all goals for the year; highlights were an injury and illness case rate less than half of that 

experienced in FY 2000-2001, and use of performance-based service contracting at a rate more than 50 percent 

above target. OCFO launched its managerial cost accounting project on a very ambitious schedule and made 

commendable progress toward its goal while maintaining high standards in its traditional roles. In the information 

technology arena, DOL missed its target for paperwork reduction but implemented a new e-procurement system, 

enhanced security, and made significant improvements in its management of capital investments. 

Outcome Goal HR − Establish DOL as a Model Workplace 

4 performance goals achieved & 1 substantially achieved 

OASAM quality workforce (HR1) – 

substantially achieved 

DOL completed competency models for all 27 mission-critical occupations and a 

skills inventory tool is in place for assessing skill gaps. 

OASAM lost workdays (HR2) – 

achieved 

As of third quarter FY 2004, the Department was achieving this goal with a rate of 

37.3 days lost per 100 employees (target 40.5). 

OASAM health case rate (HR3) – 

achieved 

As of third quarter FY 2004, DOL was achieving this goal with a rate of 1.72 total 

injury and illness cases per 100 employees (target 2.43). 

OASAM health lost time (HR4) – 

achieved 

As of third quarter FY 2004, DOL was achieving the goal of 1.19 lost time cases per 

100 employees with rate of 1.11. 

OASAM workers’ compensation 

(HR5) – achieved 

As of third quarter FY 2004, the average is 88.1% of claims filed on time, against at 

target of 88%. 

Outcome Goal PR – Improve Procurement Management 

1 performance goal achieved & 1 substantially achieved 

OASAM FAIR competitions (PR1) 

– substantially achieved 

DOL held competitions for almost 14% of the FTE listed in DOL’s 2000 FAIR Act 

inventory. 

OASAM performance-based 

contracting (PR2) – achieved 

DOL used PBSC techniques for 67% of total eligible service contracting dollars. 

Outcome Goal FM – Enhance Financial Performance through Improved Accountability 

1 performance goal achieved & 1 substantially achieved 

OCFO accurate and timely (FM1) – 

substantially achieved 

DOL received its eighth consecutive unqualified audit opinion on its consolidated 

financial statements and substantially complied with applicable federal financial 

management standards. 

OCFO integrated management 

(FM2) – achieved 

OCFO developed a DOL-wide managerial cost accounting capability and completed 

cost models for 15 DOL agencies. 
Performance Section 

138 United States Department of Labor 

Outcome Goal IT – Provide Improved, Secure IT Service to Citizens, Businesses, Government, and DOL Employees 

to Improve Mission Performance 

2 performance goals achieved & 1 not achieved 

OASAM e-government (IT1) – not 

achieved 

The e-procurement system was implemented in both the National and Regional 

Offices for 14 DOL component agencies, but DOL did not reach its paperwork 

elimination target of automating 100 percent of designated manual processes.

OASAM cyber security (IT2) - 

achieved 

DOL reached targets regarding Cyber Security System tests and evaluations and 

internal computer security incident response reporting. 

OASAM capital planning (IT3) - 

achieved 

All targets were reached. Rollout and migration of DOL’s new tool for electronic 

capital planning and investment management was achieved in the 2nd quarter of FY 

2004. DOL also reached its target of IT initiatives operating within 10% of cost, 

schedule, and technical performance parameters. 

The Administration’s Executive Branch Management scorecard, a quarterly assessment of Federal agencies’ 

implementation of the President’s Management Agenda (PMA), is another measure of the Department’s progress 

in these areas. In FY 2004, DOL’s status scores on all five government wide initiatives were elevated. The 

Department earned “green” in Human Capital, Financial Performance, E-Government and Budget and 

Performance Integration and “yellow” in Competitive Sourcing. This result is consistent with our record of goal 

achievement in qualitatively indicating progress in management practices at DOL for FY 2004. For more 

information about accomplishments with respect to the PMA, see the section devoted to that topic in the 

Executive Summary of this report. 

Results for the outcome goals listed above are discussed in more detail on the following pages. 
Outcome Goal HR 

FY 2004 Performance and Accountability Report 139

Outcome Goal HR – Establish DOL as a Model Workplace 

DOL is committed to recruiting, developing, and retaining a high-quality, diverse workforce that effectively meets 

changing mission requirements and program priorities. Through workforce analysis and planning, we identify 

human capital requirements to meet our organizational goals and needs, so that the right people are in the right 

place at the right time. Workforce planning reduces distance between DOL decision-makers and our customers, 

enhances front-line service delivery, addresses current and projected staff shortages, assures employees have the 

skills critical to their current positions and are prepared to progress to higher levels of responsibility, and 

anticipates changes to staff and competency requirements. Employees in occupations no longer necessary as a 

result of technology or changing business practices are afforded the opportunity to be retrained, and succession 

planning and other planned management approaches to an aging workforce will be pursued. 

DOL remains committed to assuring safe and healthful workplaces for our employees and Job Corps students, and 

to reduce human costs associated with workplace injuries and illnesses. We have expanded use of technology to 

deliver web-based, interactive occupational safety and health training targeted to hazards and conditions 

contributing to injuries and illnesses. Practices at work sites with lower than average injury rates are being 

evaluated to determine whether they can be effective elsewhere. 

DOL achieved all five performance goals, and earned a “green” status score for Strategic Management of Human 

Capital in the latest President’s Management Agenda Scorecard. 

Goal (Agency) – Period 

Goal Statement [Achievement] Performance Summary 

HR1 (OASAM) – FY 2004 

The right people are in the right place at the right time to carry out 

the mission of the Department. [Substantially Achieved] 

Competency models were completed for all 27 

mission-critical occupations and a skills inventory 

tool is in place for assessing skill gaps. Diversity 

continued to improve significantly, overall. 

HR2 (OASAM) – FY 2004 

Reduce the rate of lost production days due to work related injuries 

and illnesses by two percent. [Achieved]

As of third quarter FY 2004, the Department was 

achieving this goal with a rate of 37.3 days lost per 

100 employees (target 40.5). 

HR3 (OASAM) – FY 2004 

Reduce the total case rate for injuries and illnesses for DOL 

employees by three percent. (Total number of cases reported to the 

Office of Workers’ Compensation Programs.) [Achieved]

As of third quarter FY 2004, the Department is 

achieving this goal with a rate of 1.72 total injury and 

illness cases per 100 employees (target 2.43). 

HR4 (OASAM) – FY 2004 

Reduce the lost time case rate for injuries and illnesses for DOL 

employees by three percent. (Number of injury/illness cases 

reported to the Office of Workers’ Compensation Programs that 

resulted in days away from work.) [Achieved] 

As of third quarter FY 2004, the Department is 

achieving the goal of 1.19 lost time cases per 100 

employees with rate of 1.11. 

HR5 (OASAM) – FY 2004 

Improve the timeliness of filing notices of injuries and illnesses 

with the Office of Workers’ Compensation Programs. [Achieved]

The target is 88% of claims filed on time. As of third 

quarter FY 2004, the average is 88.1%. 

 

Results Summary 

Of the five goals listed, DOL substantially achieved Goal HR1 and achieved Goals HR2-5. A major goal of the 

DOL’s workforce planning efforts is to meet the objectives contained in the Strategic Human Capital 

Management section of the President’s Management Agenda. To further that effort, we developed a human 

capital scorecard, modeled on the OMB scorecard, to assess the progress being made by DOL Agencies in human 

capital management, including tracking the status of restructuring initiatives. We also developed core 

competencies for its mission critical occupations and analysis of workforce skills in mission critical occupations. 

We focus on succession management to address the impending exodus of senior level managers and employees 

minimizing the impact via succession planning programs such as the Senior Executive Service Development, 

Management Development, Mentoring, and MBA Outreach programs. 
Performance Section 

140 United States Department of Labor 

We fully recognize the importance of recruiting and maintaining a diverse workforce representative of the general 

civilian labor force. DOL continues to build upon its aggressive outreach and recruitment efforts to attract a 

highly skilled and diverse workforce including persons with disabilities and uses multiple Departmental/Office of 

Personnel Management hiring authorities and flexibilities, learning opportunities, and workplace flexibilities to 

maintain its current workforce. 

DOL focuses intently on successful implementation of the Safety, Health and Return to Employment (SHARE) 

Presidential Initiative led by the Occupational Safety and Health Administration and the Office of Workers’ 

Compensation Programs. Reducing the number of days away from work due to work related injuries or illnesses 

results in reduced workers’ compensation costs and increased productivity and responsiveness on the part of DOL 

employees. DOL organized an interagency workplace safety group, which developed and implemented several 

recommendations. Reducing the total number of injury/illness cases results in a decrease in workers’ 

compensation costs and an increase in productivity. 

DOL’s Office of the Assistant Secretary for Administration and Management (OASAM) strives to reduce work 

related injuries and illnesses by conducting accident analysis and focusing on hazard recognition and control, 

emergency preparedness, and ergonomics. OASAM developed a standardized hazard reporting protocol and uses 

its web page (LaborNet) to effect electronic hazard reporting. The agency is also developing an electronic, webbased comprehensive safety inspection checklist with corresponding training to ensure all persons who conduct 

annual safety inspections have the knowledge and tools to accurately identify workplace hazards. Increasing the 

timeliness of reporting workers’ compensation claims ensures injured employees’ medical and compensation 

costs are paid promptly. Emphasis will continue to be placed on ensuring employees’ timely use of our electronic 

workers’ compensation filing system to report injuries and illnesses. 

Office of Safety and Health’s Ergonomics 

Assistance Room held an Open House during 

DOL’s Safety Day. Here, Kim Ross, (left) of 

OASAM's Office of Safety and Health, 

demonstrates a variety of worksite devices that 

are used to improve and enhance worksite 

ergonomics, reduce worker injury, and provide 

accommodation options for return to 

employment for Pat C. Clark, OASAM. 

Photo credit: Max Krupka and Neshan 

Naltchayan 

Reducing lost time injury/illness cases 

results in an increase in productivity, 

enhanced responsiveness, and quality of 

service to the taxpayer because resources 

are not diverted to injured employees. 

DOL addresses workplace safety by equipping supervisors and employees with the knowledge they need to 

identify and eliminate unsafe working conditions and to promote safety management. In addition, DOL is 

developing an electronic, web-based comprehensive safety inspection checklist with corresponding training to 

ensure all persons who conduct annual safety inspections have the knowledge and tools to accurately identify 

workplace hazards. 

Increasing the timeliness of reporting workers’ compensation claims ensures injured employees’ medical and 

compensation costs are paid promptly. Emphasis will continue to be placed on ensuring employees use the 

Department’s electronic workers’ compensation filing system to report injuries and illnesses. Management will 

continue to emphasize timely workers’ compensation claims reporting in the coming years. 

Future Challenges 

DOL is continuing to use contract services to assist with the return to employment effort and implementing 

electronic hazard identification training to ensure accurate safety inspections. Current enhancements to DOL’s 

electronic Safety and Health Information System will ensure accurate injury/illness data. Using such existing data 

will assist management in targeting reduction of hazards that contribute to work related injuries and illnesses. 
Outcome Goal HR 

FY 2004 Performance and Accountability Report 141

Hire a High-Quality and Diverse DOL Workforce 

Performance Goal HR1 (OASAM) – FY 2004 

The right people are in the right place at the right time to carry out the mission of the Department. 

A. The DOL workforce is a prepared and competent workforce. 

B. The DOL workforce is a diverse workforce. 

Indicators 

DOL will graduate, place or certify 75% of employees from its management and leadership development 

programs; 

Competency assessment tool will be piloted and competency gap analysis completed for 10% of employees in 

mission-critical or supervisory occupations; 

Improvement will be realized in 25% of diversity indictors for professional and administrative occupations 

exhibiting under-representation in FY 2003; 

Continued improvement is realized in the extent to which diversity in the DOL workforce reflects the civilian 

labor force; and 

Diversity will be improved among management officials and supervisors. 

Program Perspective 

The Department is committed to recruiting, developing, and retaining a high-quality, diverse workforce that 

effectively meets changing mission requirements and program priorities. Through workforce analysis and 

planning, DOL identifies the human capital requirements to meet our organizational goals and needs, so that DOL 

has the right people with the right skills and competencies. 

Workforce planning is directed towards addressing current and projected staff shortages, assuring that employees 

have the skills critical to their current positions and are prepared to progress to higher levels of responsibility, and 

anticipating changes to staff and competency requirements. DOL focuses on succession management to address 

the impending exodus of senior level managers and employees minimizing the impact via succession planning 

programs such as the Senior Executive Service Development, Management Development, Mentoring, and MBA 

Outreach programs. 

The Department fully recognizes the importance of recruiting and maintaining a diverse workforce representative 

of the general civilian labor force. DOL continues to build upon its aggressive outreach and recruitment efforts to 

attract a highly skilled and diverse workforce including persons with disabilities and uses multiple hiring 

authorities and flexibilities, learning opportunities, and workplace flexibilities to maintain its current workforce. 

Results, Analysis and Future Plans 

The DOL workforce is a prepared and competent workforce. 

This target was exceeded for both indicators. Competency models have been completed for all 27 mission-critical 

occupations and a skills inventory tool is in place for assessing skill gaps. The Department is conducting a 

comprehensive skills inventory of employees in mission-critical occupations with 84.8 percent of employees 

completed and the remainder projected for completion by the end of FY 2005. DOL is building a strong cadre of 

trained Senior Executive and Management level employees to meet continuing leadership needs. Current 

leadership training programs produced 49 Senior Executive and 37 mid-level graduates prepared to fill leadership 

roles. Three MBA Fellows Program classes have hired 45 Fellows with business skills essential to DOL’s 

success and 118 employees have participated in the Mentoring Program. 

The DOL workforce is a diverse workforce. 

The target was exceeded for two of three indicators. Pockets of under-representation were identified in a number 

of the Department’s mission-critical occupations. At the end of FY 2003, DOL determined that pockets of underrepresentation existed in 57 categories, (e.g., Hispanic auditors). DOL improved in 18 categories, or 32 percent, 
Performance Section 

142 United States Department of Labor 

exceeding its target of 25 percent. Increases occurred in 29 percent of the total workforce diversity groups (target 

40 percent) and in 43 percent of the managers and supervisors groups (target 40 percent). The measure for total 

workforce diversity was impacted by employee separations from one of the groups late in the fiscal year. 

TOTAL Women White Black Hispanic Asian / 

P.I.

Native 

American/ 

Alaskan 

Native 

Persons 

with 

Disabilities 

Persons with 

Targeted 

Disabilities 

CLF 100% 46.6% 72.4% 11.2% 11.8% 3.8% 0.9% 6.0% 1.1% 

FY 16053 7971 10367 3887 1102 532 115 1019 190 

2000 100% 49.7% 64.6% 24.2% 6.9% 3.3% 0.7% 6.5% 1.2% 

16193 8119 10490 3899 1115 575 113 1076 196 FY 

2001 100% 49.9% 64.8% 24.1% 6.9% 3.6% 0.7% 6.6% 1.2% 

16,135 8,135 10,448 3,849 1,113 616 109 1,072 189 FY 

2002 100% 50.4% 64.8% 23.9% 6.9% 3.8% 0.7% 6.6% 1.2% 

16,155 8127 10,458 3,796 1,137 645 119 1,300 218 FY 

2003 100% 50.3% 64.7% 23.5% 7.0% 4.0% 0.7% 8.0% 1.3% 

15,708 7,899 10,150 3,691 1,098 655 114 1,988 206 FY 

2004 100% 50.3% 64.6% 23.5% 7.0% 4.2% 0.7% 12.7% 1.3% 

DOL will continue targeted recruitment at colleges, universities, and associations in FY 2005 as well as national 

level job fairs and conferences which have high representation of targeted groups, students with the skills we 

need, such as MBAs, and organizations and consortiums where the Department has had success in the past. To 

address retention, DOL will continue to offer succession-planning programs at the SES and mid-management 

levels and the formal mentoring program, which provide opportunities to close any skill gaps identified during the 

skills inventory process and offer workplace flexibilities. 

The DOL Online Opportunities Recruitment System (DOORS), to be fully implemented in FY 2005, is increasing 

the efficiency of the Department’s hiring system while at the same time simplifying the application process for 

applicants. DOORS, fully integrated with USAJOBS, is increasing the exposure of DOL’s job opportunities to a 

broader and more diverse audience, resulting in a higher quality of job applicants, reducing the time to fill a 

position, enabling more consistent and timely diversity reporting, and producing a significant reduction in the 

costs associated with the hiring process. 

Management Issues 

DOL has obtained Voluntary Early Out Authority (VERA) with 194 employees using the early-out authority. The 

Department has increased the use of hiring and retention flexibilities to include: 64 Career Intern and 69 Student 

Career Experience Program (SCEP) appointments, 21 Outstanding Scholars, 51 Recruitment Bonuses, 35 

Relocation Bonuses and Retention Allowances, and 13 Student Loan Repayments. The Department must 

determine the most effective means of reducing skill gaps identified as employees complete the Department’s 

mission-critical occupations skills inventory assessment tool. Retraining and career counseling must be provided 

to develop the new skills necessary for employees impacted by competitive sourcing decisions. 
Outcome Goal HR 

FY 2004 Performance and Accountability Report 143

Reduce the Rate of Lost Production Days 

Performance Goal HR2 (OASAM) – FY 2004 

Reduce the rate of lost production days due to work related injuries and illnesses by two percent.t 

Indicators 

Decrease rate of lost production days by two percent. 

Program Perspective 

This goal is one of four that DOL uses to measure its successful implementation of the Safety, Health, and Return 

to Employment (SHARE) Presidential Initiative led by the Occupational Safety and Health Administration and 

the Office of Workers’ Compensation Programs. Reducing the number of days away from work due to work 

related injuries or illnesses results in reduced workers’ compensation costs and increased productivity of DOL 

employees. 

Results, Analysis and Future Plans 

DOL’s FY 2004 Lost Production Days Rate goal is 40.5 days lost per 100 employees. As of third quarter FY 

2004, the Department is achieving this goal with a rate of 37.3, and we are on track to achieve this goal for the 

third straight year. DOL organized an interagency workplace safety group, which developed and implemented 

several recommendations: contract with a vendor to provide return to employment assistance for workers’ 

compensation coordinators in developing return to employment strategies; increase the use of injured workers to 

fill limited or light duty vacant positions; implement Agency safety and workers’ compensation program reviews; 

and enhance the Safety and Health Information System (SHIMS) to include expanded reporting capabilities. In 

addition, quarterly reports are provided to DOL Agencies on their progress towards achieving their SHARE goals. 

In FY 2005, DOL is implementing Voluntary Protection Programs as a pilot project at select worksites. 

Management Issues 

DOL has limited resources to dedicate to hiring and training workers’ compensation coordinators. Therefore, we 

are continuing to use contract services to assist with the return to employment effort. DOL is actively 

encouraging Agencies to use workplace accommodation flexibilities to return employees to work. 
Performance Section 

144 United States Department of Labor 

Reduce the Illness and Injury Rate of DOL Employees 

Performance Goal HR3 (OASAM) – FY 2004 

Reduce the total case rate for injuries and illnesses for DOL employees by three percent. (Total number of cases 

reported to the Office of Workers’ Compensation Programs.) 

Indicators 

Decrease total case rate of illnesses and injuries by three percent. 

Program Perspective 

This goal is one of four that DOL uses to measure its successful implementation of the Safety, Health, and Return 

to Employment (SHARE) Presidential Initiative led by the Occupational Safety and Health Administration and 

the Office of Workers’ Compensation Programs. Reducing the total number of injury/illness cases results in a 

decrease in workers’ compensation costs and an increase in productivity. 

Results, Analysis and Future Plans 

DOL’s FY 2004 Total Case Rate goal is 2.43 total cases per 100 employees. As of third quarter FY 2004, we are 

achieving this goal with a rate of 1.72. We are on track to achieve this goal for the third straight year. DOL’s 

Office of the Assistant Secretary for Administration and Management (OASAM) strives to reduce work related 

injuries and illnesses by conducting accident analysis and focusing on hazard recognition and control, emergency 

preparedness, and ergonomics. The Department has developed a standardized hazard reporting protocol and uses 

its web page (LaborNet) to effect electronic hazard reporting. 

Management Issues 

Current enhancements to DOL’s electronic Safety and Health Information System will ensure accurate 

injury/illness data. Using such existing data will assist management in targeting limited resources towards 

reducing and/or eliminating hazards that contribute to work related injuries and illnesses. 
Outcome Goal HR 

FY 2004 Performance and Accountability Report 145

Reduce the Lost Time Illness and Injury Case Rate of DOL Employees 

Performance Goal HR4 (OASAM) – FY 2004 

Reduce the lost time case rate for injuries and illnesses for DOL employees by three percent. (Number of 

injury/illness cases reported to the Office of Workers’ Compensation Programs that resulted in days away from 

work.) 

Indicators 

Decrease lost time case rate of illnesses and injuries by three percent. 

Program Perspective 

This goal is one of four that DOL uses to measure its successful implementation of the Safety, Health, and Return 

to Employment (SHARE) Presidential Initiative led by the Occupational Safety and Health Administration and 

the Office of Workers’ Compensation Programs and is a new goal for FY 2004. Reducing lost time injury/illness 

cases results in an increase in productivity, enhanced responsiveness, and quality of service to the taxpayer 

because resources are not diverted to injured employees. 

Results, Analysis and Future Plans 

DOL’s FY 2004 Lost Time Case Rate goal is 1.19 lost time cases per 100 employees. As of third quarter FY 

2004, we are achieving this goal with rate of 1.11. We are on track to achieve this goal in FY 2004.29 DOL 

addresses workplace safety by equipping supervisors and employees with the knowledge they need to identify and 

eliminate unsafe working conditions and to actively promote effective safety management. In addition, DOL is in 

process of developing an electronic, web-based comprehensive safety inspection checklist with corresponding 

training to ensure all persons who conduct annual safety inspections have the knowledge and tools to accurately 

identify workplace hazards. 

Management Issues 

DOL has limited resources to hire and train occupational safety and health specialists. Therefore, DOL is 

implementing electronic hazard identification training to ensure accurate safety inspections. In addition, DOL is 

conducting Job Corps Center annual safety reviews by contract to ensure consistency and uniformity. 

 

29 Performance results for this goal are estimated. The estimating methodology has been reviewed by the Department of 

Labor’s Office of Inspector General. The actual performance results for this goal will be published in the FY 2006 Budget. 
Performance Section 

146 United States Department of Labor 

Make Timely Filings of DOL Employee Injury and Illness Cases 

Performance Goal HR5 (OASAM) – FY 2004 

Improve the timeliness of filing notices of injuries and illnesses with the Office of Workers’ Compensation 

Programs. 

Indicators 

Increase in timeliness of reporting new injuries and illnesses by five percent. 

Program Perspective 

This goal is one of four that DOL uses to measure its successful implementation of the Safety, Health, and Return 

to Employment Presidential (SHARE) Initiative led by the Occupational Safety and Health Administration and 

the Office of Workers’ Compensation Programs. Increasing the timeliness of reporting workers’ compensation 

claims ensures injured employees’ medical and compensation costs are paid promptly. 

Results, Analysis and Future Plans 

DOL’s FY 2004 timeliness goal is to have 88 percent of claims filed on time. As of third quarter FY 2004, we are 

achieving an 88.1 percent average in reporting injuries and illnesses to OWCP on time. We are on track to 

achieve this goal for the third straight year.30 Emphasis will continue to be placed on ensuring employees use the 

electronic workers’ compensation filing system to report injuries and illnesses. Implementation of the Safety and 

Health Information Management System (SHIMS) in FY 2001 has ensured prompt accurate claims filing and 

greatly enhanced the Department’s timeliness over the past three years. Management will continue to emphasize 

timely workers’ compensation claims reporting in the coming years. This will, in turn, ensure DOL continues to 

meet the ever increasing timeliness goal. 

Management Issues 

The Employment and Training Administration’s (ETA) Job Corps Program accounts for the greatest number of 

injuries and illnesses reported to the Office of Workers’ Compensation Programs. Many of these Job Corps 

Centers are located in remote areas and, therefore, have difficulty transmitting data electronically. By 

restructuring the SHIMS electronic notification process to include the Job Corps National Office and emphasis on 

training in SHIMS use by ETA management, the timeliness of injury/illness claims reporting has been greatly 

improved. DOL anticipates that the timeliness of injury/illness reporting will continue to improve with these 

enhancements in place. 

 

 

30 Performance results for this goal are estimated. The estimating methodology has been reviewed by the Department of 

Labor’s Office of Inspector General. The actual performance results for this goal will be published in the FY 2006 Budget. 
Outcome Goal PR 

FY 2004 Performance and Accountability Report 147

Outcome Goal PR – Improve Procurement Management 

For FY 2004, the Department’s leadership determined that the most effective way to demonstrate it has improved 

procurement management is to more thoroughly introduce market forces into the Department’s purchase of goods 

and services. Previously, the vast majority of the Department’s administrative and management activities were 

provided by an entirely Federal workforce. Now, for those activities that the Federal Activities Inventory Reform 

(FAIR) Act inventory determines are available in the commercial marketplace, Federal and commercial providers 

compete to determine the most cost-effective means of service delivery. This approach is called competitive 

sourcing. Additionally, the previous methods for compensating the Department’s contractors included the level 

of effort, the kinds of processes, and the skills of the contractors. Through Performance-Based Service 

Contracting (PBSC), contractors are instead compensated strictly according to the results they produce. PBSC 

aligns the Department’s desire to receive high quality and completed services with contractors’ incentives to 

increase revenue. 

The Department’s use of competitive sourcing and PBSC demonstrate that its purchase of services relies on the 

market forces of competition and incentives. Their use also demonstrates improved procurement management, as 

the Department can now purchase equivalent or better services for less money. The table below capsulizes 

performance goals and achievements supporting this outcome goal. 

Goal (Agency) - Period 

Goal Statement [Achievement] Performance Summary 

PR1 (OASAM) – FY 2004 

Complete competitions on not less than 15 percent of the FTE listed 

on DOL’s 2000 Federal Activities Inventory Reform (FAIR) Act 

inventory. [Substantially Achieved]

The target was substantially reached. 

DOL’s cumulative competitions for FTE 

listed in its 2000 FAIR Act inventory 

approached 14 percent. 

PR2 (OASAM) – FY 2004 

Award contracts over $25,000 using Performance-Based Service 

Contracting (PBSC) techniques for not less than 40 percent of total 

eligible service contracting dollars. [Achieved]

The target was reached. The Department 

used PBSC techniques for 67 percent of 

total eligible service contracting dollars. 

Results Summary 

DOL substantially achieved its FAIR Act inventory goal by nearly reaching its target to compete no less than 15 

percent of the FTE listed on the inventory. The Department held competitions for almost 14 percent of these 

FTE. DOL awarded 67 percent of total eligible service contracting dollars (for contracts over $25,000) using 

PBSC techniques; the target was 40 percent. 

Future Challenges 

DOL will continue to ensure that FAIR Act competitions are conducted in accordance with applicable obligations 

between labor and management and existing personnel regulations. While this presents a challenge, it is 

surmountable if statutory provisions are properly followed and if DOL management works closely with unions 

and human resources staff. DOL has assigned human resource specialists to assist competitive sourcing staff in 

this effort. Another challenge is the substantial upfront costs of public-private competitions. Given the lasting 

savings the competitions will yield, however, these initial expenditures are really investments rather than costs; 

especially considering that the resulting savings can be used for other program improvements. 

The challenge associated with PBSC is developing expertise required to develop and oversee performance-based 

contracts. DOL will continue offer training in these areas so that PBSC will deliver on its promise to lower costs 

while improving services. 
Performance Section 

148 United States Department of Labor 

Complete FAIR Act Competitions

Performance Goal PR1 (OASAM) – FY 2004 

Complete competitions on not less than 15 percent of the FTE listed on DOL’s 2000 Federal Activities Inventory 

Reform (FAIR) Act inventory. 

Indicators 

Percentage of commercial FTE on the Department’s 2000 FAIR Act inventory included in completed 

competitions or direct conversions; 

Percentage of Direct Conversions;31 and 

Percentage of Completed A-76 Competitions.

Program Perspective 

Competitive sourcing is one of five government wide initiatives of the President's Management Agenda. Under 

competitive sourcing, executive agencies identify activities that are available in the commercial marketplace but 

that are currently performed by Federal employees. Federal and commercial providers then compete to determine 

the most cost-effective means of service delivery. 

The government spends billions of dollars every year for commercial services provided by government 

employees. Competition can easily result in savings of an average of 30 percent, whether government employees 

or private sector employees ultimately do the work. These savings can be re-invested in pursuit of the agency 

mission. This means there is enormous potential for more productive use of available funding, with no reduction 

in quality of service. It makes sense to periodically evaluate whether or not any organization is organized in the 

best possible way to accomplish its mission. This self-examination is the fundamental purpose public-private 

competition is intended to achieve. For FY 2004, DOL established a target of competing 15 percent of its Federal 

Activities Inventory Reform (FAIR) Act inventory. 

Results, Analysis and Future Plans 

The goal was substantially achieved. By the end of FY 2004, DOL had competed or directly converted to 

contract 386 commercial FTE, constituting almost 14 percent of commercial FTE on DOL’s 2000 FAIR Act 

inventory. This included almost 100 FTE that were competed in six streamlined and standard competitions in FY 

2004. The full implementation of these market-based initiatives will significantly enhance the effectiveness and 

efficiency of the Department of Labor’s (DOL) service to all Americans. 

DOL has also developed plans for competition of at least an additional 376 FTE in FY 2005, and for competition 

of virtually all of DOL’s commercial-competitive functions by the end of FY 2007, consistent with guidance from 

the Office of Management and Budget. To ensure that DOL’s scheduled competitions are completed within the 

given timeframes in the coming years, DOL will continue to: 

• establish specific, detailed competition schedules; 

• monitor competition progress to ensure timely completion; 

• designate individuals within DOL agencies who are responsible for competition progress; and 

• make technical assistance available to managers and teams involved in competitions and other 

competitive sourcing-related activities. 

 

31 Direct Conversion of work to the private sector is no longer allowed under OMB Circular A-76, Performance of 

Commercial Activities. 
Outcome Goal PR 

FY 2004 Performance and Accountability Report 149

Management Issues 

The performance data for this goal are extremely reliable. The indicator is the percentage of public-private 

competitions completed, and the completion date of a competition is reflected in an announcement on the website 

FedBizOpps.gov, which indicates whether the award went to the Federal government or to a commercial provider. 

Because Federal agencies will always have a need to explore ways to better accomplish their missions and stretch 

their budgets, competitive sourcing will continue to serve as a valuable tool for DOL management. However, 

DOL must continue to recognize and address challenges and risks to full implementation of its competitive 

sourcing plans. Ensuring that competitions are conducted in accordance with applicable obligations between 

labor and management and existing personnel regulations could present a challenge. However, this challenge is 

controllable if statutory provisions are properly followed and if DOL management utilizes effective practices, 

such as working closely with unions and human resources staff. DOL has assigned human resource specialists to 

assist competitive sourcing staff in this effort. 

Additionally, due to the substantial upfront costs of public-private competitions, particularly for the expertise of 

outside contractors, DOL must continue to marshal necessary resources to support competitions. Over time, 

agencies will begin to realize the savings resulting from competitions, which can be used not only to support 

additional competitions but also can be used for other program improvements.
Performance Section 

150 United States Department of Labor 

Ensure Performance Results Are Achieved Through Contracts

Performance Goal PR2 (OASAM) – FY 2004 

Award contracts over $25,000 using Performance-Based Service Contracting (PBSC) techniques for not less than 

40 percent of total eligible service contracting dollars. 

Indicators 

Dollar Value of Performance-Based Contracts over $25,000 awarded. 

Program Perspective 

In March 2001, the Office of Management and Budget (OMB) established a performance-based servicecontracting goal for Federal agencies. This goal is based on the goals established under the Government-Wide 

Acquisition Performance Measurement Program, developed by the Procurement Executives Council. 

Performance-based service contracting methods result in procurement efficiencies by ensuring contractors are 

paid for the actual level of service that the government receives. Performance-based contracts describe 

requirements in terms of results rather than methods of performance of work; emphasizing objective, measurable 

performance requirements and quality standards in developing statements of work, selecting contractors, 

determining contract type and incentives, and performing contract administration. Performance-based service 

contracting is a tool that offers improved contractor performance and mission attainment, significant cost savings, 

and implementation of the principles of streamlining and innovation of the President’s Management Agenda as 

well as the Government Performance and Results Act. 

Since 2001, DOL has had a performance goal to expand the application of performance-based service contracting 

techniques for DOL contracts. The emphasis is to pay for the results of a contract rather than the effort put forth 

by the contractor. Very recently, OMB directed all Federal agencies—for FY 2005—to award contracts over 

$25,000 using performance-based service contracting techniques for not less than 40 percent of total eligible 

service contracting dollars. DOL has already exceeded this new government-wide goal. The $25,000 threshold is 

a practical criterion, because Federal agencies report on contracts above that amount through the General Services 

Administration’s Federal Procurement Data System, which will be used by OMB in determining compliance with 

its FY 2005 directive. 

Results, Analysis and Future Plans 

The goal was achieved. As of the end of the 3rd quarter of FY 2004, DOL had used performance-based service 

contracting techniques for 67 percent of total eligible service contracting dollars. The total obligations of 

performance-based contracts totaled more than $294 million. DOL will continue to emphasize converting and 

awarding eligible service contracts over $25,000 using PBSC techniques. DOL will also monitor the dollar value 

of PBSC contracts to ensure attainment of the PBSC goal. 

 

DOL has encouraged the use of performance-based contracts DOL-wide by providing high-level briefings for 

senior staff, by scheduling relevant training for procurement and program staff, and by establishing an annual 

performance goal DOL-wide. DOL will continue to include the use of performance-based service contracting 

techniques as a performance goal, increasing every year the percentage of contract dollars to be awarded using 

those techniques. The ultimate objective is for DOL to put in place performance-based service contracts, as 

appropriate, for all eligible DOL contracting dollars. 

Management Issues 

The data source for this goal is the Federal Procurement Data System. The performance data are reliable, as the 

information is collected manually from the contract specialist or/and the contracting officer at the time the 

procurement action is completed. A procurement analyst in the Department’s procurement policy office validates 

the data before it is transmitted to the Federal Procurement Data Center. 

The largest acquisition program at the Department of Labor is the Employment and Training Administration’s Job 

Corps Program. Approximately 70 percent of DOL’s acquisition dollars support Job Corps contracts. These 

acquisitions are for the operation and maintenance of more than 110 Job Corps Centers around the Country, and 

their related outreach and employment assistance services. Job Corps Center contracts were converted to PBSC 
Outcome Goal PR 

FY 2004 Performance and Accountability Report 151

by modifying the fee structure to incorporate incentives and penalties for the contractor based on achievement of 

measurable goals including, but not limited to, the number of students entering employment and student retention 

in the program. By the end of FY 2005, DOL anticipates converting a majority of the Job Corps contracts to 

PBSC as the existing contracts expire. 

The remaining challenge will be to ensure that other DOL agencies expand their use of performance-based service 

contracting techniques. DOL will continue to facilitate high-level support for the performance-based service 

contracting initiative, and will offer additional training sessions to contracting and program management 

personnel throughout the Department.
Performance Section 

152 United States Department of Labor 

Outcome Goal FM – Enhance Financial Performance through Improved 

Accountability 

The Department of Labor is committed to providing timely and accurate financial information to DOL managers 

and stakeholders, and to ensuring that our business processes are efficient and customer-driven. Here in DOL the 

collaboration of program and financial managers is key to our ability to manage programs successfully and 

provide accountability for the resources entrusted to us as a Department. DOL has made strides relative to the 

President's Management Agenda, including our progress in improving the accuracy and timeliness of financial 

information and integrating financial and performance management to support day-to-day operations across DOL. 

The Office of the Chief Financial Officer (OCFO) provides integrity and stewardship of the Department’s 

financial resources. OCFO provides comprehensive direction to all DOL agencies on financial management 

policies arising from legislative and regulatory mandates. FFMIA requires agencies to implement and maintain 

financial management systems that substantially comply with Federal financial management system requirements, 

applicable Federal accounting standards, and the United States Government Standard General Ledger at the 

transaction level. The Government Management Reform Act (GMRA) requires each agency to prepare and 

submit audited financial statements. The financial statements must comply with the Office of Management and 

Budget’s Bulletin 01-09, Form and Content of Agency Financial Statements, as amended. 

In addition, OCFO provides guidance, assistance, and oversight in implementing the Cost Analysis Manager 

(CAM) in each agency. OCFO specifically provides training to agencies on how to use the CAM cost model to 

support day-to-day operations across DOL. OCFO also provides assistance to agencies on how to maintain and 

update CAM within each agency so that it can provide up-to-date and useful information. 

Goal (Agency) - Period 

Goal Statement [Achievement] Performance Summary 

FM1 (OCFO) – FY 2004 

Improve the accuracy and timeliness of 

financial information. 

[Substantially Achieved]

DOL received its eighth unqualified audit opinion on its consolidated 

financial statements from the Office of Inspector General. All 17 DOL 

financial management systems substantially comply with the FFMIA 

standards. We also received the Certificate of Excellence in Accountability 

Reporting for the fourth consecutive year. 

FM2 (OCFO) – FY 2004

Integrate financial and performance 

management to support day-to-day 

operations across DOL. [Achieved]

OCFO developed a Department wide managerial cost accounting capability, 

completing cost models for 15 DOL agencies, and conducting briefings and 

training for agency heads and executive staff. 

Results Summary 

Of the two performance goals listed, DOL achieved one and substantially achieved the other. The Department 

received its eighth unqualified audit opinion on its consolidated financial statements from DOL’s Office of 

Inspector General. DOL has reviewed and determined that all 17 financial management systems substantially 

comply with the FFMIA standards. In addition, the Departments continues to comply with the Federal Managers’ 

Financial Integrity Act (FMFIA) ensuring that its’ resources are sufficiently safeguarded. DOL issued its annual 

financial statements, related notes, and supplemental information by the statutory deadline and also received the 

Certificate of Excellence in Accountability Reporting for the fourth consecutive year. 

OCFO developed a Department-wide managerial cost accounting capability. In FY 2004, cost models were 

completed for 15 DOL agencies. These models define and cost, on a total and per unit basis, the significant 

outputs of each agency’s major programs. CAM results briefs were provided for agency heads and executive 

staff. OCFO will continue work with agencies to fully deploy a managerial cost accounting system. Training for 

agency managers on using CAM for management decision-making is planned. OCFO expects to continue to 

improve agency cost models by refining resource and activity assignments, adding and revising outputs, 

improving allocation of overhead and support costs, and further mapping of outputs to performance goals. 

Automation of data collection and standard report preparation are also planned. 

 
Outcome Goal FM 

FY 2004 Performance and Accountability Report 153

To improve financial performance under 

the President’s Management Agenda, 

DOL partners with the Social Security 

Administration to share data that will 

reduce erroneous benefit payments in the 

Unemployment Insurance Program. 

Pictured are officials from DOL and the 

Social Security Administration signing a 

partnership agreement. 

Photo credit: OCFO 

Future Challenges 

To meet the challenges of the 21st Century work environment, DOL recognizes that it must continue to be a 

proactive, analytically-driven organization that leverages technology to provide the Department’s leaders with the 

financial information necessary to make decisions about performance of their programs. 

In FY2005, OCFO will lead the effort to enhance managerial cost accounting data models, improve automated 

reporting capability, improve interface of agency program systems with CAM, integrate agency cost models on a 

department level, and provide technical support to agency managers. 
Performance Section 

154 United States Department of Labor 

Maintain the Integrity and Stewardship of the Department’s Financial Resources

Performance Goal FM1 (OCFO) – FY 2004 

Improve the accuracy and timeliness of financial information. 

Indicators 

Maintain an unqualified (clean) audit opinion with no material internal control weaknesses; 

Meet new requirements and standards in accordance with the Federal Financial Management 

Improvement Act (FFMIA) and Federal Managers’ Financial Integrity Act (FMFIA); 

Issue FY 2003 consolidated financial statements by February 1, 2004; 

Issue quarterly financial statements within 45 days after the close of each quarter; and 

Identify and correct processes and systems that contribute to erroneous benefit overpayments. 

Program Perspective 

OCFO provides comprehensive direction to all DOL agencies on financial management policies arising from 

legislative and regulatory mandates. FFMIA requires agencies to implement and maintain financial management 

systems that substantially comply with Federal financial management system requirements, applicable Federal 

accounting standards, and the U.S. Government Standard General Ledger at the transaction level. The 

Government Management Reform Act (GMRA) requires each agency to prepare and submit audited financial 

statements that comply with the Office of Management and Budget’s Bulletin 01-09, Form and Content of 

Agency Financial Statements, as amended. 

Results, Analysis and Future Plans 

This goal was substantially achieved. The Department received its eighth unqualified audit opinion on its 

consolidated financial statements. This opinion provides assurance that no material weaknesses or inadequacies 

in internal controls would affect the Department’s financial statements. All 17 DOL financial management 

systems substantially comply with the FFMIA standards. In addition, DOL continues to comply with the Federal 

Managers’ Financial Integrity Act (FMFIA), ensuring that its resources are sufficiently safeguarded. DOL issued 

its annual financial statements, related notes, and supplemental information by the statutory deadline, and issued 

all quarterly statements 45 days after the close of the first quarter and 21 days after each quarter thereafter. The 

Department also received the Certificate of Excellence in Accountability Reporting for the fourth consecutive 

year. During FY 2005, DOL will continue implementing a new core accounting system by completing the design 

phase and using live data. 

DOL complying with the Improper Payments Information Act (IPIA) and strengthening quality control for all 

DOL payments not subject to the Act’s reporting requirements. OCFO developed an inventory of programs 

susceptible to significant risk as defined by IPIA, analyzed existing improper payment mitigation activities vs. 

IPIA requirements for these at-risk programs and developed a strategy to bridge the gap. The strategy includes 

developing relevant sampling criteria, sample selection within risk programs, improper payment assessment, and 

estimation. For many years, DOL has measured the level of erroneous payments in the Unemployment Insurance 

(UI) program, analyzed the causes and identified the states with the most overpayments. To help states more 

easily confirm the identities of UI claimants, we arranged for the states and the Social Security Administration to 

exchange data, and for states to increase use of their own state new hire data. In FY 2005 and beyond, through 

the implementation of root cause analysis and corrective actions, such as the UI data exchange with SSA to permit 

real-time social security number validation, we expect to realize significant reductions in improper payments. 

Management Issues 

DOL is challenged with the task of implementing a new core accounting system that replaces the existing 14-year 

old ‘Department of Labor Accounting and Related Systems’ (DOLAR$). DOL will fully test the system before, 

during, and after launch; perform validation and verification of data transferring from the old to the new 

replacement system; to ensure the system fully meets Federal financial system requirements and users’ needs. 
Outcome Goal FM 

FY 2004 Performance and Accountability Report 155

Maintain the Integrity and Stewardship of the Department’s Financial Resources 

Performance Goal FM2 (OCFO) – FY 2004 

Integrate financial and performance management to support day-to-day operations across DOL. 

Indicators 

Interfaced Department Accounting and Agency program systems provide cost-based performance data; and 

Develop and disseminate cost accounting policy and training materials to address issues raised in prior year 

survey. 

Program Perspective 

The Office of the Chief Financial Officer (OCFO) provides guidance, assistance, and oversight in implementing 

the Cost Analysis Manager initiative (CAM) in each agency. OCFO specifically provides training to agencies on 

how to use the CAM cost model to support day-to-day operations across DOL. OCFO also provides assistance to 

agencies on how to maintain and update CAM within each agency so that it can provide up-to-date and useful 

information. 

Results, Analysis and Future Plans 

The goal was achieved. OCFO undertook the development of a Department-wide managerial cost accounting 

capability. In FY 2004, cost models were completed for 15 DOL agencies including ETA, ESA OWCP, MSHA, 

OSHA, EBSA, VETS, ODEP, WB, ILAB, OIG, ASP, OASAM, SOL (BLS already has a cost accounting 

capability). These cost models, which are the core of the CAM system, combine financial information supplied 

by the Department’s core accounting system (DOLAR$), along with labor distribution and workload data to 

develop activity and output costs for agencies. 

The CAM system provides cost-based performance information, including unit cost information on the significant 

outputs of each agency’s major programs, as well as the underlying activity and resource costs. Unit cost 

information can be used to compare performance among districts, regions, programs, etc. For example, the 

MSHA Coal Mine Safety and Health program will compare the cost of inspections across districts, allowing 

determination of which districts have higher cost activities and outputs. Further investigation will ensue to 

discover and address causes. As cost models are updated in the future, the CAM system will also allow agencies 

to use cost information to measure performance over time. In some instances, cost models include the capability 

to cost agency performance goals. 

CAM results briefs were provided for agency heads and executive staff. In FY 2004, approximately 50 

employees representing all the participating agencies were trained in managerial cost accounting principles and 

methodology; these are in addition to approximately 130 employees trained in FY 2003. Additional training is 

planned for FY 2005 to train agency managers on how to analyze cost information and use it for decision-making. 

In addition, designated agency staff will be trained on how to update and maintain the models in the CAM system. 

Software to support periodic updates of the cost models has been selected and deployed to agency desktops. 

In FY2005, OCFO anticipates continuing to work with agencies to promulgate adoption of managerial cost 

accounting. OCFO expects to continue to improve agency cost models by refining resource and activity 

assignments, adding and revising outputs, improving allocation of overhead and support costs, and further 

mapping of outputs to performance goals. Automation of data collection (from DOLAR$ core accounting system, 

agency workload and time tracking systems) and standard report preparation are also planned. 

Management Issues 

In FY2005, OCFO will lead the effort to enhance managerial cost accounting data models, improve automated 

reporting capability, improve interface of agency program systems with CAM, integrate agency cost models on a 

department level, and provide technical support to agency managers. 
Performance Section 

156 United States Department of Labor 

Outcome Goal IT – Provide Improved, Secure IT Service to Citizens, Businesses, 

Government, and DOL Employees to Improve Mission Performance 

Effective management of information technology is critical to the success of nearly every facet of DOL’s 

programs and operations and corresponds to the E-Government initiative of the President’s Management Agenda. 

DOL strives to use information technology to deliver better service to citizens, businesses, other governments, our 

federal partners and employees. To meet our goals, we are implementing a comprehensive, integrated EGovernment framework, taking full advantage of the rapidly changing technological environment and to adapt to 

changes brought forth by the digital economy. 

DOL is a recognized leader in integrating IT capital planning and enterprise architecture activities with broader 

Federal and Departmental priorities. This integrated approach to managing our information technology portfolio 

enables us to identify future environments and to ensure IT remains closely aligned with our mission, goals, and 

objectives. DOL will continue to lead the GovBenefits Presidential Priority Initiative and participate actively in 

implementing the Federal E-Government Strategy by partnering with other agencies. 

Goal (Agency) – Period 

Goal Statement [Achievement] Performance Summary 

IT1 (OASAM) – FY 2004 

E-Government – Utilizing Technology to 

Improve Service and Efficiency 

[Not Achieved] 

The system was implemented in both the National and Regional Offices for 14 

DOL component agencies. Substantial progress was also achieved toward the 

interface with GSA Advantage. Final testing is underway for on-line shopping, 

which will be available by the end of September 2004. DOL did not reach its 

GPEA target of automating 100 percent of designated manual processes.

IT2 (OASAM) – FY 2004 

Improve the performance of the 

Department’s Cyber 

Security Program in accordance with the 

Federal Information Security 

Management Act (FISMA). [Achieved] 

The Department reached its Cyber Security Program indicator targets, 

exceeding projections regarding System Tests and Evaluations and internal 

Computer Security Incident Response Reporting. 

IT3 (OASAM) – FY 2004 

Improve organizational performance and 

effective information management 

through the use of the Departmental IT 

Capital Planning Investment Control 

process. [Achieved] 

All targets were reached. Rollout and migration of the Department’s new tool 

for electronic capital planning and investment management was achieved. 

Agencies used the tool to prepare their FY 2006 IT budget submissions. DOL 

reached its target of initiatives operating within 10 percent of cost, schedule, and 

technical performance parameters. DOL also reached its target for 95 percent of 

major IT initiatives completed during FY 2004 to deliver intended benefits. 

Results Summary 

IT Goals 2 and 3 were achieved, while IT Goal 1 was not achieved. We continue to plan, acquire, and implement 

new information technology, business solutions, services and capabilities. Our now-operational web-based 

e-procurement system (EPS) provides a comprehensive toolset for extended acquisition capabilities. It takes 

advantage of technological advances in order to streamline processes, improve customer service, and reduce costs. 

Additionally, EPS provides more reliable and accurate department-wide procurement-related financial 

information. Internal factors impacting the implementation include interfaces with the new DOL property system. 

The Department’s Directory Service will automate data reconciliation and make information in existing 

directories accessible and re-useable even when the database formats differ. The design calls for the 

implementation of a metadirectory capable of pulling data from and distributing it to multiple directories based on 

defined business rules. This capability, after integration into the department’s myriad systems, will eliminate 

mismatches caused when similar information is manually entered into multiple databases. A metadirectory 

should also eliminate redundant work in maintaining DOL’s various electronic directories. 

Future Challenges 

DOL continues to plan, acquire, and implement new information technology, business solutions, services and 

capabilities, and will soon fully implement an Earned Value Management System to better manage IT projects 

while in development. 
Outcome Goal IT 

FY 2004 Performance and Accountability Report 157

Make DOL an E-Government Model 

Performance Goal IT1 (OASAM) – FY 2004 

E-Government - Utilize Technology to Improve Service and Efficiency 

Indicators 

Automate 100 percent of the manual processes designated under GPEA; 

Implement the web-based e-procurement system (EPS) to seven DOL component agencies; and 

Establish an Enterprise-wide Directory Service. 

Program Perspective 

The web-based e-procurement system (EPS) provides a comprehensive toolset for extended acquisition 

capabilities, by taking advantage of technological advances in order to streamline processes, improve customer 

service, and reduce costs. EPS provides more reliable and accurate department-wide procurement-related 

financial information. The Department’s Directory Service will automate data reconciliation and make 

information in existing directories accessible and re-useable even when database formats differ. The design calls 

for the implementation of a metadirectory capable of pulling data from and distributing to multiple directories 

based on defined business rules. This will eliminate mismatches caused by manual data entry into multiple 

databases, and alleviate directory administration burdens. 

Results, Analysis and Future Plans 

This goal was not achieved. DOL reached the web-based (EPS) target, and the system was implemented in both 

the National and Regional Offices in 14 DOL component agencies; the target was for implementation in seven 

agencies. DOL also completed interfacing EPS with ‘GSA Advantage’. Our target to establish an enterprisewide directory services was reached. The directory service, with Windows 2003 Active Directory as its 

foundation, has moved from its interim design in April 2003 to the target design. This phase of the initiative is 

fully compliant with the Department’s System Development Life Cycle Management, and received its Authority 

to Operate (ATO) from the Department’s Chief Information Security Officer in July 2004. Achieving this 

indicator simplifies and unifies DOL’s many directory functions, including email services. Our GPEA indicator 

remained at mid-year status of 93 percent, failing to reach the 100 percent target.

Performance Goal IT1 (OASAM)

E-Government – Utilizing Technology to Improve Service and Efficiency 

Result Target * 

Automate 100% of the Designated GPEA Manual Processes. 93 % 100% N 

Implement Web-based EPS in seven DOL component agencies. 14 7 Y 

Establish an Enterprise-wide Directory Service (EDWS). Y Y Y 

*Indicator target reached = (Y), substantially reached = (S) or not reached (N) 

Management Issues 

Performance data for this performance goal is based on internal tracking activities for progress on E-Government 

initiatives, E-Procurement Implementation, and E-Government Workforce efforts. DOL monitors these activities 

and produces quarterly progress reports. Internal factors impacting the implementation of the EPS include 

interfaces with the new DOL property system. Also, management will need to focus on interfacing the new 

property system and EPS with the new financial system. The complexity of the interface and its ability to enable 

some of the EPS functionality will drive the costs and timing. 
Performance Section 

158 United States Department of Labor 

Make DOL an E-Government Model 

Performance Goal IT2 (OASAM) – FY 2004 

Improve the performance of Department’s Cyber Security Program in accordance with the Federal Information 

Security Management Act (FISMA). 

Indicators 

Ensure that 95 percent of DOL’s sensitive systems have been periodically assessed for risk and magnitude of 

harm that might result from unauthorized access; 

Ensure that at least 60 percent of all weaknesses documented in the FY 2004 POA&Ms are closed or on schedule; 

Ensure that at least 90 percent of all DOL sensitive systems are fully certified and accredited during FY04; 

Ensure that at least 98 percent of all DOL employees and contractors receive annual security awareness training; 

Ensure that System Test and Evaluation has been conducted on at least 85 percent of DOL’s sensitive systems; 

Ensure that at least 50 percent of DOL agencies respond to DOLCSIRC advisories in accordance with the 

procedures in the DOL Computer Security Handbook; 

Ensure that at least 95 percent of all DOL sensitive systems have contingency plans; and 

Ensure that at least 50 percent of the contingency plans have been tested. 

Program Perspective 

The Department is faced with the increasingly difficult challenge of protecting its automated information 

resources given the ever-increasing number of IT security threats. DOL’s Cyber Security Program’s purpose is to 

identify and afford security protections. These protections are commensurate with the risk and magnitude of the 

harm resulting from the loss, misuse, or unauthorized access to, or modification of information collected or 

maintained by the Department. Protecting the Department’s critical IT resources requires the adoption of 

reasonable precautions for securing its systems and networks. It also requires quick and effective response if 

system and network security defenses are breached. To that end, the Department’s Cyber Security Program must 

be one that is comprehensive and inclusive of internal policies and guidelines that ensure the integrity, 

availability, confidentiality and security of its operations and assets. 

In providing the protections mentioned above, the Cyber Security Program must provide an effective means for 

measuring and enhancing its information security program performance and must ensure its compliance with the 

Federal information Systems Management Act (FISMA). 

 

Results, Analysis and Future Plans 

DOL achieved its Cyber Security Program performance goal. DOL will reach targets for system tests and 

evaluations and for internal computer security incident response reporting. 

Performance Goal IT2 (OASAM)

Improve the performance of Department’s Cyber Security Program in accordance with the Federal Information Security 

Management Act (FISMA) 

Result Target * 

1. Percent of DOL’s sensitive systems that have been periodically assessed for risk and 

magnitude of harm that might result from unauthorized access. 

95% 95% Y 

2. Percent of all weaknesses documented in the FY 2004 Plan of Actions and Milestones 

(POA&Ms) closed or on schedule. 

65% 60% Y 

3. Percent of all DOL sensitive systems fully certified and accredited during FY 2004. 94% 90% Y 
Outcome Goal IT 

FY 2004 Performance and Accountability Report 159

Performance Goal IT2 (OASAM)

Improve the performance of Department’s Cyber Security Program in accordance with the Federal Information Security 

Management Act (FISMA) 

4. Percent of all DOL employees and contractors that receive annual security awareness training. 98% 98% Y 

5. Percent of DOL’s sensitive systems for which a System Test and Evaluation was conducted. 94% 85% Y 

6. Percent of DOL agencies that respond to Computer Security Incident Response Capability 

(DOLCSIRC) advisories in accordance with the procedures in the DOL Computer Security 

Handbook. 

60% 50% Y 

7. Percent of all DOL sensitive systems with contingency plans. 98% 95% Y 

8. Percent of contingency plans tested. 52% 50% Y 

*Indicator target reached = (Y), substantially reached = (S) or not reached (N) 

DOL has continually improved the performance of its Cyber Security Program. According to the Federal 

Computer Security Report Card issued by Congress, the Cyber Security Program has progressed from a grade of 

“F” in 2000 and 2001, to a grade of “C+” in 2002. The current grade (assessed in 2003) is a “B.” 

Indicator three, relating to certification and accreditation, has the greatest importance to the achievement of 

greater IT security. Certifying and accrediting major information systems gives the Department a level of 

assurance that the Cyber Security Program is operating effectively. There are no planned changes to the goals or 

indicators for FY 2005. However, because IT security is crucial, targets for each of the indicators will be more 

ambitious. 

The Security program is integrated into all Departmental program areas such as the Enterprise Architecture, 

Capital Planning and Investment Control, the System Development Lifecycle, and our strategic plan. The 

Department is committed to its Computer Security Program, and will continue to ensure that resources are 

adequately allocated for the proper protection of our information systems.

Management Issues 

OIG identified three reportable conditions related to IT security: 

1. The Department lacks strong logical security controls to secure the Department’s data and information; 

2. The Department has not developed and performed comprehensive tests of all continuity of 

operations/disaster recovery plans for critical systems and processes; and 

3. The Department has not corrected all known vulnerabilities associated with its systems. 

The Office of the Chief Information Officer (OCIO) has completed several actions to mitigate the vulnerabilities 

associated with these reportable conditions. These actions include, but are not limited to: 

1. Advising senior management to give priority attention and resources to their agency specific conditions; 

2. Establishing focus group to leverage agency expertise to develop action plans to address the systemic 

issues; 

3. Performing a comprehensive review of applicable Departmental policies and procedures; and 

4. Making necessary revisions. 

The performance data used by the OCIO Security team is reliable and complete. The metrics used are those 

required by OMB. Performance data is gathered on a quarterly basis from DOL agencies and is validated by the 

OCIO Security team via internal verification and validation processes, quarterly Capital Planning and Investment 

Control reviews, and e-Government reviews. The OCIO Security team also performs reviews of its own internal 

processes and procedures to ensure the efficiency and effectiveness of the Department’s Cyber Security Program, 

thus ensuring the completeness of the performance data. 

DOL has made considerable progress on all reportable conditions. The only risk to achieving its goal is the lack 

of funding for comprehensively testing contingency plans. The OCIO has guided DOL agencies to approach this 

requirement by developing incremental test plans, which allow economical testing. 

For more information on these audits, see Study 8 in Appendix 2. 
Performance Section 

160 United States Department of Labor 

Sound IT Capital Planning

Performance Goal IT3 (OASAM) – FY 2004 

Improve organizational performance and effective information management through the use of the Departmental 

IT Capital Planning Investment Control process. 

Indicators 

95 percent of major IT initiatives completed during FY 2004 deliver intended benefits; 

87 percent of in-process IT initiatives evaluated operate within 10 percent cost, schedule, and technical 

performance parameters; and 

Rollout and migration to new investment management application for use during the FY 2006 budget cycle. 

Program Perspective 

The Clinger-Cohen Act requires agencies to use a disciplined capital planning and investment control process to 

acquire, use, maintain, and dispose of information technology. The Act seeks to improve performance by 

requiring agencies to clearly define and implement an IT Capital Planning and Investment Control (CPIC) 

process. This process is comprised of three distinct phases: select, control, and evaluate. The purpose of the 

CPIC process is to ensure that each IT investment aligns with DOL missions and supports business needs, while 

minimizing risks and maximizing returns throughout the investment’s life cycle. It also allows decision-makers 

to make prudent evaluations of an investment’s costs, benefits, risks and support for the DOL strategic goals and 

objectives when compared to other competing IT requirements. 

In FY 2004, DOL established policy for, and implemented an earned value management system (EVMS) for 

major IT investments. EVMS routinely captures standardized, detailed information for monitoring cost, schedule 

and performance of major IT investments over time. By keeping track of this data in a systematic fashion, project 

managers and DOL management receive timely progress information on IT development projects. DOL 

management is also able to make informed decisions about projects’ direction and the merits of continued 

investment in specific IT projects. DOL’s EVMS is compliant with current standards and guidance from the 

Office of Management and Budget. 

Results, Analysis and Future Plans 

This goal was achieved. All targets were reached. Rollout and migration of the Department’s new tool for 

electronic capital planning and investment management was achieved in the 2nd quarter FY 2004. Agencies used 

the tool to prepare their FY 2006 IT budget submissions. At 93 percent, DOL exceeded the 87 percent target for 

initiatives operating within ten percent cost, schedule, and technical performance parameters. DOL also reached 

its target for 95 percent of major IT initiatives completed during FY 2004 delivering intended benefits. 

DOL is committed to ensuring that information technology investments are based upon decision criteria that 

considers risk-adjusted return, emphasizes interoperability, improves delivery of services, and reduces costs. 

Achieving this goal is key to the success of the capital investment management process. Employing the 

Electronic Capital Planning and Investment Control (eCPIC) system facilitated the management of Departmentwide IT investments and the preparation of budget data for submission to OMB. In addition, the rollout of EVMS 

produces monthly project data and shows trends over time. DOL will continue to develop goals and indicators, 

and set targets designed to ensure compliance with the IT Capital Investment Management Process; and support 

and assist agency managers and analysts in executing the IT capital investment management process through 

guidance, training, and oversight. 
Outcome Goal IT 

FY 2004 Performance and Accountability Report 161

Management Issues 

To ensure the reliability of performance data and to ensure that project outcome goals are positively achieved with 

the cost, schedule, and performance projections, DOL uses a combination of performance-based management 

mechanisms, including the earned value management system and a quarterly review process. Work Breakdown 

Structures (WBS) are required and updates are provided to the OCIO upon request. Actual start and completion 

dates, percentages complete and estimated costs are assessed against each element in the WBS. Based on the 

information provided, an investment's performance is assessed, and cost and schedule variances are calculated. 

To mitigate the risk to project performance, cost and schedule variances are reported to senior management within 

the Department, and mechanisms have been put in place for addressing projects which exhibit poor performance. 

Such projects are closely reviewed during periodic reviews with the project manager, and corrective actions are 

developed and assigned. Progress of corrective actions is frequently checked to ensure that the project is on track. 

Financial Section 
Financial Section 

164 United States Department of Labor 

Chief Financial Officer’s Letter 

A popular circus performance involves motorcyclists racing around the inside 

of a steel sphere. Defying gravity and with great precision, the cyclists pass 

within inches of each other without colliding. Each performer is an expert; yet 

as a group, the feat becomes possible only through careful planning and close 

coordination. 

Improving financial performance in the Federal government involves similar 

efforts between the financial community and program managers as we work to 

make financial information an integral part of decision making. From day-today operations to senior management decisions, accurate and timely financial 

information improves the efficiency and effectiveness of our activities and 

enhances our accountability to the American people. We have a responsibility 

to accurately measure the real cost of programs and account for how well the 

funds entrusted to us have been spent. 

 

Compliance with Federal financial statutes provides an important indicator of 

accountability. For FY 2004, the Department has received its fourth 

consecutive Certificate of Excellence in Accountability Reporting from the 

Association of Government Accountants and eighth consecutive clean audit opinion. These are strong indicators 

and external validation of the strength of the Department’s financial management. For the fourth consecutive 

year, the Secretary has reported that the Department’s systems of accounting and internal controls comply with 

the Federal Managers’ Financial Integrity Act (FMFIA). The Department has no material weaknesses in internal 

controls as defined by the FMFIA. Similarly, DOL’s financial management systems meet the requirements of 

Federal Financial Management Improvement Act (FFMIA). 

These statutory provisions, however, provide just the foundation for good accountability. At the direction of 

Secretary Chao, over the past year we have instituted a new quarterly financial management attestation process 

that requires each agency head to acknowledge responsibility for internal controls over the funds entrusted to the 

agency. This certification must be accompanied by a general operations certification by the agency’s 

administrative officer, and a detailed financial certification by the agency’s financial manager. Each quarter, I 

meet with each agency head and senior executives to discuss the progress of the agency’s efforts to resolve open 

audit findings and discuss ways of preventing new issues. This new process furthers our efforts toward early 

detection and effective resolution of internal control weaknesses and enhanced accountability. Over the past year, 

we have worked intensively with program agencies to implement managerial cost accounting, department-wide, 

through the Cost Analysis Manager (CAM) initiative. This effort improves our ability to report the full costs of 

programs and activities and facilitates the use of integrated financial and performance information for decisionmaking across the Department at all levels. 

Effective use of financial information can result in more accurate benefit and assistance payments to current 

recipients. As part of our efforts to reduce improper payments, the Department signed a memorandum of 

understanding with the Social Security Administration (SSA) to improve the accuracy of payments in the 

Unemployment Insurance Program. The agreement facilitates the exchange of data between the SSA and State 

unemployment agencies to eliminate unemployment insurance payment to individuals who have returned to work. 

DOL has one of the most progressive efforts in the Federal government to proactively improve internal controls 

and eliminate systemic causes of improper payments. 

To make information more readily available in a more useful form, the Department has begun a multi-year 

initiative to replace our aging core accounting system with a new financial management information system 

(Labor Accounting Works—LAW). The new system will leverage technology and best-practice business 

processes to improve information quality, availability, and usefulness to a broad spectrum of managers and 

decision makers. The Office of the Chief Financial Officer continues to co-lead the government-wide financial 

management line of business with the Chief Information Officer of the Department of Energy. This effort 

addresses redundant IT investments and business processes across the government and focuses on businessdriven, common solutions developed through IT architectural processes. In efforts such as this agencies 
Chief Financial Officer’s Letter 

FY 2004 Performance and Accountability Report 165

government-wide are working together across traditional boundaries rather than focusing on their individual needs 

to make government more citizen-centered, results-oriented, and market-based. 

The Department has actively participated in several e-Gov initiatives. Two areas involving changes to the internal 

financial management of the Department are e-Travel and e-Payroll. The e-Travel effort will connect the 

Department to a government-wide, web-based, world-class travel management service. With the selection of an 

e-Travel service provider this year, the Department will be able to reduce or eliminate capital investments and 

minimize total cost per travel transaction. The e-Payroll initiative involves the consolidation of twenty-six federal 

payroll providers across the government. This year the Department pursued a plan that will culminate in the 

migration of the Department’s payroll services to the National Finance Center of the U.S. Department of 

Agriculture in FY 2005. In coming years, consolidation efforts such as e-Travel and e-Payroll will generate 

significant savings of tax dollars by reducing operating costs and avoiding costly modernization of duplicative 

systems. 

Under the leadership of Secretary Chao and President Bush, the Department of Labor has made significant 

progress in improving financial management beyond receiving an unqualified audit opinion. Under the 

President’s Management Agenda, we moved to “green” on the financial management scorecard at the end of FY 

2004. We are committed to staying “green” through continued efforts to increase the integration of financial data 

into Departmental decision making. We are putting in place the controls and programs to improve our 

accountability to Congress and the American people and to provide our managers with the financial information 

to improve the efficiency and effectiveness of their programs. We are better prepared than ever to deliver results 

from a Government that is well run and results-oriented. 

Samuel T. Mok 

Chief Financial Officer 

November 15, 2004 
Financial Section 

166 United States Department of Labor 

 

Independent Auditor’s Report 

To the Honorable Elaine L. Chao Secretary of Labor 

The Chief Financial Officers Act of 1990 (CFO Act) requires agencies to report annually to Congress on 

their financial status and any other information needed to fairly present the agencies’ financial position 

and results of operations. To meet the CFO Act reporting requirements, the United States Department of 

Labor (DOL), a Department of the United States Government, prepares annual financial statements, 

which are subjected to audit. 

The objectives of the audit are to express an opinion on the fair presentation of DOL’s principal financial 

statements, obtain an understanding of the Department’s internal control, and test compliance with laws 

and regulations that could have a direct and material effect on the financial statements. 

Additionally, the objectives include expressing an opinion on DOL’s compliance with requirements of the 

Federal Financial Management Improvement Act of 1996, based on an examination. 

We have audited the consolidated balance sheets of DOL as of September 30, 2004 and 2003, and the 

related consolidated statements of net cost, changes in net position, financing, and custodial activity and 

the combined statements of budgetary resources for the years then ended. These financial statements are 

the responsibility of DOL’s management. Our responsibility is to express an opinion on these financial 

statements 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 Office of Management and Budget (OMB) Bulletin 

No. 01-02, Audit Requirements for Federal Financial Statements. These standards require that we plan 

and perform the audit to obtain reasonable assurance about whether the financial statements are free of 

material misstatements. An audit includes examining, on a test basis, evidence supporting the amounts 

and disclosures in the financial statements. An audit also includes assessing the accounting principles 

used and significant estimates made by management, as well as evaluating the overall financial statement 

presentation. We believe that our audits provide a reasonable basis for our opinion. 

Relationship to the Single Audit Act 

The financial statements for the years ended September 30, 2004 and 2003, include: 

• costs for grants, subsidies, and contributions primarily with various state and local governments and 

nonprofit organizations in the amounts of $10.1 billion and $10.5 billion, respectively; 

• costs for unemployment benefits incurred by state employment security agencies in the amounts of 

$41.7 billion and $53.4 billion, respectively; 

• state employer tax revenue of $30.1 billion and $24.8 billion, respectively; 

• net receivables for state unemployment taxes, reimbursable employers, and benefit overpayments of 

$1.1 billion and $.8 billion, respectively; and 
Independent Auditor’s Report 

FY 2004 Performance and Accountability Report 167

• reimbursements from state, local, and nonprofit reimbursable employers for unemployment benefits 

paid on their behalf, in the amounts of $2.4 billion and $2.1 billion, respectively. 

Our audits included testing these costs, financing sources, and balances at the Federal level only. 

Pursuant to a mandate by Congress, the examination of these transactions below the Federal level is 

primarily performed by various auditors in accordance with the Single Audit Act of 1984, as amended, 

and OMB Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations. The 

results of those audits are reported to Federal agencies that provide direct grants, and each Federal agency 

is responsible for resolving findings for its awards. 

Opinion on Financial Statements 

In our opinion the aforementioned financial statements present fairly, in all material respects, the assets, 

liabilities, and net position of DOL as of September 30, 2004 and 2003; and the net cost, changes in net 

position, budgetary resources, reconciliation of net cost to budgetary resources, and custodial activity for 

the years then ended in conformity with accounting principles generally accepted in the United States of 

America. 

Other Accompanying Information 

Our audits were conducted for the purpose of forming an opinion on the consolidated and combined 

financial statements of DOL taken as a whole. The accompanying financial information discussed below 

is not a required part of the principal financial statements. 

The supplementary information included in the Management Discussion and Analysis, Required 

Supplementary Stewardship Information, and Required Supplementary Information sections of the 

Performance and Accountability Report are required by the Federal Accounting Standards Advisory 

Board and OMB Bulletin No. 01-09. We have applied limited procedures, performed at the Federal level 

only, which consisted principally of inquiries of management regarding the methods of measurement and 

presentation of the information. However, we did not audit the information and express no opinion on it. 

The information included in the Annual Performance Report, Financial Performance Report, Management 

and Performance Challenges and the report appendices are presented for purposes of additional analysis. 

Such information has not been subjected to the auditing procedures applied in the audit of the 

consolidated and combined financial statements and, accordingly, we express no opinion on it. 

Report on Internal Control 

In planning and performing our audit, we considered DOL’s internal control over financial reporting by 

obtaining an understanding of the Department’s internal control, determined whether internal controls had 

been placed in operation, assessed control risk, and performed tests of controls in order to determine our 

auditing procedures for the purpose of expressing our opinion on the financial statements. We limited our 

internal control testing to those controls necessary to achieve the objectives described in OMB Bulletin 

No. 01-02. We did not test all internal controls relevant to operating objectives as broadly defined by the 

Federal Managers’ Financial Integrity Act of 1982, such as those controls relevant to ensuring efficient 

operations. The objective of our audit was not to provide assurance on internal control. Consequently, 

we do not provide an opinion on internal control. 

Our consideration of the internal control over financial reporting would not necessarily disclose all 

matters in the internal control over financial reporting that might be reportable conditions. Under 

standards issued by the American Institute of Certified Public Accountants, reportable conditions are 

matters coming to our attention relating to significant deficiencies in the design or operation of the 

internal control that, in our judgment, could adversely affect the agency’s ability to record, process, 

summarize, and report financial data consistent with the assertions by management in the financial 

statements. Material weaknesses are reportable conditions in which the design or operation of one or 

more of the internal control components does not reduce to a relatively low level the risk that 
Financial Section 

168 United States Department of Labor 

misstatements caused by error or fraud in amounts that would be material in relation to the financial 

statements being audited may occur and not be detected within a timely period by employees in the 

normal course of performing their assigned functions. Because of inherent limitations in internal controls, 

misstatements, losses, or noncompliance may, nevertheless, occur and not be detected. We noted certain 

matters, discussed in the following paragraphs, involving the internal control and its operations that we 

consider to be reportable conditions. However, none of the reportable conditions are believed to be a 

material weakness. 

In addition, we considered DOL’s internal control over Required Supplementary Stewardship Information 

by obtaining an understanding of the agency’s internal controls, determining whether they had been 

placed in operation, assessing control risk, and performing tests of controls as required by OMB Bulletin 

No. 01-02. The objective of our audit was not to provide assurance on these internal controls. 

Accordingly, we do not provide an opinion on such controls. 

Finally, with respect to internal control relating to performance measures included in the Performance 

Report, we obtained an understanding of the design of significant internal controls relating to the 

existence and completeness assertions as required by OMB Bulletin No. 01-02. Our procedures were not 

designed to provide assurance on internal control over reported performance measures, and, accordingly, 

we do not provide an opinion on such controls. 

Reportable Conditions 

Current Year Reportable Conditions 

Federal Employees Compensation Act (FECA) Medical Benefit Payments 

The Employment Standards Administration’s (ESA) Office of Workers’ Compensation Programs 

(OWCP) has contracted with a third party, to perform medical bill processing for FECA claimants. The 

contractor began processing medical bills in September 2003. 

Our FY 2004 audit found errors in the processing of medical bills. We tested 358 medical bills paid by 

the contractor during the period October 1, 2003 to March 31, 2004. Of these 358 bills, we found 35 bills 

(including duplicate bills related to 5 sample items), were not paid in the correct amount, including 24 

overpayments totaling $282,577 and 11 underpayments totaling $34,658. These errors occurred because 

OWCP did not have a quality assurance and internal audit plan in place prior to implementation of the 

new system. Without adequate controls over the processing of medical bill payments, OWCP cannot 

ensure that amounts paid are correctly calculated in accordance with the fee schedules. As a result, 

medical providers have been overpaid and underpaid, resulting in the medical benefit expense being 

misstated. 

Both prior to and in response to these results, management took steps to correct some of the weaknesses 

identified. We performed additional testing and found corrective actions taken by management resulted 

in a reduction in payment errors in the third quarter of the fiscal year. 

We recommend that the Chief Financial Officer ensure that the Assistant Secretary for Employment 

Standards fully implements corrective actions that have been proposed or initiated by OWCP, and that the 

accounting records are adjusted to reflect identified misstatements. We also recommend that the Chief 

Financial Officer ensure that the Assistant Secretary for Employment Standards develops a quality 

assurance plan prior to migration to any significant system or system change. 

Management anticipates full implementation of corrective actions in FY 2005, inclusive of policies for 

quality assurance plans for IT system migrations and changes. 
Independent Auditor’s Report 

FY 2004 Performance and Accountability Report 169

FECA Medical Bill Receivables 

We noted during our FY 2004 audit that OWCP and the contractor have not implemented a system to 

track and record medical bill overpayments (receivables) as required by JFMIP Benefit System 

Requirements. In addition to the $282,577 of overpayments we identified during our audit, OWCP and 

the contractor have identified overpayments during the course of the fiscal year, and the contractor has set 

up an ad-hoc method of tracking and collecting these overpayments. 

Management indicated that a delay in the implementation of the new case management system resulted in 

a delay in the implementation of the Medical Bill Receivable feature. Without an adequate receivable 

recovery system, collection of receivables cannot be effectively managed and monitored, which could 

result in the failure to collect recoverable amounts. In addition, these receivables are not being captured 

in the Department’s general ledger, resulting in an understatement of accounts receivable. 

We recommend that the Chief Financial Officer ensure that the Assistant Secretary for Employment 

Standards develops and implements the receivable system for the identification, tracking, and reporting of 

medical benefit overpayments in accordance with JFMIP requirements and ensure that the accounting 

records are adjusted to reflect all current receivables. 

Management indicated that the case management system, inclusive of the receivable system, will be 

deployed in FY 2005. 

 

Information Technology (IT) Controls 

The Department lacks strong application controls over the access to and protection of financial 

information. During our application controls testing of the DOLAR$, SPAMIS, FECS, Longshore, and 

PeoplePower applications that support the financial statements, we tested controls in the following areas: 

understanding of the application; application access controls; input controls; data processing controls, 

including exception reporting and problem tracking; and output controls. Specifically, we noted 

consistent weaknesses across the applications tested in the following application control areas: 

• Application password settings 

• User access 

• Application segregation of duties 

• User recertification 

• Data input 

• Key reports 

These weaknesses occurred as a result of incomplete implementation and testing of policies and 

procedures, weak segregation of duties, guidance and implementation, system and/or resource limitations, 

and nonperformance of routine housekeeping and maintenance tasks to update systems and processes as 

the organization or business changes. These application control weaknesses, when taken together, 

increase the risk that an individual with access to one or more of the applications could input, process, and 

approve an erroneous transaction and not be detected. 

We recommend the Chief Information Officer (CIO) ensure that the specific application control 

weaknesses identified during the audit and reported in the OCFO, ETA, and ESA Agency Audit reports, 

as well as the PeoplePower Application Controls Audit reports, are addressed by the individual agencies, 

and that the Office of the Chief Information Officer develop and/or enforce procedures and controls to 

address consistent or systemic application control weaknesses on current and future financial management 

systems. 

The CIO generally agreed with our findings, and issued memorandums and policy statements requesting 

agency priority attention and action to strengthen application controls for DOL’s major information 

systems. 
Financial Section 

170 United States Department of Labor 

Procurement 

OASAM’s procurement office processed approximately $296 million of the $622 million (48 percent) of 

new FY 2004 procurements for supplies and services. We judgmentally selected 10 procurement files for 

review that had activity during the fiscal year, and found that four of the files lacked sufficient 

documentation and were poorly organized. As a result, management was not able to demonstrate 

compliance with the sections of the FAR pertaining to contract competition for three contracts. Also, 

management could not demonstrate compliance with Federal Appropriations Law for one contract. 

For the first procurement with a cumulative value of $10.3 million, the agency could not document the 

original scope or that modifications totaling over $10 million from July 1999 though February 2004 did 

not exceed the original scope. In addition, the file did not contain documentation that at least three 

schedule contractors were considered. In the second procurement, we found a Blanket Purchase 

Agreement (BPA) with multiple holders where the procurement file did not provide the rationale for 

expanding the scope of the work without providing other BPA holders the opportunity to bid on the work. 

In the third procurement, the contract file did not have any preaward documents or a task order with the 

contracting officer’s signature approving the procurement. In the fourth procurement, the file did not 

include the rationale for using FY 2004 appropriations for FY 2005 services. The task order was awarded 

for new services that were continuing and recurring in nature, and should have been considered severable. 

Performance of these services did not begin in FY 2004 and DOL would not realize a benefit until such 

time as the services were provided. 

The reasons for the lack of compliance with procurement policies and procedures were difficult to 

ascertain due to the change of procurement management and staff within OASAM. However, based on 

the condition of the files and the lack of critical procurement documentation, it was clear that files were 

not being maintained in accordance with existing procurement policies and procedures. 

OASAM has recently changed procurement personnel and is in the process of adopting and implementing 

new policies and procedures, which it believes will ensure compliance with the FAR and DLMS and will 

improve record maintenance over this important function. Management provided various documents 

throughout the course of our audit as evidence that corrective actions have already been initiated, such as 

training plans, compliance forms, procurement checklists, etc. 

We recommend that the Office of the Chief Financial Officer and the Assistant Secretary for 

Administration and Management ensure completion of policies that are currently being implemented to 

train staff, improve record maintenance, and establish consistent procurement practices designed to 

promote a better understanding and compliance with FAR and DLMS policies and procedures; ensure 

development of a monitoring process to ensure compliance with FAR and DLMS requirements; and 

analyzes FY 2004 obligations to determine the extent to which funds were obligated in the wrong year 

and takes necessary action to obligate the correct year. 

Management concurred with the finding and recommendations, and indicated that the procurement office 

is prepared to make needed improvements. 

Prior Year Reportable Conditions 

Job Corps Real Property 

DOL owns a significant amount of real property, which is capitalized and depreciated in the Department’s 

accounting records, and is reported in the Department’s financial statements. We previously reported that 

ETA did not sufficiently utilize the property subsidiary system, the Capitalized Assets Tracking and 

Reporting System (CATARS), as a complete property management system in accordance with the 

CATARS user guide. We also found that ETA did not establish sufficient controls to ensure that Job 

Corps capitalized real property was safeguarded and accurately reported in CATARS and the Department 

of Labor Accounting and Related Systems (DOLAR$) general ledger. 
Independent Auditor’s Report 

FY 2004 Performance and Accountability Report 171

Management concurs with the need to improve controls over Job Corps real property and is implementing 

various corrective actions to ensure that both CATARS and DOLAR$ reflect accurate and complete 

property balances, and that assets are sufficiently safeguarded. 

Federal Employees’ Compensation Act (FECA) Compensation Payments 

We previously reported that ESA’s Office of Workers’ Compensation Programs (OWCP) did not have 

adequate controls to ensure that current medical evidence is maintained in the case files to support the 

continuing eligibility of claimants. In our FY 2004 audit, we continued to note a high error rate where 

case files did not contain current medical evidence. 

Management developed a corrective action plan that calls for the implementation of a new automated 

system in FY 2005, which will help ensure that medical evidence is obtained in accordance with program 

policy. 

Information Technology (IT) Controls 

The OIG previously reported the following deficiencies with regards to the Department’s IT controls: 

• The Department lacks strong logical security controls to secure the Department’s data and 

information. Continuing weaknesses were identified with the Department’s technical security 

standards and policies; logging, monitoring and response controls; system administration 

procedures; and the overall security framework. 

• The Department has not coordinated comprehensive disaster recovery tests to ensure the 

Department’s network and applications can be recovered in the case of a disaster. Testing 

conducted in FY 2004 identified that the Department’s agencies were in varying stages of disaster 

recovery plan development and testing, and the Department had not coordinated disaster recovery 

efforts across all agencies or conducted a Department-wide test of disaster recovery plans. Given 

these conditions, there is a high likelihood that the Department could not recover its key 

operations in a timely manner in the event of a major disaster. 

The CIO generally agreed with our findings and recommendations. The CIO has made a concerted effort 

to address these issues, and has several planned FY 2005 activities that build on its FY 2004 progress. 

Accounting for Grants

The OIG previously reported the following deficiencies with regards to ETA’s grant accounting: 

• Various accounting errors were noted in amounts recorded for ETA’s grants and contracts. In FY 

2004, we continued to note errors at both the national and regional offices. For example, at the 

national level we identified that costs reported by grantees in the Enterprise Information Management 

System (EIMS) grant cost module did not agree to corresponding amounts recorded in DOLAR$, and 

that ETA was not sufficiently reconciling the cost information. At the regional offices, we noted 

errors in various Job Corps contracts selected for testing. 

• Transfers of WIA funds between programs are not accounted for in ETA’s accounting records. 

• ETA’s grantees and contractors are often delinquent in submitting required cost reports. While 

efforts have been made to address this finding, our FY 2004 audit continued to note delinquent 

reporting. 

ETA management plans to interface existing accounting systems in FY 2005, and anticipates that the 

interface will significantly improve the accuracy of grant costs recorded in DOLAR$, and has recently 

implemented other improvements to address these audit findings. 
Financial Section 

172 United States Department of Labor 

Capitalized Assets

The OIG previously reported that management’s capitalized asset tracking and reporting procedures do 

not ensure that disposals of capitalized assets are identified and reported in a timely and accurate manner, 

and that assets are adequately safeguarded against loss or theft. 

We continued to note that certain agencies within the Department were merely removing items from 

CATARS that could not be found, rather than researching to find out the actual disposition of the missing 

assets. In addition, dispositions were not recorded timely but were recorded only after items were 

identified as missing in the physical inventory process. 

Management agreed that further controls are necessary to ensure that property is properly managed and 

accounted for, and is working to correct these deficiencies. 

Unemployment Insurance Benefit Overpayments

The OIG previously reported certain deficiencies in the internal controls over Unemployment Insurance 

(UI) benefit payments. Specifically, the OIG identified that UI overpayment data collected by the Benefit 

Accuracy Measurement (BAM) unit reflect significantly higher overpayments than those established as 

accounts receivable by the states’ Benefit Payment Control (BPC) system. We also found that there has 

been little change in the rate of overpayments (about 8.5 percent) since 1989. 

Management contends that the actions outlined in its corrective action plan developed in response to this 

finding in prior years will eventually result in a significant reduction in the detectable, recoverable 

overpayment rate. 

While we recognize that management has taken certain corrective actions, we noted that the actual UI 

benefit overpayment rate for 2003 did not reflect improvement. The UI benefit overpayment rates for 

2003, 2002 and 2001 were 9.3 percent, 9.1 percent, and 8.2 percent, respectively. We conclude that 

additional evaluation of UI overpayments is necessary. 

Management expects to see a positive impact on the rate of overpayments from the corrective actions 

taken to date, as states increase the use of tools made available by ETA, such as the use of new hire 

directories to detect claimants that have returned to work. 

Implementation of Managerial Cost Accounting 

The OIG previously reported that DOL was not in compliance with the requirements for managerial cost 

accounting (MCA) contained in Statement of Federal Financial Accounting Standards (SFFAS) No. 4. 

Specifically, DOL had not defined outputs for its operating programs nor developed the capability to 

routinely report the cost of outputs at the operating program and activity levels. Further, DOL did not 

adequately link cost information to performance measures at the operating program level for use in 

managing program operations on a routine basis or use managerial cost information for purposes of 

performance measurement, planning, budgeting or forecasting. 

Management concurred with this finding, and developed a comprehensive plan to implement a 

Department-wide MCA system that complies with the requirements of SFFAS No. 4. As of the end of 

FY 2004, the implementation project directed by OCFO, with significant cooperation of agency 

personnel, has led to the successful development of cost models for substantially all of DOL’s agencies 

and their major programs. OCFO recently certified the MCA system for processing and completed 

installation of the cost accounting software throughout each of the program agencies. In the near future, 

OCFO indicates that it will complete cost model documentation and provide final training to agency 

personnel. Management projects that all cost models will be updated with FY 2004 data and be 

operational during the second quarter of FY 2005. 
Independent Auditor’s Report 

FY 2004 Performance and Accountability Report 173

We noted other matters involving the internal control and its operations that will be reported to the 

management of DOL in a separate letter. 

Report on Compliance With Laws and Regulations Exclusive of the Federal Financial Management 

Improvement Act of 1996 (FFMIA)

The management of the DOL is responsible for complying with laws and regulations applicable to the 

Department. As part of obtaining reasonable assurance about whether the Department’s financial 

statements are free of material misstatement, we performed tests of its compliance with certain provisions 

of laws and regulations, noncompliance with which could have a direct and material effect on the 

determination of financial statement amounts and certain laws and regulations specified in OMB Bulletin 

No. 01-02, including the requirements referred to in the FFMIA. We limited our tests of compliance to 

those provisions and we did not test compliance with all laws and regulations applicable to the DOL. 

Providing an opinion on compliance with those provisions was not an objective of our audit and, 

accordingly, we do not express such an opinion. 

The results of our tests of compliance with the laws and regulations described in the preceding paragraph 

disclosed no instances of noncompliance with laws and regulations that are required to be reported under 

Government Auditing Standards and OMB Bulletin 01-02. 

Report on Compliance With FFMIA

We have examined DOL's compliance with the requirements of FFMIA as of September 30, 2004. These 

include implementing and maintaining financial management systems that substantially comply with: (1) 

financial management systems requirements, (2) applicable Federal accounting standards, and (3) the 

United States Government Standard General Ledger (SGL) at the transaction level. Management is 

responsible for DOL's compliance with these requirements. Our responsibility is to express an opinion on 

DOL's compliance based on our examination. 

Our examination was conducted in accordance with the attestation standards established by the American 

Institute of Certified Public Accountants; Government Auditing Standards, issued by the Comptroller 

General of the United States; and OMB Bulletin No. 01-02, Audit Requirements for Federal Financial 

Statements. These standards include examining on a test basis, evidence about DOL's compliance with 

those requirements 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 of DOL's compliance with specified requirements. 

In our opinion, as of September 30, 2004, DOL substantially complied with the requirements of FFMIA. 

This report is intended solely for the information and use of the management of the U.S. Department of 

Labor, the Office of Management and Budget, and Congress, and is not intended to be and should not be 

used by anyone other than these specified parties. 

November 15, 2004 

Annual Financial Statements 

Principal Financial Statements and Notes 
Financial Section 

PRINCIPAL FINANCIAL STATEMENTS 

178 United States Department of Labor 

Principal Financial Statements Included in This Report 

The principal financial statements included in this report have been prepared in accordance with the 

requirements of the Chief Financial Officers Act of 1990 (P.L. 101-576), the Government Management 

Reform Act of 1994 and the Office of Management and Budget’s (OMB) Bulletin 01-09, “Form and 

Content of Agency Financial Statements.” 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 for FY 2004 and 2003 was performed by R. Navarro & 

Associates, Inc., Certified Public Accountants. The auditors’ report accompanies the principal statements.

The Department’s principal financial statements for fiscal years (FY) 2004 and 2003 consisted of the 

following: 

• The Consolidated Balance Sheets, which present as of September 30, 2004 and 2003 those resources 

owned or managed by DOL which are available to provide future economic benefits (assets); amounts 

owed by DOL that will require payments from those resources or future resources (liabilities) and 

residual amounts retained by DOL, comprising the difference (net position). 

• The Consolidated Statements of Net Cost, which present the net cost of DOL operations for the 

years ended September 30, 2004 and 2003. DOL’s net cost of operations includes the gross costs 

incurred by DOL less any exchange revenue earned from DOL activities. Due to the complexity of 

DOL’s operations, the classification of gross cost and exchange revenues by major program and 

suborganization is presented in Note 14 to the consolidated financial statements. 

• The Consolidated Statements of Changes in Net Position, which present the change in DOL’s net 

position resulting from the net cost of DOL operations, budgetary financing sources other than 

exchange revenues and other financing sources for the years ended September 30, 2004 and 2003. 

• The Combined Statements of Budgetary Resources, which present the budgetary resources 

available to DOL during FY 2004 and 2003, the status of these resources at September 30, 2004 and 

2003, and the outlay of budgetary resources for the years ended September 30, 2004 and 2003. 

• The Consolidated Statements of Financing, which reconcile the net cost of operations with the 

obligation of budgetary resources for the years ended September 30, 2004 and 2003. 

• The Consolidated Statements of Custodial Activity, which present the sources and disposition of 

non-exchange revenues collected or accrued by DOL on behalf of other recipient entities for the years 

ended September 30, 2004 and 2003.
Annual Financial Statements 

The accompanying notes are an integral part of these statements. 

FY 2004 Performance and Accountability Report 179 

CONSOLIDATED BALANCE SHEETS 

As of September 30, 2004 and 2003 

(Dollars in Thousands) 

2004 2003

ASSETS

Intra-governmental

Funds with U.S. Treasury (Notes 1-C and 2) 9,700,757 $ 9,615,513 $ 

Investments (Notes 1-D and 3) 45,446,51 48,408,153 0 

Interest receivable from investments 726,16 580,180 0

Accounts receivable (Notes 1-E and 4) 3, 916,674 3,789,999

Total intra-governmental 59,644,121 62,539,825 

Accounts receivable, net of allowance (Notes 1-E and 4) 1, 939,688 127,034 

Advances (Notes 1-F and 5) 777,032 481,078 

Property, plant and equipment, net

 of depreciation (Notes 1-G and 6) 876,269 830,558

Total assets $ 62,424,456 $ 64,791,149

LIABILITIES AND NET POSITION

Liabilities (Note 1-I)

Intra-governmental

Accounts payable 22,207 $ 37,948 $ 

Advances from U.S. Treasury (Notes 1-J and 8) 8,740,557 8,243,557 

Other liabilities (Note 11) 194,427 170,184

Total intra-governmental 8,957,191 8,451,689 

Accounts payable 1,008,45 669,873 0 

Accrued leave (Note 1-K) 99,676 97,913 

Accrued benefits (Notes 1-L and 9) 1,344,009 1,638,594 

Future workers' compensation benefits (Notes 1-M and 10) 528,068 592,125 

Energy employees occupational illness

 compensation benefits (Note 1-N) 2,793,823 2,222,574 

Other liabilities (Note 11) 239,333 270,125

Total liabilities 14,970,550 13,942,893

Net position (Note 1-R)

Unexpended appropriations 8,299,897 8,587,666 

Cumulative results of operations 39,154,009 42,260,590

Total net position 47,453,906 50,848,256

Total liabilities and net position $ 62,424,456 $ 64,791,149
Financial Section 

The accompanying notes are an integral part of these statements. 

180 United States Department of Labor 

CONSOLIDATED STATEMENTS OF NET COST 

For the Years Ended September 30, 2004 and 2003 

(Dollars in Thousands) 

2004 2003

NET COST OF OPERATIONS (Notes 1-S and 14)

CROSSCUTTING PROGRAMS

Income maintenance

Intra-governmental 972,951 $ 852,394 $ 

With the public 50,464,699 60,808,540

Total cost 51,437,65 61,660,934 0 

Less earned revenue (3,274,386) (3,015,750)

Net program cost 48,163,264 58,645,184

Employment and training

Intra-governmental 44,642 43,709 

With the public 6,389,375 7,198,735

Total cost 6,434,017 7,242,444 

Less earned revenue (17,140) (17,630)

Net program cost 6,416,877 7,224,814

Labor, employment and pension standards

Intra-governmental 137,019 138,11 0

With the public 563,409 459,858

Total cost 700,428 597,968 

Less earned revenue (11,475) (10,644)

Net program cost 688,953 587,324

Worker safety and health

Intra-governmental 163,696 158,339 

With the public 638,194 642,819

Total cost 801,890 801,158 

Less earned revenue (5,207) (5,351)

Net program cost 796,683 795,807

OTHER PROGRAMS

Statistics

Intra-governmental 165,549 168,252 

With the public 372,556 359,768

Total cost 538,105 528,02 0

Less earned revenue (5,504) (4,438)

Net program cost 532,601 523,582

Costs not assigned to programs 126,139 98,721 

Less earned revenue not attributed to programs (20,643) (29,669)

Net cost not assigned to programs 78,078 96,470

Net cost of operations $ 56,676,456 $ 67,873,181
Annual Financial Statements 

The accompanying notes are an integral part of these statements. 

FY 2004 Performance and Accountability Report 181 

CONSOLIDATED STATEMENTS OF CHANGES IN NET POSITION 

 For the Years Ended September 30, 2004 and 2003 

(Dollars in Thousands) 

Cumulative Cumulative

Results of Unexpended Results of Unexpended

Operations Appropriations Operations Appropriations

Beginning balances $ 8,587,666 42,260,590 $ 61,929,810 $ 9,343,624 $ 

Budgetary financing

 sources (Note 1-T)

Appropriations received 11, 10,891,922 510,488 

Appropriations transferred (646,727) (702,501) 

Appropriations not available - (153,632) - (190,679) 

Appropriations used 10,997,898 (10,997,898) 10,754,700 (10,754,700) 

Nonexchange revenue (Note 15)

Employer taxes 37,376,035 31,698,813 

Interest 2,525,135 3,454,045 

Assessments 145,564 137,723 

Reimbursement of 

 unemployment benefits 2,411,887 2,050,363

Total nonexchange revenue 42,458,621 37,340,944 

Transfers without

 reimbursement (Note 16) 3,000 3,000 

Other financing sources (Note 1-U)

Imputed financing from costs

 absorbed by others 110,344 106,003 

Transfers without

 reimbursement (Note 16) 12 (686)

Total financing sources (287,769) 53,569,875 48,203,961 (755,958) 

Net cost of operations (56,676,456) (67,873,181)

Ending balances $ 39,154,009 $ 8,299,897 $ 42,260,590 $ 8,587,666

2004 2003
Financial Section 

The accompanying notes are an integral part of these statements. 

182 United States Department of Labor 

COMBINED STATEMENTS OF BUDGETARY RESOURCES 

For the Years Ended September 30, 2004 and 2003 

(Dollars in Thousands) 

2004 2003

BUDGETARY RESOURCES

Budget authority

Appropriations received 58, $ 68,937,478 039,574 $ 

Net transfers (19,879) (80,878) 

Unobligated balance

Beginning of period 3,173,996 2,971,602 

Net transfers (37,592) (732) 

Spending authority from offsetting collections

Earned

Collected 2,645,532 2,633,039 

Receivable from Federal sources (24, (45,828) 109) 

Change in unfilled customer orders

Advance received (5, 17,65 534) 0

Without advance from Federal sources - (2,396) 

Transfers from trust funds 3,884,725 4,012,226

Total spending authority from offsetting collections 6,500,614 6,614,691 

Recoveries of prior year obligations 463,631 308,966 

Temporarily not available pursuant to public law (22,661) - 

Permanently not available (207,353) (250,856)

Total budgetary resources $ 67,890,330 $ 78,500,271

STATUS OF BUDGETARY RESOURCES

Obligations incurred (Note 17)

Direct 61,566,245 $ 72,731,481 $ 

Reimbursable 2,746,299 2,595,002

Total obligations incurred 64,312,544 75,326,483 

Unobligated balances available

Apportioned 2,344,404 2,423,022 

Exempt from apportionment (5) (208) 

Other available 212,708 207,40 0

Unobligated balances not available 1,020,679 543,574

Total status of budgetary resources $ 67,890,330 $ 78,500,271

RELATIONSHIP OF OBLIGATIONS TO OUTLAYS

Obligated balance, net, beginning 9,364,834 $ 10,538,67 $ 0

Obligated balance transferred, net - 1,304,116 

Obligated balance, net, ending

Accounts receivable (1, (1,336,589) 344,626) 

Undelivered orders 6,227,548 7,112,519 

Accounts payable 3,628,904 3,588,904 

Outlays

Disbursements 64,693,879 76,534,321 

Collections (6,492,578) (6,960,265)

Total outlays 58,201,301 69,574,056 

Offsetting receipts (1, 549,472) (1,277,239)

Net outlays $ 56,651,829 $ 68,296,817
Annual Financial Statements 

The accompanying notes are an integral part of these statements. 

FY 2004 Performance and Accountability Report 183 

CONSOLIDATED STATEMENTS OF FINANCING 

 For the Years Ended September 30, 2004 and 2003 

(Dollars in Thousands) 

2004 2003

RESOURCES USED TO FINANCE ACTIVITIES

Budgetary resources obligated

Obligations incurred 64,312,544 $ 75,326,483 $ 

Recoveries of prior year obligations (463,631) (308,966) 

Less spending authority from offsetting collections (6,500,614) (6,614,691)

Obligations, net of offsetting collections and recoveries 57,348,299 68,402,826 

Other resources

Imputed financing from costs absorbed by others 110,344 106,003 

Transfers, net 3,012 2,314 

Exchange revenue not in budget (71,873) (78,398) 

Trust fund exchange revenue (823,315) (613,147) 

Total resources used to finance activities 56,566,467 67,819,598

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 931,663 583,394 

Resources that finance the acquisition of assets (102,862) (101,221) 

Allocation transfers to other agencies (77,215) (225,950) 

Other resources that do not affect net cost of operations (800,760) (191) 

Total resources used to finance items not part of the

 net cost of operations 604,301 (397,443) 

Total resources used to finance the net cost of operations 56,169,024 68,423,899

COMPONENTS OF THE NET COST OF OPERATIONS 

 THAT WILL NOT REQUIRE OR GENERATE RESOURCES

 IN THE CURRENT PERIOD

 Components requiring or generating resources in future periods

Increase in annual leave liability 1,763 3,979 

Increase (decrease) in employee benefits and

 retirement liabilities 495,628 (572,516) 

Other (28,273) 27,875 

Total 469,118 (540,662)

Components not requiring or generating resources

Depreciation and amortization 50,106 43,275 

Revaluation of assets and liabilities 678,954 472,304 

Benefit overpayments (690,746) (525,635) 

Total 38,314 (10,056) 

Total components of the net cost of operations that will not

 require or generate resources in the current period 507,432 (550,718)

Net cost of operations $ 56,676,456 $ 67,873,181
Financial Section 

The accompanying notes are an integral part of these statements. 

184 United States Department of Labor 

CONSOLIDATED STATEMENTS OF CUSTODIAL ACTIVITY 

For the Years Ended September 30, 2004 and 2003 

(Dollars in Thousands)

2004 2003

SOURCES OF CUSTODIAL REVENUE (Notes 1-V and 18)

Cash collection of fines, penalties, assessments

 and related interest 131,639 $ 119,911 $ 

Less refunds (2,206) (102)

Net cash collections 129,433 119,809 

Increase (decrease) in amounts to be collected (1,964) 2,291

Total sources of custodial revenue 127,469 122,100

DISPOSITION OF CUSTODIAL REVENUE (Note 1-V)

Net transfers to U.S. Treasury general fund 129,433 119,809 

Increase (decrease) in amounts to be transferred (1,964) 2,291

Total disposition of custodial revenue 127,469 122,100

Net custodial activity $ - $ - 
Annual Financial Statements 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 

For the Years Ended September 30, 2004 and 2003 

FY 2004 Performance and Accountability Report 185

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 

A. Reporting Entity 

The U.S. Department of Labor (DOL), a cabinet level agency of the Executive Branch of the United 

States Government, was established in 1913, to promote the welfare of the wage earners of the United 

States. Today the Department’s mission remains the same: to foster and promote the welfare of the job 

seekers, wage earners and retirees of the United States by improving their working conditions, advancing 

their opportunities for profitable employment, protecting their retirement and health care benefits, helping 

employers find workers, strengthening free collective bargaining, and tracking changes in employment, 

prices, and other economic measurements. 

DOL is organized into major program agencies, which administer the various statutes and programs for 

which the Department is responsible. Through the execution of its congressionally approved budget, 

DOL conducts operations in five major Federal program areas, under three major budget functions: 

education, training, employment and social services, health (occupational health and safety), and income 

security. DOL’s major program agencies, and the major programs in which they operate, are shown 

below. 

1. Major program agencies 

• Employment and Training Administration (ETA) 

• Employment Standards Administration (ESA) 

• Occupational Safety and Health Administration (OSHA) 

• Bureau of Labor Statistics (BLS) 

• Mine Safety and Health Administration (MSHA) 

• Employee Benefits Security Administration (EBSA) 

(Formerly Pension and Welfare Benefits Administration) 

• Veterans’ Employment and Training (VETS) 

• Other Departmental Programs

- Office of the Assistant Secretary for Administration and Management

- Office of the Solicitor

- Office of the Chief Financial Officer

- Office of the Inspector General

- Bureau of International Labor Affairs

- Women’s Bureau 

- Office of Disability Employment Policy

2. Major programs 

• Income maintenance 

• Employment and training 

• Labor, employment, and pension standards 

• Worker safety and health 

• Statistics

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.
Financial Section 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 

For the Years Ended September 30, 2004 and 2003 

186 United States Department of Labor 

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – Continued 

A. Reporting Entity - Continued 

3. Fund accounting structure 

DOL’s financial activities are accounted for by Federal account symbol, utilizing individual funds 

and fund accounts within distinct fund types, as discussed below. 

• Trust 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 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 Workmens’ Compensation Act Trust Fund, established under the 

authority District of Columbia Workmens’ 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. 

The Black Lung Disability Trust Fund, established under the Black Lung Benefit Act, provides 

compensation and medical benefits to coal miners who suffer disability due to pneumoconiosis, 

and compensation benefits to their dependent survivors. 

Gifts and Bequests uses miscellaneous funds received by gift or bequest to support various 

activities of the Secretary of Labor. 

• 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. 

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, 2004 and 2003 

FY 2004 Performance and Accountability Report 187

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – Continued 

A. Reporting Entity - Continued 

3. Fund accounting structure - 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 workers 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 associated 

administrative costs. The fund is currently used to provide general fund financing for emergency 

benefits as provided by the Temporary Extended Unemployment Compensation Act. 

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. 

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. 

 
Financial Section 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 

For the Years Ended September 30, 2004 and 2003 

188 United States Department of Labor 

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – Continued 

A. Reporting Entity - Continued 

3. Fund accounting structure - continued 

• General funds - continued

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 the Department of Labor 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. 

• Special funds

The Panama Canal Commission Compensation Fund was established to pay workers 

compensation obligations of the Panama Canal Commission under the Federal Employees’ 

Compensation Act from funding provided by the Commission. 

H-1b Funded provides demonstration grants to regional and local entities to provide technical 

skills training to unemployed and incumbent workers. The fund is 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. 

• 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. 

• Miscellaneous receipt and clearing accounts

Miscellaneous receipt accounts hold non-entity receipts and accounts receivable from DOL 

activities which by law, cannot be deposited into funds under DOL control. The U.S. Department 

of the Treasury automatically transfers all cash balances in these receipt accounts to the general 

fund of the Treasury at the end of each fiscal year. 

Clearing accounts hold monies which belong to DOL, but for which a specific receipt account has 

not been determined. 
Annual Financial Statements 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 

For the Years Ended September 30, 2004 and 2003 

FY 2004 Performance and Accountability Report 189

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – Continued 

A. Reporting Entity - Continued 

4. Inter-departmental relationships 

DOL and the Department of the Treasury (Treasury) are jointly responsible for the operations of 

the Unemployment Trust Fund and the Black Lung Disability Trust Fund. DOL is responsible for 

the administrative oversight and policy direction of the programs financed by these trust funds. 

Treasury acts as custodian over monies deposited into the funds and also invests amounts in 

excess of disbursing requirements in Treasury securities on behalf of DOL. DOL consolidates the 

financial results of the Unemployment Trust Fund and the Black Lung Disability Trust Fund into 

these financial statements. 

B. Basis of Accounting and Presentation 

These consolidated financial statements present the financial position, net cost of operations, changes in 

net position, budgetary resources, financing, and custodial activities of the U.S. Department of Labor, in 

accordance with accounting principles generally accepted in the United States of America and the form 

and content requirements of OMB Bulletin 01-09. They have been prepared from the books and records 

of DOL, and include the accounts of all funds under the control of the DOL reporting entity. All 

interfund balances and transactions have been eliminated, except in the Statement of Budgetary 

Resources. OMB Bulletin 01-09 requires that the Statement of Budgetary Resources be presented on a 

combined basis. 

OMB 01-09 requires budget authority and other resources allocated to another agency to be reported by 

the transferor of the appropriation in its financial statements unless the allocation transfer is material to 

the recipient’s financial statements. The activity relating to the allocation should be reported in all of the 

recipient’s financial statements, except the Statement of Budgetary Resources, when the allocation 

transfer is material to the recipient’s financial statements. The transferor should continue to report the 

appropriation and the related budgetary activity in its Statement of Budgetary Resources. 

 

DOL has allocated appropriations to the Department of Agriculture and the Department of Interior in 

fiscal years 2004 and 2003. These Departments consider this activity material to their respective financial 

statements, and therefore, DOL reports this activity only in the Combined Statement of Budgetary 

resources. Appropriations have been allocated to DOL from the Environmental Protection Agency, the 

General Service Administration, and the Agency for International Development, which DOL considers to 

be immaterial. These amounts are not included in the DOL financial statements. 

Accounting principles generally accepted in the United States of America 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. 
Financial Section 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 

For the Years Ended September 30, 2004 and 2003 

190 United States Department of Labor 

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – Continued 

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.) 

D. Investments 

DOL trust fund balances not required to meet current expenditures are invested by Treasury in interest 

bearing securities of the U.S. government. Balances held in the Unemployment Trust Fund are invested 

in non-marketable, special issue Treasury securities, 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 Longshore and Harbor Workers’ Trust Fund and the District of Columbia Trust 

Fund, as well as balances held in the Panama Canal Commission Compensation Fund, the Energy 

Employees Occupational Illness Compensation Fund and the Backwage Restitution Fund are invested in 

marketable Treasury securities. These investments are stated at amortized cost, which is equivalent 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. (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 Special Benefit Fund provides workers’ 

compensation (FECA) benefits to eligible Federal workers on behalf of other Federal agencies. 

DOL recognizes as accounts receivable amounts due from other Federal agencies to the Special 

Benefit Fund for unreimbursed FECA benefits. 

DOL also has receivables from other Federal agencies for work performed on their behalf under 

various reimbursable agreements. 
Annual Financial Statements 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 

For the Years Ended September 30, 2004 and 2003 

FY 2004 Performance and Accountability Report 191

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – Continued 

E. Accounts Receivable, Net of Allowance - Continued 

2. Accounts receivable due from the public 

DOL recognizes as accounts receivable State unemployment taxes due from covered employers. 

Also recognized as accounts receivable are benefit overpayments made by DOL to individuals not 

entitled to receive the benefit. 

DOL recognizes as accounts receivable amounts due from the public for fines and penalties 

levied against employers by OSHA, MSHA, ESA, and EBSA; for amounts due for backwages 

assessed against employers by ESA; and for amounts due from grantees and contractors for grant 

and contract costs disallowed by ETA. 

 3. Allowance for doubtful accounts 

Accounts receivable 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. (See Note 4.) 

F. Advances 

DOL advances consist primarily of payments made to State employment security agencies (SESAs), and 

to grantees and contractors to provide for future DOL program expenditures. These advance payments 

are recorded by DOL as an asset, which is reduced when actual expenditures or the accrual of unreported 

expenditures are recorded by DOL. (See Note 5.) 

G. Property, Plant and Equipment, Net of Depreciation 

The majority of DOL’s property, plant and equipment (PP&E) is general purpose PP&E held by Job 

Corps centers owned and operated by DOL through a network of contractors. DOL maintains the Capital 

Asset Tracking and Reporting System (CATARS) to account for Job Corp’s PP&E, as well as other 

general purpose PP&E used by the Department. Internal use software is considered general purpose 

PP&E. 

Real property purchases or improvements and leasehold improvements with a cost greater than $500,000 

and a useful life of 2 or more years, internal use software with a cost greater than $300,000 and a useful 

life of 2 or more years, and equipment with a cost of $50,000 or more and a useful life of 2 or more years 

are capitalized. PP&E acquisitions not meeting these criteria are charged to expense at the time of 

purchase. In 2001, PP&E (excluding internal use software) with a cost greater than $25,000 ($5,000 for 

the Working Capital Fund) and a useful life of 2 or more years and internal use software with a cost 

greater than $300,000 and a useful life of 2 or more years were capitalized. Prior to 2001, internally 

developed software in the Working Capital Fund with a cost greater than $5,000 was capitalized, when 

the cost was intended to be recovered through charges to other DOL users. Prior to 1996, PP&E with a 

cost greater than $5,000 and a useful life of 2 or more years were capitalized. PP&E acquisitions not 

meeting these criteria were charged to expense at the time of purchase. 
Financial Section 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 

For the Years Ended September 30, 2004 and 2003 

192 United States Department of Labor 

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – Continued 

G. Property, Plant and Equipment, Net of Depreciation - Continued 

Property, plant and equipment purchases and additions are stated at cost. Normal repairs and maintenance 

are charged to expense as incurred. Plant and equipment are depreciated over their estimated useful lives 

using the straight-line method of depreciation. 

Job Corps center construction costs are capitalized as construction-in-progress until completed. Upon 

completion they are reclassified as structures or facilities and depreciated over their estimated useful life. 

Leasehold improvements made at Job Corps centers and DOL facilities leased from the General Services 

Administration are recorded at cost and amortized over their useful lives, using the straight-line method of 

amortization. (DOL has no operating leases which extend for a period of more than one year.) 

Internal use software development costs are capitalized as software development in progress until the 

development stage has been completed and successfully tested. Upon completion and testing, software 

development-in-progress costs are reclassified as internal use software and amortized over their estimated 

useful life. 

The table below shows the major classes of DOL’s depreciable plant and equipment, and the depreciation 

periods used for each major classification. (See Note 6.) 

 Years 

Structures, facilities and improvements 20 - 50 

Furniture and equipment 2 - 36 

ADP software 2 - 15 

DOL grantees have acquired real and tangible property with Federal grant funds in which DOL has a 

reversionary interest when the property is disposed of or no longer used for its authorized purpose. DOL 

is entitled to a pro rata share of the proceeds from sale of the property or a pro rata share of the property’s 

fair market value, if the property is retained by the grantee but no longer used for DOL purposes. 

The value of DOL’s reversionary interest in real and tangible property acquired with Federal grant funds 

can not be determined until the grantee’s intention to sell or convert the property is known. 

H. Non-entity Assets 

Assets held by DOL which are not available to DOL for obligation are considered non-entity assets. DOL 

holds non-entity assets for the Railroad Retirement Board and for transfer to the U.S. Treasury. (See Note 

7.)
Annual Financial Statements 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 

For the Years Ended September 30, 2004 and 2003 

FY 2004 Performance and Accountability Report 193

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 for consumption, regardless of whether the available 

resources have been obligated. Liabilities are classified as not covered by budgetary resources if 

budgetary resources are not available for consumption. 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, 

in the event fund resources are not adequate to meet fund obligations. Spending 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 at a rate determined by 

the Secretary of the Treasury to be 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 5.250% to 

13.875% at September 30, 2004 and 2003. 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.) 

K. Accrued Leave 

A liability for annual and compensatory leave is accrued as leave is earned and paid when leave is taken. 

The balance of leave earned but not taken will be paid from future funding sources. Sick leave and other 

types of non-vested leave are expensed as taken. 
Financial Section 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 

For the Years Ended September 30, 2004 and 2003 

194 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 payable from various DOL funds, as discussed below. (See Note 9.) 

1. Unemployment benefits payable 

The Unemployment Trust Fund provides benefits to unemployed workers who meet State and 

Federal eligibility requirements. Regular and extended unemployment benefits are paid from 

State accounts within the Unemployment Trust Fund, financed primarily by a State 

unemployment tax on employer payrolls. Fifty percent of the cost of extended unemployment 

benefits is paid from the Extended Unemployment Compensation Account (EUCA) within the 

Unemployment Trust Fund, financed by a Federal unemployment tax on employer payrolls. 

Temporary extended unemployment benefits, which began in 2002, are paid from the EUCA and 

are financed by Federal unemployment tax and general fund appropriations. New claims for this 

program ended in January 2004. 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 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, 2004 and 2003 

FY 2004 Performance and Accountability Report 195

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. 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 Trust Fund and the District of Columbia 

Workmens’ Compensation 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. Future Workers’ Compensation Benefits 

The financial statements include a liability for future workers’ compensation benefits payable by DOL to 

its employees, to employees of the Panama Canal Commission and to enrollees of the Job Corps, as well 

as benefits not chargeable to other Federal agencies, which must be paid by DOL’s Federal Employees’ 

Compensation Act Special Benefit Fund. The liability includes the expected payments for death, 

disability, medical, and miscellaneous costs for approved compensation cases, as well as a component for 

incurred but not reported claims. The liability is determined using historical benefit payment patterns 

related to a specific incurred period to predict the ultimate payments related to that period. 

The methodology provides for the effects of inflation and adjusts historical payments to current year 

constant dollars by applying wage inflation factors (cost of living adjustments or COLAs) and medical 

inflation factors (consumer price index medical or CPIMs) to the calculation of projected benefits. The 

compensation COLAs and CPIMs used in the projections for 2004 and 2003 were as follows: 

 2004 2003 2004 2003

 FY COLA COLA CPIM CPIM

2003 2.70% 2.70% 4.49% 4.49% 

2004 2.13% 2.30% 4.10% 3.21% 

2005 2.03% 2.00% 4.14% 3.54% 

2006 2.73% 1.83% 3.96% 3.64% 

2007 2.40% 1.97% 3.98% 3.80% 

2008 2.40% 2.17% 3.99% 3.92% 

2009+ 2.40% 2.17% 4.02% 3.92% 
Financial Section 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 

For the Years Ended September 30, 2004 and 2003 

196 United States Department of Labor 

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – Continued 

M. Future Workers’ Compensation Benefits – Continued 

Projected annual payments were discounted to present value based on OMB’s interest rate assumptions 

for ten year Treasury notes. For 2004, interest rate assumptions were 4.9% in year one and 5.2% in year 

two and thereafter. For 2003, interest rate assumptions were 3.8% in year one and 4.4% in year two and 

thereafter. (See Note 10.) 

N. Energy Employees Occupational Illness Compensation Benefits 

The Energy Employees Occupational Illness Compensation Fund, established under the authority of the 

Energy Employees Occupational Illness Compensation Program Act of 2000 (EEOICPA), provides 

benefits to eligible current or former employees of the Department of Energy (DOE) and its contractors, 

or to certain survivors of those employees and contractors, as well as benefits to certain beneficiaries of 

the Radiation Exposure Compensation Act. 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. Compensation of $50,000 and payment of medical 

expenses from the date a claim is filed are available to individuals eligible for compensation under of the 

Radiation Exposure Compensation Act. 

DOL has recognized a $2.8 billion and $2.2 billion liability for estimated future benefits payable by DOL 

at September 30, 2004 and 2003, respectively, to eligible individuals under the EEOICPA. For fiscal year 

2004, the undiscounted liability is $4.4 billion discounted to a present value liability of $2.8 billion based 

on an interest rate of 5.24% projected over a sixteen year period. For fiscal year 2003, the undiscounted 

liability is $3.0 billion discounted to a present value liability of $2.2 billion based on an interest rate 

4.29% projected over a sixteen 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. 

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 2004, DOL’s contributions to 

the FEHBP and FEGLIP were $70.4 and $1.9 million, respectively. During 2003, DOL’s contributions to 

the FEHBP and FEGLIP were $63.4 and $1.9 million, respectively. These contributions are recognized as 

current operating expenses. 
Annual Financial Statements 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 

For the Years Ended September 30, 2004 and 2003 

FY 2004 Performance and Accountability Report 197

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – Continued 

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, and is offset by DOL through recognition of an imputed financing source. 

Using cost factors supplied by OPM, DOL recorded ORB expense and imputed financing sources of 

$60.8 million in 2004 and $53.2 million in 2003.

Q. Employee Pension Benefits 

DOL employees participate in either the Civil Service Retirement System (CSRS) or the Federal 

Employees’ Retirement System (FERS). For employees participating in CSRS, 7.0% of their gross 

earnings is withheld and transferred to the Civil Service Retirement and Disability Fund. DOL 

contributes an additional 7.0% of the employee gross earnings to the CSRS Retirement and Disability 

Fund. For employees participating in FERS, DOL withholds 0.8% of gross earnings, and matches the 

withholding with a 10.7% 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 FICA withholdings. 

DOL makes matching contributions to FICA, recognized as operating expenses. DOL’s matching FICA 

contributions were $58.7 million in 2004 and $54.4 million in 2003. 

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 9% of their gross 

pay to the TSP, but there is no departmental matching contribution. FERS participants may contribute up 

to 14% of their gross pay to the TSP. For employees covered under FERS, DOL contributes 1% of the 

employees’ gross pay to the TSP. DOL also matches 100% of the first 3% contributed and 50% of the 

next 2% contributed. DOL contributions to the TSP are recognized as current operating expenses. The 

maximum amount that either FERS or CSRS employees may contribute to the TSP in a calendar year is 

$13,000. 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. 
Financial Section 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 

For the Years Ended September 30, 2004 and 2003 

198 United States Department of Labor 

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – Continued 

Q. Employee Pension Benefits - Continued 

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 as non-exchange revenue an imputed financing source equal to the excess amount. DOL does 

not recognize in its financial statements FERS or CSRS assets, accumulated plan benefits or unfunded 

liabilities, if any, applicable to its employees. (See Note 13.) 

R. Net Position 

DOL’s net position consists of the following: 

1. Unexpended appropriations 

Unexpended appropriations include the unobligated balances and undelivered orders of DOL’s 

appropriated funds. Unobligated balances associated with appropriations that expire at the end of 

the fiscal year remain available for obligation adjustments, but not new obligations, until that 

appropriation is closed, five years after the appropriations expire. Multi-year appropriations 

remain available to DOL for obligation in future periods. 

2. Cumulative results of operations 

Cumulative results of operations includes 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 the program’s net operating 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 suborganization in Note 14 to the financial statements. Note 14 

also presents DOL’s net operating costs by the outcome goals adopted in the Department's Annual 

Performance Plan for FY 2004 and DOL’s net operating costs by budget function.
Annual Financial Statements 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 

For the Years Ended September 30, 2004 and 2003 

FY 2004 Performance and Accountability Report 199

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – Continued 

S. Net Cost of Operations - Continued 

2. Earned revenue 

Earned revenues arise from exchange transactions which occur through the provision of goods 

and services for a price, and are deducted from the full cost of DOL’s major programs to arrive at 

net program cost. Earned revenues are recognized by DOL to the extent reimbursements are 

payable from other Federal agencies and from the public, as a result of costs incurred or services 

performed on their behalf. Major sources of DOL’s earned revenue include reimbursements due 

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 due to the Unemployment Trust Fund from Federal agencies for 

the cost of unemployment benefits provided to or accrued on behalf of their employees. 

T. Budgetary Financing Sources 

Budgetary financing sources other than earned revenues provide funding for the Department’s net cost of 

operations and are reported on the Consolidated Statement of Changes in Net Position. These financing 

sources include appropriations received, less appropriations transferred and not available, non-exchange 

revenue, and transfers without reimbursement, as discussed below:

1. Appropriations received, appropriations transferred and appropriations not available 

DOL receives financing sources through congressional appropriations to support its operations. A 

financing source is recognized for these appropriated funds received, less appropriations 

transferred or not available through rescission or cancellation. 

2. Non-exchange revenue 

Non-exchange revenues arise from the Federal government’s power to demand payments from 

and receive donations from the public. Non-exchange revenues are recognized by DOL on the 

Consolidated Statement of Changes in Net Position for the transfer of employer and excise taxes 

from the entities collecting these taxes and for interest from investments, as discussed below: 

(See Note 15.) 

• Employer taxes

Employer tax revenues are recognized on a modified cash basis, to the extent of cash transferred 

by the collecting entity to DOL, plus the change in inter-entity balances between the collecting 

entity and DOL. Inter-entity balances represent revenue received by the collecting entity, net 

amounts due to the collecting entity and adjustments made to previous transactions by the 

collecting entity which have not been transferred to the receiving entity. 
Financial Section 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 

For the Years Ended September 30, 2004 and 2003 

200 United States Department of Labor 

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – Continued 

T. Budgetary Financing Sources - Continued 

2. Non-exchange revenue - continued 

• Employer taxes - continued

Federal and state unemployment taxes represent non-exchange revenues collected from 

employers based on wages paid to employees in covered employment. Federal unemployment 

taxes are collected by the Internal Revenue Service and transferred to designated accounts within 

the Unemployment Trust Fund. State unemployment taxes are collected by each State and 

deposited in separate State accounts within the Unemployment Trust Fund. Federal 

unemployment taxes are used to pay the Federal share of extended unemployment benefits and to 

provide for Federal and State administrative expenses related to the operation of the 

unemployment insurance program. State unemployment taxes are restricted in their use to the 

payment of unemployment benefits. 

• Interest

The Unemployment Trust Fund, Longshore and Harbor Workers’ Trust Fund, District of 

Columbia Trust Fund, the Panama Canal Commission Compensation Fund and the Energy 

Employees Occupational Illness Compensation Fund receive interest on fund investments. The 

Unemployment Trust Fund receives interest from states that had accounts with loans payable to 

the Federal unemployment account at the end of the prior fiscal year. Interest is also earned on 

Federal funds in the possession of non-Federal entities. Interest is recognized as non-exchange 

revenue when earned. 

• Assessments

The Longshore and Harbor Workers’ Trust Fund and District of Columbia Trust Fund receive 

non-exchange revenues from assessments levied on insurance companies and self-insured 

employers. Assessments are recognized as non-exchange revenues when due. 

• 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 their employees. 

These reimbursements are recognized as other non-exchange revenue when due. 

3. Transfers without reimbursement 

Other transfers recognized as financing sources by DOL include the transfer from various DOL 

general fund unexpended appropriation accounts to the Working Capital Fund’s cumulative 

results of operations. (See Note 16.) 
Annual Financial Statements 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 

For the Years Ended September 30, 2004 and 2003 

FY 2004 Performance and Accountability Report 201

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – Continued 

U. Other Financing Sources 

Other financing sources include nonexchange revenue and other items that do not represent budgetary 

resources. 

1. Imputed financing 

A financing source is imputed by DOL to provide for pension and other retirement benefit 

expenses recognized by DOL but financed by OPM. (See Notes 1-P and Q.)

2. Transfers without reimbursement 

Other transfers recognized as financing sources by DOL include the transfer of property from the 

General Services Administration to the Employment and Training Administration (ETA) to be 

used in ETA job training programs. (See Note 16.) 

V. Custodial Activity 

DOL collects and transfers to the general fund of the U.S. Treasury custodial non-exchange revenues for 

penalties levied against employers by OSHA, MSHA, ESA, and EBSA for regulatory violations, for ETA 

disallowed grant costs assessed against canceled appropriations and for FECA administrative costs 

assessed against government corporations in excess of amounts reserved to finance capital improvements 

in the Federal Employees’ Compensation Act Special Benefit Fund. These collections are not available to 

the agencies for obligation or expenditure. Penalties and other assessments are recognized as custodial 

revenues when collected or subject to collection. The source and disposition of these revenues are 

reported on the Consolidated Statements of Custodial Activity. (See Note 18.) 
Financial Section 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 

For the Years Ended September 30, 2004 and 2003 

202 United States Department of Labor 

NOTE 2 - FUNDS WITH U.S. TREASURY 

Funds with U.S. Treasury at September 30, 2004 consisted of the following: 

Funds with U.S. Treasury at September 30, 2003 consisted of the following: 

Unobligated Unobligated Obligated

Balance Balance Balance Not Total Non-entity

(Dollars in thousands) Available Unavailable Yet Disbursed Entity Assets Assets Total

Revolving funds 3,900 $ - $ 24,280 $ 28,180 $ - $ 28,180 $ 

Trust funds 149,034 53 52,908 201,995 2 201,997 

Appropriated funds 2,566,402 655,579 6,179,624 9,401,605 - 9,401,605 

Other - - - - 68,975 68,975

$ 655,632 2,719,336 $ 6,256,812 $ $ 9,631,780 $ 68,977 $ 9,700,757

Entity Assets

Unobligated Unobligated Obligated

Balance Balance Balance Not Total Non-entity

(Dollars in thousands) Available Unavailable Yet Disbursed Entity Assets Assets Total

Revolving funds 3,900 $ - $ 20,692 $ 24,592 $ - $ 24,592 $ 

Trust funds 99,076 184 (127,486) (28,226) (206) (28,432) 

Appropriated funds 2,458,905 293,596 6,782,608 9,535,109 - 9,535,109 

Other - - - - 84,244 84,244

$ 293,780 2,561,881 $ 6,675,814 $ $ 9,531,475 $ 84,038 $ 9,615,513

Entity Assets
Annual Financial Statements 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 

For the Years Ended September 30, 2004 and 2003 

FY 2004 Performance and Accountability Report 203

NOTE 3 - INVESTMENTS 

Investments at September 30, 2004 consisted of the following: 

Face Premium Net Market

(Dollars in thousands) Value (Discount) Value Value

Unemployment Trust Fund

Non-marketable

U.S. Treasury Certificates of Indebtedness

4.375% maturing June 30, 2005 10,238,570 $ - $ 10,238,570 $ 10,238,570 $ 

Special issue U.S. Treasury Bonds

4.375% maturing June 30, 2005 4,210,119 - 4,210,119 4,210,119 

6.250% maturing June 30, 2005 22,266,681 - 22,266,681 22,266,681 

5.500% maturing June 30, 2006 8,524,011 - 8,524,011 8,524,011

 45,239,381 - 45,239,381 45,239,381

Panama Canal Commission

 Compensation Fund

Marketable

U.S. Treasury Notes

3.625% to 7.875% various maturities 27,685 450 28,135 28,607 

U.S. Treasury Bonds

10.375% to 14.000% various maturities 49,428 6,494 58,767 55,922 

 77,113 6,944 84,057 87,374

Energy Employees Occupational Illness

 Compensation Fund

Marketable

U.S. Treasury Bill

1.720% maturing October 1, 2004 46,833 - 46,833 46,833 

Longshore and Harbor Workers' Trust Fund

Marketable

U.S. Treasury Bills

1.340% to 1.890% various maturities 69,863 (210) 69,653 69,653 

District of Columbia Trust Fund

Marketable 

U.S. Treasury Bills

1.320% to 1.790% various maturities 5,020 (13) 5,007 5,007 

Backwage Restitution Fund

Marketable

U.S. Treasury Bill

1.543% to 1.553% various maturities 1,593 (14) 1,579 1,579 

$ 45,439,803 $ 6,707 $ 45,446,510 $ 45,449,827

Entity investments $ 6,707 45,353,104 $ 45,359,811 $ 45,363,128 $ 

Non-entity investments 86,699 - 86,699 86,699 

$ 45,439,803 $ 6,707 $ 45,446,510 $ 45,449,827

 
Financial Section 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 

For the Years Ended September 30, 2004 and 2003 

204 United States Department of Labor 

NOTE 3 - INVESTMENTS - Continued 

Investments at September 30, 2003 consisted of the following: 

Face Premium Net Market

(Dollars in thousands) Value (Discount) Value Value

Unemployment Trust Fund

Non-marketable

U.S. Treasury Certificates of Indebtedness

4.625% maturing June 30, 2004 1,367,501 $ - $ 1,367,501 $ 1,367,501 $ 

Special issue U.S. Treasury Bonds

4.875% maturing June 30, 2004 522,089 - 522,089 522,089 

6.500% maturing June 30, 2004 14,068,830 - 14,068,830 14,068,830 

6.250% maturing June 30, 2005 23,705,952 - 23,705,952 23,705,952 

5.500% maturing June 30, 2006 8,524,011 - 8,524,011 8,524,011

 48,188,383 - 48,188,383 48,188,383

Panama Canal Commission

 Compensation Fund

Marketable

U.S. Treasury Notes

5.875% to 7.875% various maturities 13,747 43 13,790 14,882 

U.S. Treasury Bonds

8.750% to 14.000% various maturities 62,701 12,222 74,923 77,192

 76,448 12,265 88,713 92,074

Energy Employees Occupational Illness

 Compensation Fund

Marketable

U.S. Treasury Bill

0.950% maturing October 1, 2003 60,232 - 60,232 60,232 

Longshore and Harbor Workers' Trust Fund

Marketable

U.S. Treasury Bills

0.900% to 0.990% various maturities 64,438 (90) 64,348 64,348 

District of Columbia Trust Fund

Marketable 

U.S. Treasury Bills

0.900% to 0.960% various maturities 4,903 (5) 4,898 4,898 

Backwage Restitution Fund

Marketable

U.S. Treasury Bill

0.865% to 0.940% various maturities 1,592 (13) 1,579 1,579

$ 48,395,996 $ 12,157 $ 48,408,153 $ 48,411,514

Entity investments $ 12,157 48,339,233 $ 48,351,390 $ 48,354,751 $ 

Non-entity investments 56,763 - 56,763 56,763

$ 48,395,996 $ 12,157 $ 48,408,153 $ 48,411,514

 
Annual Financial Statements 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 

For the Years Ended September 30, 2004 and 2003 

FY 2004 Performance and Accountability Report 205

NOTE 4 - ACCOUNTS RECEIVABLE, NET OF ALLOWANCE

 

Accounts receivable at September 30, 2004 consisted of the following: 

Changes in the allowance for doubtful accounts during 2004 consisted of the following: 

 

Gross Net

(Dollars in thousands) Receivables Allowance Receivables

Entity intra-governmental assets

Due for UCFE and UCX benefits 333,918 $ - $ 333,918 $ 

Due for workers' compensation benefits 3,572,765 - 3,572,765 

Other 9,991 - 9,991 

 3,916,674 - 3,916,674

Entity assets

State unemployment taxes 755,789 (556,917) 198,872 

Due from reimbursable employers 659,820 (39,404) 620,416 

Benefit overpayments 2,091,586 (1,862,710) 228,876 

Other 6,991 (2,121) 4,870 

 3,514,186 (2,461,152) 1,053,034

Non-entity assets

Fines and penalties 115,869 (56,326) 59,543 

Backwages 24,846 (10,389) 14,457 

 140,715 (66,715) 74,000

 3,654,901 (2,527,867) 1,127,034

$ 7,571,575 $ (2,527,867) 5,043,708 $ 

Balance at Balance at

September 30, Revenue September 30,

(Dollars in thousands) 2003 Write-offs Adjustment Bad Debt 2004

Entity assets

State unemployment taxes (524,043) $ 307,970 $ (340,844) $ - $ (556,917) $ 

Due from reimbursable employers (36,072) 18,974 (22,306) - (39,404) 

Benefit overpayments (1,881,135) 688,846 - (670,421) (1,862,710) 

Other (481) 1,061 - (2,701) (2,121) 

 (2,441,731) 1,016,851 (363,150) (673,122) (2,461,152)

Non-entity assets

Fines and penalties (51,700) 8,504 (13,130) - (56,326) 

Backwages (921) - - (9,468) (10,389) 

 (52,621) 8,504 (13,130) (9,468) (66,715)

$ (2,494,352) $ 1,025,355 $ (376,280) $ (682,590) $ (2,527,867)
Financial Section 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 

For the Years Ended September 30, 2004 and 2003 

206 United States Department of Labor 

NOTE 4 - ACCOUNTS RECEIVABLE, NET OF ALLOWANCE - Continued

 

Accounts receivable at September 30, 2003 consisted of the following: 

Changes in the allowance for doubtful accounts during 2003 consisted of the following: 

Gross Net

(Dollars in thousands) Receivables Allowance Receivables

Entity intra-governmental assets

Due for UCFE and UCX benefits 254,464 $ - $ 254,464 $ 

Due for workers' compensation benefits 3,520,021 - 3,520,021 

Other 15,514 - 15,514

 3,789,999 - 3,789,999

Entity assets

State unemployment taxes 665,961 (524,043) 141,918 

Due from reimbursable employers 538,542 (36,072) 502,470 

Benefit overpayments 2,090,664 (1,881,135) 209,529 

Other 9,242 (481) 8,761

 3,304,409 (2,441,731) 862,678

Non-entity assets

Fines and penalties 113,206 (51,700) 61,506 

Backwages 16,425 (921) 15,504

 129,631 (52,621) 77,010

 3,434,040 (2,494,352) 939,688

$ 7,224,039 $ (2,494,352) $ 4,729,687

Balance at Balance at

September 30, Revenue September 30,

(Dollars in thousands) 2002 Write-offs Adjustment Bad Debt 2003

Entity assets

State unemployment taxes (518,847) $ 299,589 $ (304,785) $ - $ (524,043) $ 

Due from reimbursable employers (36,583) 17,273 (16,762) - (36,072) 

Benefit overpayments (1,731,612) 318,674 - (468,197) (1,881,135) 

Other (491) 2,115 - (2,105) (481)

 (2,287,533) 637,651 (321,547) (470,302) (2,441,731)

Non-entity assets

Fines and penalties (41,030) 6,966 (17,636) - (51,700) 

Backwages (3,825) 2,904 - - (921)

 (44,855) 9,870 (17,636) - (52,621)

$ (2,332,388) $ 647,521 $ (339,183) $ (470,302) $ (2,494,352)
Annual Financial Statements 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 

For the Years Ended September 30, 2004 and 2003 

FY 2004 Performance and Accountability Report 207

NOTE 5 – ADVANCES 

Advances at September 30, 2004 and 2003 consisted of the following: 

NOTE 6 - PROPERTY, PLANT AND EQUIPMENT, NET OF DEPRECIATION 

Property, plant and equipment at September 30, 2004 and 2003 consisted of the following: 

NOTE 7 - NON-ENTITY ASSETS 

Non-entity assets consisted of the following at September 30, 2004 and 2003: 

(Dollars in thousands) 2004 2003

Intra-governmental

Funds with U.S. Treasury 68,977 $ 84,038 $ 

Investments 56,763 86,699 

Interest receivable from investments 1,086 828 

 141,629 156,762 

Accounts receivable, net of allowance 74,000 77,010

$ 230,762 $ 218,639

(Dollars in thousands) 2004 2003

Advances to states for UI benefit payments 623,172 $ 471,592 $ 

Advances to grantees and contractors to finance future DOL program expenditures 146,463 8,798 

Other 688 7,397 

$ 777,032 $ 481,078

2003

Accumulated

Cost or Depreciation/ Net Book Net Book

(Dollars in thousands) Basis Amortization Value Value

Structures, facilities and improvements

Structures and facilities 801,869 $ (337,815) $ 464,054 $ 461,690 $ 

Improvements to leased facilities 356,904 (206,116) 115,492 150,788 

 1,158,773 (543,931) 614,842 577,182

Furniture and equipment

Equipment held by contractors 160,744 (154,718) 6,026 9,648 

Furniture and equipment 62,648 (33,338) 31,128 29,310 

 223,392 (188,056) 35,336 40,776

ADP software (54,059) 106,406 52,347 49,693 

Construction-in-progress - 106,668 106,668 96,831 

Land 67,076 - 66,076 67,076 

$ 1,662,315 $ (786,046) $ 830,558 876,269 $ 

2004
Financial Section 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 

For the Years Ended September 30, 2004 and 2003 

208 United States Department of Labor 

NOTE 8 - ADVANCES FROM U.S. TREASURY 

Advances from U.S. Treasury to the Black Lung Disability Trust Fund during 2004 consisted of the 

following: 

Advances from U.S. Treasury to the Black Lung Disability Trust Fund during 2003 consisted of the 

following: 

Assuming the continuation of current operating conditions, repayment of these and necessary future 

advances will require a change in the statutory operating structure of the fund. (See Note 19.) 

NOTE 9 – ACCRUED BENEFITS 

Accrued benefits at September 30, 2004 and 2003 consisted of the following: 

Balance at Balance at

September 30, Net September 30,

(Dollars in thousands) 2002 Borrowing 2003

Intra-governmental

Borrowing from the Treasury 7,718,557 $ $ 525,000 $ 8,243,557

$ 7,718,557 $ 525,000 $ 8,243,557

Balance at Balance at

September 30, Net September 30,

(Dollars in thousands) 2003 Borrowing 2004

Intra-governmental

Borrowing from the Treasury 8,243,557 $ $ 497,000 $ 8,740,557

$ 8,243,557 $ 497,000 $ 8,740,557

(Dollars in thousands) 2004 2003

State regular and extended unemployment benefits payable 869,504 $ 983,337 $ 

Federal extended unemployment benefits payable 36,265 76,528 

Federal temporary extended unemployment benefits 23,581 199,700 

Federal emergency unemployment benefits payable 31,951 28,391 

Federal employees' unemployment benefits payable 26,200 24,499 

Federal employees' unemployment benefits for existing

 claims due in the subsequent year 141,022 152,614

Total unemployment benefits payable 1,128,523 1,465,069 

Black lung disability benefits payable 55,542 25,654 

Federal employees' disability and 10(h) benefits payable 155,716 144,747 

Energy employees occupational illness compensation benefits payable 790 777 

Longshore and harbor workers disability benefits payable 3,155 2,172 

District of Columbia disability benefits payable 283 175

$ 1,344,009 $ 1,638,594
Annual Financial Statements 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 

For the Years Ended September 30, 2004 and 2003 

FY 2004 Performance and Accountability Report 209

NOTE 10 - FUTURE WORKERS' COMPENSATION BENEFITS 

DOL’s liability for future workers’ compensation benefits at September 30, 2004 and 2003 consisted of 

the following: 

(Dollars in thousands) 2004 2003

Projected gross liability of the Federal government

 for future FECA benefits $ 25,570,723 $ 27,054,049

Less liabilities attributed to other agencies:

U.S. Postal Service (8,379,832) (8,729,029) 

Department of Navy (2,744,041) (2,999,824) 

Department of Army (1,937,818) (2,081,971) 

Department of Veterans Affairs (1,752,895) (1,887,701) 

Department of Air Force (1,418,832) (1,558,355) 

Department of Transportation (1,020,500) (1,114,602) 

Department of Homeland Security (1,398,161) (1,103,401) 

Tennessee Valley Authority (594,461) (664,669) 

Department of Treasury (678,272) (782,903) 

Department of Agriculture (836,341) (939,818) 

Department of Justice (829,336) (839,748) 

Department of Interior (664,856) (711,565) 

Department of Defense, Other (955,952) (858,146) 

Department of Health and Human Services (266,389) (296,315) 

Social Security Administration (288,158) (305,289) 

General Services Administration (176,351) (195,552) 

Department of Commerce (179,186) (200,056) 

Department of Energy (95,184) (102,553) 

Department of State (59,984) (61,628) 

Department of Housing & Urban Development (78,622) (84,240) 

Department of Education (19,882) (22,265) 

National Aeronautics and Space Administration (68,876) (69,446) 

Environmental Protection Agency (40,281) (44,096) 

Small Business Administration (28,436) (31,822) 

Office of Personnel Management (13,077) (14,397) 

National Science Foundation (1,465) (1,649) 

Nuclear Regulatory Commission (8,114) (9,073) 

Agency for International Development (24,523) (27,400) 

Other (580,636) (626,605)

 (25,042,655) (26,461,924)

$ 528,068 $ 592,125

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 $ 241,639 228,487 $ 

FECA benefits due to eligible workers of DOL and Job Corp enrollees 236,560 280,398 

FECA benefits due to eligible workers of the Panama Canal Commission 63,021 70,088 

$ 528,068 $ 592,125
Financial Section 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 

For the Years Ended September 30, 2004 and 2003 

210 United States Department of Labor 

NOTE 11 - OTHER LIABILITIES 

Other liabilities at September 30, 2004 and 2003 consisted of the following current liabilities: 

NOTE 12 - LIABILITIES NOT COVERED BY BUDGETARY RESOURCES 

Liabilities not covered by budgetary resources at September 30, 2004 and 2003 consisted of the 

following: 

(Dollars in thousands) 2004 2003

Intra-governmental

Accrued payroll and benefits 8,281 $ 6,314 $ 

Unearned FECA assessments 39,261 44,577 

Non-entity receipts due to U.S. Treasury 59,542 61,506 

Amounts held for the Railroad Retirement Board 55,806 86,209 

Advances from other Federal agencies 1,134 1,981

Total intra-governmental 194,427 170,184

Accrued payroll and benefits 40,833 34,539 

Due to Backwage recipients 63,901 58,354 

Unearned assessment revenue 48,117 44,653 

Deposit and clearing accounts 20,738 38,561 

Readjustment allowances and other Job Corps liabilities 58,244 86,518 

Other advances 7,500 7,500

 239,333 270,125

$ 433,760 $ 440,309

(Dollars in thousands) 2004 2003

Intra-governmental

Advances from U.S. Treasury 8,740,557 $ $ 8,243,557

Future workers' compensation benefits 236,559 280,398 

Accrued annual leave 94,846 93,324 

Readjustment allowances and other Job Corps liabilities 58,244 86,518

 389,649 460,240

$ 9,130,206 $ 8,703,797
Annual Financial Statements 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 

For the Years Ended September 30, 2004 and 2003 

FY 2004 Performance and Accountability Report 211

NOTE 13 - PENSION EXPENSE 

Pension expense in 2004 consisted of the following: 

Pension expense in 2003 consisted of the following: 

 

NOTE 14 - PROGRAM COST 

Schedules A, B, and C present detailed cost and revenue information by suborganization (responsibility 

segment) for programs in the Department, the Employment and Training Administration, and the 

Employment Standards Administration in support of the summary information presented in the 

Consolidated Statement of Net Cost for 2004. 

Cost and revenue by suborganization for the nine outcome goals adopted in the Department’s Annual 

Performance Plan for FY 2004, submitted under the requirements of the Government Performance and 

Review Act (GPRA), are presented in schedule D. 

Detailed cost and revenue information by budget function for 2004 is presented in Schedule E and intragovernmental cost and revenue information by budget function for 2004 is presented in Schedule F. 

Accumulated Total

Employer Costs Imputed Pension

(Dollars in thousands) Contributions by OPM Expense

Civil Service Retirement System $ 48,827 39,378 $ 88,205 $ 

Federal Employees' Retirement System 2,954 65,834 68,788 

Thrift Savings Plan 25,755 - 25,755 

$ 130,967 $ 182,748 51,781 $ 

Accumulated Total

Employer Costs Imputed Pension

(Dollars in thousands) Contributions by OPM Expense

Civil Service Retirement System $ 46,281 31,473 $ 77,754 $ 

Federal Employees' Retirement System 3,199 72,622 75,821 

Thrift Savings Plan 28,712 - 28,712 

$ 132,807 $ 182,287 49,480 $ 
Financial Section 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 

For the Years Ended September 30, 2004 and 2003 

212 United States Department of Labor 

NOTE 14 - PROGRAM COST - Continued 

 

A. Consolidating Statement of Net Cost by Suborganization 

Net cost by suborganization for the year ended September 30, 2004 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 211,805 $ 782,018 $ - $ - $ 

With the public 46,152,478 4,285,156 - - 

 Total cost 46,364,283 5,067,174 - - 

Less earned revenue (901,861) (2,394,786) - - 

Net program cost 45,462,422 2,672,388 - - 

 Employment and training

Intra-governmental 56,263 - - - 

With the public 6,164,127 - - - 

 Total cost 6,220,390 - - - 

Less earned revenue (17,235) - - - 

Net program cost 6 - ,203,155 - - 

 Labor, employment and pension

 standards

Intra-governmental - 107,613 - - 

With the public - 227,619 - - 

 Total cost - 335,232 - - 

Less earned revenue - (970) - - 

Net program cost - 334,262 - - 

 Worker safety and health

Intra-governmental - - 114,460 - 

With the public - - 391,575 - 

 Total cost - - 506,035 - 

Less earned revenue - - (4,191) - 

Net program cost - - 501,844 - 

OTHER PROGRAMS

 Statistics

Intra-governmental - - - 179,644 

With the public - - - 356,809

 Total cost - - - 536,453 

Less earned revenue - - - (5,504)

Net program cost - - - 530,949

 Cost not assigned to programs - - - - 

Less earned revenue not

 attributed to programs - - - - 

Net cost not assigned to programs - - - - 

 Net cost of operations $ 3,006,650 51,665,577 $ $ 501,844 $ 530,949
Annual Financial Statements 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 

For the Years Ended September 30, 2004 and 2003 

FY 2004 Performance and Accountability Report 213

Mine Safety Employee Benefits Veterans' Other

and Health Security Employment Departmental

Administration Administration and Training Programs Eliminations Total

$ 4,666 - $ - $ 4,278 $ (29,816) $ 972,951 $ 

 - 10,776 - 8,755 7,534 50,464,699 

 15,442 - - 13,033 (22,282) 51,437,650 

 - - - (21) 22,282 (3,274,386) 

 - 15 - ,442 13,012 - 48,163,264

 - - 8,639 2,320 (22,580) 44,642 

 - - 197,709 5,054 22,485 6,389,375 

 - - 206,348 7,374 (95) 6,434,017 

 - - - - 95 (17,140) 

 - - 206,348 7,374 - 6,416,877

 39,486 - 518 32,127 (42,725) 137,019 

 - 109,490 11,664 171,911 42,725 563,409 

 148,976 - 12,182 204,038 - 700,428 

 - (10,351) - (154) - (11,475) 

 - 138,625 12,182 203,884 - 688,953

 - 90,874 - 227 (41,865) 163,696 

 204,182 - - 572 41,865 638,194 

 - 295,056 - 799 - 801,890 

 - (1,016) - - - (5,207) 

 294 - ,040 - 799 - 796,683

 - - - 454 (14,549) 165,549 

 - - - 1,198 14,549 372,556 

 - - - 1,652 - 538,105 

 - - - - - (5,504) 

 - - - 1,652 - 532,601

 - - - 100,383 (1,662) 98,721 

 - - - (22,305) 1,662 (20,643) 

 - - - 78,078 - 78,078 

$ 294,040 154,067 $ 218,530 $ $ 304,799 $ - 56,676,456 $ 
Financial Section 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 

For the Years Ended September 30, 2004 and 2003 

214 United States Department of Labor 

NOTE 14 - PROGRAM COST - Continued

 

B. Consolidating Statement of Net Cost - Employment and Training Administration 

Net cost of the Employment and Training Administration for the year ended September 30, 2004 

consisted of the following: 

 

 

Training and

Employment Employment

(Dollars in thousands) Security Programs Eliminations Total

CROSSCUTTING PROGRAMS

 Income maintenance

Benefits 41,431,384 $ 63 $ - $ 41,431,447 $ 

Grants 4,563,342 - - 4,563,342 

Interest 3,421 - - 3,421 

Other 365,837 236 - 366,073

 Total cost 46,363,984 299 - 46,364,283 

Less earned revenue (901,861) - - (901,861)

Net program cost 45,462,123 299 - 45,462,422

 Employment and training

Benefits - (8,217) - (8,217) 

Grants - 6,057,175 - 6,057,175 

Other - 171,432 - 171,432

 Total cost - 6,220,390 - 6,220,390 

Less earned revenue - (17,235) - (17,235)

Net program cost - 6,203,155 - 6,203,155

Net cost of operations $ 6,203,454 45,462,123 $ $ - $ 51,665,577
Annual Financial Statements 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 

For the Years Ended September 30, 2004 and 2003 

FY 2004 Performance and Accountability Report 215

NOTE 14 - PROGRAM COST - Continued 

C. Consolidating Statement of Net Cost - Employment Standards Administration 

Net cost of the Employment Standards Administration for the year ended September 30, 2004 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 4,150,302 $ - $ - $ - $ (1,982) $ 4,148,320 $ 

Interest 650,579 - - - - 650,579 

Other 268,275 - - - 268,275 - 

 Total cost 5,069,156 - - - (1,982) 5,067,174 

Less earned revenue - (2,396,768) - - 1,982 (2,394,786)

Net program cost 2 - ,672,388 - - - 2,672,388

 Labor, employment and

 pension standards

Benefits - 10,335 22,012 4,881 - 37,228 

Grants - - 16 - - 16 

Other - 83,229 175,121 39,638 297,988 - 

 Total cost - 93,564 197,149 44,519 - 335,232 

Less earned revenue - - (970) - (970) - 

Net program cost - 93,564 196,179 44,519 - 334,262

Net cost of operations $ 93,564 2,672,388 $ $ 196,179 $ 44,519 $ 3,006,650 - $ 
Financial Section 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 

For the Years Ended September 30, 2004 and 2003 

216 United States Department of Labor 

NOTE 14 - PROGRAM COST - Continued

 

D. Consolidating Statement of Net Cost by Outcome Goal 

Net cost by outcome goal for the year ended September 30, 2004 consisted of the following: 

Employment Employment Occupational Bureau of

and Training Standards Safety and Health Labor

(Dollars in thousands) Administration Administration Administration Statistics

A prepared workforce

Increase employment, earnings and assistance 5,230,392 $ - $ - $ - $ 

Less earned revenue (30,253) - - - 

Net program cost 5,200,139 - - - 

Increase the number of youth making a successful

 transition to work - 2,697,935 - - 

Less earned revenue (455) - - - 

Net program cost 2,697,480 - - - 

Improve the effectiveness of information and 

 analysis on the U.S. economy - - - 536,273 

Less earned revenue - - - (5,504)

Net program cost - - - 530,769

Total 7,897,619 - - 530,769

A secure workforce

Increase compliance with worker protection laws 2,259 237,995 - - 

Less earned revenue (13) (1,006) - - 

Net program cost 2,246 236,989 - - 

Protect worker benefits 44,653,510 5,073,637 - - 

Less earned revenue (888,375) (2,394,750) - - 

Net program cost 43,765,135 2,678,887 - - 

Total 43,767,381 2,915,876 - - 

Quality workplaces

Reduce workplace injuries, illnesses and, fatalities - - 505,845 - 

Less earned revenue - - (4,191) - 

Net program cost - - 501,654 - 

Foster equal opportunity workplaces - 90,367 - - 

Less earned revenue - - - - 

Net program cost - 90,367 - - 

Reduce exploitation of child labor, protect the basic

 rights of workers and strengthen labor markets - - - - 

Less earned revenue - - - - 

Net program cost - - - - 

Total - 90,367 501,654 - 

A competitive workforce

Promote job flexibility and minimize 

 regulatory burden 577 407 190 180 

Less earned revenue - - - - 

Net program cost 577 407 190 180

Total 577 407 190 180

Cost not assigned to goals - - - - 

Less earned revenue not attributed to goals - - - - 

Net cost not assigned to goals - - - - 

Net cost of operations 51,665,577 $ $ 3,006,650 $ 501,844 $ 530,949
Annual Financial Statements 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 

For the Years Ended September 30, 2004 and 2003 

FY 2004 Performance and Accountability Report 217

Mine Safety Employee Benefits Veterans' Other

and Health Security Employment Departmental

Administration Administration and Training Programs Eliminations Total

$ - - $ 205,868 $ 6,087 $ - $ 5,442,347 $ 

 - - - - - (30,253)

 - - 205,868 6,087 - 5,412,094

 - - - 5,574 (95) 2,703,414 

 - - - - 95 (360)

 - - - 5,574 - 2,703,054

 - - - 8,548 - 544,821 

 - - - - - (5,504)

 - - - 8,548 - 539,317

 - - 205,868 20,209 - 8,654,465

 2,746 - - 54,184 - 297,184 

 - - - - - (1,019)

 - 2 - ,746 54,184 - 296,165

 161,665 - - 65,953 (22,282) 49,932,483 

 - - (10,351) (175) 22,282 (3,271,369)

 - 151 - ,314 65,778 - 46,661,114

 - 154 - ,060 119,962 - 46,957,279

 - 294,800 - 16,467 - 817,112 

 - (1,016) - - - (5,207)

 293 - ,784 - 16,467 - 811,905

 - - 12,659 9,385 - 112,411 

 - - - - - - 

 - - 12,659 9,385 - 112,411

 - - - 96,603 - 96,603 

 - - - - - - 

 - - - 96,603 - 96,603

 293 - ,784 12,659 122,455 - 1,020,919

 7 256 3 4,078 - 5,698 

 - - - - - - 

 256 7 3 4,078 - 5,698

 256 7 3 4,078 - 5,698

 - - - 60,400 (1,662) 58,738 

 - - - (22,305) 1,662 (20,643)

 - - - 38,095 - 38,095

$ 154,067 294,040 $ 218,530 $ $ 304,799 $ - $ 56,676,456
Financial Section 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 

For the Years Ended September 30, 2004 and 2003 

218 United States Department of Labor 

NOTE 14 - PROGRAM COST - Continued 

 

E. Consolidating Statement of Net Cost by Budget Function 

Net cost by budget function for the year ended September 30, 2004 consisted of the following: 

Education,

Training and Income

(Dollars in thousands) Employment Health Security

CROSSCUTTING PROGRAMS

 Income maintenance

Intra-governmental 68,154 $ - $ 841,646 $ 

With the public 287,379 - 49,299,603

 Total cost 355,533 - 50,141,249 

Less earned revenue (78) - (3,274,308)

Net program cost 355,455 - 46,866,941

 Employment and training

Intra-governmental 38,973 - - 

With the public 6,190,693 - - 

 Total cost 6,229,666 - - 

Less earned revenue (17,140) - - 

Net program cost 6,212,526 - - 

 Labor, employment and pension standards

Intra-governmental 109,111 - 27,402 

With the public 440,236 - 111,565

 Total cost 549,347 - 138,967 

Less earned revenue (1,124) - (10,351)

Net program cost 548,223 - 128,616

 Worker safety and health

Intra-governmental 10,723 152,973 - 

With the public 37,550 600,644 - 

 Total cost 48,273 753,617 - 

Less earned revenue - (5,207) - 

Net program cost 48,273 748,410 - 

OTHER PROGRAMS

 Statistics

Intra-governmental 165,549 - - 

With the public 372,556 - - 

 Total cost 538,105 - - 

Less earned revenue (5,504) - - 

Net program cost 532,601 - - 

 Cost not assigned to programs - 98,721 - 

Less earned revenue not attributed

 to programs (20,643) - - 

Net cost not assigned to programs 78,078 - - 

Net cost of operations $ 7,775,156 $ 748,410 $ 46,995,557
Annual Financial Statements 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 

For the Years Ended September 30, 2004 and 2003 

FY 2004 Performance and Accountability Report 219

Veterans'

National Benefits and

Defense Services Total

$ - 63,151 $ 972,951 $ 

 - 877,717 50,464,699 

 - 940,868 51,437,650 

 - - (3,274,386) 

 - 940,868 48,163,264

 5,669 - 44,642 

 - 198,682 6,389,375 

 204,351 - 6,434,017 

 - - (17,140) 

 - 204,351 6,416,877

 506 - 137,019 

 - 11,608 563,409 

 12,114 - 700,428 

 - - (11,475) 

 - 12,114 688,953

 - - 163,696 

 - - 638,194 

 - - 801,890 

 - - (5,207) 

 - - 796,683

 - - 165,549 

 - - 372,556 

 - - 538,105 

 - - (5,504) 

 - - 532,601

 - - 98,721 

 - - (20,643) 

 - - 78,078

$ 940,868 $ 216,465 $ 56,676,456
Financial Section 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 

For the Years Ended September 30, 2004 and 2003 

220 United States Department of Labor 

NOTE 14 - PROGRAM COST - Continued 

F. Consolidating Statement of Net Cost by Budget Function (Intra-governmental) 

Net intra-governmental cost by budget function for the year ended September 30, 2004 consisted of the 

following: 

 

 

Education, Veterans'

Training, and Income National Benefits and

(Dollars in thousands) Employment Health Security Defense Services Total

CROSSCUTTING PROGRAMS

Income maintenance

Intra-governmental $ - 68,154 $ 841,646 $ 63,151 $ - $ 972,951 $ 

Less earned revenue (78) - (3,272,008) - - (3,272,086) 

Net program cost - 68,076 (2,430,362) 63,151 - (2,299,135)

Employment and training

Intra-governmental - 38,973 - - 5,669 44,642 

Less earned revenue (16,780) - - - - (16,780) 

Net program cost - 22,193 - - 5,669 27,862

Labor, employment and

 pension standards

Intra-governmental - 109,111 27,402 - 506 137,019 

Less earned revenue (95) - (9,804) - - (9,899) 

Net program cost - 109,016 17,598 - 506 127,120

Worker safety and health

Intra-governmental 152,973 10,723 - - - 163,696 

Less earned revenue - (2,363) - - - (2,363) 

Net program cost 10,723 150,610 - - - 161,333

OTHER PROGRAMS

Statistics

Intra-governmental - 165,549 - - - 165,549 

Less earned revenue (4,197) - - - - (4,197) 

Net program cost - 161,352 - - - 161,352

Cost not assigned to programs

Intra-governmental - 98,721 - - - 98,721 

Less earned revenue not

 attributed to programs (10,912) - - - - (10,912) 

Net cost not assigned to

 programs 87,809 - - - - 87,809 

Net cost of operations $ 150,610 459,169 $ $ (2,412,764) $ 63,151 $ (1,733,659) 6,175 $ 
Annual Financial Statements 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 

For the Years Ended September 30, 2004 and 2003 

FY 2004 Performance and Accountability Report 221

NOTE 14 - PROGRAM COST - Continued

Schedules G, H and I 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 2003. 

Detailed cost and revenue information by budget function for 2003 is presented in Schedule J and intragovernmental cost and revenue information by budget function for 2003 is presented in Schedule K. 
Financial Section 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 

For the Years Ended September 30, 2004 and 2003 

222 United States Department of Labor 

NOTE 14 - PROGRAM COST - Continued 

G. Consolidating Statement of Net Cost by Suborganization 

Net cost by suborganization for the year ended September 30, 2003 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 169,269 $ 711,102 $ - $ - $ 

With the public 58,047,556 2,750,513 - - 

 Total cost 58,216,825 3,461,615 - - 

Less earned revenue (633,588) (2,407,747) - - 

Net program cost 57,583,237 1,053,868 - - 

 Employment and training

Intra-governmental 62,255 - - - 

With the public 6,959,849 - - - 

 Total cost 7,022,104 - - - 

Less earned revenue (17,607) - - - 

Net program cost 7 - ,004,497 - - 

 Labor, employment and pension

 standards

Intra-governmental - 106,262 - - 

With the public - 232,908 - - 

 Total cost - 339,170 - - 

Less earned revenue - (1,879) - - 

Net program cost - 337,291 - - 

 Worker safety and health

Intra-governmental - - 105,801 - 

With the public - - 397,210 - 

 Total cost - - 503,011 - 

Less earned revenue - - (4,547) - 

Net program cost - - 498,464 - 

OTHER PROGRAMS

 Statistics

Intra-governmental - - - 182,072 

With the public - - - 346,741

 Total cost - - - 528,813 

Less earned revenue - - - (6,030)

Net program cost - - - 522,783

 Cost not assigned to programs - - - - 

Less earned revenue not

 attributed to programs - - - - 

Net cost not assigned to programs - - - - 

 Net cost of operations $ 64,587,734 1,391,159 $ $ 498,464 $ 522,783
Annual Financial Statements 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 

For the Years Ended September 30, 2004 and 2003 

FY 2004 Performance and Accountability Report 223

Mine Safety Employee Benefits Veterans' Other

and Health Security Employment Departmental

Administration Administration and Training Programs Eliminations Total

$ - - $ - $ 2,747 $ (30,724) $ 852,394 $ 

 - - - 5,332 5,139 60,808,540 

 - - - 8,079 (25,585) 61,660,934 

 - - - - 25,585 (3,015,750) 

 - - - 8,079 - 58,645,184

 - - 10,398 384 (29,328) 43,709 

 - - 208,563 972 29,351 7,198,735 

 - - 218,961 1,356 23 7,242,444 

 - - - - (23) (17,630) 

 - - 218,961 1,356 - 7,224,814

 42,054 - 624 31,543 (42,373) 138,110 

 - 113,054 12,373 59,826 41,697 459,858 

 155,108 - 12,997 91,369 (676) 597,968 

 - (9,441) - - 676 (10,644) 

 - 145,667 12,997 91,369 - 587,324

 - 94,387 - 201 (42,050) 158,339 

 203,052 - - 507 42,050 642,819 

 - 297,439 - 708 - 801,158 

 (804) - - - - (5,351) 

 296 - ,635 - 708 - 795,807

 - - - 225 (14,045) 168,252 

 - - - 574 12,453 359,768 

 - - - 799 (1,592) 528,020 

 - - - - 1,592 (4,438) 

 - - - 799 - 523,582

 - - - 126,691 (552) 126,139 

 - - - (30,221) 552 (29,669) 

 - - - 96,470 - 96,470 

$ 296,635 145,667 $ 231,958 $ $ 198,781 $ - 67,873,181 $ 
Financial Section 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 

For the Years Ended September 30, 2004 and 2003 

224 United States Department of Labor 

NOTE 14 - PROGRAM COST - Continued 

 

H. Consolidating Statement of Net Cost - Employment and Training Administration 

Net cost of the Employment and Training Administration for the year ended September 30, 2003 

consisted of the following: 

 

Training and

Employment Employment

(Dollars in thousands) Security Programs Eliminations Total

CROSSCUTTING PROGRAMS

 Income maintenance

Benefits 53,423,986 $ 62 $ - $ 53,424,048 $ 

Grants 4,336,284 - - 4,336,284 

Interest 3,350 - - 3,350 

Other 452,899 7,244 (7,000) 453,143

 Total cost 58,216,519 7,306 (7,000) 58,216,825 

Less earned revenue (640,588) - 7,000 (633,588)

Net program cost 57,575,931 7,306 - 57,583,237

 Employment and training

Benefits - 25,496 - 25,496 

Grants - 6,776,529 - 6,776,529 

Other - 220,079 - 220,079

 Total cost - 7,022,104 - 7,022,104 

Less earned revenue - (17,607) - (17,607)

Net program cost - 7,004,497 - 7,004,497

Net cost of operations $ 7,011,803 57,575,931 $ $ - $ 64,587,734
Annual Financial Statements 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 

For the Years Ended September 30, 2004 and 2003 

FY 2004 Performance and Accountability Report 225

NOTE 14 - PROGRAM COST - Continued 

I. Consolidating Statement of Net Cost - Employment Standards Administration 

Net cost of the Employment Standards Administration for the year ended September 30, 2003 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 2,608,321 $ - $ - $ - $ (1,893) $ 2,606,428 $ 

Interest 620,582 - - - - 620,582 

Other 234,605 - - - 234,605 - 

 Total cost 3,463,508 - - - (1,893) 3,461,615 

Less earned revenue (2,409,640) - - - 1,893 (2,407,747)

Net program cost 1 - ,053,868 - - - 1,053,868

 Labor, employment and

 pension standards

Benefits - 10,500 21,898 4,788 - 37,186 

Grants - - 366 - - 366 

Other - 85,362 180,189 36,067 301,618 - 

 Total cost - 95,862 202,453 40,855 - 339,170 

Less earned revenue - - (1,879) - (1,879) - 

Net program cost - 95,862 200,574 40,855 - 337,291

Net cost of operations $ 95,862 1,053,868 $ $ 200,574 $ 40,855 $ 1,391,159 - $ 
Financial Section 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 

For the Years Ended September 30, 2004 and 2003 

226 United States Department of Labor 

NOTE 14 - PROGRAM COST - Continued 

J. Consolidating Statement of Net Cost by Budget Function 

Net cost by budget function for the year ended September 30, 2003 consisted of the following: 

Education,

Training and Income

(Dollars in thousands) Employment Health Security

CROSSCUTTING PROGRAMS

 Income maintenance

Intra-governmental 55,543 $ - $ 768,731 $ 

With the public 181,892 - 60,866,574

 Total cost 237,435 - 61,635,305 

Less earned revenue (4,088) - (3,011,662)

Net program cost 233,347 - 58,623,643

 Employment and training

Intra-governmental 37,679 - - 

With the public 6,987,814 - - 

 Total cost 7,025,493 - - 

Less earned revenue (17,630) - - 

Net program cost 7,007,863 - - 

 Labor, employment and pension standards

Intra-governmental 110,374 - 27,131 

With the public 342,685 - 104,851

 Total cost 453,059 - 131,982 

Less earned revenue (1,879) - (8,765)

Net program cost 451,180 - 123,217

 Worker safety and health

Intra-governmental 11,027 147,312 - 

With the public 35,290 607,529 - 

 Total cost 46,317 754,841 - 

Less earned revenue - (5,351) - 

Net program cost 46,317 749,490 - 

OTHER PROGRAMS

 Statistics

Intra-governmental 168,252 - - 

With the public 359,768 - - 

 Total cost 528,020 - - 

Less earned revenue (4,438) - - 

Net program cost 523,582 - - 

 Cost not assigned to programs - 126,139 - 

Less earned revenue not attributed

 to programs (29,669) - - 

Net cost not assigned to programs 96,470 - - 

Net cost of operations $ 8,358,759 $ 749,490 $ 58,746,860
Annual Financial Statements 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 

For the Years Ended September 30, 2004 and 2003 

FY 2004 Performance and Accountability Report 227

Veterans'

National Benefits and

Defense Services Total

$ - 28,120 $ 852,394 $ 

 - (239,926) 60,808,540 

 - (211,806) 61,660,934 

 - - (3,015,750) 

 (211 - ,806) 58,645,184

 6,030 - 43,709 

 - 210,921 7,198,735 

 216,951 - 7,242,444 

 - - (17,630) 

 - 216,951 7,224,814

 605 - 138,110 

 - 12,322 459,858 

 12,927 - 597,968 

 - - (10,644) 

 - 12,927 587,324

 - - 158,339 

 - - 642,819 

 - - 801,158 

 - - (5,351) 

 - - 795,807

 - - 168,252 

 - - 359,768 

 - - 528,020 

 - - (4,438) 

 - - 523,582

 - - 126,139 

 - - (29,669) 

 - - 96,470

$ (211,806) $ 229,878 $ 67,873,181
Financial Section 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 

For the Years Ended September 30, 2004 and 2003 

228 United States Department of Labor 

NOTE 14 - PROGRAM COST - Continued 

K. Consolidating Statement of Net Cost by Budget Function (Intra-governmental) 

Net intra-governmental cost by budget function for the year ended September 30, 2003 consisted of the 

following: 

Education, Veterans'

Training, and Income National Benefits and

(Dollars in thousands) Employment Health Security Defense Services Total

CROSSCUTTING PROGRAMS

Income maintenance

Intra-governmental 55,543 $ - $ 768,731 $ 28,120 $ - $ 852,394 $ 

Less earned revenue (4,088) - (3,010,287) - - (3,014,375) 

Net program cost - 51,455 (2,241,556) 28,120 - (2,161,981)

Employment and training

Intra-governmental 37,679 - - - 6,030 43,709 

Less earned revenue (17,244) - - - - (17,244) 

Net program cost - 20,435 - - 6,030 26,465

Labor, employment and

 pension standards

Intra-governmental 110,374 - 27,131 - 605 138,110 

Less earned revenue 89 - (8,216) - - (8,127) 

Net program cost - 110,463 18,915 - 605 129,983

Worker safety and health

Intra-governmental 11,027 147,312 - - - 158,339 

Less earned revenue - (2,757) - - - (2,757) 

Net program cost 11,027 144,555 - - - 155,582

OTHER PROGRAMS

Statistics

Intra-governmental 168,252 - - - - 168,252 

Less earned revenue (3,440) - - - - (3,440) 

Net program cost - 164,812 - - - 164,812

Cost not assigned to programs

Intra-governmental 69,236 - - - - 69,236 

Less earned revenue not

 attributed to programs (19,446) - - - - (19,446) 

Net cost not assigned to

 programs 49,790 - - - - 49,790 

Net cost of operations $ 144,555 407,982 $ $ (2,222,641) $ 28,120 $ (1,635,349) 6,635 $ 
Annual Financial Statements 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 

For the Years Ended September 30, 2004 and 2003 

FY 2004 Performance and Accountability Report 229

NOTE 15 - NON-EXCHANGE REVENUE 

Non-exchange revenues reported on the Consolidated Statement of Changes in Net Position in 2004 and 

2003 consisted of the following: 

NOTE 16 - TRANSFERS WITHOUT REIMBURSEMENT 

Transfers from (to) other Federal agencies in 2004 and 2003 consisted of the following: 

(Dollars in thousands) 2004 2003

Employer taxes

Unemployment Trust Fund

Federal unemployment taxes 6,613,154 $ 6,514,194 $ 

State unemployment taxes 30,196,902 24,678,538

 31,192,732 36,810,056 

Black Lung Disability Trust Fund excise taxes 565,979 506,081

 37,376,035 31,698,813

Interest

Unemployment Trust Fund 3,447,565 2,522,421 

Longshore and Harbor Workers' Trust Fund 511 421 

District of Columbia Trust Fund 31 48 

Panama Canal Commission Compensation Fund 6,155 1,299 

Energy Employees Occupational Illness Compensation Fund 263 655 

Black Lung Disability Trust Fund (497) 308 

 2,525,135 3,454,045

Assessments

Longshore and Harbor Workers' Trust Fund 127,661 135,813 

District of Columbia Trust Fund 10,352 9,510 

Other (601) 552 

 145,564 137,723

Reimbursement of unemployment benefits from state and

 local governments and non-profit organizations

 to the Unemployment Trust Fund 2,411,887 2,050,363 

$ 42,458,621 $ 37,340,944

(Dollars in thousands) 2004 2003

Budgetary financing sources

From DOL general fund unexpended appropriation

 accounts to the DOL Working Capital Fund 3,000 $ 3,000 $ 

Other financing sources

From General Services Administration 1,063 2,123 

To General Services Administration (1,051) (2,809) 

 12 (686)

$ 2,314 3,012 $ 
Financial Section 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 

For the Years Ended September 30, 2004 and 2003 

230 United States Department of Labor 

NOTE 17 - STATUS OF BUDGETARY RESOURCES

 

A. Apportionment Categories of Obligations Incurred

Obligations incurred reported on the Combined Statement of Budgetary Resources in 2004 and 2003 

consisted of the following: 

B. Permanent Indefinite Appropriations

The Department of Labor’s permanent indefinite appropriations include all trust funds, the Federal 

Employees’ Compensation Act Special Benefit Fund, the Panama Canal Commission Compensation 

Fund, the Energy Employees Occupational Illness Compensation Fund, ETA and ESA H-1b funds, and 

portions of State Unemployment Insurance and Employment Service Operations and Federal 

Unemployment Benefits and Allowances. These funds are described in Note 1-A.3. 

C. Legal Arrangements Affecting Use of Unobligated Balances

Unemployment Trust Fund receipts are reported as budget authority in the Consolidated Statement of 

Budgetary Resources. The portion of UTF receipts collected in excess of amounts needed to pay benefits 

and other valid obligations are precluded by law from being available for obligation at year end. 

Therefore, these excess receipts are not classified as budgetary resources in the Consolidated Statement of 

Budgetary Resources and 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. 

D. Explanation of Differences Between the Statement of Budgetary Resources and the 

Budget of the United States Government

The Budget of the United States Government with actual amounts for the year ended September 30, 2004 

has not been published as of the issue date of these financial statements. This document will be available 

in February 2005. In addition, the reconciliation of the SF133 and the Statement of Budgetary Resources 

will be performed in Fiscal Year 2005 after the Department receives the final SF 133 reports from Trust 

Funds and allocated accounts. 

(Dollars in thousands) 2004 2003

Direct Obligations

Category A $ 3,815,410 3,961,569 $ 

Category B 10,399,454 10,265,880 

Exempt from apportionment 47,205,222 58,650,191

Total direct obligations 61,566,245 72,731,481

Reimbursable Obligations

Category A 150,970 154,951 

Category B 2,591,348 2,444,032

Total reimbursable obligations 2,746,299 2,595,002

$ 64,312,544 $ 75,326,483
Annual Financial Statements 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 

For the Years Ended September 30, 2004 and 2003 

FY 2004 Performance and Accountability Report 231

NOTE 17 - STATUS OF BUDGETARY RESOURCES – Continued 

D. Explanation of Differences Between the Statement of Budgetary Resources and the 

Budget of the United States Government - Continued

A reconciliation of budgetary resources, obligations incurred and outlays, as presented in the 

Consolidated Statement of Budgetary Resources, to amounts included in the Budget of the United States 

Government for the year ended September 30, 2003 is shown below. 

Unemployment Trust Fund receipts are reported as budget authority in the Consolidated 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 Consolidated 

Statement of Budgetary Resources. 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 amount 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, 2003, 

reclassified from unobligated balances to UTF unavailable collections, is presented below. 

Budgetary Obligations Total

(Dollars in millions) Resources Incurred Outlays

Consolidated Statement of Budgetary Resources $ 75,326 78,500 $ 69,574 $ 

Pension Benefit Guaranty Corporation reported separately 14,764 2,546 229 

Special benefits for disabled coal miners reported by 

 the Social Security Administration 410 420 421 

Reimbursements recognized as budgetary resources in the budget 639 639 639 

Accruals not reported in the budget 686 686 - 

Amounts in the budget not included in the Consolidated

 Statement of Budgetary Resources (43) (43) 

Amounts in the Consolidated Statement of Budgetary 

 Resources not included in the budget - - 9 

Expired accounts (460) (177) - 

Other (4) (3) (3) 

Budget of the United States Government $ 94,492 $ 70,869 79,394 $ 

(Dollars in millions) 2003

Unemployment Trust Fund unavailable collections, beginning $ 65,021

Budget authority from current year appropriations 37,584 

Less obligations (57,116)

Excess of obligations over budget authority (19,532) 

Unemployment Trust Fund unavailable collections, ending $ 45,489
Financial Section 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 

For the Years Ended September 30, 2004 and 2003 

232 United States Department of Labor 

NOTE 18 – SOURCES OF CUSTODIAL REVENUE 

Custodial revenues in 2004 consisted of the following: 

Custodial revenues in 2003 consisted of the following: 

Increase

Net (Decrease) in

Cash Less Cash Amounts to Total

(Dollars in thousands) Collections Refunds Collections be Collected Revenues

Civil monetary penalties

OSHA 59,563 $ - $ 59,563 $ (985) $ 58,578 $ 

MSHA 16,628 - 16,628 4,532 21,160 

EBSA 9,450 - 9,450 (1,520) 7,930 

ESA 23,789 (96) 23,693 136 23,829

 (96) 109,430 109,334 2,163 111,497 

ETA disallowed grant costs 4,853 (6) 4,847 128 4,975 

Other - 5,628 5,628 - 5,628

$ (102) 119,911 $ $ 119,809 $ 2,291 $ 122,100

Increase

Net (Decrease) in

Cash Less Cash Amounts to Total

(Dollars in thousands) Collections Refunds Collections be Collected Revenues

Civil monetary penalties

OSHA 60,390 $ - $ 60,390 $ 917 $ 61,307 $ 

MSHA 17,399 - 17,399 6,017 23,416 

EBSA 13,373 - 13,373 843 14,216 

ESA 24,370 (318) 24,052 (3,543) 20,509

 (318) 115,532 115,214 4,234 119,448 

ETA disallowed grant costs 15,526 (1,808) 13,718 (6,198) 7,520 

Other (80) 581 501 - 501

$ (2,206) 131,639 $ $ 129,433 $ (1,964) $ 127,469
Annual Financial Statements 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 

For the Years Ended September 30, 2004 and 2003 

FY 2004 Performance and Accountability Report 233

NOTE 19 - DEDICATED COLLECTIONS 

DOL is responsible for the operation of four major trust funds. The financial position of each trust fund 

as of September 30, 2004 is shown below. 

Longshore

Black Lung and Harbor District of

(Dollars in thousands) Unemployment Disability Workers' Columbia

Assets

Intra-governmental

Funds with U.S. Treasury 157,591 $ 43,777 $ 465 $ 2 $ 

Investments 45,239,381 - 69,653 5,007 

Accounts receivable, net

Due from other Federal agencies

 for UCX and UCFE benefits 333,918 - - - 

Interest receivable from investments 577,341 - - - 

Total intra-governmental 46,308,231 43,777 70,118 5,009 

Accounts receivable, net

State unemployment tax 198,872 - - - 

Due from reimbursable employers 620,416 - - - 

Benefit overpayments 196,156 9,651 - - 

Other - 1,003 1,317 280 

Advances to states 623,172 - - - 

Total assets $ 47,946,847 $ 54,431 $ 5,289 71,435 $ 

Liabilities

Intra-governmental

Accounts payable to DOL agencies 1,336,263 $ - $ - $ - $ 

Advances from U.S. Treasury - 8,740,557 - - 

Amounts held for the Railroad

 Retirement Board 86,209 - - - 

Total intra-governmental 1,422,472 8,740,557 - - 

Accrued benefits 1,128,523 25,318 3,155 283 

Other - - 3,979 44,138 

Total liabilities 2,550,995 8,765,875 47,293 4,262

Net position

Cumulative results of operations 45,395,852 (8,711,444) 1,027 24,142 

Total liabilities and net position $ 47,946,847 $ 54,431 $ 5,289 71,435 $ 
Financial Section 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 

For the Years Ended September 30, 2004 and 2003 

234 United States Department of Labor 

NOTE 19 - DEDICATED COLLECTIONS – Continued 

The net results of operations of each trust fund for the year ended September 30, 2004 is shown below. 

The financial position of each trust fund as of September 30, 2003 is shown below and on the following 

page. 

Longshore

Black Lung and Harbor District of

(Dollars in thousands) Unemployment Disability Workers' Columbia

Assets

Intra-governmental

Funds with U.S. Treasury (59,434) $ 30,432 $ 56 $ 4 $ 

Investments 48,188,383 - 64,348 4,898 

Accounts receivable, net

Due from other Federal agencies

 for UCX and UCFE benefits 254,677 - - - 

Interest receivable from investments 723,114 - - - 

Total intra-governmental 49,106,740 30,432 64,404 4,902 

Accounts receivable, net

State unemployment tax 141,918 - - - 

Due from reimbursable employers 502,470 - - - 

Benefit overpayments 179,479 10,638 - - 

Other 1,131 - 2,541 87 

Advances to states 471,592 - - - 

Total assets $ 50,402,199 $ 42,201 $ 66,945 $ 4,989

Longshore

Black Lung and Harbor District of

(Dollars in thousands) Unemployment Disability Workers' Columbia

Cost, net of earned revenues

Benefits (41,424,320) $ (344,340) $ (133,560) $ (10,800) $ 

Interest (3,421) (650,579) - - 

Administrative (293,243) (60) - - 

 (994,979) (41,720,984) (133,560) (10,800) 

Earned revenue - 823,315 - - 

 (40,897,669) (994,979) (133,560) (10,800)

Net financing sources

Taxes 36,810,056 565,979 - - 

Interest 2,522,421 309 421 30 

Assessments 2,411,887 - 135,813 10,352 

Transfers-in

Treasury 80,000 - - - 

DOL Entities 721,054 - - - 

Transfers-out

DOL entities (3,829,105) (55,743) (2,021) - 

 38,716,313 510,545 134,213 10,382

Net results of operations (2,181,356) (484,434) 653 (418) 

Net position, beginning of period 47,577,208 (8,227,010) 23,489 1,445

Net position, end of period $ 45,395,852 $ (8,711,444) $ 24,142 $ 1,027
Annual Financial Statements 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 

For the Years Ended September 30, 2004 and 2003 

FY 2004 Performance and Accountability Report 235

NOTE 19 - DEDICATED COLLECTIONS - Continued

 

The net results of operations of each trust fund for the year ended September 30, 2003 is shown below. 

Longshore

Black Lung and Harbor District of

(Dollars in thousands) Unemployment Disability Workers' Columbia

Cost, net of earned revenues

Benefits (53,417,598) $ (375,031) $ (133,286) $ (11,055) $ 

Interest (3,350) (620,582) - - 

Administrative (386,531) (59) - - 

 (995,672) (53,807,479) (133,286) (11,055) 

Earned revenue 613,146 - - - 

 (53,194,333) (995,672) (11,055) (133,286) 

Net financing sources

Taxes 31,192,732 506,081 - - 

Interest 3,447,565 (497) 511 48 

Assessments 2,050,363 - 127,661 9,510 

Transfers-out

DOL entities (3,315,901) (55,273) - (2,016) 

 33,374,759 450,311 9,558 126,156 

Net results of operations (19,819,574) (545,361) (7,130) (1,497) 

Net position, beginning of period 67,396,782 (7,681,649) 2,942 30,619 

Net position, end of period $ 47,577,208 $ (8,227,010) $ 1,445 23,489 $ 

Longshore

Black Lung and Harbor District of

(Dollars in thousands) Unemployment Disability Workers' Columbia

Liabilities

Intra-governmental

Accounts payable to DOL agencies 1,304,116 $ - $ - $ - $ 

Advances from U.S. Treasury - 8,243,557 - - 

Amounts held for the Railroad

 Retirement Board 55,806 - - - 

Total intra-governmental 1,359,922 8,243,557 - - 

Accrued benefits 1,465,069 25,654 2,172 175 

Other - - 3,369 41,284 

Total liabilities 2,824,991 8,269,211 3,544 43,456 

Net position

Cumulative results of operations 47,577,208 (8,227,010) 1,445 23,489 

Total liabilities and net position $ 50,402,199 $ 42,201 $ 4,989 66,945 $ 

Required Supplementary Stewardship Information 
Financial Section 

REQUIRED SUPPLEMENTARY STEWARDSHIP INFORMATION 

238 United States Department of Labor 

STEWARDSHIP INVESTMENTS IN HUMAN CAPITAL 

Stewardship investments are made by the DOL for the nation’s benefit. For accounting purposes, these 

investments are expensed as incurred, and reflected in the net cost of the DOL’s operations. Stewardship 

investments provide long-term benefits which cannot be measured in traditional financial reports. 

The DOL’s stewardship investments are in human capital, reported as expenses in the net cost of the 

DOL’s employment and training programs. These investments are intended to maintain or increase 

national economic productive capacity, as demonstrated by program outputs and outcomes. Within the 

DOL, the Employment and Training Administration and the Veterans’ Employment and Training Service 

administer programs which invest in human capital, as discussed below. 

Employment and Training Administration 

The U.S. Department of Labor, Employment and Training Administration’s (ETA) Federal investment in 

human capital comprises expenses incurred for training and employment services enacted under the 

Workforce Investment Act of 1998 (WIA), Job Training Partnership Act, as amended (JTPA), the Trade 

Act of 1974, as amended (Trade Act), School-To-Work Opportunities Act of 1994, as amended (STW), 

and Balanced Budget Act of 1997, as amended. This investment is made for the general public and the 

expenses incurred are intended to increase or maintain national economic productive capacity. The 

ETA’s investment in human capital for fiscal years 2000 to 2004, excluding the cost of internal Federal 

education and training, is presented below. 

Investment in Human Capital

1.00

2.00

3.00

4.00

5.00

6.00

7.00

8.00

2000 2001 2002 2003 2004

Fiscal Year

Dollars (in billions)
Annual Financial Statements 

REQUIRED SUPPLEMENTARY STEWARDSHIP INFORMATION 

FY 2004 Performance and Accountability Report 239

A brief description of the programs under each Act is as follows: 

Workforce Investment Act (Successor Legislation to the JTPA) 

• Youth Activities - Grants to provide financial assistance to States and U.S. territories to 

design and operate workforce investment activities for eligible youth. 

• Adult and Dislocated Worker Employment and Training Activities - Grants to provide 

financial assistance to States and U.S. territories to design and operate training programs for 

low income adults and re-employment services and retraining assistance to individuals 

dislocated from their employment. 

• Job Corps - Nationwide program carried out in partnership with States and communities to 

assist eligible youth to become more responsible, employable, and productive citizens. 

• National Programs - Grants to provide financial assistance in support of employment and 

training activities and opportunities for Native American, Migrant and Seasonal Farm 

Workers, and Disadvantaged Youth. 

Job Training Partnership Act (Antecedent Legislation to the WIA) 

• Adult Employment and Training - Grants to provide financial assistance to States and U.S. 

territories to design and operate training programs for low-income adults. 

• Dislocated Worker Employment and Training - Grants to provide re-employment services 

and retraining assistance to individuals dislocated from their employment. 

• Youth Training - Grants to provide financial assistance to States and U.S. territories to 

design and operate training programs for economically disadvantaged youth. 

• Summer Youth Employment and Training - Grants to operate programs of employment 

and opportunities, as well as academic enrichment for economically disadvantaged youth 

during the summer months. 

• Native Americans - Grants to Indian tribes and other Native American groups to provide 

training, work experience, and other employment-related services to Native Americans. 

• Migrant and Seasonal Farm Workers - Grants to public agencies and nonprofit groups to 

provide training and other employability development services to economically 

disadvantaged families whose principal livelihood is gained in migratory and other forms of 

seasonal farm work. 

• Veterans Employment - Grants or contracts to provide disabled, Vietnam era, and recently 

separated veterans with programs to meet their unique employment and training needs. 

• National Activities - Provides program support for JTPA activities and nationally 

administered programs for segments of the population that have special disadvantages in the 

labor market. 
Financial Section 

REQUIRED SUPPLEMENTARY STEWARDSHIP INFORMATION 

240 United States Department of Labor 

Trade Act of 1974 

• Trade Adjustment Assistance - Adjustment assistance, including cash weekly benefits, 

training, job search, and relocation allowances provided to workers as authorized by the 

Trade Act of 1974, as amended. 

• North American Free Trade Agreement (NAFTA) - Transition adjustment assistance, 

including weekly cash benefits, training, job search, and relocation allowances provided to 

workers determined to be adversely affected as a result of the NAFTA as authorized by the 

Trade Act of 1974, as amended. 

School-To-Work Opportunities Act 

• School-To-Work Opportunities - Grants to States and localities, jointly administered by the 

DOL and U.S. Department of Education to build systems that provide youth with the 

knowledge and skills necessary to make an effective transition from school to careers through 

work-based learning, school-based education, and connecting activities.

Balanced Budget Act of 1997 

• Welfare-To-Work Opportunities - Grants to States and localities, jointly administered by the 

DOL and U.S. Department of Health and Human Services to build programs to provide 

recipients receiving assistance under State funded programs with the knowledge and skills 

necessary to make an effective transition to unsubsidized employment opportunities.
Annual Financial Statements 

REQUIRED SUPPLEMENTARY STEWARDSHIP INFORMATION 

FY 2004 Performance and Accountability Report 241

Veterans’ Employment and Training Service 

The mission of Veterans’ Employment and Training Service (VETS) is to provide veterans and 

transitioning service members with the resources and services to succeed in the 21st Century workforce, 

by maximizing their employment opportunities, protecting their employment rights, and meeting labor 

market demands with qualified veterans. The Agency’s vision is embodied in this statement: Veterans 

Succeeding in the 21st Century Workforce. 

VETS can be classified into two main areas, Career Counseling and Employment Services, and Transition 

and Reemployment Services. Brief descriptions follow: 

Career Counseling and Employment Services 

Disabled Veterans Outreach Program Specialist (DVOP) - This program is codified at 38 U.S.C. 

4103A. DVOP grants are made to State Workforce Agencies (SWAs) according to a distribution formula 

prescribed by law. DVOP staff provide counseling, assessment, lifelong learning skills and/or referral to 

training for veterans, particularly those with disabilities or recently separated from the military. 

Local Veterans’ Employment Representative (LVER) - This program is codified at 38 U.S.C. 4104. 

The program provides grants to SWAs for the appointment of LVER staff positions identified in Job 

Service local offices and One-Stop Career Centers to enhance the services provided to veterans through 

oversight, technical support, and direct provision of services. LVER staffs help veterans into productive 

employment through lifelong learning services. 

Homeless Veterans’ Reintegration Project (HVRP) - The HVRP, codified at 38 U.S.C. 2021, provides 

employment assistance to homeless veterans through grants to both urban and other areas. 

Veterans’ Workforce Investment Program (VWIP) - The VWIP, codified at 29 U.S.C. 2913, provides 

targeted veterans training and/or employment opportunities. The program targets service connected 

disabled veterans, recently separated, campaign badge veterans and veterans with significant employment 

barriers. 

Transition and Reemployment Services 

Transition Assistance Program (TAP) - Authority for TAP is provided in 38 U.S.C. 4215 and 10 

U.S.C. 1144. TAP operates as a partnership between the Departments of Labor, Defense, and Veterans 

Affairs. This partnership also exists at the local level, where memoranda of understanding spell out the 

responsibilities of SWAs, military installations, VETS staff and VA facilities. The program provides 

separating service members and their spouses or individuals retiring from military service with career 

counseling and training on becoming productive members of society through employment. TAP 

workshops are provided throughout the Nation and overseas. 

Uniformed Services Employment and Reemployment Rights and Veteran’s Preference Rights 

(USERRA) - is codified at 38 U.S.C. Chapter 43. The Uniformed Services Employment and 

Reemployment Rights Act of 1994 (USERRA) succeeded Veterans’ Reemployment Rights statutes. 

USERRA continues to protect civilian job rights and benefits for veterans, members of the National 

Guard and Reserves. Veteran’s Preference for Federal employment is codified in 5 U.S.C. 2108. VETS 

educates both employee and employer so they better understand the rights of the individuals and promotes 

a more productive relationship between employer and employee.
Financial Section 

REQUIRED SUPPLEMENTARY STEWARDSHIP INFORMATION 

242 United States Department of Labor 

The full cost of VETS major programs is presented below. Full costs include all direct program costs and 

those indirect costs which can reasonably be assigned or allocated to the program. 

A summary of program outputs is presented below. 

(Dollars in thousands) 2004 2003 2002 2001

Program Expenses

Career Counseling and Employment Services

Disabled Veterans Outreach Program $ 84,063 * $ 82,582 87,013 $ 84,681 $ 

Local Veterans' Employment Representative 82,148 78,320 77,977 80,155 

Transition and Reemployment Services 28,500 25,957 25,635 27,970

$ 190,883 $ 195,118 $ 186,194 $ 192,806

Program Outputs 2004 2003 2002 2001

Disabled Veterans Outreach Program

Participants employed 281,591 na 120,400 131,000 

Disabled veterans 32,993 na 15,057 16,000 

Special disabled veterans 13,929 na 7,107 8,000 

Participants assisted 507,190 na 584,719 581,000 

Local Veterans' Employment Representative

Participants employed 286,720 na 128,450 138,700 

Disabled veterans 29,391 na 13,533 14,000 

Special disabled veterans 12,015 na 6,233 6,500 

Participants assisted 529,911 na 639,694 733,600 

Transition and Reemployment Services

Participants served 130,000 * 104,000 110,055 112,000 

Workshops 3,200 3,142 3,151 3,181 

Uniformed Services Employment and Reemployment

Briefings, presentations, and technical assistance 9,300 * 5,436 10,081 3,200 

Individuals briefed or assisted 59,300 66,545 54,050 - 

* - Projected data.

na - Data not available.
Annual Financial Statements 

REQUIRED SUPPLEMENTARY STEWARDSHIP INFORMATION 

FY 2004 Performance and Accountability Report 243

SOCIAL INSURANCE PROGRAMS

The Federal Accounting Standards Advisory Board (FASAB) has classified certain government income 

transfer programs as social insurance programs. Recognizing that these programs have complex 

characteristics that do not fit traditional accounting models, the FASAB has developed accounting 

standards for social insurance programs which require the presentation of supplementary information to 

facilitate the assessment of the program’s long term sustainability. 

The U.S. Department of Labor operates two programs classified under Federal accounting standards as 

social insurance programs, the Unemployment Insurance Program and the Black Lung Disability Benefits 

Program. Presented below is the supplementary information for the two programs. 

Unemployment Insurance Program 

The Unemployment Insurance (UI) Program was created in 1935 to provide income assistance to 

unemployed workers who lose their jobs through no fault of their own. The program protects workers 

during temporary periods of unemployment through the provision of unemployment compensation 

benefits. These benefits replace part of the unemployed worker’s lost wages and, in so doing, stabilize 

the economy during recessionary periods by increasing the unemployed’s purchasing power. The UI 

program operates counter cyclically, with benefits exceeding tax collections during recessionary periods 

and UI tax revenues exceeding benefit payments during periods of recovery. 

Program Administration and Funding

The UI program is administered through a unique system of Federal-State partnerships, established in 

Federal law but executed through conforming State laws by State officials. The Federal government 

provides broad policy guidance and program direction through the oversight of the U.S. Department of 

Labor, while program details are established through individual State UI statutes, administered through 

State UI agencies. 

Federal and State Unemployment Taxes 

The UI program is financed through the collection of Federal and State unemployment taxes levied on 

subject employers and deposited in the Unemployment Trust Fund (UTF). The UTF was established to 

account for the receipt, investment and disbursement of unemployment taxes. Federal unemployment 

taxes are used to pay for the administrative costs of the UI program, including grants to each State to 

cover the costs of State UI operations and the Federal share of extended UI benefits. Federal 

unemployment taxes are also used to maintain a loan account within the UTF, from which insolvent 

States may borrow funds to pay UI benefits. State UI taxes are used exclusively for the payment of 

regular UI benefits, as well as the State’s share of extended benefits. 

Federal Unemployment Taxes

Under the provisions of the Federal Unemployment Tax Act (FUTA), a Federal tax is levied on 

covered employers, at a current rate of 6.2% of the first $7,000 in annual wages paid to each 

employee. This Federal tax rate is reduced by a credit of up to 5.4%, granted to employers 

paying State UI taxes under conforming State UI statutes. Accordingly, in conforming States, 

employers pay an effective Federal tax of 0.8%. Federal unemployment taxes are collected by 

the Internal Revenue Service. 
Financial Section 

REQUIRED SUPPLEMENTARY STEWARDSHIP INFORMATION 

244 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. 

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 nonrepayable advances from the general fund of the Treasury to finance emergency unemployment 

compensation benefits. Emergency unemployment benefits require Congressional authorization. 
Annual Financial Statements 

REQUIRED SUPPLEMENTARY STEWARDSHIP INFORMATION 

FY 2004 Performance and Accountability Report 245

The Federal Employees Compensation Account (FECA) was established pursuant to Section 909 

of the Act. The FEC account provides funds to States for unemployment compensation benefits 

paid to eligible former Federal civilian personnel and ex-service members. Generally, benefits 

paid are reimbursed to the Federal Employees Compensation Account by the various Federal 

agencies. Any additional resources necessary to assure that the account can make the required 

payments to States, due to the timing of the benefit payments and subsequent reimbursements, 

will be provided by 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. 

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. 
Financial Section 

REQUIRED SUPPLEMENTARY STEWARDSHIP INFORMATION 

246 United States Department of Labor 

Extended UI Benefits

The Federal/State Extended Unemployment Compensation Act of 1970 provides for the 

extension of the duration of UI benefits during periods of high unemployment. When the insured 

unemployment level within a State, or in some cases total unemployment, reaches certain 

specified levels, the State must extend benefit duration by fifty percent, up to a combined 

maximum of 39 weeks. Fifty percent of the cost of extended unemployment benefits is paid from 

the Extended Unemployment Compensation Account within the UTF, and fifty percent by the 

State, from the State’s UTF account. 

Emergency UI Benefits

During prolonged periods of high unemployment, Congress may authorize the payment of 

emergency unemployment benefits to supplement extended UI benefit payments. Emergency 

benefits are currently being paid under the Temporary Extended Unemployment Compensation 

Act. The program is currently phasing out. No new claimants have been allowed to enter the 

program since January 2004 and no benefits will be paid after January 2005. Emergency benefit 

payments totaling $4.2 and $10.7 billion were paid in FY 2004 and 2003, respectively, and 

payments in excess of $23 billion have been paid since inception of the program in March 2002. 

The benefits under this program are paid from Federal unemployment taxes and general fund 

appropriations in EUCA. 

 

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, 2004, total assets within the UTF exceeded liabilities by $45.4 billion. This fund 

balance approximates the accumulated surplus of tax revenues and earnings on these revenues over 

benefit payment expenses and is available to finance benefit payments in future periods when tax 

revenues may be insufficient. Treasury invests this accumulated surplus in Federal securities. The net 

value of these securities at September 30, 2004 was $45.2 billion. These investments accrue interest, 

which is distributed to eligible State and Federal accounts within the UTF. Interest income from these 

investments during FY 2004 was $2.4 billion. Federal and State UI tax and reimbursable revenues of 

$39.2 billion and regular, extended and emergency benefit payment expense of $41.4 billion were 

recognized for the year ended September 30, 2004. 

As discussed in Note 1.L.1 to the consolidated financial statements, DOL recognized a liability for 

regular, extended and temporary extended unemployment benefits to the extent of unpaid benefits 

applicable to the current period. Accrued unemployment benefits payable at September 30, 2004 were 

$1.1 billion. 
Annual Financial Statements 

REQUIRED SUPPLEMENTARY STEWARDSHIP INFORMATION 

FY 2004 Performance and Accountability Report 247

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. 
Financial Section 

REQUIRED SUPPLEMENTARY STEWARDSHIP INFORMATION 

248 United States Department of Labor 

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 5.35% during FY 2005, decreasing to 5.10% in FY 2008 and thereafter. Total cash inflows 

exceed total cash outflows for all years projected. The net inflow peaks at $7.6 billion in FY 

2007 and decreases to $3.0 billion in FY 2010, indicating that States have replenished their funds 

to desired levels. 

These projections, excluding interest earnings, indicate net cash inflows from FY 2005 to FY 

2009, then net cash outflows for four of the next five years. This crossover back to net outflows 

implies that the fund must rely on interest earnings to keep growing. 

Chart I

Excludes the Federal Employee Compensation Account 

Unemployment Trust Fund 

Cash Inflow and O utflow

30

35

40

45

50

55

60

65

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

$ - Billions

T o ta l C a s h Inf lo ws C a s h In flo w E xc lu din g In te re s t To ta l C as h Outflo w

Excludes the Federal Employee Compensation Account 
Annual Financial Statements 

REQUIRED SUPPLEMENTARY STEWARDSHIP INFORMATION 

FY 2004 Performance and Accountability Report 249

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, 2014. Yearly projected total cash inflows, 

including interest earnings, and cash outflows are depicted, as well as the net effect of this cash 

flow on UTF assets. 

Total cash inflows exceed cash outflows for all years projected, with this excess peaking in 2007. 

Starting at $51.7 billion in FY 2005, net UTF assets increase by 87% over the next nine years to 

$96.5 billion by the end of FY 2014. 

Chart II 

Excludes the Federal Employee Compensation Account 

Unemployment Trust Fund 

Effect of Net Cash Flow on Net Assets

30

40

50

60

70

80

90

100

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

$ - Billions

Total Cash Inflows Total Cash O utflows Net Assets

Excludes the Federal Employee Compensation Account 
Financial Section 

REQUIRED SUPPLEMENTARY STEWARDSHIP INFORMATION 

250 United States Department of Labor 

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, 2014, 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 2007, 

net cash outflows are projected in FY 2006 through FY 2008. Net cash inflows are reestablished 

in FY 2009 and peak in FY 2012 with a drop in the unemployment rate to 5.18%. Net assets 

never fall below $33.9 billion and are within $6.4 billion of the balance under expected economic 

conditions by 2014. The crossover pattern remains the same when interest earnings are excluded. 

Chart III 

Excludes the Federal Employee Compensation Account 

Unemployment Trust Fund 

Effect of Net Cash Flow on Net Assets

0

10

20

30

40

50

60

70

80

90

100

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

$ - Billions

To ta l C a s h Inflo ws To tal Cas h Outflo ws Net As s ets
Annual Financial Statements 

REQUIRED SUPPLEMENTARY STEWARDSHIP INFORMATION 

FY 2004 Performance and Accountability Report 251

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 10.15% in FY 2008. 

Under this scenario, net cash outflows are projected in FY 2006 through FY 2009, with the fund 

in a deficit situation from 2008 to 2012. The net assets of the UTF decrease from $50.9 billion in 

FY 2005 to negative $28.9 billion in 2009, a decline of $79.8 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 discussion of State solvency measures following.) 

Net cash inflows are reestablished in FY 2010, with a drop in the unemployment rate to 7.28%. 

By the end of FY 2014, this positive cash flow has replenished UTF account balances to $38.7 

billion at a growth rate higher than prior to the recession. This example demonstrates the counter 

cyclical nature of the UI program, which experiences net cash outflows during periods of 

recession, to be replenished through net cash inflows during periods of recovery. However, at the 

end of the projection period, net assets are still $57.8 billion less than under expected economic 

conditions. 

Chart IV 

Tables containing the total yearly cash inflow, interest earnings and cash outflow for each 

scenario are presented in the following pages. 

Excludes the Federal Employee Compensation Account 

Excludes the Federal Employee Compensation Account Unemployment Trust Fund 

Effect of Net Cash Flow on Net Assets

(40)

(20)

0

20

40

60

80

100

120

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014

$ - Billions

To ta l C a s h Inflo ws To tal Cas h Outflo ws Net As s ets

Excludes the Federal Employee Compensation Account 
252 United States Department of Labor 

(Do llars in tho us ands ) 2005 2006 2007 2008 2009 2010 2011 2012 B alanc e , s tart o f ye ar $ 45,240,552 51,713,792 $ 58,699,634 $ 66,282,965 $ 72,041,495 $ 76,349,212 $ 79,309,577 $ 83,053,670 $ 8

$ 

Cas h inflo w

State unemployment taxes 36,507,000 38,884,000 40,255,000 41,350,000 41,808,000 42,198,000 44,714,000 47,345,000 4

 

Federal unemployment taxes 7,007,000 7,133,000 7,325,000 5,953,000 5,822,000 6,104,000 6,588,000 7,094,000 

 

General revenue appropriation 400 600 700 600 800 800 800 800 

 

Interest on loans 46,000 16,000 14,000 24,000 37,000 57,000 72,000 96,000 

 

CMIA receipts 3,000 3,000 3,000 3,000 3,000 3,000 3,000 3,000 

 

Deposits by the Railroad Retirement Board 102,500 109,100 125,200 126,100 111,000 100,000 107,900 121,700 

Total cash inflow excluding interest 43,665,900 46,145,700 47,722,900 47,456,700 47,781,800 48,462,800 51,485,700 54,660,500 5

 

Interest on Federal securities 2,381,221 2,345,688 2,629,035 2,963,831 3,441,631 3,823,401 4,111,480 4,402,242 

Total cash inflow 46,047,121 48,491,388 50,351,935 50,420,531 51,223,431 52,286,201 55,597,180 59,062,742 

 

Cas h o utflo w

State unemployment benefits 35,551,000 37,620,000 38,907,000 40,782,000 43,022,000 45,370,000 47,818,000 50,317,000 5

 

State administrative costs 3,762,902 3,627,898 3,602,516 3,617,053 3,626,668 3,681,993 3,754,571 3,829,367 

 

Federal administrative costs 142,760 143,221 145,857 148,898 151,581 156,119 160,700 165,326 

 

Interest on tax refunds 3,239 2,827 2,871 2,370 2,505 2,784 3,116 3,431 

 

Railroad Retirement Board withdrawals 113,980 111,600 110,360 111,680 112,960 114,940 116,700 118,200 

Total cash outflow 39,573,881 41,505,546 42,768,604 44,662,001 46,915,714 49,325,836 51,853,087 54,433,324 5

 

Excess of total cash inflow excluding interest over total cash outflow 4,092,019 4,640,154 4,954,296 2,794,699 866,086 (863,036) (367,387) 227,176 

Excess of total cash inflow over total cash outflow 6,473,240 6,985,842 7,583,331 5,758,530 4,307,717 2,960,365 3,744,093 4,629,418 

B alanc e , e nd o f ye ar $ 58,699,634 51,713,792 $ 66,282,965 $ 72,041,495 $ 76,349,212 $ 79,309,577 $ 83,053,670 $ 87,683,088 $ 9

$ 

Total unemployment rate 5.35% 5.30% 5.15% 5.10% 5.10% 5.10% 5.10% 5.10% 

FOR THE TEN YEAR P ERIOD ENDING S EP TEMB ER 30, 2014

(1) EXP ECTED ECONOMIC CONDITIONS

U.S . DEP ARTMENT OF LAB OR

S UP P LEMENTARY S OCIAL INS URANCE INFORMATION

CAS H INFLOW AND OUTFLOW OF THE 

UNEMP LOYMENT TRUS T FUND EXCLUDING THE FEDERAL EMP LOYEES COMP ENS ATION ACCOUNT
FY 2004 Performance and Accountability Report 253

(Do llars in tho us ands ) 2005 2006 2007 2008 2009 2010 2011 2012 B alanc e , s tart o f ye ar $ 45,240,552 50,906,800 $ 48,502,588 $ 39,617,339 $ 33,983,002 $ 37,071,632 $ 47,479,537 $ 59,573,832 $ 7

$ 

Cas h inflo w State unemployment taxes 36,471,000 39,370,000 42,386,000 45,956,000 48,910,000 50,964,000 51,990,000 51,489,000 5

 

Federal unemployment taxes 6,990,000 7,367,000 7,563,000 6,747,000 7,257,000 8,696,000 10,442,000 11,725,000 1

 

General revenue appropriation 500 11,800 33,900 28,000 4,200 500 800 600 

 

Interest on loans 46,000 16,000 14,000 24,000 37,000 57,000 72,000 96,000 

 

CMIA receipts 3,000 3,000 3,000 3,000 3,000 3,000 3,000 3,000 

 

Deposits by the Railroad Retirement Board 102,500 109,100 125,200 126,100 111,000 100,000 107,900 121,700 

Total cash inflow excluding interest 43,613,000 46,876,900 50,125,100 52,884,100 56,322,200 59,820,500 62,615,700 63,435,300 6

 

Interest on Federal securities 2,358,221 2,164,688 2,084,035 2,084,831 2,384,631 2,796,401 3,281,480 3,817,242 

Total cash inflow 45,971,221 49,041,588 52,209,135 54,968,931 58,706,831 62,616,901 65,897,180 67,252,542 6

 

Cas h o utflo w State unemployment benefits 36,282,000 47,372,000 56,866,000 56,385,000 51,524,000 48,168,000 49,713,000 49,683,000 

 

State administrative costs 3,763,002 3,816,059 3,969,203 3,955,004 3,826,538 3,765,971 3,807,546 3,841,473 

 

Federal administrative costs 142,760 143,221 145,857 148,898 151,581 156,119 160,700 165,326 

 

Interest on tax refunds 3,231 2,920 2,964 2,686 3,122 3,966 4,939 5,671 

 

Railroad Retirement Board withdrawals 113,980 111,600 110,360 111,680 112,960 114,940 116,700 118,200 

Total cash outflow 40,304,973 51,445,800 61,094,384 60,603,268 55,618,201 52,208,996 53,802,885 53,813,670 5

 

Excess of total cash inflow excluding interest over total cash outflow 3,308,027 (4,568,900) (10,969,284) (7,719,168) 703,999 7,611,504 8,812,815 9,621,630 

Excess of total cash inflow over total cash outflow 5,666,248 (2,404,212) (8,885,249) (5,634,337) 3,088,630 10,407,905 12,094,295 13,438,872 1

 

B alanc e , e nd o f ye ar $ 48,502,588 50,906,800 $ 39,617,339 $ 33,983,002 $ 37,071,632 $ 47,479,537 $ 59,573,832 $ 73,012,704 $ 8

$ 

Total unemployment rate 5.45% 6.60% 7.43% 7.13% 6.35% 5.63% 5.48% 5.18% 

FOR THE TEN YEAR P ERIOD ENDING S EP TEMB ER 30, 2014

(2) MILD RECES S IONARY UNEMP LOYMENT RATE

U.S . DEP ARTMENT OF LAB OR

S UP P LEMENTARY S OCIAL INS URANCE INFORMATION

CAS H INFLOW AND OUTFLOW OF THE 

UNEMP LOYMENT TRUS T FUND EXCLUDING THE FEDERAL EMP LOYEES COMP ENS ATION ACCOUNT
254 United States Department of Labor 

 (Do llars in tho us ands ) 2005 2006 2007 2008 2009 2010 2011 2012 B alanc e , s tart o f ye ar $ 50,861,800 45,240,552 $ 45,704,391 $ 19,915,557 $ (20,163,071) $ (28,934,517) $ (24,739,902) $ (17,131,796) $ 

$ 

Cas h inflo w

State unemployment taxes 36,477,000 39,313,000 42,661,000 47,984,000 54,485,000 58,830,000 60,253,000 60,548,000 

 

Federal unemployment taxes 6,990,000 7,330,000 7,524,000 6,739,000 7,695,000 10,291,000 12,315,000 14,511,000 

 

General revenue appropriation 500 15,400 70,500 103,600 73,700 14,000 10,700 6,900 

 

Interest on loans 46,000 16,000 14,000 24,000 37,000 57,000 72,000 96,000 

 

CMIA receipts 3,000 3,000 3,000 3,000 3,000 3,000 3,000 3,000 

 

Deposits by the Railroad Retirement Board 102,500 109,100 125,200 126,100 111,000 100,000 107,900 121,700 

Total cash inflow excluding interest 43,619,000 46,786,500 50,397,700 54,979,700 62,404,700 69,295,000 72,761,600 75,286,600 

Interest on Federal securities 2,354,221 2,121,688 1,909,035 1,822,831 2,033,631 2,353,401 2,723,480 3,138,242 

Total cash inflow 45,973,221 48,908,188 52,306,735 56,802,531 64,438,331 71,648,401 75,485,080 78,424,842 

Cas h o utflo w

State unemployment benefits 36,329,000 49,943,000 73,553,000 91,491,000 67,431,000 61,539,000 62,134,000 59,270,000 

 

State administrative costs 3,763,002 3,864,871 4,283,403 4,626,898 4,210,926 4,039,034 4,059,750 4,041,757 

 

Federal administrative costs 142,760 143,221 145,857 148,898 151,581 156,119 160,700 165,326 

 

Interest on tax refunds 3,231 2,905 2,949 2,683 3,310 4,693 5,824 7,018 

 

Interest on General Fund advances - - - 500,000 1,300,000 1,600,000 1,400,000 1,100,000 

 

Railroad Retirement Board withdrawals 113,980 111,600 110,360 111,680 112,960 114,940 116,700 118,200 

Total cash outflow 40,351,973 54,065,597 78,095,569 96,881,159 73,209,777 67,453,786 67,876,974 64,702,301 

Excess of total cash inflow excluding interest over total cash outflow 3,267,027 (7,279,097) (27,697,869) (41,901,459) (10,805,077) 1,841,214 4,884,626 10,584,299 

Excess of total cash inflow over total cash outflow 5,621,248 (5,157,409) (25,788,834) (40,078,628) (8,771,446) 4,194,615 7,608,106 13,722,541 

B alanc e , e nd o f ye ar $ 45,704,391 50,861,800 $ 19,915,557 $ (20,163,071) $ (28,934,517) $ (24,739,902) $ (17,131,796) $ (3,409,255) $ 

$ 

Total unemployment rate 5.45% 6.93% 9.08% 10.15% 7.83% 7.28% 7.05% 6.43% 

FOR THE TEN YEAR P ERIOD ENDING S EP TEMB ER 30, 2014

(3) DEEP RECES S IONARY UNEMP LOYMENT RATE

S UP P LEMENTARY S OCIAL INS URANCE INFORMATION

CAS H INFLOW AND OUTFLOW OF THE 

UNEMP LOYMENT TRUS T FUND EXCLUDING THE FEDERAL EMP LOYEES COMP ENS ATION ACCOUNT
Annual Financial Statements 

REQUIRED SUPPLEMENTARY STEWARDSHIP INFORMATION 

FY 2004 Performance and Accountability Report 255 

States Minimally Solvent 

Each State’s accumulated UTF net assets or reserve balance should provide a defined level of benefit 

payments over a defined period. To be minimally solvent, a State’s reserve balance should provide for 

one year’s projected benefit payment needs based on the highest levels of benefit payments experienced 

by the State over the last twenty years. A ratio of 1.0 or greater prior to a recession indicates a state is 

minimally solvent. States below this level are vulnerable to exhausting their funds in a recession. States 

exhausting their reserve balance must borrow funds from the Federal Unemployment Account (FUA) to 

make benefit payments. The Missouri, New York and Minnesota state accounts had loans payable to 

FUA at the end of FY 2004. In addition, Texas, Illinois and North Carolina had outstanding debts to other 

sources. 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, 2004, in descending order, by 

ratio. As the table below illustrates, 32 state funds were below minimal solvency ratio at September 30, 

2004. 

Chart V 

Minimally Solvent Not Minimally Solvent 

State Ratio State Ratio 

New Mexico 2.99 Tennessee 0.99 

Mississippi 2.78 Florida 0.96 

Vermont 2.08 Kansas 0.96 

Maine 1.76 Nebraska 0.91 

Virgin Islands 1.76 Maryland 0.86 

New Hampshire 1.66 Wisconsin 0.84 

Hawaii 1.60 South Carolina 0.81 

Montana 1.60 Alaska 0.80 

Iowa 1.59 Washington 0.80 

Wyoming 1.59 West Virginia 0.78 

Delaware 1.56 South Dakota 0.73 

Arizona 1.54 Alabama 0.66 

Louisiana 1.50 Kentucky 0.61 

District of Columbia 1.47 North Dakota 0.56 

Utah 1.35 Connecticut 0.55 

Puerto Rico 1.26 Rhode Island 0.52 

Oregon 1.23 Idaho 0.49 

Oklahoma 1.22 New Jersey 0.45 

Indiana 1.11 Virginia 0.45 

Nevada 1.10 Ohio 0.44 

Georgia 1.07 Michigan 0.42 

Arkansas 0.31 

Pennsylvania 0.29 

Colorado 0.19 

California 0.17 

Massachusetts 0.08 

North Carolina 0.00 

Illinois 0.00 

Minnesota 0.00 

Missouri 0.00 

New York 0.00 

Texas 0.00 
Financial Section 

REQUIRED SUPPLEMENTARY STEWARDSHIP INFORMATION 

256 United States Department of Labor 

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, 2004, total liabilities of the Black Lung Disability Trust Fund exceeded assets by $8.7 

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, 2004 were $8.7 billion, 

bearing interest rates ranging from 5.375 to 13.875 percent. Excise tax revenues of $566.0 million, 

benefit payment expense of $344.3 million and interest expense of $650.6 million were recognized for the 

year ended September 30, 2004. 

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, 2004 were 

$25.3 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 production estimates, the tax rate structure, 

number of beneficiaries, life expectancy, medical costs 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-six 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 $16.2 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-six 

periods included in the projections. Net cash outflows after interest payments are projected to reach $47.2 

billion by the end of the year 2040, increasing the BLDTF’s deficit to $55.9 billion at September 30, 

2040. (See Chart I on following page.) 

The net present value of future benefit payments for the thirty-six year period ending 2040 is $2.9 billion. 

The net present value of future excise taxes for the thirty-six year period is $7.7 billion which results in a 

$4.8 billion excess of excise taxes over benefit payments. However, the net present value of total cash 

outflows, including interest payments and administrative costs, is $23.6 billion resulting in an excess of 

cash outflows over excise taxes of $15.9 billion. The interest rate used for net present value is 5.25 

percent. 
Annual Financial Statements 

REQUIRED SUPPLEMENTARY STEWARDSHIP INFORMATION 

FY 2004 Performance and Accountability Report 257 

Chart I 

 

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-eight 

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 $10.9 billion by the year 2040. 

 

Yearly cash inflows and outflows are presented in the table on the following page. 

BLACK LUNG DISABILITY TRUST FUND 

CASH INFLOW AND OUTFLOW

0

500

1,000

1,500

2,000

2,500

3,000

3,500

2005 2015 2025 2035

$ - Millions

To tal Cas h Outflo w To ta l C a s h Inflo w C a s h Outflo w B e fo re Inte re s t
258 United States Department of Labor 

(Do llars in tho us ands ) 2005 2006 2007 2008 2009 2010 - Cas h inflo w

Excise taxes 540,000 $ 552,000 $ 572,000 $ 594,000 $ 611,000 $ 13,

$ 

Interest - - - - - 

Total cash inflow 540,000 552,000 572,000 594,000 611,000 13,

 

Cas h o utflo w

Disabled coal miners benefits 327,986 313,104 299,553 285,337 270,447 3,

 

Administrative costs 57,049 58,725 60,684 62,764 65,259 9

 

Cash outflows before interest payments 385,035 371,829 360,237 348,101 335,706 4,

 

Cash inflow over cash outflow  before interest payments 154,965 180,171 211,763 245,899 275,294 9

 

Interest on advances 671,122 696,827 724,209 752,599 781,531 53,7

 

Total cash outflow 1,056,157 1,068,656 1,084,446 1,100,700 1,117,237 58,

 

Total cash outflow over total cash inflow (516,157) (516,656) (512,446) (506,700) (506,237) (44,

 

B alanc e , s tart o f ye ar (8,711,444) (9,227,601) (9,744,257) (10,256,703) (10,763,403) (11,2

 

B alanc e , e nd o f ye ar $ (9,227,601) (9,744,257) $ (10,256,703) $ (10,763,403) $ (11,269,640) $ (55,9

$ 

U.S . DEP ARTMENT OF LAB OR

S UP P LEMENTARY S OCIAL INS URANCE INFORMATION

CAS H INFLOW AND OUTFLOW OF THE B LACK LUNG DIS AB ILITY TRUS T FUND

FOR THE THIRTY-S IX YEAR P ERIOD ENDING S EP TEMB ER 30, 2040

Required Supplementary Information 
Annual Financial Statements 

REQUIRED SUPPLEMENTARY INFORMATION 

FY 2004 Performance and Accountability Report 261

STATEMENT OF BUDGETARY RESOURCES

The principal Statement of Budgetary Resources combines the availability, status and outlay of DOL’s 

budgetary resources during FY 2004 and 2003. 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 

262 United States Department of Labor 

COMBINING STATEMENT OF BUDGETARY RESOURCES 

For the Year Ended September 30, 2004 

Employment Employment Occupational

and Training Standards Safety and Health

(Dollars in thousands) Administration Administration Administration

BUDGETARY RESOURCES

Budget authority

Appropriations received $ 1,993,802 54,241,769 $ 460,786 $ 

Net transfers (565,235) 502,865 - 

Unobligated balance

Beginning of period 1,460,715 1,615,419 17,927 

Net transfers (589) (147) (883) 

Spending authority from offsetting collections

Earned

Collected 100,753 2,350,388 8,462 

Receivable from Federal sources (418) (17,284) (412) 

Change in unfilled customer orders

Advance received (5,315) - - 

Transfers from trust funds 3,554,031 34,025 - 

Total spending authority from offsetting collections 3,654,366 2,361,814 8,050 

Recoveries of prior year obligations 347,462 10,731 14,665 

Temporarily not available pursuant to Public Law (22,646) (15) - 

Permanently not available (176,850) (6,897) (7,579)

Total budgetary resources $ 59,093,696 $ 6,322,868 $ 492,966

STATUS OF BUDGETARY RESOURCES

Obligations incurred

Direct 56,940,460 $ 2,409,831 $ 466,813 $ 

Reimbursable 73,911 2,484,876 4,059

Total obligations incurred 57,014,371 4,894,707 470,872 

Unobligated balances available

Apportioned 1,221,910 1,109,138 34 

Exempt from apportionment (5) - - 

Other available - 212,547 - 

Unobligated balances not available 857,420 106,476 22,060

Total status of budgetary resources $ 59,093,696 $ 6,322,868 $ 492,966

RELATIONSHIP OF OBLIGATIONS TO OUTLAYS

Obligated balance, net, beginning 8,400,538 $ 261,764 $ 83,179 $ 

Obligated balance, net, ending

Accounts receivable (1,336,364) (1,107) (475) 

Undelivered orders 5,529,146 77,114 43,145 

Accounts payable 3,204,978 253,276 27,543 

Outlays

Disbursements 57,637,954 4,833,741 469,585 

Collections (3,622,638) (2,379,098) (8,462)

Total outlays 54,015,316 2,454,643 461,123 

Offsetting receipts (1,542,933) (6,539) - 

Net outlays $ 52,472,383 $ 2,448,104 $ 461,123
Annual Financial Statements 

REQUIRED SUPPLEMENTARY INFORMATION 

FY 2004 Performance and Accountability Report 263

Bureau of Mine Safety Employee Benefits Veterans' Other

Labor and Health Security Employment Departmental

Statistics Administration Administration and Training Programs Total

$ 270,826 447,088 $ 124,962 $ 26,550 $ 473,791 $ 58,039,574 $ 

 - - - - 42,491 (19,879) 

 14,422 11,616 1,946 1,795 50,156 3,173,996 

 (331) (1,304) (169) (51) (34,118) (37,592) 

 2,058 7,588 10,812 144 165,327 2,645,532 

 (839) (794) (236) (70) (4,056) (24,109) 

 - - - - (219) (5,534) 

 - 74,667 - 192,253 3,884,725 29,749 

 1,219 81,461 10,576 192,327 190,801 6,500,614 

 2,876 9,151 1,622 1,103 76,021 463,631 

 - - - - - (22,661) 

 (7,424) (2,918) (1,447) (157) (4,081) (207,353) 

$ 286,094 540,588 $ 137,490 $ $ 221,567 $ 67,890,330 795,061 $ 

$ 276,058 522,100 $ 125,328 $ 215,336 $ 610,319 $ 61,566,245 $ 

 904 5,507 10,352 - 2,746,299 166,690 

 276,962 527,607 135,680 215,336 777,009 64,312,544 

 5,834 466 24 5,274 1,724 2,344,404 

 - - - - - (5) 

 - - - - 161 212,708 

 3,298 12,515 1,786 957 1,020,679 16,167 

$ 286,094 540,588 $ 137,490 $ $ 221,567 $ 67,890,330 795,061 $ 

$ 20,452 57,906 $ 39,095 $ 55,215 $ 446,685 $ 9,364,834 $ 

 (35) - - - (6,645) (1,344,626) 

 11,191 33,279 31,216 18,416 484,041 6,227,548 

 15,927 31,911 8,587 39,833 46,849 3,628,904 

 268,294 511,967 133,585 211,268 627,485 64,693,879 

 (82,255) (2,058) (10,812) (192,397) (194,858) (6,492,578)

 266,236 429,712 122,773 18,871 432,627 58,201,301 

 - - - - - (1,549,472) 

$ 266,236 429,712 $ 122,773 $ $ 18,871 $ 56,651,829 432,627 $ 
Financial Section 

REQUIRED SUPPLEMENTARY INFORMATION 

264 United States Department of Labor 

COMBINING STATEMENT OF BUDGETARY RESOURCES 

For the Year Ended September 30, 2003 

Employment Employment Occupational

and Training Standards Safety and Health

(Dollars in thousands) Administration Administration Administration

BUDGETARY RESOURCES

Budget authority

Appropriations received $ 1,657,892 65,489,498 $ 453,256 $ 

Net transfers (605,878) 525,000 - 

Unobligated balance

Beginning of period 1,301,463 1,575,277 16,163 

Net transfers (781) (363) (402) 

Spending authority from offsetting collections

Earned

Collected 61,721 2,381,620 6,380 

Receivable from Federal sources 497 (45,082) 807 

Change in unfilled customer orders

Advance received 17,466 - - 

Without advances from Federal sources - - - 

Transfers from trust funds 3,690,196 34,003 - 

Total spending authority from offsetting collections 3,752,414 2,388,007 7,187 

Recoveries of prior year obligations 231,926 5,722 12,210 

Permanently not available (224,999) (3,533) (6,139)

Total budgetary resources $ 70,217,457 $ 5,874,188 $ 482,275

STATUS OF BUDGETARY RESOURCES

Obligations incurred

Direct 68,582,902 $ 2,021,901 $ 459,864 $ 

Reimbursable 19,344 2,391,572 4,484

Total obligations incurred 68,602,246 4,413,473 464,348 

Unobligated balances available

Apportioned 1,268,996 1,100,707 919 

Exempt from apportionment (208) - - 

Other available - 207,223 - 

Unobligated balances not available 346,423 152,785 17,008

Total status of budgetary resources $ 70,217,457 $ 5,874,188 $ 482,275

RELATIONSHIP OF OBLIGATIONS TO OUTLAYS

Obligated balance, net, beginning 9,777,073 $ 171,155 $ 99,381 $ 

Obligated balance transferred, net 1,304,116 - - 

Obligated balance, net, ending

Accounts receivable (1,304,637) (18,390) (887) 

Undelivered orders 6,530,531 31,031 49,972 

Accounts payable 3,174,644 249,123 34,094 

Outlays

Disbursements 70,005,263 4,363,272 470,372 

Collections (4,011,032) (2,434,137) (9,219)

Total outlays 65,994,231 1,929,135 461,153 

Offsetting receipts (1,270,628) (6,611) - 

Net outlays $ 64,723,603 $ 1,922,524 $ 461,153
Annual Financial Statements 

REQUIRED SUPPLEMENTARY INFORMATION 

FY 2004 Performance and Accountability Report 265

 

Bureau of Mine Safety Employee Benefits Veterans' Other

Labor and Health Security Employment Departmental

Statistics Administration Administration and Training Programs Total

$ 274,741 423,893 $ 117,045 $ 26,900 $ 494,253 $ 68,937,478 $ 

 - - - - - (80,878) 

 5,267 18,021 2,814 1,968 50,629 2,971,602 

 (457) (1,166) (145) (161) 2,743 (732) 

 946 6,390 9,978 185 165,819 2,633,039 

 859 780 236 70 (3,995) (45,828) 

 - - - - 184 17,650 

 - - - - (2,396) (2,396) 

 - 71,561 - 187,312 4,012,226 29,154 

 1,805 78,731 10,214 187,567 188,766 6,614,691 

 2,542 7,506 972 870 47,218 308,966 

 (6,437) (2,895) (1,113) (1,392) (4,348) (250,856) 

$ 281,003 520,548 $ 129,787 $ $ 215,752 $ 78,500,271 779,261 $ 

$ 265,842 502,893 $ 118,397 $ 213,957 $ 565,725 $ 72,731,481 $ 

 739 6,039 9,444 - 2,595,002 163,380 

 266,581 508,932 127,841 213,957 729,105 75,326,483 

 10,958 1,337 265 1,031 38,809 2,423,022 

 - - - - - (208) 

 - - - - 177 207,400 

 3,464 10,279 1,681 764 543,574 11,170 

$ 281,003 520,548 $ 129,787 $ $ 215,752 $ 78,500,271 779,261 $ 

$ 23,138 60,229 $ 41,949 $ 19,557 $ 346,188 $ 10,538,670 $ 

 - - - - - 1,304,116 

 (874) (794) (236) (70) (10,701) (1,336,589) 

 11,946 28,551 31,201 21,133 408,154 7,112,519 

 9,380 30,149 8,130 34,152 49,232 3,588,904 

 266,400 502,992 129,486 206,347 590,189 76,534,321 

 (77,974) (1,480) (9,978) (216,485) (199,960) (6,960,265)

 264,920 425,018 119,508 (10,138) 390,229 69,574,056 

 - - - - - (1,277,239) 

$ 264,920 425,018 $ 119,508 $ $ (10,138) $ 68,296,817 390,229 $ 
Financial Section 

REQUIRED SUPPLEMENTARY INFORMATION 

266 United States Department of Labor 

DEFERRED MAINTENANCE

The U.S. Department of Labor, Employment and Training Administration (ETA) maintains ninety-six 

(96) Job Corps centers located throughout the United States. While the ETA does fund safety, health, and 

environmental projects in the year those deficiencies are identified, funding constraints limit the extent of 

maintenance that the ETA can undertake each fiscal year. Consequently, maintenance projects are not 

always performed as scheduled and, therefore, must be deferred to a future period. 

Condition assessment surveys are conducted every three years at each Job Corps center, one third of the 

centers each year, to determine the current condition of facilities and the estimated cost to correct 

deficiencies. The surveys are based on methods and standards that are applied on a consistent basis, 

including: 

• condition descriptions of facilities, 

• recommended maintenance schedules, 

• estimated costs for maintenance actions, and 

• standardized condition codes. 

These surveys evaluate the facilities at each Job Corps center to identify: 

• rehabilitation projects that are required to provide for health and safety, or upgrade to an acceptable 

state of repair, 

• present utilization, 

• health and safety programs, 

• barrier-free access, 

• maintenance, operations, and security programs, 

• energy usage, 

• natural hazards, and 

• conformance to U.S. Environmental Protection Agency and applicable air and water quality standards. 

The total estimated cost of deferred maintenance for the most recent surveys of the Job Corps centers for 

fiscal years 2000 to 2004 is presented below. Amounts reported in fiscal years 2003 and 2004 reflect a 

change in estimation methods. 

Summary of Deferred Maintenance

59.3 6 1.8

52.0 48.7

1.5 0.4 3.3 3.2

11.7 11.5 12 .2

40.2

10 1.9

6 1.8

27.1 32.9 29.1

12 .5

6.0 2.0

- 

20.0

40.0

60.0

80.0

100.0

120.0

2000 2001 2002 2003 2004

Fiscal Year

Dollars (in Millions)

Site utilities

Structural and

mechanical

New construction and

space utilization

Other
Annual Financial Statements 

REQUIRED SUPPLEMENTARY INFORMATION 

FY 2004 Performance and Accountability Report 267

SEGMENT INFORMATION 

Franchise and intra-governmental support revolving funds not separately reported on the principal 

financial statements are required to report certain supplementary information. The Department of Labor’s 

Working Capital Fund qualifies under this definition. Required supplementary information for the 

Working Capital Fund is presented below. 

Working Capital Fund 

The Working Capital Fund was established to provide obligational authority, without fiscal year 

limitation, for expenses necessary to provide certain centralized services and activities to agencies within 

DOL. These agencies are identified in the condensed financial information. 

The WCF is an intra-governmental revolving fund authorized specifically by law to finance a cycle of 

operations in which expenditures generate receipts which are available to the Fund for continuing use 

without annual re-authorization by Congress. 

The Fund provides services on a centralized basis for the following Departmental activities: 

• Financial and Administrative Services - This activity provides a program of centralized 

administrative management services at both national and regional levels. 

• Field Services - This activity provides a full range of administrative, technical, and managerial support 

services to all agencies of the Department in their regional and field offices. 

• Human Resources Services - This activity provides guidance and technical assistance to DOL 

personnel offices in all areas of human resources management and provides a full range of operating 

personnel services to all Assistant Secretary for Administration and Management client organizations. 

• Capitalized Equipment - The collection of funds for the periodic recordation of depreciation, 

amortization and system support are held and made available to fund future acquisitions of major 

systems and system components that provide a service or benefit to agencies within DOL and ensure 

the Department has funds available to either extend the useful life or improve major asset acquisitions. 

• Investment in Reinvention Fund - The IRF was established within the WCF in FY 1996 to invest in 

Departmental projects designed to achieve improvements in agency processes and result in significant 

savings to the taxpayer. 

The activities are provided under the overall direction of the Assistant Secretary for Administration and 

Management. The WCF advisory committee assists in reviewing overall procedures, systems, and 

regulations as well as programs, functions, and activities performed and financed through the WCF. The 

WCF advisory committee is chaired by the Chief Financial Officer and consists of the Agency Financial 

Manager for each DOL agency, or a formally designated alternate. 
Financial Section 

REQUIRED SUPPLEMENTARY INFORMATION 

268 United States Department of Labor 

Condensed financial information for the WCF as of and for the years ended September 30, 2004 and 2003 

is as follows: 

(Dollars in thousands) 2004 2003

Assets

Funds with U.S. Treasury 28,180 $ 24,592 $ 

Accounts receivable, net of allowance 3,647 5,894 

Property, plant and equipment 26,695 24,936

Total assets 58,522 $ $ 55,422

Liabilities and Net Position

Accounts payable 14,496 $ 12,835 $ 

Accrued leave 3,969 4,192 

Future workers' compensation benefits 2,562 3,991 

Other liabilities 3,716 3,611

Total liabilities 24,966 24,406

Cumulative results of operations 33,556 31,016

Total liabilities and net position 58,522 $ $ 55,422

Cost

Intra-governmental 51,798 $ 49,280 $ 

With the public 87,624 88,941

 139,422 138,221

Earned

Departmental Management (36,449) (33,600) 

Employment Standards Administration (33,419) (31,293) 

Employment and Training Administration (21,913) (20,593) 

Occupational Safety and Health Administration (20,109) (18,865) 

Bureau of Labor Statistics (13,801) (12,899) 

Mine Safety and Health Administration (9,121) (9,049) 

Other revenues 715 (5,805)

Total revenues (134,097) (132,104)

Net costs of operations 5,325 $ $ 6,117

Net costs of operations (5,325) $ (6,117) $ 

Imputed financing 4,865 4,780 

Transfers-in 3,000 3,000 

Net position, beginning of period 31,016 29,353

Net position, ending of period $ 33,556 $ 31,016

BALANCE SHEET

STATEMENT OF NET COST

STATEMENT OF CHANGES IN NET POSITION
Annual Financial Statements 

REQUIRED SUPPLEMENTARY INFORMATION 

FY 2004 Performance and Accountability Report 269

INTRA-GOVERNMENTAL ASSETS

 

Intra-governmental assets at September 30, 2004 consisted of the following: 

Funds with Interest Accounts

(Dollars in thousands) U.S. Treasury Investments Receivable Receivable

Trading partner

Department of Agriculture - $ - $ - $ 183,573 $ 

Department of Commerce - - - 32,547 

Department of Interior - - - 140,869 

Department of Justice - - - 163,690 

Department of the Navy - - - 642,887 

United States Postal Service - - - 310,415 

Department of State - - - 19,168 

Department of the Treasury 9,700,757 45,446,510 580,180 132,645 

Department of the Army - - - 463,278 

Office of Personnel Management - - - 2,813 

Social Security Administration - - - 55,992 

U.S. Nuclear Regulatory Commission - - - 1,678 

Department of Veterans Affairs - - - 363,863 

General Services Administration - - - 36,018 

National Science Foundation - - - 288 

Department of the Air Force - - - 330,596 

Federal Emergency Management

 Agency - - - 4,857 

Tennessee Valley Authority - - - 88,217 

Environmental Protection Agency - - - 8,765 

Department of Transportation - - - 225,319 

Department of Homeland Security - - - 242,237 

Agency for International Development - - - 8,944 

Small Business Administration - - - 7,552 

Department of Health and Human

 Services - - - 53,943 

National Aeronautics and Space

 Administration - - - 16,173 

Department of Housing and Urban

 Development - - - 17,682 

Department of Energy - - - 18,441 

Department of Education - - - 3,941 

Department of Defense - - - 191,425 

Other - - - 148,858 

$ 9,700,757 $ 45,446,510 $ 580,180 $ 3,916,674
Financial Section 

REQUIRED SUPPLEMENTARY INFORMATION 

270 United States Department of Labor 

INTRA-GOVERNMENTAL LIABILITIES

Intra-governmental liabilities at September 30, 2004 consisted of the following: 

Accounts Advances from

(Dollars in thousands) Payable U.S. Treasury Other

Trading partner

Department of Agriculture 373 $ - $ - $ 

Department of Commerce - 159 - 

Department of Interior 13 - - 

Department of Justice 779 - - 

United States Postal Service 1,742 - 39,261 

Department of State 193 - - 

Department of the Treasury 221 8,740,557 - 

Office of Personnel Management 669 - 6,235 

Social Security Administration 256 - 29 

Department of Veterans Affairs 38 - - 

General Services Administration 14,545 - 1,339 

National Science Foundation 58 - - 

Railroad Retirement Board 1 - 86,209 

Department of Transportation 353 - - 

Department of Homeland Security 71 - - 

Department of Health and Human Services 1,373 - 564 

Department of Energy - - 300 

Department of Defense 1 - - 

Treasury General Fund - - 60,995 

Other 1,362 - (505)

$ 22,207 $ 8,740,557 $ 194,427
Annual Financial Statements 

REQUIRED SUPPLEMENTARY INFORMATION 

FY 2004 Performance and Accountability Report 271

INTRA-GOVERNMENTAL EARNED REVENUES AND RELATED COSTS 

Intra-governmental earned revenue and the related costs to generate that revenue for the year ended 

September 30, 2004 consisted of the following: 

Earned

(Dollars in thousands) Revenue

Trading partner

Department of Agriculture 121,105 $ 

Department of Commerce 10,470

Department of Interior 87,165

Department of Justice 91,521

Department of the Navy 453,752

United States Postal Service 936,318 

Department of State 9,658

Department of the Treasury 102,805 

Department of the Army 434,114 

Office of Personnel Management 1,229 

Social Security Administration 33,280 

U.S. Nuclear Regulatory Commission 802 

Department of Veterans Affairs 170,309 

General Services Administration 17,119 

National Science Foundation 537

Department of the Air Force 79,782 

Tennessee Valley Authority 59,855 

Environmental Protection Agency 4,225 

Department of Transportation 125,500 

Department of Homeland Security 131,402 

Agency for International Development 3,777 

Small Business Administration 5,304 

Department of Health and Human Services 29,241 

National Aeronautics and Space Administration 7,636 

Department of Housing and Urban Development 9,281 

Department of Energy 12,275

Department of Education 19,214

Department of Defense 92,037

Other 266,524

$ 3,316,237

Gross Cost

to Generate

Revenue

Budget Functional Classification

Education, Training and Employment 32,062 $ 

Income Security 3,281,812

Health 2,363

$ 3,316,237
Financial Section 

REQUIRED SUPPLEMENTARY INFORMATION 

272 United States Department of Labor 

INTRA-GOVERNMENTAL NON-EXCHANGE REVENUE 

Intra-governmental non-exchange revenue for the year ended September 30, 2004 consisted of the 

following: 

 

(Dollars in thousands) Interest Taxes

Trading partner

Department of the Treasury 2,441,311 $ - $ 

Treasury General Fund - 6,613,184

$ 2,441,311 $ 6,613,184
Management and Performance Challenges 
Management and Performance Challenges 

274 United States Department of Labor 

Inspector General’s Statement 

Top Management Challenges Facing the Department of Labor 

Following are the areas the Office of Inspector General (OIG) considers to be the most serious management and 

performance challenges facing the Department of Labor (DOL). They involve compliance, accountability, and 

delivery of services and benefits. 

 

• Reducing Improper Payments 

• Safeguarding Unemployment Insurance 

• Integrity of Foreign Labor Certification Programs 

• Financial and Performance Accountability 

• Systems Planning and Development 

• Information Systems Security 

• Security of Employee Benefit Plan Assets 

• Accounting for Real Property 

• Workforce Investment Act Reauthorization 

 

Reducing Improper Payments 

Reducing improper payments in DOL administered benefit programs, including Unemployment Insurance (UI) 

and the Federal Employee Compensation Act (FECA) program, is a challenge to the Department. Improper 

payments include those made in the wrong amount, or to an ineligible recipient, or improperly used by the 

recipient. The need for Federal agencies to take action to eliminate overpayments is recognized by the President’s 

Management Agenda (PMA) and the Improper Payments Information Act of 2002. UI overpayments by the 

states are projected by DOL at about $4 billion annually. The Department’s estimate for FECA overpayments, 

which we consider conservative, is $10 million annually. 

Unemployment Insurance and the Use of New Hire Data 

The UI program, a Federal-state partnership, is the DOL’s largest income maintenance program. While the 

framework of the program is determined by Federal law, benefits for individuals are dependent on state law and 

administered by State Workforce Agencies. 

The UI system could attain significant savings by detecting overpayments through cross-matching UI claims 

against state and national new hire data. This would detect UI claimants who have returned to work but are still 

collecting UI benefits. Using new hire data to identify overpayments is more effective than the more common 

method of matching UI claims against employers’ quarterly wage records because employers must report new 

hires within twenty days, whereas wage records are not available for months. The new hire method results in 

earlier detection of overpayments, reduces overpayment dollars, and increases the chance of overpayment 

recovery. 

In 2003, the OIG made recommendations for reducing overpayments by expanding states' use of new hire data. 

The full implementation of these recommendations, in our opinion, would save the Unemployment Trust Fund 

(UTF) an estimated $428 million annually. In response, DOL implemented a pilot program in 6 states and 

improved its quality control program. DOL’s Employment and Training Administration (ETA) also drafted 

policy changes and is collecting data for the pilot program. The pilot cost-benefit study results are due in January 

2006. DOL will then need to make sure that lessons learned from the pilot are implemented. 

Despite the benefits of new hire detection, a recent OIG audit found 12 states had not used their own state new 

hire data to reduce overpayments. DOL should continue to provide technical assistance and resources to the state 

UI programs that are currently not using new hire detection to initiate and/or complete plans for implementation 

as soon as possible. In addition, more detailed employer reporting, improving employer compliance for new hire 

reporting, and helping states analyze how to best use their Benefit Payment Control resources would enhance new 

hire detection. Finally, DOL should encourage states to use the National Database of New Hires, which recently 

enacted legislation made available to State Workforce Agencies, to help identify overpayments. 
Inspector General’s Statement 

FY 2004 Performance and Accountability Report 275

Federal Employees’ Compensation Act Program Controls 

The DOL administered FECA program impacts the employees and budgets of all Federal agencies. The OIG is 

concerned about increased risks of FECA overpayments due to inadequate controls in the system. In order to 

determine continuing eligibility for FECA compensation payments, DOL’s Office of Workers’ Compensation 

Programs (OWCP) is generally required to obtain and review medical evidence on a periodic basis. In Fiscal 

Year (FY) 2003, the OIG determined that many FECA cases did not have current medical information on file as 

required. This occurred because OWCP does not have effective controls to ensure that current medical evidence 

is requested and received in a timely manner. Inadequate procedures for obtaining and reviewing current medical 

evidence increase the risk of improper payments. The only way for OWCP to determine if a person is still 

medically disabled is to obtain medical evidence. If OWCP makes payments to a claimant who is no longer 

medically disabled, that would be an improper payment. In January 2005, DOL plans to implement a new 

automated tracking system to alert claims staff when medical evaluations are due. It will still require diligence on 

the part of FECA staff to ensure the tracking system is used efficiently. 

This year the OIG also reported additional weaknesses in medical bill payment processing and the tracking of 

receivables due to medical bill overpayments. These weaknesses resulted in erroneous payments being processed 

during FY 2004. OWCP contracted with a third party to perform medical bill processing for FECA claimants, and 

encountered a number of problems at start up of the Medical Bill Processing system because it did not have a 

quality assurance and internal audit plan in place prior to implementation of the new system. For FY 2004, we 

found 10.8% of bills were not paid the correct amount. However, corrective actions taken by management 

resulted in a reduction in payment errors in the third quarter of the fiscal year. 

Safeguarding Unemployment Insurance 

Improving the integrity and solvency of the UI program to better serve qualified recipients is a challenge for the 

Department of Labor. During FY 2003, the UI program paid over $53 billion in income maintenance benefits to 

American workers. Among the difficulties faced by the program are inadequate Unemployment Trust Fund 

reserves, overcharges for UTF administration, and the program’s susceptibility to fraud schemes involving 

identity theft and organized crime. 

 

Unemployment Trust Fund Resources 

The OIG remains concerned that states may not have adequate reserves to meet the demands on their UI 

compensation trust funds, causing them to borrow from the Federal Unemployment Account (FUA) to make 

benefit payments. In its yearly financial statements, DOL reports on the number of states that are “not minimally 

solvent,” or vulnerable to exhausting their funds during a recession. As of September 2003, 32 states were 

reported by DOL as “not minimally solvent” and four had outstanding loans from the FUA. 

Internal Revenue Service (IRS) overcharges for administering the UTF is a concern that has gone unresolved for 

too long. Prior OIG audits determined the IRS did not have a system to capture its costs for administering the 

UTF, and had overcharged the Fund millions of dollars. Our FY 2003 follow-up audit determined that the IRS 

charged almost $300 million in administrative costs to the UTF for FYs 1999-2002 without adequate 

documentation. We recommended ETA work with IRS to adopt an alternative method to allocate costs and seek 

reimbursement for overcharges. 

Following our audit, the IRS reduced the amount of its FY 2002 administrative charges to UTF. The IRS is 

scheduled to implement a new cost methodology in FY 2004, and has proposed substantial charges ($73 million) 

to the UTF through the first 3 quarters of FY 2004. Because of the magnitude of the charges and the complexity 

of IRS’ methodology, ETA has requested the OIG again review IRS’ charges. We are including another such 

audit in our FY 2005 work plan. 

Identity Theft and Organized Crime Activity in Unemployment Insurance Fraud 

OIG investigations have identified several methods used to defraud the UI system that have resulted in substantial 

losses to the UTF. Of greatest concern are identity theft schemes, which involve the use of stolen identities to 

apply for UI benefits. These cases often involve non-traditional organized crime groups, and are therefore 

broader in scope and more costly to the UI program than individual claimant fraud schemes of the past. One 

such case in California involved 3,000 stolen identities and identified a total of over $58 million in losses. The 
Management and Performance Challenges 

276 United States Department of Labor 

investigation disclosed that a Mexican non-traditional organized crime group was involved, allowing for the 

systematic filing of thousands of fraudulent claims in four states. 

One key way for DOL to mitigate UI fraud is to make states more aware of its dangers and of typical fraud 

schemes, such as identity theft or creation of fictitious companies to obtain UI benefits for alleged former 

employees. We therefore recommended and continue to work with ETA to provide training for state UI personnel 

on fraud prevention and detection. 

Integrity of Foreign Labor Certification Programs 

Reducing the susceptibility of DOL foreign labor certification programs to abuse remains a challenge to the 

Department. These programs allow U.S. employers to hire foreign workers when their admission does not 

adversely impact the job opportunities, wages, and working conditions of citizens and legal residents. DOL 

received almost 400,000 employer applications for foreign workers through these programs in FY 2003. 

Problems with the integrity of the labor certification process and fraud against the program persist. This may 

result in economic hardship for American workers, the abuse of foreign workers, and may have national security 

implications when applications are not adequately screened before being certified. 

Problems with the Labor Certification Process 

DOL’s ETA is responsible for approving employers’ labor certification applications, which is the first step in the 

process by which foreign nationals obtain work visas from U.S. immigration officials. However, the 

Department’s role in the labor certification process continues to be perfunctory. 

In the Permanent Labor Certification program, we are concerned that DOL will approve questionable applications 

received prior to implementation of a new automated processing system. All applications received before the 

systems’ implementation, known as backlogged applications, will be processed by companies contracted by ETA 

before approval/denial by the Department’s certifying officer. The backlog (315,000 applications as of May 

2004) was mostly created by a December 2000 amendment to the Immigration and Nationality Act, which 

allowed foreign labor certification applications for alien workers already in the United States. This provision 

applied from January 1 through April 30, 2001, and resulted in a 450% increase in applications over the prior 

year. 

A recent OIG audit disclosed that 69% of the backlogged applications we reviewed were misrepresented or 

incomplete; 84% of the aliens did not have legal status to work in the U.S.; 72% of the aliens did not have a legal 

status to be in the U.S.; and 67% of the aliens were already working for the employer at the time of application, 

including 28% who had worked for the employer for over 5 years. Because of the priority to eliminate the 

backlog, the OIG is concerned that many applications that should be denied will be approved. 

Regarding automation of the Permanent Labor Certification approval system, ETA has made a significant effort 

to develop labor certification applications for the system that would assist in automatic fraud detection. 

Automation of the certification process must ensure controls and safeguards to promote transparency and 

oversight of the program. 

In the H1-B Temporary Specialty Workers program, under current law DOL must approve labor condition 

applications if they are complete and free of obvious errors. Without the authority to validate information on the 

application, DOL’s role in this program does little to add value to the process of protecting American jobs and 

wages. We recommend DOL seek legislative action to rectify this situation. 

Regulatory Change Needed 

The OIG is also concerned about regulations that allow employers to obtain permission to hire a specific foreign 

worker cleared by immigration officials to fill the job. Since entering the U.S. as a substitute worker on an 

approved labor certification is quicker than starting at the beginning of the application process, alien workers are 

willing to pay for approved certifications. The practice of allowing substitutions therefore provides incentive for 

filing fraudulent applications. One attorney filed 1,000 applications using false worker names and then sold the 

certifications to others. The OIG is also concerned that approved labor certifications do not have an expiration 

date, and can therefore be used indefinitely. ETA is working to address the problem of substitution, prohibit the 
Inspector General’s Statement 

FY 2004 Performance and Accountability Report 277

sale or purchase of certifications, and shorten the period a certification is valid in coordination with the OIG and 

the Departments of Justice and Homeland Security. 

Labor Certification Fraud 

OIG continues to identify fraud cases that involve corrupt immigration attorneys and labor brokers who file 

fraudulent labor certification applications with DOL using either a fictitious company name or the name of a real 

company without its knowledge. They then collect fees up to $20,000 from foreign workers for the certifications. 

In one OIG case alone, the defendant was convicted of obtaining 2,800 fraudulent labor certification applications. 

Moreover, the OIG is concerned about the vulnerability of DOL’s foreign labor certification programs to fraud by 

non-traditional, transnational organized crime groups. In one such case, five members of a Russian organized 

crime group were sentenced for their roles in a complex scheme using fictitious companies, falsified computer 

generated visas, and false social security cards to help illegal aliens, some of which are Russian organized crime 

associates, obtain H1-B visas. 

Financial and Performance Accountability 

In order to manage DOL programs for results and fully integrate budget and performance, the Department needs 

timely financial data, a managerial cost accounting system that matches cost information with program outcomes, 

quality performance data, and useful information from single audits that cover 90 % of its expenditures. While 

DOL has received high marks on the President’s Management Agenda scorecard for financial performance and 

budget and performance integration, it faces challenges in fully implementing improvements undertaken in these 

areas. 

Financial Accounting 

DOL is developing a new core accounting system that will be the foundation for all financial management 

activity, including preparation of the Department's financial statements. Among the challenges the Department 

will encounter are: fully testing the system, performing validation and verification of data transferring from the 

old system, and ensuring that the system fully meets Federal financial system requirements and users' needs. The 

OIG is planning to provide audit oversight of the system’s development. 

Managerial Cost Accounting 

OIG previously reported a substantial noncompliance with the Federal Financial Management Improvement Act 

(FFMIA) because DOL’s accounting system did not comply with managerial cost accounting requirements 

specified by Federal accounting standards. Spurred in part by the OIG's FY 2002 and FY 2003 FFMIA findings, 

in March 2003 the DOL’s Office of the Chief Financial Officer (OCFO) launched a redesign of the cost 

accounting initiative to achieve full implementation of a DOL-wide managerial cost accounting system. 

The implementation project has led to the successful development of cost models for substantially all of DOL’s 

major agencies and programs. These cost models integrate program activities, outputs, costs, and non-financial 

data to provide the basis for reporting useful managerial cost accounting information. OCFO has recently 

selected cost accounting software and is in the process of importing the cost model structures. In the near future, 

OCFO will provide final training to agency personnel and effect formal transfer of system ownership to the 

agencies. The remaining challenges rest with agency and program management to refine the cost models and 

successfully institutionalize the use of cost accounting information to achieve improved program operations and 

better reporting of program results.

Quality Performance Data 

Many program results data required by DOL to measure attainment of its strategic plan goals are generated by 

states and other sources below the Federal level. This presents challenges for ensuring data quality and evaluating 

program effectiveness. Past OIG audit work has disclosed high error rates in grantee-reported performance data 

and raised concerns about the use of that data for decision-making. ETA has developed a data validation program 

to improve the reliability of program data. 

Single Audit 

The Department relies on audits conducted under the Single Audit Act to provide oversight of more than 90% of 

its expenditures. OIG is concerned about the adequacy of information DOL receives from these audits, which are 

conducted by public accountants or state auditors and procured with DOL grant funds. Quality control reviews we 
Management and Performance Challenges 

278 United States Department of Labor 

conducted in 2002 found serious deficiencies in single audits, including inadequate sampling, which would make 

the audits unreliable. The OIG is participating in several projects to improve single audit quality including an 

effort led by the Department of Education OIG to assess the quality of single audits government-wide. However, 

the Department should ensure that grantees procure quality audits whose results are used to improve programs. 

Systems Planning and Development 

Developing efficient and effective systems to perform the day-to-day business of DOL is also a challenge to the 

Department. Judicious planning and program management are critical to the implementation of new systems. 

Enduring problems in existing systems must also be addressed in a timely, effective manner. The OIG has 

concerns about insufficient planning for new DOL information technology and other systems. Lack of progress in 

addressing longstanding concerns in established programs like the Davis-Bacon prevailing wage determination 

process are also of concern. 

Information Systems Planning and Implementation 

OIG audits have demonstrated that DOL information technology systems development activities have ineffective 

planning for major system initiatives and weak project management. Current system development plans should 

be structured to include milestone reviews and key decision points. Project plans should be strengthened to 

include budget and cost tracking, project timelines, and resources monitoring. Taking these steps would improve 

DOL’s management of IT systems. The Department’s Chief Information Officer needs to take a stronger role to 

ensure that the agencies adequately plan for system development and are providing adequate project management. 

Department IT Project Managers should be encouraged and given the opportunity and resources to obtain 

certification in the field of project management. 

E-Payroll 

DOL participation in government-wide initiatives like E-payroll, which aims to consolidate and standardize 

civilian payroll processing in Federal government, also presents challenges. Under this initiative, DOL’s payroll 

system, which covers 16,000 employees, will move to the National Finance Center, which is part of the 

Department of Agriculture. OIG audit work conducted during the Department’s implementation of E-payroll 

identified vulnerabilities in the management of the payroll migration, originally scheduled for September 30, 

2004, was postponed. We believe this was appropriate because of the extent of system readiness questions and 

human resources data errors. Among the vulnerabilities were that, as of March 31, 2004, DOL had prepared only 

a draft detailed e-payroll conversion plan and lacked a data validation process to ensure reliability of existing 

payroll data before conversion. Also of concern were lack of user involvement in project development and 

limited involvement of agency IT executives. 

Davis-Bacon Prevailing Wage Determination 

Another example involves the Davis-Bacon prevailing wage determination process, which impacts the salaries 

and fringe benefits of workers on Federally-funded or assisted construction projects. The OIG continues to have 

concerns over the lack of progress made by DOL in addressing past OIG and GAO (now the Government 

Accountability Office) concerns and recommendations for improving prevailing wage determinations used in the 

Davis Bacon program. From FY 1997 through 2003, DOL’s Employment Standards Administration (ESA) spent 

a total of over $22 million for Davis–Bacon improvements. 

A recent OIG follow-up audit found that this investment resulted in limited improvements in wage data accuracy, 

timeliness of wage determinations, and survey methodology. Since ESA obtains survey data from employers and 

third parties who volunteer to participate in surveys, we have concerns about whether survey results are 

representative and unbiased. Based on our audit work, and because the economic impact of this program is 

substantial, we recommend that the Department move to a statistically valid survey approach, such as that used by 

Bureau of Labor Statistics (BLS), to collect the data upon which Davis-Bacon wage determinations are based. 

ESA responded that it was willing to reevaluate the feasibility of conducting surveys using a sampling 

methodology involving BLS data. We strongly encourage the Department to take immediate action on this 

important issue. 

OSHA System Development Efforts 

An OIG audit also identified project management weaknesses in the Occupational Safety and Health 

Administration’s (OSHA) redesign of its Integrated Management Information System (IMIS), a mission critical 
Inspector General’s Statement 

FY 2004 Performance and Accountability Report 279

data system that collects information required to manage OSHA. Since its initiation in 1995, the redesign project 

has experienced procurement and contract performance problems and changed contractors. Its planned cost, 

initially estimated at $2 million, was revised to $8.5 million in 2000 and to $12.6 million in 2002. We found that 

IMIS’s Project Management Plan did not cover the entire redesign, that uncertain funding increased project risk, 

and that the project manager lacked critical knowledge and experience. During our audit fieldwork, OMB 

withdrew $4 million in funding for the redesign and OSHA has since suspended the redesign effort. We 

recommend that OSHA adopt best practices, such as using a system development lifecycle approach to project 

planning and experienced project managers, to establish a better foundation for, and minimize risks in, future 

system development projects. 

Information Systems Security 

As is the case for all government agencies, information technology security is an ongoing challenge for the 

Department of Labor because of new threats and increased automation through E-Government initiatives. 

Keeping up with these developments, and providing assurances that DOL systems will function reliably and 

safeguard information assets in an E-government environment require a sustained effort. The security of DOL IT 

systems and data is vital, since it relates to key economic indicators and the payment of billions of dollars to 

workers. 

IT Security Controls 

The Department continues to take advantage of the benefits of E-Government technology. This will require DOL 

to ensure Federal security policies and guidance are being implemented at the system and application level. Our 

audit efforts over the past 5 years have identified significant control weaknesses across the programs, which 

continue to exist. For example, 1) the FECA system lacks adequate application access and input controls, 

increasing the risk that an individual with access could input, process, and approve an erroneous claim and not be 

detected; 2) the State UI Tax and Benefit system has control weaknesses that could expose UI data to risk of loss, 

misuse, or inadvertent/deliberate corruption; and 3) system access and contingency planning is inadequate for 

financial related systems. 

Keys to being successful include DOL providing more consistent and thorough testing of its systems’ controls, 

and becoming proactive in identifying and mitigating IT security weaknesses identified through its own 

assessments, as well as those identified by audits. Also, the Department can strengthen its management over its 

IT resources by creating a Chief Information Officer who is organizationally independent within DOL and 

focuses solely on IT issues, much as the Chief Financial Officer is organizationally independent. 

Security of Employee Benefit Plan Assets 

Protecting the benefits of American workers, including pensions and health care, remains a significant challenge 

to the Department. DOL is responsible for overseeing and protecting the interests of participants in about 730,000 

private pension plans and 6 million health and welfare plans covered by the Employee Retirement Income 

Security Act (ERISA). These pension plans hold over $4 trillion in assets and cover more than 150 million 

workers. Recent failures in corporate financial management and reporting, as well as in the auditing and 

oversight of these activities, show the need to enhance worker pension and healthcare security by expanding 

safeguards and improving benefit plan regulatory enforcement. 

Safeguards to Protect Pension Assets 

One of the safeguards ERISA put into place was the requirement for an annual audit of employee benefit plans. 

However, the OIG has longstanding concerns about the quality and scope of these audits and the resulting 

protections for workers. An unacceptably high number of benefit plan audits do not meet professional standards, 

and compliance has not improved. Moreover, a recent OIG audit found that when the Employee Benefits Security 

Administration (EBSA) detects deficiencies in plan audits, it has not been effective in correcting those 

deficiencies. In our view, ERISA does not provide EBSA with sufficient direct enforcement authority to ensure 

that substandard audits are corrected and that auditors with poor track records are not engaged to perform 

additional audits. ERISA’s “limited scope” provision, which exempts from audit all pension plan assets held in 

entities regulated by Federal or State governments, also contributes to inadequate coverage of pension plan assets 

and should be repealed. Current audits of these plans do not provide sufficient safeguards to ensure plan assets 

are protected. 
Management and Performance Challenges 

280 United States Department of Labor 

The Department is working to implement changes the OIG has recommended to alleviate this situation. The 

changes include improving follow-up to audit deficiencies found, better management systems, and improved 

enforcement targeting. The OIG will continue to follow this important aspect of pension plan protection. Based 

on our recent audit, the OIG is also recommending that DOL seek legislative changes to ERISA that would give 

EBSA adequate enforcement authority over plan auditors to effect corrective actions or prevent malfeasant 

auditors from performing work in the employee benefit arena. EBSA’s lack of enforcement authority makes it 

difficult, if not impossible, to make audits an effective protection for the American worker. 

Pension Plan Fraud 

Also of concern is the security of assets in pension plans, which are attractive targets to organized crime groups, 

corrupt pension plan officials, and those who influence the investment of plan assets. OIG labor racketeering 

investigations consistently show that assets in Taft-Hartley plans, which are jointly administered by labor union 

and management representatives, are at risk. The courts ordered $4.3 million in monetary results, including fines, 

restitutions and forfeitures, based on OIG investigations from October 1, 2003 through July 2004. 

We continue to identify multi-million dollar abuses by plan service providers whose complex financial schemes 

may impact more than one benefit plan. One such case recently led to guilty pleas by an attorney, a real estate 

agent, and a former pension plan trustee who received illegal payoffs in connection with a $10 million land 

purchase by the pension fund of the Northwest District Council of Carpenters. This joint investigation with 

EBSA is one of 64 current joint OIG and EBSA pension investigations. In addition, the OIG has renewed 

concern about the security of the assets in employer sponsored 401(k) plans that are collectively bargained and is 

developing investigative casework on these plans. 

Cash Balance Pension Plans 

In 2002, the OIG raised concerns about the methodology used to calculate lump sum payments to participants 

who left converted cash balance plans before normal retirement age. We found that some employers’ calculations 

resulted in underpaid benefits, and recommended that EBSA strengthen the agency’s oversight of cash balance 

pension plans. We further recommended that EBSA work with the IRS to develop improved guidance for plan 

administrators in calculating participant accrued benefits. 

EBSA responded that its enforcement oversight responsibilities are statutorily restricted. Nonetheless, in 

February 2002, EBSA asked the IRS for advice concerning pension plans that may have underpaid participants. 

Two years have passed and the IRS has not responded. We urge the Department to take whatever action is 

necessary to resolve this matter in the best interest of plan participants. We believe plan participants who left the 

plans before normal retirement age may have been underpaid significant amounts because of IRS’ and EBSA's 

continued lack of action. 

Corrupt Multiple Employer Welfare Arrangements (MEWAs) 

DOL is also challenged to enhance its commitment to investigating corrupt health insurers, whose schemes are 

burdening an increasing number of Americans with unpaid medical claims. These insurers establish unlicensed 

health benefit plans known as MEWAs, which are not covered by ERISA and are therefore more vulnerable to 

fraud. The insurers collect insurance premiums, but ultimately fail to pay claims. Fraudulent MEWAs were 

recently identified by the Department of Justice as an emerging area of health care fraud, which we believe merits 

increased OIG and EBSA attention. In February 2004, the GAO reported that from 2000 to 2002, state insurance 

commissioners and the DOL identified 144 unauthorized entities selling health insurance coverage across the 

country to at least 15,000 employers covering more than 200,000 persons. Over the same period these 

unauthorized entities left more than $252 million in unpaid medical claims. 

Accounting for Real Property 

The Department is challenged to improve accountability for and management of millions of dollars worth of real 

property. The GAO designated Federal real property as a high-risk area in January 2003, and in February 2004 

the position of Senior Real Property Officer for Federal Agencies was established by Executive Order. The 

President’s Management Agenda also includes a government-wide initiative aimed at improving stewardship of 

Federal real property assets. With respect to the Department of Labor, OIG audits have highlighted opportunities 

for improvement in real property management. 
Inspector General’s Statement 

FY 2004 Performance and Accountability Report 281

Job Corps Real Property 

In our FY 2003 report on the Department’s internal controls over financial reporting, the OIG noted that Job 

Corps did not adequately account for $728 million worth of real property. Namely, ETA did not sufficiently 

utilize DOL’s property reporting and tracking system and did not establish sufficient controls to ensure that Job 

Corps real property was safeguarded and accurately reported in DOL’s tracking system and general ledger 

systems. ETA has begun to review its existing processes and plans to restructure them to strengthen the property 

management system. 

State Workforce Agency Real Property 

In addition, an OIG audit of management controls over Federal equity in State Workforce Agency (SWA) real 

property found that ETA had not established adequate management controls over accounting for the 

Department's equity interest in SWAs’ real properties. Specifically, ETA's inventory of SWA property was 

neither accurate nor complete, and ETA did not ensure the states properly handled the proceeds from disposing of 

SWA properties with DOL equity. We recommended the ETA make control and management of real property a 

high priority. ETA has begun to review its existing processes and will restructure them to strengthen the property 

management system. 

Workforce Investment Act Reauthorization 

The Department also faces the challenge of improving Workforce Investment Act (WIA) programs through the 

WIA reauthorization process. To date Congress has not reauthorized the WIA legislation. Prior OIG audits 

identified areas in which WIA could be improved to better achieve its goals. Based on our audit work, we 

recommended changes to increase training provider participation, improve dislocated worker program services 

and outcomes, better document youth program outcomes, and better assess states’ current WIA funding 

availability. DOL has agreed to most of our recommendations, but many have yet to be implemented. 

Changes from Last Year 

In identifying the most critical management challenges faced by DOL each year, the OIG recognizes significant 

matters meriting the continued attention of the Department may be omitted from the list. In the area of grant 

accountability, ETA has undertaken a grants management initiative, the results of which the OIG plans to review. 

While it does not appear on this year’s challenges list, accountability over DOL awarded grants will continue to 

merit diligent attention. DOL has also implemented a variety of initiatives to enhance human capital management, 

which have been recognized in its scores on implementing the President’s Management Agenda. Nonetheless 

continued attention to recruiting and retaining the best people will be critical to the Department’s future success. 

Recently identified challenges have also replaced some well documented, prior year challenges on the list of most 

critical issues. Insolvency of the Black Lung Trust Fund, a well publicized concern with a legislative proposal to 

address it, therefore does not appear on the challenge list. Nevertheless, follow through by DOL will be required 

to address $8.2 billion in advances the Fund has borrowed from the Treasury. The DOL will also need to follow 

through on planned efforts to decrease asbestos contamination for miners by lowering permissible exposure 

limits, using better detection methods, and addressing take-home contamination from asbestos.
Management and Performance Challenges 

282 United States Department of Labor 

Management’s Response 

Management’s Response to the Inspector General’s Statement on the Top Management 

Issues Facing the U.S. Department of Labor (September, 2004)

Since the announcement of the President’s Management Agenda in 2001, the Department of Labor (DOL) 

continues to make solid progress in implementing the five Government-wide initiatives: Strategic Management 

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

and Budget and Performance Integration. DOL remains one of the leaders among Cabinet agencies — with 

status scores of Green for four of the five Government-wide initiatives, and progress scores of Green for all five. 

Nonetheless, we recognize the areas needing improvement and have plans in place to achieve success. 

The Department recognizes that the nine challenges identified by the Inspector General represent issues of 

significant potential impact on the effectiveness and efficiency of DOL's programs and operations. The 

Department's responses identify extensive actions to address these challenges, all of which have been completed 

or are currently in progress. The Department anticipates that the results of initiatives to address several 

management issues during FY 2004 and a reassessment of other issues should enable the Inspector General to 

report even further progress next year. 

Several of the challenges reference specific concerns reported in detail in OIG audits issued over the past several 

years; the management response summarizes corrective action plans taken or planned by the Department. We 

anticipate that the majority of these findings should be corrected within the next year. Other challenges require 

legislative action or require that DOL take actions jointly with non-DOL government agencies. Performance 

goals and strategies are provided in either the Departmental or agency annual performance plans, whenever a 

sustained effort requires several years to address an OIG management challenge that impacts a core program or 

management priority. Actions taken or planned by the Department to address each management challenge 

identified by the OIG are discussed below. 

Top Management Challenges Facing the Department of Labor 

Following are areas the Office of Inspector General (OIG) considers to be the most serious management and 

performance challenges facing DOL. They involve compliance, accountability, and delivery of services and 

benefits: 

• Reducing Improper Payments 

• Safeguarding Unemployment Insurance 

• Integrity of Foreign Labor Certification Programs 

• Financial and Performance Accountability 

• Systems Planning and Development 

• Information Systems Security 

• Security of Employee Benefit Plan Assets 

• Accounting for Real Property 

• Workforce Investment Act Reauthorization 

Reducing Improper Payments 

Unemployment Insurance and the Use of New Hire Data 

DOL was very pleased with the enactment of P.L. 108-295, which is based on draft legislation proposed DOL, 

and which gives state UI agencies access to the National Directory of New Hires. This will enhance states’ ability 

to detect unreported work violations by UI claimants working in other states or for certain multi-state employers 

who may report all new hires to only one state. ETA is working with the Department of Health and Human 

Services on implementation details and will encourage states to use the directory when it becomes accessible. 

ETA continues to promote activities to prevent and detect overpayments. In FY 2004, $2.3 million in funds is 

being made available to states that submitted acceptable proposals to implement or enhance benefit payment 

control activities such as computer cross-matches to detect overpayments. An example of these activities would 
Management’s Response 

FY 2004 Performance and Accountability Report 283

include the use of the states’ Directories of New Hires as well as an electronic data exchange between state UI 

agencies and the Social Security Administration. 

Federal Employees’ Compensation Act Program Controls 

While ESA agrees that obtaining current medical evidence for long-term disability cases is important, the absence 

of it is not evidence of or even a likely indicator of an improper payment. Existing procedures for requesting and 

verifying medical reports are manual and rely on ad-hoc tracking utilized by individual claims examiners in each 

of the FECA Program District Offices. The long-term solution rests with the FECA Program’s new automated 

claims processing system, which will include a disability review function that determines the presence or absence 

of current medical evidence in file. This will update automated claims examiner task and reminder lists through 

the system’s workload tracking function and will also provide supervisors with the ability to list overdue tasks and 

ensure follow-up. The new system will be deployed in FY 2005. 

The Central Bill Processing service encountered a number of problems at start-up, many of which are documented 

in the audit findings. The audit also documents a significant reduction in medical bill processing problems by the 

third quarter of FY 2004. Throughout the start-up period and on an ongoing basis, as OWCP and the contractor 

identify problems, corrective actions were developed and put into place. For example, completion of the medical 

bill Receivables Tracking/Adjustment processing design will include automated recoupment of overpayments 

from future payments and completion of an interface with FECA’s new claims processing system. This will 

enable review of previous adjustments made to medical bills and creation of receivable/credit records for those 

adjustments. The program will be able to record the overpayments and credits currently stored in Medical Bill 

History to the receivable system. The development of a medical bill processing audit plan for the FECA Program 

based on the successful Black Lung Program’s model is ahead of schedule. Draft procedures for the plan will be 

developed by September, 2004, with plan implementation by October 2004. 

Safeguarding Unemployment Insurance 

DOL again notes that there is no Federal solvency standard, and that states can borrow to make up any shortfall 

during economic downturns. 

Unemployment Trust Fund Resources 

DOL shares the OIG concern regarding IRS overcharges for administering the Unemployment Trust Fund (UTF). 

ETA has had several meetings with IRS to learn details and provide input into the complex methodology that has 

been developed, the most recent meeting being August 5, 2004. The new methodology, which IRS intends to 

implement beginning October 1, 2004, produces charges of the same magnitude that the OIG reported to be 

excessive. ETA is particularly concerned about charges for compliance and the reliance on “area experts” to 

estimate the amount of time devoted to collection of Federal Unemployment Tax Act (FUTA) taxes when audits 

are conducted related to other taxes. Problems have also surfaced relating to how IRS scrutinizes returns from 

multi-state employers while charging the UTF for the service. 

Identity Theft and Organized Crime Activity in Unemployment Insurance Fraud 

On September 17, 2004, ETA announced a second round of funding for Benefit Payment Control integrity-related 

projects. These funds will provide additional resources to implement or enhance activities, such as various 

computer cross-matches to detect overpayments including fraud related to identity theft. Unemployment 

insurance data is cross-matched with a variety of data bases including states’ Directories of New Hires, Bureau of 

Vital Statistics, Departments of Corrections, Departments of Motor Vehicles, as well as data exchanges with the 

Social Security Administration. 

Integrity of Foreign Labor Certification Programs 

To clarify, DOL does not admit aliens into the country who may pose national security risks. Our responsibility 

extends only to ascertaining whether the area of intended employment has been adequately tested such that there 

are no available, willing, able, and prepared U.S. workers for the position being proposed by an employer. 
Management and Performance Challenges 

284 United States Department of Labor 

Problems with the Labor Certification Process 

We concur that reinstating Section 245(i) of the Immigration and Nationality Act (INA) resulted in dramatic 

increases in applications for permanent labor certification creating a major backlog in the processing of 

applications. ETA has attempted to eliminate the large backlog through administrative means available, however 

additional resources have been appropriated to begin eliminating the entire backlog. 

ETA has always required, and will continue to require, foreign labor certification applications to be processed in 

compliance with all applicable statutes, regulations, and policies. Notices of Findings are issued routinely, as 

warranted, by ETA Certifying Officers. Whether an alien has earned experience with the petitioning employer is 

addressed in ETA policy and is routinely reviewed during the certification adjudication process. ETA is 

establishing central processing centers where the majority of the permanent program backlog cases referenced in 

the OIG will be reviewed and adjudicated. We agree with the OIG recommendation to verify an employer’s 

current in-business status prior to certification and refer to OIG Office of Labor Racketeering and Fraud 

Investigations any applications where the employer is determined not to be a bona fide employer; accordingly, we 

have already built this verification process into the case-management software. 

Regarding automation of the Permanent Labor Certification Program, ETA has developed a fraud 

detection/prevention module for use in the new Program Electronic Review Management (PERM) system. This 

module is being designed to quickly validate applicant information and highlight signs of risk or fraud using a 

public record database to be supplied and updated by a third party vendor. ETA is considering the use of 

additional safeguards to authenticate the identity of an employer and to maintain the integrity of the process. 

Once the new system is implemented, the re-engineered PERM system will mark a significant change to the labor 

certification process in helping to validate information. The program will identify ineligible employers using 

automated system edit checks. 

ETA believes that statutory limitations restricting ETA in reviewing H-1B applications for completeness and 

obvious inaccuracies is a structural flaw in the program. Requiring employers to conduct a labor market test as 

part of the application process could provide a reasonable degree of protection for U.S. workers. 

Regulatory Change Needed 

ETA is working with representatives from interested Federal agencies on the issue of fraud in the Permanent 

Labor Certification Program. To clarify the point regarding substitution of aliens on approved labor certifications, 

the Department of Homeland Security, not the Department of Labor, receives requests from employers for an 

alien substitution and decides whether or not to approve the request. 

Labor Certification Fraud 

When denying an application for H-2B Labor Certification, alien labor certification staff attach a detailed 

explanation outlining all deficiencies within the application. These explanations should reduce the number of 

overturns by U.S. Citizenship and Immigration Services (CIS). ETA continues to work with CIS to improve H2B application processing. ETA meets quarterly with CIS and Department of State to discuss ways to reduce 

fraud in the foreign labor certification programs. ETA and CIS have formed a subgroup that meets monthly to 

improve information sharing on employers that are currently being investigated for fraud. ETA’s Foreign Labor 

Certification program has filled a policy analyst position whose sole focus will be on quality control and fraudrelated issues. 

Financial and Performance Accountability 

Financial Accounting 

OCFO recognizes effective project management as among the most important factors affecting the eventual 

success of the New Core Financial Management System Project (NCFMS). Effective and responsive project 

monitoring, oversight, and controls, clear and effective direction, and systems of governance can mitigate the risk 

of missing the intended end result. Project risks for the NCFMS are managed through the use of detailed project 

plans and resourced Work Breakdown Structures (WBS), which also populate the Department’s Earned Value 

Management System. The project plan and WBS enable effective management of tasks to be performed at the 

activity level, monitoring resource and time consumption, and comparing baseline estimates with actual costs and 
Management’s Response 

FY 2004 Performance and Accountability Report 285

schedule. The project plan includes activities associated with the testing of the various software deliveries against 

DOL requirements documents, as well as responding to regulatory requirements and changes. 

Both the vendor and DOL employees will conduct thorough testing and piloting in the DOL test environment. 

After delivery is made, confirmation testing will occur in the production environment. The NCFMS project team 

has engaged an independent validation and verification contractor to ensure: (1) the technical integrity of 

products and processes; and (2) that all data from feeder and subsystems interface with the NCFMS. In order to 

conduct regression testing, a baseline set of test scripts will be developed and executed as a co-requisite to 

introducing changes to the software. 

Since the adopted software, Oracle Federal Financials 11i, has been tested and certified by the Joint Financial 

Management Improvement Program (JFMIP), we assume that the functionality meets all the Federal standards for 

financial management systems, as well as all DOL user requirements. Despite these assurances from JFMIP, the 

NCFMS project team plans to continually test the baseline requirements whenever new functionality or changes 

are introduced, and conduct regression testing to ensure the system is indeed compliant in all material respects. In 

addition, OCFO’s partnership with the OIG will help ensure that all Federal financial system requirements and 

user needs are met. 

Managerial Cost Accounting 

In FY 2002 and FY2003 the Secretary determined that the Department was in substantial compliance with the 

FFMIA. However, DOL did agree that integrating performance and cost information to support decision making 

was a top priority and initiated the Cost Analysis Manager (CAM) project. The CAM initiative made substantial 

progress in FY 2004. Cost models were completed for 15 agencies to provide cost information on outputs and 

activities of major agency programs. OCFO selected and put into production a managerial cost accounting 

software tool that will serve as the CAM system for ongoing model updates, revisions, and reporting. OCFO 

trained approximately 50 employees representing all the participating agencies were trained in managerial cost 

accounting principles and methodology; these are in addition to approximately 130 employees trained in FY 

2003. Additional training for Agency managers is planned for the 1st quarter of FY 2004 on how to analyze cost 

information and use it for decision-making. In addition, designated agency staff will be trained on how to update 

and maintain the models in the CAM system. Agencies have already begun to make use of information from their 

cost models and identified future plans for using cost information. DOL submitted a Financial Data Integration 

Improvement Plan to the Office of Management and Budget (OMB) outlining how agencies intend to use CAM 

and demonstrating existing capabilities that help in improving operations and reporting results. 

The CAM system uses financial information supplied by the Department's core accounting system (DOLAR$), 

along with labor distribution and workload information. As such, the CAM system provides DOL the capability 

to integrate performance and cost information to support agency program managers at all levels. As part of the 

cost model development process for each Agency, the OCFO CAM team analyzed and documented financial data 

for the agency cost models. Based on that analysis, the OCFO CAM team determined that the type and level of 

financial information provided by DOLAR$ meets the managerial cost accounting needs of the agencies and that 

no changes are needed to support the CAM system. 

 

In FY 2005, agencies will update their models to include cost information for FY 2004. Agencies will also refine 

and expand their cost models to meet their specific cost information needs. OCFO expects to improve agency 

cost models by refining resource and activity assignments, adding and revising significant outputs, improving 

allocation of overhead and support costs, and further mapping of outputs to performance goals. Automation of 

data collection (from DOLAR$ core accounting system, agency workload and time tracking systems) and 

standard report preparation are also planned. 

Quality Performance Data 

ETA currently requires data validation for three employment and training programs: (1) Workforce Investment 

Act (WIA); (2) Employment Service (ES); and (3) Trade Adjustment Assistance (TAA). The agency is 

developing data validation software and guidance for three additional programs to be implemented during 2005: 

(1) National Farmworker Jobs Program (NFJP); (2) Indian and Native Americans (INA); and (3) Senior 

Community Service Employment Program (SCSEP). OMB approved DOL’s request to collect data validation 

results from the states on August 31, 2004. 
Management and Performance Challenges 

286 United States Department of Labor 

ETA issued Training and Employment Guidance Letter No. 3-03, Change 1, Data Validation Policy for 

Employment and Training Programs, in August, 2004 which gave states new timelines for data validation and 

provided guidance on acceptable source documents to be used in validating data elements related to eligibility and 

performance. States are required to complete report validation for WIA prior to submitting the Program Year 

2003 Annual Report on October 1, 2004. ETA requires report validation and minimal data element validation. 

Report validation for the ETA 9002 and VETS 200 reports must be conducted prior to submission on November 

15, 2004. States are required to conduct data element validation on the cumulative file of four quarters of the FY 

2004 TAPR by February 1, 2005. ETA is continuing to provide data validation software and technical assistance 

to states during the validation process. NFJP grantees will receive data validation training in November 2004. 

Data element validation for PY 2003 must be completed by June 15, 2005. Validation software, instructions, 

training and timetables for INA and SCSEP will be issued at a later date.

Single Audit 

We share the OIG's concerns about the adequacy of Single Audit Act (SAA) audit coverage of its programs. In 

our oversight and monitoring activities, we will continue our efforts to ensure that covered recipients and subrecipients have required audits performed, that audit findings are appropriately resolved, and that audit results are 

used to improve program performance. In FY 2004 and beyond, DOL will establish quality controls more 

proactively through implementation of the Improper Payments Information Act of 2002. For every 

program/activity with significant erroneous payments, the Department will construct a statistically valid 

methodology and program design to estimate the annual amount of erroneous payments, analyze the causes of the 

errors, and ensure progress in reducing the amount of erroneous payments. These actions will allow the 

Department to more effectively target payment errors. DOL will also conduct periodic reviews to improve 

internal controls and train staff to provide guidance on maintaining these controls over the long term. ILAB 

completed an assessment which confirmed that the single audits conducted for ILAB’s grantees do not provide all 

the information necessary for adequate oversight of the international child labor program. To address this, ILAB 

recently entered into a contract, with OIG’s support, for an independent public accounting firm to examine 

grantees’ compliance with applicable regulations and cooperative agreement provisions and the reliability of their 

financial and performance reports. 

Systems Planning and Development 

Information Systems Planning and Implementation 

The Office of Chief Information Officer (OCIO) continues to implement a comprehensive project management 

structure that employs a rigorous system development life-cycle management process that includes checks and 

balances to ensure projects are being executed according to plan, within budget and meeting performance 

expectations. This is accomplished through systematic quarterly reviews carried out in accordance with the 

Department’s Capital Planning, Investment, and Control Process. During this monitoring/review process, the 

OCIO and the Departmental Budget Center evaluate the progress of information technology (IT) projects against 

a range of parameters, including: cost, schedule and performance; enterprise architecture alignment; and 

compliance with security requirements. IT development projects are then rated on quarterly review “scorecards” 

in each of these categories. 

Maturing this development life-cycle management process further, the Chief Information Officer established 

policy for and implemented through the OCIO an earned value management system (EVMS) for major IT 

investments in FY 2004. By memorandum of September 27, 2004, the Deputy Chief Information Officer issued 

detailed for guidance for implementation of the Department’s EVMS. The EVMS routinely captures 

standardized, detailed information for monitoring the cost, schedule and performance of major IT investments 

over time. Systematic tracking of this data allows project managers and DOL top management to be informed in 

a timely manner about the progress of IT development projects; this facilitates their ability to make informed 

decisions about project direction and continued investment in projects. The Department’s EVMS is in 

compliance with current standards and guidance from the Office of Management and Budget, including ANSI 

Standard 748. 

The overall Departmental IT management structure continued to be strengthened. In FY 2004, three IT Project 

Management classes were conducted for DOL IT professionals; 48 staff members completed the training. 
Management’s Response 

FY 2004 Performance and Accountability Report 287

Fourteen IT professionals also submitted applications to complete the Project Management Professional (PMP) 

certification exam in FY 2004. Going forward in FY 2005, IT Project Management classes will be offered on a 

quarterly basis, and project management modules will be included in the Department’s Skillsoft online learning 

library. Contracting Officers Technical Representative (COTR) training was also provided to the OCIO Programs 

and the Information Technology Center entire senior staff to enhance the management and oversight of systems 

planning and development services acquired through contract. 

The Office of Management and Budget (OMB) continued in FY2004 to positively rate the Department’s 

performance under the E-Government component of the President’s Management Agenda (PMA). The 

Department has a modernization blueprint that focuses IT investments, has steadily improved its business cases 

for IT development projects and closely tracks cost, schedule and performance metrics for information systems 

implementation. DOL has been rated “green” for progress against these and other criteria for measuring EGovernment performance since inception of the PMA scorecard and reached “green” for status in September 

2004. 

E-Payroll 

DOL will migrate its payroll operations to the National Finance Center (NFC) in FY 2005. At the inception of the 

project, OCFO submitted a complete and approved conversion plan. Additionally, the OCFO validated that the 

pay-affecting data of its employees contained in Peoplepower, DOL’s current payroll system, was complete and 

accurate. OASAM then implemented a department-wide data validation process to confirm OCFO’s results. 

Furthermore, HR users and IT executives were involved in the project since inception leading training and 

telecommunication efforts. 

Davis-Bacon Prevailing Wage Determination 

ESA/WHD agrees with the OIG that the Davis-Bacon Act (DBA) wage determination process should be 

accomplished under the most efficient and effective system possible. ESA/WHD remains unconvinced, that the 

Audit Report provides adequate justification to promote statutory changes to the Davis-Bacon Act as 

recommended by the OIG. ESA/WHD also has several concerns with OIG conclusions relating to errors in the 

wage data, bias in the wage date, and the timeliness of wage decisions. ESA/WHD believes, as the Government 

Accountability Office (GAO) noted in May 1999, that the system changes currently being pursued under DBA 

program have the potential to improve wage determinations. 

Although ESA/WHD did not agree with OIG concerns about the current universe survey approach as opposed to a 

sample survey approach, there is justification to reexamine our previous conclusions and intends to explore with 

the Bureau of Labor Statistics (BLS) the possibility of using BLS data for purposes of establishing prevailing 

wage rates under DBA. ESA/WHD believes that any change to a sample survey methodology for DBA wage 

determinations should involve the use of BLS data rather than create a whole new sample survey program 

conducted by ESA/WHD. 

OSHA System Development Efforts 

OSHA accepted the recommendations from the OIG. The agency had previously suspended further work on the 

IMIS Redesign and had contracted for an independent assessment of its IMIS Redesign activities. OSHA is 

awaiting the contractor’s final report. Receipt of that evaluation will assist the agency in determining how best to 

proceed in complying with the OIG recommendations. 

Information Systems Security 

IT Security Controls 

The Office of the Chief Information Officer (OCIO) performed a comprehensive review of the Department’s 

Security Program to measure its efficiency and effectiveness. This review included a broad assessment of 

security vulnerabilities identified by the OIG, as well as applicable Departmental IT security policies and 

procedures. Based on this review, a DOL Plan of Actions and Milestones (POA&M) was developed which 

mapped out a strategy to mitigate identified security vulnerabilities and other program areas needing 

improvement. Agency senior management was advised by the Chief Information Officer to give priority and 

resources to their agency-specific vulnerabilities prior to funding new IT investments. Agencies were also 

advised to ensure these vulnerabilities and their corrective actions were documented in their Plans of Actions and 
Management and Performance Challenges 

288 United States Department of Labor 

Milestones (POA&Ms). In addition, the OCIO established several focus groups comprised of representatives 

from multiple Departmental agencies to leverage agency expertise and assistance in enhancing the Department’s 

Cyber Security Program. 

Accomplishments in IT security improvements include: 

• Completing mitigation activities to close 62 and resolve 21 of 99 outstanding OIG audit 

recommendations, including ten FECA recommendations that were closed and one that was resolved in 

FY 2004. Remaining FECA issues will be addressed in the new claims processing system, scheduled to 

be deployed in FY 2005. Progress was also made in implementing mitigating activities for State UI 

systems. Eight UI system recommendations were closed and six were resolved in FY 04. Additionally, 

data encryption and testing has been implemented for data transfers between the State UI systems and the 

Federal systems. A Federal IT team is working with the State Workforce agencies to provide guidance 

and instructions on computer security requirements. 

• Developing Contingency Plans for 92% of major systems, and testing 64% of those plans. 

• Revising the DOL Computer Security Handbook to include more comprehensive security procedures and 

guidance. 

• Completing Authority to Operate documentation for 95% of Major Information Systems. 

• Completing security testing and evaluation for over 90% of Major Information Systems. 

• Completing Computer Security Awareness and Training for some 99% of employees and contractors. 

The Department’s completion of ATO’s for the vast majority of DOL's Major Information Systems was favorably 

noted in OMB’s 3rd Quarter PMA scorecard for E-Government. The Department will continue to assess the 

efficiency and effectiveness of its IT security controls and focus on mitigating security vulnerabilities. Currently, 

the Department is directing attention to improving its Contingency Planning testing and vulnerabilities associated 

with logical security controls and wireless technologies. 

Security of Employee Benefit Plan Assets 

Safeguards to Protect Pension Assets 

Between 1991 and 1997, the Department submitted legislative proposals calling for the repeal of the limitedscope audit provision and calling for reforms to strengthen plan audits. During that same period, DOL also 

proposed legislative changes that would require direct reporting of certain criminal violations relating to 

employee benefit plans. Neither the House nor Senate reported legislation out of committee. 

The Department continues to take steps to improve the audit process established by the Employee Retirement 

Income Security Act of 1974 (ERISA). In February 2003, EBSA initiated its second nationwide review to assess 

the quality of employee benefit plan audits. The study involved a statistical sample of 300 plan audits and 

assessed compliance with professional accounting and auditing standards; a report of study findings is being 

prepared. Ongoing DOL initiatives include cooperative efforts with the accounting profession, such as referral of 

deficient accountant work to State boards of accountancy and to the American Institute of Certified Public 

Accountants (AICPA) for appropriate remedial and disciplinary actions. In addition, EBSA will be coordinating 

closely with the Public Company Accounting Oversight Board (created by the Sarbanes – Oxley Act) and 

continue its active involvement with the AICPA and the Financial Accounting Standards Board (FASB) to 

develop accounting guidance for employee benefit plans and additional technical materials for CPAs to use in 

conducting audits of employee benefit plans. 

Pension Plan Fraud 

During the past few years, EBSA has stepped up its criminal enforcement program. During FY 2004, EBSA’s 

criminal investigations led to the indictment of 121 individuals for crimes related to employee benefit plans. 

EBSA will continue to target criminal cases in various ways that have yielded successful results in the past (e.g., 

analyzing computer data, gathering information through civil investigations, leads from plan participants, plan 

officials, informants, and media sources, and information gained from other government agencies). EBSA also 

maintains close working relationships with other law enforcement agencies such as the U.S. Attorneys, the FBI, 

Postal Inspectors, and OIG. 

For employer-sponsored 401(k) plans, including multi-employer 401(k) plans, EBSA has had a national 

enforcement project since 1995 focusing on the failure of employers to timely remit employee contributions to 
Management’s Response 

FY 2004 Performance and Accountability Report 289

401(k) plans. From the project’s inception, EBSA has closed over 9,400 civil investigations (over 72% with 

violations and monetary results). EBSA has achieved monetary results of over $337 million nationwide through 

this project and criminally prosecuted 137 persons. 

Finally, while not all violations can be prevented, EBSA is proactive in the early detection and prevention of 

wrongdoing by, among other things, aggressive outreach and education campaigns. Education campaigns create 

knowledgeable consumers who can assist in identifying issues within their own benefit plans. EBSA also seeks to 

leverage its enforcement resources. In its Strategic Enforcement Plan, published in April 2000, EBSA identified 

plan service providers as a national investigative priority. Investigations of plan service providers offer the 

opportunity to address abusive practices that may affect more than one plan. By focusing investigative resources 

on plan service providers, EBSA can address violations involving many plans. 

EBSA’s Voluntary Fiduciary Correction Program (VFCP) continues to enhance the security of pension assets. 

Through the VFCP, plan sponsors self-correct delinquent participant contributions and other ERISA violations. 

Sponsors that meet the conditions of the VFCP and a related Class Exemption receive relief from civil 

enforcement action and any applicable penalties and excise taxes. EBSA received 474 VFCP applications during 

FY 2004, and verified approximately $264 million in corrections. In FY 2004, EBSA contacted hundreds of 

401(k) sponsors regarding delinquent contributions reported on the Form 5500 Annual Report. That initiative 

resulted in additional correction of losses and increased participation in the VFCP. 

Cash Balance Pension Plans 

The Department’s regulatory and enforcement authority in this area is limited. DOL cannot take any enforcement 

action or begin working with the IRS on additional guidance until the IRS determines whether or not there were 

violations of Internal Revenue Code and ERISA. Consequently, the Department forwarded a copy of the OIG 

report and supporting work papers to the IRS for its review and comments. We await IRS’ response, and will 

provide assistance in developing new guidance if IRS determines this action is warranted. However, Treasury 

appropriations law includes a provision prohibiting Treasury/IRS from spending funds to take action with respect 

to implementing rules or regulations concerning cash balance plans.

Corrupt Multiple Employer Welfare Arrangements (MEWAs) 

Stopping the abusive practices of corrupt Multiple Employer Welfare Arrangements (MEWAs) and their 

operators is one of EBSA’s top priorities. EBSA is fully committed to putting an end to the fraudulent and 

abusive practices of those individuals preying on the American worker, using a three-pronged approach. 

First, we focus on prevention by educating employers and consumers. Secretary Chao released detailed guidance 

to over 80 leaders of America’s small business community outlining steps they can take to avoid being taken in 

and asking them to inform their membership. EBSA has also published and distributed educational materials, 

including a booklet explaining Federal and State regulation of MEWAs, and guidance for workers on what to do 

when claims aren’t paid or coverage is lost. All these materials are available on our website and are distributed in 

outreach sessions we hold with consumers, small employers, and service providers throughout the country. 

Second, EBSA aggressively pursues civil and criminal enforcement actions to shut down scams. By conducting 

parallel civil and criminal investigations, EBSA has battled hard to stem this abuse both by shutting down corrupt 

MEWAs through civil court orders and by criminally prosecuting those responsible for operating the illegal 

enterprises. Third, the Administration strongly supports legislation to establish a secure and affordable alternative 

for small businesses looking to purchase health insurance for their workers - Association Health Plans (AHPs). 

The AHP legislation contains strong provisions to combat fraud, including mandatory certification of all AHPs, 

solvency standards for both insured and self-insured arrangements, and rigorous State and Federal oversight. 

With AHPs, small employers and their workers will be assured that their health insurance is secure. 

EBSA is well aware that corrupt MEWAs are not a federal issue alone but one where the states also have 

jurisdictional interest. In many instances, the states have filed cease and desist orders to shut down a corrupt 

MEWA before it causes significant harm. In other cases, the states have been able to revoke or suspend the 

licenses of insurance agents. EBSA has worked very closely with state insurance departments and the National 

Association of Insurance Commissioners (NAIC) to coordinate our enforcement efforts. NAIC coordinates the 

sharing of information regarding potential corrupt MEWAs with EBSA contacts in each of the regions, as well as 

with State department of insurance contacts. The NAIC also coordinates on-going MEWA activity through an e-
Management and Performance Challenges 

290 United States Department of Labor 

mail contact list which allows EBSA and various State departments of insurance representatives to communicate 

about on-going and emerging problems. 

More recently, EBSA has encouraged the Department of Justice to prosecute these complex financial, white-collar 

crimes. EBSA has worked closely with the Department of Justice in identifying corrupt MEWAs as an emerging 

area of health care fraud. In April 2004 EBSA spoke with a number of United States Attorneys regarding corrupt 

MEWAs, educating U.S. Attorneys about the problem, and encouraging them to emphasize the prosecution of 

these MEWA operators. EBSA has also participated in the Department of Justice’s national Health Care Fraud 

Working Group meetings to bring attention to the problem. The Department of Justice recently issued an 

advisory memorandum to all U.S. Attorneys emphasizing the need for increased prosecution of corrupt MEWA 

operators. EBSA assisted in preparing and coordinating the memorandum. 

Accounting for Real Property 

Job Corps Real Property 

ETA completed its first annual (physical) inventory of Job Corp capitalized real property in January 2004. This 

effort served to resolve differences between the Job Corp site survey data and the CATARS, and reconciliation of 

CATARS to DOLAR$ for land has been completed. Procedures are in place to ensure that future Job Corp land 

acquisitions are entered in the CATARS, and that all additions and dispositions are processed timely.

State Workforce Agency Real Property 

ETA is in general agreement with the OIG’s concerns about the need to: (1) maintain an accurate, up-to-date 

inventory and valuation of State Workforce Agency (SWA) real property; and (2) insure that states properly 

handle the proceeds resulting from the disposition of real property with federal equity. Currently, ETA sends a 

letter to SWA Administrators every two years asking them to review and update the information in our property 

records. ETA then updates its inventory records with state-provided information. ETA acknowledges that, 

although this is the best information available, these records are not always current or accurate. ETA has a 

Training and Employment Guidance Letter (TEGL) on SWA real property in the final clearance process. This 

guidance requires states to report changes and/or updates to their real property data by November 30, 2004 and reemphasizes the requirement that states must remit the proceeds from real property sales to DOL. ETA is working 

on issuing a Field Memorandum (FM) which requires ETA regional offices to follow-up and ensure that states 

promptly update their property inventory records. 

Workforce Investment Act Reauthorization 

As of September 2004, the House and Senate WIA reauthorization bills that were passed in 2003 are still awaiting 

conference. DOL has taken numerous steps to address the concerns outlined in the OIG findings, even while we 

await further action on WIA reauthorization. In addition to the specific steps referenced above, ETA convened 

two Federal/State Policy Forums in 2004 to discuss high-level policy issues such as those identified by the OIG. 

The continued implementation of the President’s High-Growth Job Training Initiative is also helping to address 

these key issues by funding innovative partnerships between the workforce investment system, business and 

training providers to train adults and young people for jobs that are in demand. 
Appendices 
292 United States Department of Labor 

1. Performance Goal Details 

The November 15, 2004 publication date for the FY 2004 Department of Labor Annual Performance and Accountability Report is than the Department has ever published this report. Due to the early reporting date and the wide variety of sources from which the performance data – including states, contractors, and domestic and international grant recipients – not all of the data required to rep

available before the publication date. For these reasons the Department is estimating performance results for some of its goals. Where estimates have been used in this report, they are clearly identified as such. These estimates are based on methodologies devreviewed by the Department of Labor’s Office of Inspector General. Most of these performance estimates use partial year data and fiscal year. In instances where final quarter data have not traditionally been representative of the entire fiscal year, other estimating 

Performance Goal 1.1A (ETA) 

Increase the employment, retention, and earnings of individuals registered under the WIA Adult progra

PY 2000 

Goal Achieved 

PY 2001 

Goal Achieved 

PY 2002 

Goal Not Ach

*Indicator target reached (Y), substantially reached (S) or not reached (N) 

Result Target * Result Target * Result Target 

Percent of participants employed in the first quarter after program exit NA NA NA NA NA NA 74% 70% Percent of those employed in the first quarter after program exit still employed in the third quarter after program exit 

78% 77% Y 79% 78% Y 84% 80% 

Average earnings change for those who are employed in the first quarter after program exit and are still employed in the third quarter after program exit 

$3684 $3264 Y $3555 $3361 Y $2900 $3423 

Data Source(s): Annual Workforce Investment Act Standardized Record Data in the Enterprise Information Management System and Unemplo

Performance Goal 1.1B (ETA) 

Improve the outcomes for job seekers and employers who receive public labor exchange services.

PY 2000 

Goal Achieved 

PY 2001 

Goal Not Achieved 

PY 2002 

Goal Not Ach

*Indicator target reached (Y), substantially reached (S) or not reached (N) 

Result Target * Result Target * Result Target 

Percent of job seekers registered with the public labor exchange will enter employment with a new employer by the end of the second quarter following registration PY 2000: Employment Service applicants entering employment 

3.9 

million

3.2 

million

Y NA NA NA 63% 55% 

Percent of job seekers that continue to be employed two quarters after initial entry into employment with a new employer 

NA NA NA NA 76% NA NA 70% 
FY 2004 Performance and Accountability Report 293

Job openings listed with the public labor exchange (with both State Workforce Agencies and America’s Job Bank) 

12.3 

million

11.2 

million

Y 11.8 

million 

13.5 

million

N 10.2 

million

11.8 

million

New employers registered with America’s Job Bank 66,563 60,000 Y NA NA NA NA NA Number of job searches conducted by job seekers using America’s Job Bank 

NA NA NA NA NA NA NA NA 

The number of resume searches conducted by employers from America’s Job Bank will be collected to determine a baseline for setting future performance targets. 

NA NA NA NA NA NA NA NA 

Data Source(s): Quarterly State reports, UI wage records, and AJB Center Reports. PY 2003 indicators 1 and 2 were revised to be consistent with the new WIA program. During PY 2001, ETA underwent a transition to a new lameasurement system. There is no statistically valid baseline data for these new measures. Targets reflect very limited test experience with a few 

Performance Goal 1.1C (ETA) 

Strengthen the registered apprenticeship system to meet the training needs of business and workers in the 21st 

FY 2002 

Goal Achieved 

FY 2003 

Goal Substan

Achieved 

*Indicator target reached (Y), substantially reached (S) or not reached (N) 

Result Target * Result Target 

New programs in new and emerging industries 326 293 Y 359 359 New apprentices registered by OATELS staff only FY 2002-2003: All registrations 129,388 86,647 Y 130,615 133,909 New apprenticeship programs 2,952 1854 Y NA NA New businesses involved in apprenticeship 5,883 3248 Y NA NA 

Data Source(s): Registered Apprenticeship Information System (RAIS) and Apprenticeship Information Management System (AIMS) 

Performance Goal 1.1D (ODEP) 

To provide national leadership to increase access and employment opportunities for youth and adults with disabilities receiving 

employment support services by developing, testing, and disseminating effective practices

FY 2002 

Goal Achieved 

FY 2003 

Goal Not Ach

*Indicator target reached 

(Y), substantially reached (S) or not reached (N) 

Result Target * Result Target 

People with disabilities served through ODEP projects NA NA NA NA NA Entered employment rate at pilot sites NA NA NA NA NA 
294 United States Department of Labor 

3-month and 6-month retention rates for people with disabilities served by the pilots NA NA NA NA NA Effective practices identified through pilot project sites and other research-related initiatives NA NA NA NA NA Implement 30 new Olmstead grant projects, targeted at persons with significant disabilities who are institutionalized 

NA NA NA 16 30 

Implement 12 youth grant projects (6 of which are new technology skills projects) to assist youth through the One-Stop Centers and the WIA youth programs 

NA NA NA 21 12 

Implement 12 demonstration programs, through grants, designed to develop and test strategies and techniques that need to be implemented in order for One-Stop Centers and WIA youth programs to effectively serve persons with significant disabilities. 

16 

WIA, 

22 

other 

12 Y NA NA 

Data Source(s): Program data from pilot locations 

Performance Goal 1.1E (VETS) 

Increase the employment and retention rate of veteran job seekers registering for public labor exchange ser

FY 2000 

Goal Achieved 

FY 2001 

Goal Achieved 

FY 2002 

Goal Achieved 

FY 2003 

Goal Not Mea

*Indicator target reached (Y), substantially reached (S) or not reached (N) 

Result Target * Result Target * Result Target * Result Target 

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

NA NA NA 33% 27% Y 43% 34% Y NA NA 

Percent of veteran job seekers who continue to be employed two quarters after initial entry into employment with a new employer 

NA NA NA NA NA NA NA NA NA NA NA 

Percent of veterans that register with the Public Employment Service who enter employment. DVOP and LVER staff registrations 

32% 32% 

27% 30% 

Y NA NA NA NA NA NA NA NA 

Data Source(s): State reports and UI wage records and homeless veteran grantee reports. Quarterly State Performance Reports included in the Management System (EIMS) and Unemployment Insurance Records Note: A major transition was underway during FY 2003 to a new system of measuring and reporting the outcomes of labor exchange services f

the common measures and that operates on a program year basis. 
FY 2004 Performance and Accountability Report 295

Performance Goal 1.1F (VETS) 

Increase employment of homeless veterans

FY 2001 

Goal Achieved 

FY 2002 

Goal Not Achieved 

FY 2003 

Goal Achiev

*Indicator target reached (Y), substantially reached (S) or not reached (N) 

Result Target * Result Target * Result Target 

Percentage of veterans enrolled in Homeless Veterans Reintegration Projects entering employment 

54% 50% Y 54.4% 54% Y 60.3% 54.5% 

Establish a baseline retention rate NA NA NA N Y N NA NA 

Data Source(s): State reports and UI wage records and homeless veteran grantee reports. Quarterly State Performance Reports included in the Management System (EIMS) and Unemployment Insurance Records 

Performance Goal 1.1F (ETA) 

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

PY 2000 

Goal Achieved 

PY 2001 

Goal Achieved 

PY 2002 

Goal Not Ach

*Indicator target reached (Y), substantially reached (S) or not reached (N) 

Result Target * Result Target * Result Target 

Participants employed in the first quarter after program exit 75% 71% Y 79% 73% Y 82% 78% Participants employed in the first quarter after program exit who are still employed in the third quarter after program exit 

83% 82% Y 87% 83% Y 90% 88% 

Percent of pre-dislocation earnings for those still employed in the third quarter after program exit 

95% 90% Y 101% 91% Y 90% 98% 

Data Source(s): Annual State WIA Reports in the Enterprise Information Management System (EIMS); Unemployment Insurance Wage Recor

Performance Goal 1.1G (ETA) 

Increase the employment, retention, and earnings replacement of workers dislocated in important part because of trade and who rece

benefits

FY 2001 

Goal Substantially 

Achieved 

FY 2002 

Goal Not Achieved 

FY 2003 

Goal Not Ach

*Indicator target reached (Y), substantially reached (S) or not reached (N) **Estimated 

Result Target * Result Target * Result Target 

Participants employed in the first quarter after program exit 65% 73% N 66% 78% N 62% 78% Participants employed in the first quarter after program exit still employed in the third quarter after exit 

90% 80% Y 89% 88% Y 86% 90% 

Percent of pre-separation earnings for those still employed in the third quarter after program exit 

85% 82% Y 80% 90% N 73% 90% 
296 United States Department of Labor 

Data Source(s): TAPR (Trade Act Participant Report) included in the Enterprise Information Management System (EIMS) Performance Goal 1.2A (ETA) 

Increase entrance and retention of youth registered under the WIA youth program in education or employ

PY 2000 

Goal Substantially 

Achieved 

PY 2001 

Goal Achieved 

PY 2002 

Goal Achiev

*Indicator target reached 

(Y), substantially reached (S) or not reached 

(N) 

Result Target * Result Target * Result Target 

Percent of the 14-18 year-old youth who enter the program without a diploma or equivalent that attain a secondary school diploma or equivalent by the first quarter after exit PY 2000-2001: Percent of the 14–18 year-old youth either employed, in advanced training, post-secondary education, military service or apprenticeships in the third quarter after program exit 

47% 50% N 50% 50% Y 

55% 51% 

Percent of 19–21 year-old youth employed in the first quarter after exit NA NA NA NA NA NA 67% 63% Percent of 19–21 year-old youth employed in the first quarter after exit still employed in the third quarter after program exit 74% 70% Y 75% 75% Y 80% 77% 

Data Source(s): Annual State WIA Performance Reports in the Enterprise Information System (EIMS) and Unemployment Insurance wage rec

Performance Goal 1.2B (ETA) 

Increase participation, retention, and earnings of Job Corps graduates in employment and education

PY 1999 

Goal Achieved 

PY 2000 

Goal Substantially 

Achieved 

PY 2001 

Goal Substantially 

Achieved 

PY 2002 

Goal Not Ach

*Indicator target reached (Y), substantially reached (S) or not reached (N) 

Result Target * Result Target * Result Target * Result Target 

The number of students who attain high school diplomas while enrolled in Job Corps 

NA NA NA NA NA NA NA NA NA 6381 3912 

Percent of graduates who continue to be employed or enrolled in education six months after initial placement date 

NA NA NA 67% 70% N 64% 70% N 63% 65% 

Average hourly wages of graduates with jobs at six months after initial placement 

$7.49 $6.50 Y $7.97 $7.50 Y $7.96 $7.25 Y $8.03 $8.20 

Percent of graduates who enter employment or enroll in education 

88% 75% Y 91% 85% Y 90% 85% Y 87% 90% 

Data Source(s): Job Corps Management Information System 
FY 2004 Performance and Accountability Report 297

Performance Goal 1.2C (ETA) 

Increase retention of Youth Opportunity Grant participants in education, training, or employment

PY 2001 

Goal Not Measured 

PY 2002 

Goal Not Ach

*Indicator target reached 

(Y), substantially reached (S) or not reached (N) 

Result Target * Result Target 

Percent of 14-18 year-old youth who enter the program without a diploma or equivalent that attain a secondary school diploma or equivalent by the first quarter after exit 

NA NA NA 46% 51% 

Percent of 19–21 year-old youth employed in the first quarter after exit NA NA NA 50% 63% Percent of 19–21 year-old youth employed in the first quarter after exit still employed in the third quarter after program exit 

NA 60% NA 78% 77% 

Data Source(s): Quarterly Youth Opportunity Grant program grantee reports and Unemployment Insurance wage records 

Performance Goal 1.3A (BLS) 

Improve information available to decision-makers on labor market conditions, and price and productivity ch

*Indicator target reached 

(Y), substantially reached (S) or not reached (N) 

Improve relevancy

Improve data relevance by reflecting changes in the economy, as measured by the number of series (e.g., Current Employment Statistics, Emplo

Cost Index, etc.) converted to the North American Industry Classification System (12 series in total) 

Improve accuracy

Coverage Improve coverage by increasing the percent of domestic output of in-scope services included in the Producer Price Index (PPI) Improve coverage by increasing the percent of in-scope industries in the labor productivity measures Response Improve the response to the Employment Cost Index 

Enhance information technology

Lessen the likelihood of major systems failures that could affect the PPI's ability to release data on time, as measured by the percent of the com

of the new repricing system completed 

Raise customer satisfaction with BLS products and services (e.g., the American Customer Satisfaction Index) Deliver economic data on time (Percent of scheduled releases issued on time) Percent of accuracy measures met (e.g., revision, response rates, etc.) 
298 United States Department of Labor 

Data Source(s): Office of Publications and Special Studies report of release dates against OMB release schedule for BLS Principal Federal Ecofor each Principal Federal Economic Indicator; BLS budget submissions and Quarterly Review and Analysis System; ACSI Quarterly E-GoverNotes: Target for indicator 1 is cumulative over a 5-year period. For example, four data series were converted to NAICS in FY 2004; the other 

and FY 2003. The target for indicator 3 – developed under the SIC system – was initially 61.4%; its NAICS equivalent is 58.0%.

Performance Goal 2.1A (ESA) 

Covered American workplaces legally, fairly, and safely employ and compensate their workers

FY 2002 

Goal Substantially 

Achieved 

FY 2003 

Goal Substan

Achieved 

*Indicator target reached (Y), substantially reached (S) or not reached (N) 

Result Target * Result Target 

Ensuring continued customer service by minimizing the average number of days to conclude a complaint 

NA NA NA 108 

days 

126 

days 

Reducing employer recidivism Percent of prior violators who achieved and maintained FLSA compliance following a full FLSA investigation Percent of reinvestigations without any violations Percent of reinvestigations with identical violations 

NA 

34% 19% 

NA 

Base 

base 

NA 

Y Y 

NA 

37% 17% 

NA 

36% 17% 

Increasing compliance in industries with chronic violations 

as indicated in the garment manufacturing industry by: 

Percent of employees paid “on the payroll” in New York City Number of manufacturers in southern California that monitor contractors Percent of employees paid “on the payroll” in southern California New contractors in NYC participating in Compliance Assistance program Number of manufacturers in NYC that monitor contractors Percent of contractors in NYC that pay all employees “on the payroll” Number of monitoring components used by manufacturers in monitoring contractors for compliance in southern California Percent of contractors in southern California that pay all employees “on the payroll” Percentage of compliance of new contractors in NYC 

NA 

53% 

NA NA NA 

42% 

6.4 

92% 43% 

NA 

43% 

NA NA NA 

53% 

5.6 

65% 55% 

NA 

Y 

NA NA NA 

N Y Y N 

33% 

715 

91% 

73 

158 

NA NA NA NA 

base 

714 

base 

72 

153 

NA NA NA NA 
FY 2004 Performance and Accountability Report 299

as indicated in the long-term health care industry by: 

Percent of nursing homes in compliance with the FLSA. Percent of nursing home employees employed or paid in compliance with the FLSA. Percent of nursing home complaint cases concluded in 180 days Percent of employees in residential care paid in compliance with the FLSA overtime requirements Additional employees of multi-establishment nursing home corporations impacted by corporate proactive steps such as training and self-audit. Nursing home employers provided compliance assistance information through seminars and other outreach efforts Percent of employers (residential living) in compliance with the recordkeeping requirements of the Fair Labor Standards Act 

NA NA NA NA 

16,426 

7,681 

77% 

NA NA NA NA 

6000 2559 

base 

NA NA NA NA 

Y Y Y 

NA NA 

48% 77% 

NA NA NA 

NA NA 

42% 85% 

NA NA NA 

as indicated in agricultural commodities by: 

Number of employees affected by compliance assistance programs for agricultural employers subject to the DWHaT provisions of MSPA Number of agricultural housing providers who corrected violations following an investigation. Number of agricultural housing providers who corrected violations following a first investigation Percent of employers in compliance with the MSPA disclosure provisions. Percent of employers in compliance with the MSPA wage provisions. Percent of employers in compliance with the MSPA housing safety and health provision. Percent of employers in compliance with MSPA vehicle safety provisions Percent of employers complying with MSPA drivers license provisions Percent of employers complying with MSPA vehicle insurance provisions Percent of investigated employers in compliance with child labor provisions of the FLSA

NA NA NA 

61% 91% 74% 88% 90% 85% 98% 

NA NA NA 

Base Base Base Base Base Base Base 

NA NA NA 

Y Y Y Y Y Y Y 

NA 

256 133 

NA NA NA NA NA NA NA 

NA 

170 

98 

NA NA NA NA NA NA NA 

Ensuring timely and accurate prevailing wage determinations by: 

Number of wage determination forms processed per 1,000 hours. Percent of survey-based DBA wage determinations within 60 days of the receipt of the 

underlying survey data. 

NA NA 

NA NA 

NA NA 

NA NA 

NA NA 

Data Source(s): Wage and Hour Investigator Support and Reporting Database (WHISARD) data; WH significant activity reports; regional logs 

and statistically valid investigation-based compliance surveys in defined industries 
300 United States Department of Labor 

Performance Goal 2.1B (ESA) Advance safeguards for union financial integrity and democracy and the transparency of union operatio

FY 2002 

Goal Achieved 

FY 2003 

Goal Not Ach

*Indicator target reached 

(Y), substantially reached (S) or not reached (N) 

Result Target * Result Target 

Percent of unions with fraud FY 2002-2003: Percent of investigative resources applied to criminal investigation that result in convictions 

50% base Y 63% 53% 

Percent of union reports meeting standards of acceptability for public disclosure 

FY 2002-2003: The timely filing of union annual financial reports by unions with annual receipts over $200,000 

44% base Y 

73% 64% 

base 

85% 

Data Source(s): 1. Labor Organization Reporting System and 2. OLMS Case Data System. 

Performance Goal 2.2A (ETA) 

Make timely and accurate benefit payments to unemployed workers, facilitate the reemployment of Unemployment Insurance claiman

accounts promptly for new employers

FY 2000 

Goal Substantially 

Achieved 

FY 2001 

Goal Not Achieved 

FY 2002 

Goal Not Achieved 

FY 2003 

Goal Not Ach

*Indicator target reached (Y), substantially reached (S) or not reached (N) 

Result Target * Result Target * Result Target * Result Target 

Pay Benefits Promptly: percent of all intrastate first payments made within 14/21 days FY 2000-2001: Number of states meeting or exceeding the Secretary’s Standard for intrastate payment timeliness 

47 47 Y 42 48 N 

88.7% 91% N 89% 91% 

Detect Overpayments: Percent of estimated overpayments that States detect established for recovery FY 2002: Establish a measure and baseline for payment accuracy 

NA NA NA NA NA NA 

Y Y Y 

54% 59% 
FY 2004 Performance and Accountability Report 301

Facilitate Reemployment: Entered employment rate for UI claimants FY 2003: Develop a measure and a method to obtain entered employment information on UI claimants FY 2002: Define a measure of entered employment of Unemployment Insurance claimants and establish a baseline 

NA NA NA NA NA NA 

N Y N 

Y Y 

Establish Tax Accounts Promptly: Percent of determinations about the Unemployment Insurance tax liability of new employers made within 90 days of the end of the first quarter they become liable for the tax. FY 2000-2001: Number of states meeting or exceeding the minimum performance criterion for benefit adjudication quality 23 24 N 25 26 N 

81.7% 80% Y 83% 80% 

Data Source(s): ETA 9056, 9050 and 9050p Reports; Benefits Accuracy Measurement (BAM) data, and ETA 227 Report; ETA 5159 Report aReport. 

Performance Goal 2.2B (EBSA) 

Enhance Pension and Health Benefit Security

FY 2003 

Goal Achiev

*Indicator target reached 

(Y), substantially reached (S) or not reached (N) 

Result Target 

Enforcement: 

Ratio of closed civil cases with corrected violations to civil closed cases. Ratio of criminal cases referred for prosecution to total criminal cases 

69% 40% 

50% 25% 

Participant Assistance: Customer Satisfaction Index, or comparable measurement, for Participants and Beneficiaries who 

have contacted EBSA for assistance. 

59 59 

Data Source(s): Enforcement Management System and The Gallup Organization 
302 United States Department of Labor 

Performance Goal 2.2C (ESA) Minimize the human, social, and financial impact of work-related injuries for workers and their familie

FY 2000 

Goal Achieved 

FY 2001 

Goal Not Achieved 

FY 2002 

Goal Not Achieved 

FY 2003 

Goal Substan

Achieved 

*Indicator target reached (Y), substantially reached (S) or not reached (N) 

Result Target * Result Target * Result Target * Result Target 

Lost production days (LPD) per 100 employees for FECA cases of the United States Postal Service (see note below) FY 2001: combined with all other governmental agencies FY 2000: QCM cases only 164 

days 

173 

days 

Y 

76.9 

days 

66.7 

days 

N 

131 

days 

115 

days 

N 143 

days 

130 

days 

LPD rate for FECA cases of All Other Governmental Agencies (see note below) NA NA NA NA NA NA 54 days 55 days Y 55 days 54.7 days FECA Vocational Rehabilitation placements with new employers for injured USPS employees 

NA NA NA NA NA NA NA NA NA 

56 

placements 

52 

placements 

First-year savings in the FECA program through use of Periodic Roll Management 

$72 

million

$66 

million Y $103mi llion $95 million Y $129 million $122mi llion Y $24.6 million $20 million 

Trend in indexed cost per case of FECA cases receiving medical treatment remains below the Milliman Health Cost Index FY 2002: Reduce Inflation-adjusted costs per case in the FECA program FY 2001: Reduction in average annual cost for physical therapy and psychiatric services FY 2000: Save $5 million over FY 1999 for inpatient hospital and pharmacy services 

$34.5 

million

$21.5 

million

Y 

PT 

+4.5%

PS 

-3% 

-1% 

(both) 

N 

$2604 $2219 N 

stable 10% 

rise 

Targets met for key performance areas NA NA NA NA NA NA NA NA NA 5 base Average time required to resolve disputed issues in Longshore and Harbor Worker’s Compensation Program contested cases 

NA NA NA NA NA NA 285 

days 

242 

days 

N 266 279 
FY 2004 Performance and Accountability Report 303

Percent of Black Lung benefit claims filed under the revised regulations for which, following an eligibility decision, there are no requests for further action from any party pending one year after receipt of the claim. 

NA NA NA NA NA NA 89.9% 68.5% Y 86.6% 70.5% 

Percent of Initial Claims for benefits in the Energy Program processed within standard timeframes: 

120 days for Department of Energy (DOE) employees or contractors employed at DOE facilities 180 days for employees of Atomic Weapons Employers (AME) and Beryllium Vendors 

NA NA NA NA NA NA 

48% 48% 

75% 75% 

N 79% 75% 

Percent of Final Decisions in the Energy Program processed within standard timeframes 

Approved Claims or No-Contest Denials: within 75 days of the Recommended Decision. Reviews of the Written Record: within 75 days of request Formal Hearings: within 250 days of request 

76% 74% 

100% 

75% 75% 75% 

S 76.9% 75% 

Data Source(s): 1&2. Federal Employees’ Compensation Act (FECA) data systems, Federal agency payroll offices and Office of Personnel Ma

3. Nurse/Rehabilitation Tracking System 4. Periodic Roll Management System and FECA Automated Compensation Payment System; 5. FECA Milliman USA Health Cost Index Report; 6. Telecommunications system standard reports, FECA district office and national MIS reports, custo

and other customer service performance data sources; 7. Longshore Case Management System; 8. Black Lung Automated Support Package; 9&Management System Note: In FY 2004, OWCP changed the way it measures LPD. The FY 2003 result data for USPS and also for all other government agencies’ Lthe measurement changes. LPD’s are now measured in real-time rather than with accumulated data, as they were in the past. 

Performance Goal 2.2D (PBGC) 

Serve sponsors of covered pension plans and participants in trusteed plans

*Indicator target reached (Y), substantially reached 

(S) or not reached (N) 

American Customer Satisfaction Index (ACSI) score for sponsors of covered pension plans who have contacted PBGC for assistance ACSI score for participants in trusteed plans who have contacted PBGC for assistance. 
304 United States Department of Labor 

Data Source(s): American Customer Satisfaction Index (ACSI) report Performance Goal 3.1A (MSHA) 

Reduce mine industry fatalities and injuries

FY 2000 

Goal Substantially 

Achieved 

FY 2001 

Goal Achieved 

FY 2002 

Goal Not Achieved 

FY 2003 

Goal Not Ach

*Indicator target reached (Y), substantially reached (S) or not reached (N) **Estimated 

Result Target * Result Target * Result Target * Result Target 

Fatal incidence rate (number of mining fatalities per 200,000 hours worked) FY 2000-2002: Mine fatalities 88 89 Y 71 89 Y 71 64 Y 

.023 .020 

All-injury incidence rate (all injuries, including fatalities, per 200,000 hours worked) FY 2000-2002: Non-fatal injury incidence rate 

3.46 3.83 Y 3.29 3.65 Y 3.15 2.87 N 

4.26 3.79 

Data Source(s): Mine Accident, Injury, and Employment information. Mine operators and contractors report to MSHA under Title 30 Code of 

Performance Goal 3.1B (MSHA) 

Reduce mine industry health hazards

FY 2000 

Goal Achieved 

FY 2001 

Goal Achieved 

FY 2002 

Goal Not Achieved 

FY 2003 

Goal Achiev

*Indicator target reached (Y), substantially reached (S) or not reached (N) 

Result Target * Result Target * Result Target * Result Target 

Percent of respirable coal dust samples exceeding the applicable standards by 5% for designated occupations FY 2000-2001: Percent of coal dust samples that are out of compliance for high risk mining occupations 

11.2% 11.7% Y 10.2% 11.1% Y 

15.0% 14.2% N 11.7% 14.2% 

Percent of silica dust samples in metal and nonmetal mines exceeding the applicable standards by 5% for high risk occupations FY 2000-2001: Index percentage of silica dust samples that are out of compliance for high risk mining occupations 

65% 85% Y 64% 80% Y 

6.6% 8.8% Y 6.5% 8.6% 
FY 2004 Performance and Accountability Report 305

Percentage of noise exposures above the citation level in all mines by 5%. 

NA NA NA NA NA NA 5.8% 8.6% Y 4.8% 9.3% 

Data Source(s): Mine Accident, Injury, and Employment information. Mine operators and contractors report to MSHA under Title 30 Code of 

Performance Goal 3.1C (OSHA) 

Reduce workplace fatalities

FY 2003 

Goal Not Ach

*Indicator target reached (Y), substantially reached (S) or not reached (N) 

**Estimated 

Result Target 

Fatalities per 100,000 workers 1.62 1.59 

Data Source(s): OSHA Integrated Management Information System (IMIS) and Bureau of Labor Statistics (BLS) Current Employment Statisti

Performance Goal 3.1D (OSHA) 

Reduce workplace injuries and illnesses

FY 2000 

Goal Achieved 

FY 2001 

Goal Achieved 

FY 2002 

Goal Not Achieved 

FY 2003 

Goal Achiev

*Indicator target reached (Y), substantially reached (S) or not reached (N) **Estimated Result Target * Result Target * Result Target * Result Target Days away from work case rate per 100 workers Injury and illness incidence rates in industries characterized by high-hazard workplaces  Lost workdays (FY 2000-2001)  Days away from work (FY 2002) 

Shipyard Food processing Meat Products Nursing homes Logging Construction (FY 2000-2001 injuries only) 

9.9 7.3 

NA 

7.9 4.6 4.0 

12.5 

8.3 

NA 

8.1 6.7 4.8 

Y Y 

NA 

Y Y Y 

7.5 6.3 

NA 

7.3 3.5 3.9 

11.9 

7.9 

NA 

7.7 6.4 4.6 

Y Y 

NA 

Y Y Y 

8.1 

NA 

7.9 7.6 

NA 

3.8 

6.8 

NA 

7.7 6.6 

NA 

3.6 

N 

NA 

N N 

NA 

N 

1.7** 1.8 

Data Source(s): Bureau of Labor Statistics (BLS) Annual Survey of Occupational Injuries and Illnesses (ASOII). FY 2003 estimated results us

estimated results use CY 2002 data. 
306 United States Department of Labor 

Performance Goal 3.2A (ESA) Federal contractors achieve equal opportunity workplaces

FY 2001 

Goal Not Achieved 

FY 2002 

Goal Achieved 

FY 2003 

Goal Achiev

*Indicator target reached (Y), substantially reached (S) or not reached (N) 

Result Target * Result Target * Result Target 

Incidence of discrimination among Federal contractors FY 2001-2002: For contractors that participate in specified DOL/OFCCP compliance assistance activities and are subsequently evaluated - 

Rate of compliance findings for SIC 50 For SIC 87 Rate of findings of severe violations for SIC 50 For SIC 87 Rate of focused and offsite compliance evaluations – SIC 50 For SIC 87 

50.9% 49.6% 

7.7% 9.0% 

36.5% 27.8%

Base Base Base Base Base 

base 

Y Y Y Y Y Y 

58.4% 64.5% 

2.2% 1.6% 

52.8% 50.8% 

51.9% 48.6% 

6.7% 8.0% 

37.5% 28.8%

Y Y Y Y Y Y 

1.2% 9% 

Compliance among Federal contractors in all other respects of equal opportunity workplace standards FY 2001-2002: For contractors and subcontractors that are selected for evaluation, outreach, or compliance assistance activities – 

Rate of compliance findings for all supply and service closures Rate of findings of severe violations for contractors and subcontractors that have had prior contact with DOL/OFCCP Rate of focused and offsite compliance evaluation 

52.9% 

9.8% 

34.1%

Base Base 

base 

Y N N 

62.9% 

2.7% 

49.8% 

53.9% 

8.8% 

35.1%

Y Y Y 

72.4% 59% 

Data Source(s): EEO-1 data file; Case Management System (CMS) Completions Data; Federal contractors’ data; and compliance evaluation re

Performance Goal 3.2B (OASAM) 

States that receive financial assistance under the Workforce Investment Act provide benefits and services to persons with disabilities i

FY 2003 

Goal Achiev

*Indicator target reached 

(Y), substantially reached (S) or not reached (N) 

Result Target 

Desk reviews conducted of a representative sample of States using the WIA Section 188 Disability Checklist. FY 2003: Technical assistance reviews conducted of a representative sample of One-Stop Centers in the One-Stop systems of the cities of New York City and Miami 

Y Y 

Initiate technical assistance reviews of the One-Stop Career systems in Los Angeles, CA and Houston, TX. NA NA 
FY 2004 Performance and Accountability Report 307

Determine the nature and number of discrimination complaints filed nationwide under Title I of the WIA, Wagner-Peyser 

Act funded programs, the Unemployment Insurance program, and against DOL-operated Job Corps Centers based on a longitudinal study 

Y Y 

Specialized Alternative Dispute Resolution (ADR) training for the State of New York’s mediators and Equal Opportunity representatives conducted in FY 2003. 

Y Y 

Data Source(s): CRC Complaint management information system, WIA Section 188 Disability Checklist responses and complaint log database discrimination complaints files 

Performance Goal 3.2C (VETS) 

Reduce employer-employee employment issues originating from service members’ military obligations conflicting with their 

*Indicator target reached (Y), substantially reached 

(S) or not reached (N) 

Indicators will be established to target reductions in USERRA compliance problems that are most severe and pervasive based on survey of vete

service members covered by USERRA. 

Data Source(s): VETS’ data reports 

Performance Goal 3.3A (ILAB) 

Contribute to the Elimination of the Worst Forms of Child Labor Internationally

FY 2000 

Goal Achieved 

FY 2001 

Goal Not Achieved 

FY 2002 

Goal Achieved 

FY 2003 

Goal Achiev

*Indicator target reached (Y), substantially reached (S) or not reached (N) 

Result Target * Result Target * Result Target * Result Target 

Children prevented or withdrawn from exploitive child labor and provided education or training opportunities by DOL-IPEC programs funded in prior fiscal years 

NA NA NA 25,800 50,000 N 51,922 50,000 Y 79,769 60,000 

Countries with increased capacities to address child labor as a result of DOL-IPEC programs funded in prior fiscal years FY 2000-2003: Action plans, policies or programs established that combat child labor and/or promote access to education for child laborers or children at-risk 

2 1 Y 13 15 N 15 10 Y 19 15 

Child Labor Education projects that establish targets for education retention and completion rates in project areas 

NA NA NA NA NA NA NA NA NA 8 6 
308 United States Department of Labor 

Child Labor Education Initiative projects that establish baseline for rate of enrollment and drop out for targeted children FY 2002-2003: Countries in which new Child Labor Education Initiative projects begin 

NA NA NA NA NA NA 

9 8 Y 10 9 

Children targeted for prevention or removal from child labor, particularly its worst forms, through the provision of education or training opportunities in new DOL-funded programs 

109,000 50,000 Y 200,000 100,000 Y 103,772 90,000 Y 83,682 40,000 

Countries that ratify International Labor Organization (ILO) Convention 182 on Worst Forms of Child Labor. 

36 1 Y 63 25 Y 29 15 Y NA NA 

Increase awareness through dissemination of reports, other publications and website 

Y Y Y NA NA NA NA NA NA NA NA 

Data Source(s): DOL/ILAB, ILO-IPEC and Child Labor Education Initiative Grantees 

Performance Goal 3.3B (ILAB) 

Improve Living Standards and Conditions of Work Internationally

FY 2000 

Goal Substantially 

Achieved 

FY 2001 

Goal Achieved 

FY 2002 

Goal Achieved 

FY 2003 

Goal Achiev

*Indicator target reached (Y), substantially reached (S) or not reached (N) 

Result Target * Result Target * Result Target * Result Target 

Number and percent of relevant government officials and members and officials of workers’ and employers’ organizations who are influential in determining living standards and working conditions and participating in USDOL project activities, who consider the project to have improved their conditions of work 

NA NA NA NA NA NA NA NA NA 63.3% base 

Number and percent of individuals whose economic situation has benefited from USDOL project assistance 

NA NA NA NA NA NA NA NA NA 39% base 

Number and percent of workplaces exposed to USDOL project assistance that have implemented new measures to prevent workplace accidents and illnesses 

NA NA NA NA NA NA NA NA NA 10% base 
FY 2004 Performance and Accountability Report 309

Number of workers participating in pension funds that are government regulated by project partner agencies 

NA NA NA NA NA NA NA NA NA 3.545 

million

base 

Number of new countries where HIV/AIDS workplace education projects begin 

NA NA NA NA NA NA NA NA NA NA NA 

Countries committed to undertake improvements in assuring compliance and implementation of core labor standards 

12 8 Y 15 15 Y 41 7 Y NA NA 

Countries that commit with US/DOL assistance to make substantive improvements in raising income levels of working families 

11 4 Y 10 8 Y 49 6 Y NA NA 

Judicial and legal decisions which improve core labor standards and workplace safety standards 

1 ? Y NA NA NA NA NA NA NA NA 

Countries that improve social safety net programs that protect workers and develop markets 

0 ? N NA NA NA NA NA NA NA NA 

Data Source(s): ILO Reports; reports by government, contractors, grantees, and nongovernmental organizations; surveys. 

Performance Goal 4.2A (OASP) 

Maximize regulatory flexibility and benefits and promote flexible workplace programs

*Indicator target reached (Y), substantially reached 

(S) or not reached (N) 

Seek input from the public as part of its decision-making process in determining which regulations or regulatory programs should be prioritized review for their effects on small businesses and entities Ensure that all new regulatory proposals identify monetary costs, benefits, and net benefits, and include a summary of this information in all ReImpact Analyses performed by DOL agencies Develop plan to review all significant regulations for maximum flexibility in their reporting and record keeping requirements in order to assess 

DOL agencies are allowing the use of electronic technology by employers where practicable 

Women’s Bureau - Flex-Options for Women Project: Companies enlisted as corporate mentors Women-owned businesses seeking to establish workplace flexibility policies or programs 

Data Source(s): 
310 United States Department of Labor 

Performance Goal HR1 (OASAM) The right people are in the right place at the right time to carry out the mission of the Department

FY 2002 

Goal Not Achieved 

FY 2003 

Goal Achiev

*Indicator target reached (Y), substantially reached (S) or not reached (N) 

Result Target * Result Target 

The DOL workforce is a prepared and competent workforce 

Percent of employees graduated, placed or certified from DOL management and leadership development programs FY 2002-2003: Percent of managers indicating satisfaction with the quality of applicants referred for their vacancies Percent of competency assessment tools piloted and competency gap analyses completed for employees in mission-critical or supervisory occupations Percent of mission critical occupations for which employee competencies and skill sets are assessed and gaps identified Retention rates in targeted professional occupations Key professional occupations identified in agency restructuring plans with retention problemsCore competencies for DOL mission critical occupations are established 

Percent of agencies for which Human Capital Standards scores improved 

94% 

Y 

10 

60% 

90% 

base 

? 

20% 

Y Y Y Y 

? 

NA 

90% 20% 

? 

NA 

The DOL workforce is a diverse workforce 

Percent of improved diversity indicators for professional and administrative occupations exhibiting under-representation in the prior year Continued improvement is realized in the extent to which diversity in the DOL workforce reflects the civilian labor force Diversity will be improved among management officials and supervisors 

30% 

Y 

NA 

30% 

Y 

NA 

S 

N 

NA 

38% 

Y 

NA 

30% 

Y 

NA 

Data Source(s): HR Information System; Agency strategic, workforce & recruitment plans; employee performance and development plans; AE

Performance Goal HR2 (OASAM) 

Reduce lost production due to work-related injuries and illnesses

FY 2000 

Goal Not Achieved 

FY 2001 

Goal Not Achieved 

FY 2002 

Goal Achieved 

FY 2003 

Goal Achiev

*Indicator target reached (Y), substantially reached (S) or not reached (N) 

Result Target * Result Target * Result Target * Result Target 

Lost production days per 100 employees (number of days employees spend away from work due to work related injuries and illnesses) 

57.3 

days 

56.2 

days 

N 66.0 

days 

56.2 

days 

N 50.6 

days 

53.7 

days 

Y 41.3 

days 

52.6 

days 

Data Source(s): OWCP Table 2 Reports and Charge Back System data; personnel data from the Office of Personnel Management. 
FY 2004 Performance and Accountability Report 311

Performance Goal HR3 (OASAM) 

Reduce the occurrence of injuries and illnesses for DOL employees

FY 2000 

Goal Achieved 

FY 2001 

Goal Not Achieved 

FY 2002 

Goal Achieved 

FY 2003 

Goal Achiev

*Indicator target reached (Y), substantially reached (S) or not reached (N) 

Result Target * Result Target * Result Target * Result Target 

Total case rate of illnesses and injuries (based on reports to workers’ compensation programs) 

3.50 3.60 Y 4.01 3.49 N 2.98 3.39 Y 2.50 3.29 

Percent on time filing rate (became Goal HR5 in FY 2004) 

57% 50% Y 55% 65% N 75% 62% Y 84% 78% 

Data Source(s): OWCP Table 2 Reports and personnel data from the Office of Personnel Management. 

Performance Goal HR4 (OASAM) 

Reduce the lost time case rate for injuries and illnesses for DOL employees

*Indicator target reached (Y), substantially reached (S) or not reached (N) 

**Estimated 

Lost time injury and illness cases per 100 employees (number of cases that result in days away from work due to work related injury or illness) 

Data Source(s): OWCP Table 2 Reports, Chargeback Reports, and personnel data from DOL’s Departmental Budget Center. 

Performance Goal HR5 (OASAM) 

Improve the timeliness of filing notices of injuries and illnesses with the Office of Workers’ Compensation Pr

*Indicator target reached (Y), substantially reached (S) or not reached (N) 

**Estimated 

Percent on time filing rate 

Data Source(s): OWCP Table 2 Reports, Chargeback Reports, and timeliness records. 

Performance Goal PR1 (OASAM) 

Compete positions listed on DOL’s Federal Activities Inventory Reform (FAIR) Act inventory

FY 2002 

Goal Achieved 

FY 2003 

Goal Not Ach

*Indicator target reached (Y), substantially reached (S) or not reached (N) 

Result Target * Result Target 

FTE on the FAIR Act inventory included in completed competitions or direct conversions 152 140 Y 168 268 
312 United States Department of Labor 

Data Source(s): DOL ‘s 2000 Federal Activities Inventory Reform Act inventory Performance Goal PR2 (OASAM) 

Increase use of Performance-Based Service Contracting (PBSC) techniques

FY 2002 

Goal Substantially 

Achieved 

FY 2003 

Goal Achiev

*Indicator target reached (Y), substantially reached (S) or not reached (N) 

Result Target * Result Target 

Percent of total eligible service contracting dollars awarded (for contracts exceeding $25,000) 

using Performance-Based Service Contracting (PBSC) techniques 

18% 20% S 42% 30% 

Data Source(s): Federal Procurement Data System 

Performance Goal FM1 (OCFO) 

Improve the accuracy and timeliness of financial information

FY 2000 

Goal Substantially 

Achieved 

FY 2001 

Goal Achieved 

FY 2002 

Goal Substantially 

Achieved 

FY 2003 

Goal Achiev

*Indicator target reached (Y), substantially reached (S) or not reached (N) 

Result Target * Result Target * Result Target * Result Target 

Maintain an unqualified (clean) audit opinion with no material internal control weaknesses 

NA NA NA NA NA NA NA NA NA Y Y 

Meet new requirements and standards in accordance with the Federal Financial Management Improvement Act (FFMIA) and Federal Managers’ Financial Integrity Act FY 2001-2002: DOL financial management conforms to all Federal accounting standards, laws, and regulations. All DOL financial systems meet FFMIA and Government Management Reform Act standards. FY 2000: All DOL financial systems meet the standards or have prepared corrective action plans to meet them 

88% 100% S 

100% 100% Y 100% 100% S 

100% 100% 

Issue consolidated financial statements by Feb.1 the following year 

NA NA NA NA NA NA NA NA NA 100% Y 

Issue quarterly financial statements within 45 days after each quarter 

NA NA NA NA NA NA NA NA NA 100% Y 
FY 2004 Performance and Accountability Report 313

Identify and correct processes and systems that contribute to erroneous benefit overpayments 

NA NA NA NA NA NA NA NA NA NA NA 

Data Source(s): OIG audit opinion in FY 2003 Annual Report; Secretary’s Assurance Statements on FFMIA and FMFIA; President’s Managem

Performance Goal FM2 (OCFO) 

Integrate financial and performance management to support day-to-day operations across DOL

FY 2003 

Goal Achiev

*Indicator target reached 

(Y), substantially reached (S) or not reached (N) 

Result Target 

Interfaced Department Accounting and Agency program systems provide cost-based performance data NA NA Develop and disseminate cost accounting policy and training materials to address issues raised in prior year survey NA NA Assess program agencies’ level of integration of financial and performance information. Prioritize areas for improvement 100% Y Complete documentation with and for agency managers in order for them to access and utilize cost accounting information 100% Y Survey program managers for actual use of cost accounting information in program management decision-making processes 100% Y 

Data Source(s): OMB Financial Management Scorecard 

Performance Goal IT1 (OASAM) 

E-Government - Utilizing Technology to Improve Service and Efficiency

*Indicator target reached (Y), substantially reached 

(S) or not reached (N) 

Automate 100% of the Manual Processes Designated Under GPEA Implement the Web-based E-Procurement System (EPS) in seven DOL component agencies. Establish an Enterprise-wide Directory Service 

Data Source(s): 1. GPEA and E-Gov Progress Reports to OMB and other internal reports. 2. Internal tracking activities for progress on E-GoveImplementation, and E-Government Workforce efforts. 3. Phase II Enterprise Architecture documentation, Industry-standard best practices an

Performance Goal IT2 (OASAM) 

Improve the performance of Department’s Cyber Security Program in accordance with the Federal Information Security Ma

*Indicator target reached (Y), substantially reached 

(S) or not reached (N) 

Percent of DOL’s sensitive systems that have been periodically assessed for risk and magnitude of harm that might result from unauthorized acc
314 United States Department of Labor 

Percent of all weaknesses documented in the FY 2004 Plan of Actions and Milestones (POA&Ms) closed or on schedule Percent of all DOL sensitive systems fully certified and accredited during FY04 Percent of all DOL employees and contractors that receive annual security awareness training Percent of DOL’s sensitive systems for which a System Test and Evaluation has been conducted Percent of DOL agencies that respond to Computer Security Incident Response Capability (DOLCSIRC) advisories in accordance with the procin the DOL Computer Security Handbook Percent of all DOL sensitive systems with contingency plans Percent of contingency plans tested 

Data Source(s): 1, 3, 4, 5, 7, & 8. FISMA Agency reviews and final report. 2. 4th Quarter PO&AM report to OMB. 6. DOLCSIRC Agency Re

Performance Goal IT3 (OASAM) 

Improve organizational performance and effective information management through the use of the Departmental IT Capital Plannin

*Indicator target reached (Y), substantially reached 

(S) or not reached (N) 

Percent of major IT initiatives completed during FY 2004 that deliver intended benefits Percent of in-process IT initiatives evaluated operate within 10% of cost, schedule, and technical performance parameters Rollout and migration to new investment management application for use during the FY 2006 budget cycle 

Data Source(s): 1 & 2. Quarterly control reviews and post implementation reviews. 3. Exhibits 53 and 300 submitted in 9/04. 
Significant Audits and Evaluations 

FY 2004 Performance and Accountability Report 315 

2. Significant FY 2004 Audits and Evaluations 

The Department of Labor has worked hard to cultivate an “Evaluation Culture,” a term used by the U.S. General 

Accounting Office (GAO) in a recent report.32 For the Department, this has meant welcoming objective reviews 

and audits by the Office of the Inspector General (OIG) and the GAO. Beyond that, we initiate self-examination 

by contracting with professional evaluators, inviting them to study our programs and assess our effectiveness. 

During the course of the past year, the evaluation programs at the Department of Labor have supported a wide 

variety of studies, such as: 

• Process evaluations: reviewing our operating procedures and program implementation. 

• Outcome evaluations: moving us beyond a focus on our “outputs” and guiding us further in our 

commitment toward producing positive “outcomes.” 

• Impact evaluations: distinguishing the precise contribution of our programs from that of other external 

factors. 

• Case studies: analyzing the delicate balance between the cost of operations and the yield in benefits. 

While all of the audits and evaluations described below have their own unique focus and content, they each share 

in our common goal of trying to improve our efforts to develop a global economy for the 21st century. 

Studies Conducted by the DOL Office of Inspector General (OIG) 

1. Bureau of Labor Statistics: Government Information Security Reform Act (GISRA) Review of 

Current Population Survey (CPS), July 2002. 

Performance Goal(s) Affected: 1.3A – Improve information available to decision-makers on labor market 

conditions, and price and productivity changes 

Findings: There were four findings related to: (1) the CPS Continuity of Operations Plan (COOP); (2) the CPS 

System Security Plan (SSP); (3) security controls of the CPS; and (4) a Bureau-wide Uninterruptible Power 

Supply (UPS) system. 

Recommendations: (1) Complete, provide training, and test the CPS Continuity of Operations Plan (COOP); (2) 

Complete risk assessment and update the CPS System Security Plan (SSP); (3) Add "Data Integrity and 

Validation" section to the CPS SSP; (4) Test and evaluate the security controls of the CPS; and (5) Procure new 

building-wide Uninterruptible Power Supply (UPS) system. 

Actions Taken: BLS responded to the final report from the OIG on November 21, 2003. Each of the five 

recommendations is completed, except for Number 1. Number 1 includes COOP testing, which is a longer-term 

commitment. 

Additional Information: A copy of the final evaluation may be obtained from the Bureau of Labor Statistics, 

Division of Management Systems, Room 4080, 2 Massachusetts Avenue, NE, Washington, DC 20212, or by 

calling 202-691-7628. 

2. Employee Benefits Security Administration: Audit of EBSA Participant and Compliance Assistance 

Program (#09-04-001-12-121), March 2004. 

Performance Goal(s) Affected: 2.2B – Enhance pension and health benefit security 

Findings: The Office of Inspector General conducted an audit of the Employee Benefits Security 

Administration’s Participant and Compliance Assistance program. The objective was to determine if EBSA’s 

program: (1) provided information and assistance timely and accurately; and (2) whether the reported 

performance data, including benefit recoveries, was accurately reported for FY 2002. The OIG findings and 

 

32 Program Evaluation: An Evaluation Culture and Collaborative Partnerships Help Build Agency Capacity, GAO-03-454, 

May 2003. 
Appendices 

316 United States Department of Labor

recommendations are summarized as follows: (1) EBSA provided information and assistance timely and 

accurately; and (2) reported performance data was reasonably accurate. 

Recommendations: None. 

Actions Taken: None. 

Additional Information: http://www.oig.dol.gov/public/reports/oa/2004/09-04-001-12-121.pdf 

3. Employee Benefits Security Administration: EBSA Needs Additional Authority to Improve Quality of 

Employee Benefit Plan Audits (#09-04-005-12-12), September 2004 

 Performance Goal Affected: 2.2B – Enhance pension and health benefit security. 

Findings: The OIG reviewed the process used by EBSA to identify and correct substandard audits of employee 

benefit plans. The Employee Retirement Income Security Act (ERISA) requires employee benefit plans to be 

audited annually. The audit requirement is intended to help protect the interests of benefit plan participants and 

beneficiaries. The OIG found that although EBSA has made efforts to correct substandard audits, including 

rejecting annual report findings and referring auditors to oversight and or licensing organizations for possible 

investigation and disciplinary action, the process for identifying and correcting substandard audits has not been 

effective. For example, some referred audits had not been brought up to ERISA requirements. Moreover, OIG’s 

review found that EBSA does not have the authority to take direct action against auditors who perform 

substandard audits on employee benefit plans. 

Recommendations: Among the OIG’s recommendations were that EBSA propose changes to ERISA to grant 

EBSA greater enforcement authority over such matter as registration, suspension, debarment, and civil penalties 

against employee benefit plan auditors. The IG also recommended that EBSA improve the accuracy of its case 

tracking system and develop targeting methods to identify substandard audits based on common attributes of 

plans with substandard audits. 

Actions Taken: EBSA responded the OIG report, generally agreeing with its recommendations, identifying 

planned steps to address the recommendations, and citing ongoing efforts to improve employee benefit plan audit 

quality. With respect to its enforcement authority, EBSA responded that it recognizes deficiencies in the current 

law and is considering options for correcting those deficiencies. With regard to identifying substandard audits, 

EBSA is adopting an inspection approach, which focuses on CPA firms performing the most employee benefit 

plan audits.

Additional Information: http://www.oig.dol.gov/public/reports/oa 

4. Employment Standards Administration: 2003 Financial Audit (#22-04-002-13-001), March 2004

Performance Goal(s) Affected: 2.2C – Minimize the human, social and financial impact of work-related 

injuries for workers and their families. 

Findings: To determine continuing eligibility for some claimants’ compensation, FECA is required to 

periodically review medical evidence. An Office of Inspector General audit concluded that the primary control 

ensuring that claimants submit medical evidence was not effective. Because OWCP did not follow its procedures, 

it could not terminate benefits if the medical evidence did not support continuing eligibility. 

Recommendations: The Chief Financial Officer should ensure that ESA implements automated procedures to 

ensure FECA claims examiners review current medical evidence. 

Actions Taken: The long-term solution rests with a new automated Periodic Entitlement Review application that 

checks files for the presence or absence of current medical evidence. In December 2004, FECA will begin using 

an automated tracking mechanism that will alert claims staff when medical evaluations are due. The FECA 

program believes that the new system and targeted training will eliminate this finding from future audits. 

Additional Information: http://www.oig.dol.gov/public/reports/oa/

5. Employment Standards Administration: Concerns Persist with the Integrity of Davis Bacon Prevailing 

Wage Determinations (#04-04-003-04-420), March 2004. 

Performance Goal(s) Affected: 2.1A – Covered American workplaces legally, fairly, and safely employ and 

compensate their workers. 
Significant Audits and Evaluations 

FY 2004 Performance and Accountability Report 317 

Findings: The Office of Inspector General audited the process of determining prevailing wage rates under the 

Davis-Bacon Act and found the Wage and Hour Division (WHD) had not sufficiently resolved past OIG and 

GAO concerns and recommendations. The OIG identified three issues that continue to affect the validity and 

usefulness of Davis-Bacon surveys: (1) errors in submitted wage data; (2) a methodology that may allow bias; 

and (3) time gaps between surveys and the resulting publication of the results. 

Recommendations: OIG concluded that the current wage determination process should be replaced with a 

statistically valid methodology, and encouraged ESA to promote changes that would allow reliable and objective 

sources of data, such as those offered by the Bureau of Labor Statistics (BLS), to be used in prevailing wage 

determinations. 

Actions Taken: WHD has contacted BLS about the possibility of using its data as a basis for Davis-Bacon 

prevailing wage determinations. 

Additional Information: http://www.oig.dol.gov/public/reports/oa/2004/04-04-003-04-420.pdf 

6. Employment and Training Administration: New Hire Detection is a Better Method for Establishing UI 

Overpayments (#05-04-002-03-315), September 2004

Performance Goal(s) Affected: 2.2A – 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. 

Findings: The UI program, a Federal-state partnership, is the DOL’s largest income maintenance program. 

While the framework of the program is determined by Federal law, benefits for individuals are dependent on state 

law and administered by State Workforce Agencies. The UI system could attain significant savings by detecting 

overpayments through cross-matching UI claims against state and national new hire data. This would detect UI 

claimants who have returned to work but are still collecting UI benefits. Using new hire data to identify 

overpayments is more effective than the more common method of matching UI claims against employers’ 

quarterly wage records because employers must report new hires within twenty days, whereas wage records are 

not available for months. The new hire method results in earlier detection of overpayments, reduces overpayment 

dollars, and increases the chance of overpayment recovery. In 2003, the OIG made recommendations for 

reducing overpayments by expanding states' use of new hire data. The full implementation of these 

recommendations, in OIG’s opinion, would save the Unemployment Trust Fund (UTF) an estimated $428 million 

annually. In response, DOL implemented a pilot program in 6 states and improved its quality control program. 

DOL’s Employment and Training Administration (ETA) also drafted policy changes and is collecting data for the 

pilot program. The pilot cost-benefit study results are due in January 2006. DOL will then need to make sure that 

lessons learned from the pilot are implemented. Despite the benefits of new hire detection, a recent OIG audit 

found 12 states had not used their own state new hire data to reduce overpayments. 

Recommendations: OIG recommended that ETA 1) continue to provide technical assistance and resources to the 

state UI programs that are currently not using new hire detection in order to initiate and/or complete plans for 

implementation as soon as possible; 2) work with Department of Health and Human Services (DHHS) to 

communicate to Congress the need for amending the Personal Responsibility and Work Opportunities 

Reconciliation Act of 1996 (PRWORA), or introducing new legislation, to require employers to report a new 

hire’s first day of earnings and provide a clear, consistent, nationwide definition for this date; 3) encourage state 

UI programs to access the National Directory of New Hire (NDNH) and coordinate efforts with DHHS and the 

state UI programs to accomplish this; 4) work with DHHS, the lead department, to encourage state agencies 

compiling the State Directory of New Hires (SDNH) to expand monitoring and outreach programs that will 

improve employer compliance and seek enforcement through penalties for employers who repeatedly fail to report 

new hires; and 5) assist the state UI programs in analyzing resources to determine the best detection methods, how 

to best allocate resources, and frequency of New Hire cross-matches. 

Actions Taken: DOL was very pleased with the enactment of P.L. 108-295, which is based on draft legislation 

proposed DOL, and which gives state UI agencies access to the National Directory of New Hires. This will 

enhance states’ ability to detect unreported work violations by UI claimants working in other states or for certain 

multi-state employers who may be all new hires to only one state. ETA is working with the Department of Health 

and Human Services on implementation details and will encourage states to use the directory when it becomes 

accessible. ETA continues to promote activities to prevent and detect overpayments. In FY 2004, $2.3 million in 

funds is being made available to states that submitted acceptable proposals to implement or enhance benefit 

payment control activities such as computer cross-matches to detect overpayments. An example of these 
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318 United States Department of Labor

activities would include the use of the states’ Directories of New Hires as well as an electronic data exchange 

between state UI agencies and the Social Security Administration.

Additional Information: http://www.oig.dol.gov/public 

7. OSHA’s Future System Development Efforts Require Greater Use of Best Practices (#23-04-009-10-

001), September 2004 

Performance Goal(s) affected: 3.1C – Reduce occupational fatalities. 3.1D – Reduce occupational injuries 

and illnesses. 

Findings: Based on observations made in FY 2002 and 2003, OIG identified three Project Management 

weaknesses in OSHA’s IMIS Redesign project: (1) project management didn’t cover the entire period; (2) lack of 

steady and assured funding increased project risk; (3) agency’s Project Manager lacked system development 

knowledge/experience. 

Recommendations: OIG made four recommendations: (1) Develop an SDLC (System Development Life Cycle) 

approach incorporating best practices to minimize risk in future system development; (2) Correct project 

management weaknesses identified in the report; (3) Ensure that every major system development effort is led by 

a senior program expert with experience and knowledge of the agency’s mission, functions, and operations; and, 

(4) Obtain periodic status reports and information from the Project Manager. 

Actions Taken: The agency accepted all of the OIG recommendations. The agency had previously suspended 

further work on the IMIS Redesign and had contracted for an independent assessment of its IMIS Redesign 

activities. OSHA is awaiting the contractor’s final report. Receipt of that evaluation will assist the agency in 

determining how best to proceed in complying with the OIG recommendations. 

Additional Information: http://www.oig.dol.gov 

8. Office of the Assistant Secretary for Administration and Management: Departmentwide Reportable 

Conditions Resulting from OIG’s Audit of General, Application, and Security Controls for Selected 

DOL IT systems that Support the Financial Statements (#23-04-001-07-001), March 2004. 

Performance Goal(s) Affected: IT2 – Continuously improve the performance of the Department’s Cyber 

Security Program in accordance with the Federal Information Security Management Act (FISMA). 

Findings: 1) The Department lacks strong logical security controls (LSC) to secure the Department’s data and 

information. DOL has not developed and performed comprehensive tests of all continuity of operations/disaster 

recovery plans for critical systems and processes. 2) DOL agencies are in varying stages of disaster recovery plan 

development and testing and the Department has not conducted a coordinated Department-wide test of disaster 

recovery plans. 3) The Department has not corrected known vulnerabilities associated with its IT systems. 

Recommendations: Recommend the Department continue to improve its security architecture and technical 

security standards, administrative and end-user guidelines and procedures, enforcement and monitoring processes, 

disaster recovery planning, and process for resolving known IT vulnerabilities and weaknesses. 

Actions Taken: To correct the Logical Security Control (LSC) deficiencies, the Office of the Chief Information 

Officer (OCIO) has performed a complete review of Departmental operations manuals and proposed revisions to 

the documents; developed the DOL Technical Standards Manual (TSM) to provide hardening system standards 

and integrate actions for security configuration management; and revised the Computer Security Handbook. The 

Disaster Recovery/Contingency Planning Working Group has completed the following actions: (1) collected 

information from all DOL agencies related to the agencies processing priorities; (2) collected information from all 

DOL agencies related to the agencies’ primary and backup data center status; (3) integrated collected information 

into the Department’s consolidation efforts; and (4) further developed a bridging document that links Agency 

Contingency planning efforts to the DOL COOP, where applicable. This information helps clarify the role the 

Departmental Communications Network (DCN) will play in the failure and recovery process. OCIO has also 

developed a comprehensive test plan for the Emergency Management Center (EM-Net) and ECN/DCN networks 

to provide backup Internet and DOL agency connectivity; continued work to provide redundant agency interconnectivity through a set of alternative DCN network interconnections; continued testing of core functions such 

as Active Directory, Common E-Mail and Internet connectivity; arranged for implementation of Backup Active 

Directory servers; prepared for Backup Common E-Mail services; and completed testing of the backup Internet 

connectivity. The OCIO Security team continues to monitor the agencies’ implementation of their Plan of Action 
Significant Audits and Evaluations 

FY 2004 Performance and Accountability Report 319 

& Milestones; in response to a memo from the CIO to Agency Heads requesting that they resolve outstanding 

OIG recommendations by August, Agencies met with OIG and performed the necessary mitigation activities. As 

a result, the majority of the outstanding OIG recommendations have been closed and OIG is considering 

removing this recommendation from its reportable conditions. 

Additional Information: http://www.oig.dol.gov/public/reports/oa/ 

Studies Conducted by the U.S. Government Accountability Office (GAO) 

9. Employment and Training Administration: States and Local Areas Have Developed Strategies to 

Assess Performance, but Labor Could Do More to Help (GAO-04-657), June 2004. 

Performance Goal(s) Affected: 1.1A – Increase the employment, retention, and earnings of individuals 

registered under the Workforce Investment Act Adult program. 1.1F – Increase the employment, retention, 

and earnings replacement of individuals registered under the WIA dislocated worker program. 

Findings: The study found that Workforce Investment Act (WIA) performance data: (1) provides a national 

picture of workforce outcomes, but these data offer little information about current performance (because of time 

lags in Unemployment Insurance wage data from about 1 1⁄2 years to 2 1⁄2 years); and (2) represents a small portion 

of job seekers who received WIA services because of restrictions in the law and policies of Labor. The study also 

noted that states and local areas try to fill data gaps by using other locally defined indicators such as additional 

job-seeker measures, employer measures, and program partnership measures, but states and local areas would like 

more help from Labor in disseminating best practices on interim performance measures. 

Recommendations: GAO recommends that Labor: (1) continue to allow supplemental data for reporting 

outcomes; (2) assist states in sharing best practices on interim indicators; (3) develop a systematic method to 

account for different populations and economic conditions when negotiating performance levels; and (4) expedite 

steps to implement an impact evaluation of WIA services. Lastly, Congress may also consider requiring that all 

WIA participants be tracked for reporting purposes. 

Actions Taken: (1) DOL published guidance on the Common Measures for employment, retention and earnings 

in Training and Employment Guidance Letter 15-03. These measures require the use of Unemployment 

Insurance wage records for reporting on WIA performance outcomes, and continue to allow states to use 

supplemental wage data to assess program outcomes. Further guidance is being provided for using supplemental 

wage data, and states will be allowed to use and report supplemental wage data where appropriate. (2) For 

sharing best practices to states and local areas, ETA has created a system-based Web site where successful 

practices in this and other program areas can be posted by program operators. ETA Performance Enhancement 

Project is developing an on-line tutorial on WIA performance measures to assist states and local areas for 

improving performance outcomes. (3) ETA currently has a project with the State of Michigan to develop an 

adjustment model to account for economic conditions and different populations. Michigan has the lead in 

partnering with other states in the design and development of an adjustment model. (4) ETA plans to conduct an 

impact evaluation of the reauthorized WIA programs when the changes are implemented. A major study of this 

type will be more cost-effective if conducted after the WIA reauthorization because of the significant changes 

proposed for the reauthorization. 

Additional Information: http://www.gao.gov/new.items/d04657.pdf 

10. Employment and Training Administration: Labor Actions Can Help States Improve Quality of 

Performance Outcome Data and Delivery of Youth Services (GAO-04-308), February 2004 

Performance Goal(s) Affected: 1.2A – Increase entrance and retention of youth registered under the WIA 

youth program in education or employment. 

Findings: The study found that local areas primarily used the WIA program for dropout prevention and other 

efforts to improve academic achievement for in-school youth. Local areas emphasized learning-related summer 

employment for in-school youth. Local areas reported that serving out-of-school youth is difficult, expensive, and 

less effective, but when services are provided, they tend to focus on occupational skills training and supportive 

services. Despite DOL’s guidance, areas face implementation challenges in identifying and retaining out-ofschool youth, providing youth with mentoring and follow-up services, and using interim measures for on-going 
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320 United States Department of Labor

program assessment. Access to DOL’s promising practice website and to technical assistance has been difficult 

for some local areas. 

Recommendations: GAO is recommending that the Departments of Labor and Education coordinate efforts to 

clarify how schools can work with workforce officials to help connect school dropouts to local WIA youth 

programs. GAO is also recommending that the Department of Labor provide states and local areas with technical 

assistance necessary to address the aforementioned ongoing implementation challenges and establish standard 

monitoring procedures to improve the quality of data reported by states. 

Actions Taken: DOL is setting up an interagency group with the Department of Education and will issue guidance 

on connecting dropouts to WIA youth programs. DOL will also issue guidance on a number of ongoing 

implementation challenges including serving out-of-school youth, providing mentoring services, providing followup services, and using interim measures to track program performance. The data validation initiative will ensure 

improvements in the quality of data reported by states. 

Additional Information: http://www.gao.gov/new.items/d04308.pdf 

11. Employment and Training Administration: Trade Adjustment Assistance: Reforms Have Accelerated 

Training Enrollment, but Implementation Challenges Remain; GAO-04-1012, September 2004 

Performance Goal(s) Affected: 1.1G - Increase the employment, retention, and earnings replacement of 

workers dislocated in important part because of trade and who receive trade adjustment assistance benefits.

Findings: The GAO report notes that at this early stage of implementation of the Trade Adjustment Assistance 

(TAA) Reform Act of 2002, several changes appear to be helping trade-affected workers. Overall, the study 

found that most workers are enrolling for service more quickly than in prior years because of a new 40-day time 

limit for DOL to process petitions which reduced the processing time from 107 days in 2002 to 38 days in 2003, 

and because of requirements for workers to register more quickly after the TAA certification or layoff event. One 

concern expressed in the GAO report was that this may not leave enough time to assess a worker’s needs, 

particularly during a large layoff. Implementation of the Health Coverage Tax Credit has increased the workload 

in some areas. Demand for TAA training increased substantially in FY 2002, prior to implementation of the 

reforms, and States have struggled to meet the higher demand with available TAA training funds, even though 

TAA training funds available nationally doubled between FY 2002 and 2003. Most States have responded by 

using other federal employment and training resources. The study notes that information on TAA program results 

has been limited, but DOL is making improvements using wage records to track TAA outcomes and through a 

five year evaluation study initiated in FY 2003. 

Recommendations: The study recommends that DOL monitor implementation of TAA for unintended 

consequences and propose legislative changes, if appropriate. In particular, DOL should track: (1) the ability of 

workers to meet the new training enrollment deadline and of states and local areas to provide appropriate 

assessments to impacted workers within deadlines; and (2) whether the eligibility criteria for the new wage 

insurance program are resulting in denial of services to some older workers who could benefit from the program. 

Actions Taken: ETA shares GAO’s concerns related to the possible negative impact on some workers of the 

retraining enrollment deadline and the new wage insurance provision having to do with “less than easily 

transferable skills” which may be resulting in denial of services to some workers who might benefit from them. 

ETA’s Division of Trade Adjustment Assistance intends to work closely with states in upcoming months, when 

more experience with these issues is available, to better assess the possible need for legislative remedies. In 

addition, inclusion of the GAO concerns for further examination in the recently initiated TAA evaluation study 

will be explored.

Additional Information: A copy of this report may be found at http://www.gao.gov/new.items/d041012.pdf 

12. Mine Safety and Health Administration: MSHA Devotes Substantial Effort to Ensuring the Safety and 

Health of Coal Miners, but Its Programs Could Be Strengthened, GAO-03-945, October 2003 

 

Performance Goal(s) Affected: 3.1A – Reduce the mine industry fatal injury and all-injury incidence rates. 

3.1B – Reduce the percentage of respirable coal dust samples and silica dust samples in mines exceeding 

applicable standards; and reduce noise exposures above the citation level in all mines. 

Findings: To help ensure the safety and health of underground coal miners, MSHA staff review and approve 

mine plans, conduct inspections, and investigate serious accidents. In these three areas, GAO found that MSHA 
Significant Audits and Evaluations 

FY 2004 Performance and Accountability Report 321 

has extensive procedures and qualified staff. However, GAO found that MSHA can improve oversight, guidance, 

and human capital planning efforts. 

Recommendations: (1) Monitor the timeliness of ventilation and roof control plan review to ensure that all 

inspections are completed by the district offices. (2) Monitor follow-up actions taken by district offices to ensure 

that mine operators are correcting hazards on a timely basis. (3) Update and consolidate guidance provided to 

district offices on plan approval and inspections to eliminate inconsistencies and outdated instructions, and clarify 

guidance on coordinating technical inspections with regular quarterly inspections. (4) Develop a plan for 

addressing anticipated shortages of qualified inspectors. (5) Amend the guidance provided to independent 

contractors engaged in high-hazard activities requiring them to report information on the number of hours worked 

at specific mines so that MSHA can use this information to compute the injury and fatality rates used to measure 

the effectiveness of its enforcement efforts. (6) Revise systems used to collect information on accidents and 

investigations to provide better data on accidents and better link injuries, accidents, and investigations. 

Actions Taken: MSHA has: (1) improved headquarters monitoring of timely ventilation and roof control plan 

approvals; (2) improved headquarters monitoring of timely operator abatements; (3) updated and consolidated 

plan approval and inspection guidance, and procedures; (4) developed human capital strategies to address future 

inspector shortages; (5) initiated an independent contractor study of factors influencing contractor employment 

and potential methods to obtain contractor injury and employment data by individual mine; and (6) incorporated 

the existing Accident Investigation (AI) database into the MSHA Data Warehouse, allowing better linkage 

between accidents and investigations, and will develop additional information technology solutions to 

incorporate Part 50 data, including information currently residing in the AI database, into MSHA’s new 

Standardized Information System (FY 2005 and 2006). 

Additional Information: Copies of the report can be obtained at http://www.gao.gov/new.items/d03945.pdf 

13. Occupational Safety and Health Administration: OSHA’s Voluntary Compliance Strategies Show 

Promising Results, but Should be Evaluated before They are Expanded, GAO-04-378, March 2004 

Performance Goal(s) Affected: 3.1C – Reduce occupational fatalities. 3.1D – Reduce occupational injuries 

and illnesses. 

Findings: OSHA’s voluntary compliance programs appear to have yielded many positive outcomes, but OSHA 

does not yet have adequate data to assess their individual and relative effectiveness. 

Recommendations: GAO recommended that OSHA: (1) identify cost-effective methods of assessing the 

effectiveness of OSHA’s voluntary compliance programs; and (2) develop a strategic framework that articulates 

the priorities and resource allocations for the agency’s voluntary compliance programs before further expanding 

the use of these strategies. 

Actions Taken: At OSHA’s request, DOL has funded an evaluation of the effectiveness of OSHA’s Voluntary 

Protection Programs (VPP) in reducing injuries and illnesses from the inception of the employers’ decision to 

participate in the VPP through to acceptance into the VPP. As part of this effort, the contractor conducting the 

evaluation is planning to develop a model to estimate VPP participants’ changes in injury and rates over time that 

could be used for other OSHA voluntary compliance programs. 

Additional Information: http://www.gao.gov/new.items/d04378.pdf 

14. Occupational Safety and Health Administration: OSHA's Complaint Response Policies: OSHA Credits 

Its Complaint System with Conserving Agency Resources, but the System Still Warrants Improvement, 

GAO-04-658, June 2004 

 

Performance Goal(s) Affected: 3.1C – Reduce occupational fatalities. 3.1D – Reduce occupational injuries 

and illnesses. 

Findings: The GAO stated that the extent of OSHA’s area office supervisors’ involvement in the decisionmaking process regarding which worker safety and health complaints would result in inspections and which 

would not varied across area offices. (OSHA’s complaint policy sets forth certain responsibilities for area office 

supervisors in deciding which complaints should be investigated by inspection and which should be investigated 

by other means.) Although OSHA requires annual audits to identify the extent to which its area offices are 

correctly employing the OSHA complaint policies, some regions were not conducting these audits. 
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322 United States Department of Labor

Recommendations: OSHA should ensure that area offices comply with complaint practices established by the 

agency and take additional actions to improve the quality of complaint information. 

Actions Taken: OSHA is taking action to ensure compliance with its complaint policies. 

Additional Information: http://www.gao.gov/new.items/d04658.pdf 

15. Occupational Safety and Health Administration: OSHA's Oversight of Its Civil Penalty Determination 

and Violation Abatement Processes Has Limitations, GAO-04-920, August 2004 

 

Performance Goal(s) Affected: 3.1C – Reduce occupational fatalities. 3.1D – Reduce occupational injuries 

and illnesses. 

Findings: GAO found that OSHA’s oversight for ensuring that penalties are correctly determined and violations 

are properly abated had limitations. While the national office received copies of the regions’ annual audits, it did 

not review or use them to monitor the extent to which penalties were calculated correctly and violations were 

properly abated. Even if OSHA had used the results of annual audits for oversight purposes, the information the 

audits provided was not always complete. In four of five regional offices that GAO reviewed, audits were not 

completed in accordance with OSHA procedures during fiscal years 2002 and 2003. 

Recommendations: OSHA should ensure that regions complete audits in accordance with its required audit 

procedures and monitor audit results to oversee civil penalty determination and violation abatement processes. In 

addition, GAO recommended that the Secretary of Labor direct the Assistant Secretary for Occupational Safety 

and Health to evaluate the feasibility of using statistical modeling to help OSHA determine if penalties are being 

assessed correctly and identify if unanticipated factors are influencing penalty amounts. 

Action Taken: OSHA is taking action to ensure compliance with its civil penalty determination and violation 

abatement processes. 

Additional Information: http://www.gao.gov/new.items/d04920.pdf 

Studies Conducted by Other Evaluators 

16. Employee Benefits Security Administration: Assessing the Effectiveness of Methodologies Used to 

Evaluate EBSA’s Enforcement Program – Case Opening and Results Analysis and Baseline 

Compliance Studies, March 2004. 

Performance Goal(s) Affected: 2.2B – Enhance Pension and Health Benefit Security

Conducted by: Mathematica Policy Research (MPR)

Findings: Compliance Baselines: (1) Compliance baselines are useful for allocating EBSA investigative 

resources but do not, by themselves, measure program impact; (2) Measuring baseline compliance would require 

an unreasonable diversion of investigative resources away from plans in which there is evidence of a violation, 

thus diminishing agency performance; (3) Estimating EBSA program impacts requires an experimental design 

because they cannot be measured by a baseline compliance audit alone; and (4) Neither a true experimental design 

nor the most reliable quasi-experimental design is feasible and the least reliable experimental design while 

feasible, would be expensive. When comparing National Project pension investigation cases: (1) Most effective 

at closing cases with results if the source of investigation is a participant complaint; (2) Most efficient cases are 

those that are regional office initiated; (3) When measured by highest average monetary result per investigation, 

those cases referred by state and local government are the most successful; (4) When measured by number of 

participants, EBSA was most effective and efficient with plans less than 100 participants but generated the highest 

average monetary result in cases with more than 2,500 participants. When comparing National Project health 

investigation cases: (1) Most effective and efficient at closing cases with results if the source of investigation is a 

national office referral; (2) When measured by highest monetary result per investigation, those cases referred by 

state and local government are again the most successful; (3) When measured by number of participants, EBSA is 

most effective with plans fewer less than 10,000 participants but generated the highest average monetary result in 

cases with more than 50,000 participants.

Recommendations: (1) Ensure that the Enforcement Management System (EMS) contains highly accurate data 

by executing edit checks and error detection reports at least annually; (2) Modify EMS fields so that they more 
Significant Audits and Evaluations 

FY 2004 Performance and Accountability Report 323 

accurately reflect plan data stored in the EDS; (3) Continue to use outcome measures like those contained in the 

FY 2003-2008 Strategic Plan; (4) consider computer modeling to address investigative balancing and coverage 

objectives to include cost effectiveness of various strategies. 

Actions Taken: (1) EBSA has incorporated the suggested edit checks into EMS. The newest EMS version 

should be operational during the first quarter of FY 2005. (2) EBSA is reviewing the changes suggested to better 

reflect EDS data in EMS. (3) EBSA will evaluate the concept of computer modeling to address investigative 

balancing and coverage objectives. 

Additional Information: A copy of the complete report can be obtained from the Employee Benefits Security 

Administration, 200 Constitution Avenue, N.W., Room N-5702 Washington, D.C., 20210. 

17. Employee Benefits Security Administration: EBSA Customer Service Program, March 2004, 

Performance Goal(s) Affected: 2.2B – Enhance Pension and Health Benefit Security

Conducted by: The Gallup Organization

Findings: The Gallup Organization conducted a comprehensive program evaluation comprising five distinct 

activities within the Office of Participant Assistance. The evaluation included a quantitative evaluation of the 

participant assistance program involving both a mystery shopping technique and customer satisfaction surveys of 

the participants served as well as selected program publications, the outreach program, and the EBSA website. 

Study findings and recommendations include: Participant Assistance Customer Satisfaction Surveys and Mystery 

Shopper: (1) EBSA met its customer satisfaction goal and received strong ratings overall but there was variance 

amongst offices and amongst staff. (2) Those offices and individuals scoring the highest were more likely to 

“delve into the customer’s question in more detail”, provide the “right level of detail” in their answers, and 

provide “as complete an answer as possible.” Higher scores were also correlated to obtaining benefit recoveries. 

(3) EBSA needs to improve its score on being easy to find and reach. Publications Surveys: (1) Survey response 

rates were extremely low suggesting that other forms of evaluation are warranted. (2) Pension and Health 

Coverage for Dislocated Workers was viewed favorably by workers. (3) Health Benefits Under COBRA was 

viewed favorably but some readers suggested more detailed content, and (4) Savings Fitness was viewed 

favorably but some suggested that more graphics and illustrations would have been helpful. Outreach Surveys: 

(1) Attendees and sponsors of outreach seminars rate presenters favorably. (2) EBSA received its highest score 

for presenters being knowledgeable and well informed. (3) EBSA received its lowest scores for information 

being clear and easy to understand. Website Surveys: (1) A wide variety of users access the web site and for a 

variety of reasons. (2) Users spend a substantial amount of time and many are repeat visitors. (3) A majority of 

users give the web-site positive ratings. (4) The website has strengths (e.g. clear, concise, useful, and trustworthy) 

but also some weaknesses (e.g. search engine, layout, easy to find information). 

Recommendations: Participant Assistance Customer Satisfaction Surveys and Mystery Shopping: (1) use 

qualitative evaluation results in conjunction with customer satisfaction results to direct next steps; (2) share 

individual results with advisors and managers to aid training and customer service improvement; (3) share best 

practices of top BAs and offices for meeting service attributes described above; (4) examine existing telephone 

systems and improve routing of calls, if necessary; (5) examine ways to make EBSA and its services easier to find 

and contact; and (6) examine the fit of advisers for the customer service role. Gallup also noted that EBSA’s 

GPRA goal (75% of customers rating services a four or five on a five point scale) is too ambitious for the type of 

service that EBSA provides and recommended that a goal of reaching 67% over the next four years was more 

appropriate. Publications: (1) consider a qualitative evaluation instead of a survey; and (2) consider adding more 

details and graphics to the publications Health Benefits under Cobra and Savings Fitness. Outreach: (1) reexamine program content and format; and (2) continue to evaluate the presenters participating in the session. 

Website: (1) redesign layout; (2) improve links on Department of Labor’s main site; and (3) improve the search 

engine. 

Actions Taken: Participant Assistance Program: The Gallup Organization conducted training on the results of 

both participant assistance evaluations for each of the 11 offices that carry out this mission. Benefit Advisors in 

each office worked together to devise a plan for improving their office’s scores. These plans are being 

implemented and will be reviewed throughout the fiscal year in conjunction with the new office-by-office 

satisfaction ratings to be developed by Gallup at the end of each quarter. The Department has accepted Gallup’s 

recommendation to revise the GPRA goal from 75% to 67%. Publications: Suggestions will be taken into 

consideration when revising the publications. Outreach: EBSA will continue to evaluate this service and relate 
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324 United States Department of Labor

updated findings to the presenters and offices conducting outreach. Web site: EBSA has shared Web site survey 

results with the Department’s Web site coordinator for his consideration regarding issues EBSA cannot resolve, 

including the search engine and the Web site’s overall layout. 

Additional Information: A copy of the complete report can be obtained from the Employee Benefits Security 

Administration, 200 Constitution Avenue, N.W., Room N-5702 Washington, D.C., 20210. 

18. Employment Standards Administration: Federal Employees Compensation Act (FECA) Program 

Effectiveness Study, March 2004. 

Performance Goal(s) Affected: 2.2C – Minimize the human, social and financial impact of work-related 

injuries for workers and their families. 

Conducted by: ICF Consulting 

Findings: The study, a broad review of program’s effectiveness, focused on disability case management and 

wage-loss benefit payments. It included a statistical review of performance data, opinion surveys of FECA 

program staff and stakeholders, and review of promising practices in other governmental and private workers’ 

compensation systems. ICF’s assessment of FECA was generally positive, as indicated by the finding that 

“...OWCP is currently employing practices that are consistent with those found in well administered, modern 

workers’ compensation systems.” 

Recommendations: ICF recommended that: (1) OWCP reformulate staffing allocations and examine caseload 

levels in light of the heavy per examiner workload compared to other compensation programs; (2) increase 

collaboration among its district offices; (3) develop more in-depth data analysis capability; and (4) conduct 

regular and rigorous training for Federal employing agencies and work with those agencies to strengthen their 

disability management and injured worker reemployment programs. 

Actions Taken: OWCP is currently reviewing these recommendations for adaptation to the FECA program. 

This review includes consideration of several industry disability and return-to-work practices and better informing 

Federal agencies of their own injured employees’ FECA status as well as FECA’s most current tracking and 

review methods. 

Additional Information: http://www.dol.gov/esa/owcp_org.htm 

19. Employment Standards Administration: Evaluation of Office of Federal Contract Compliance 

Programs Westat Final Report, December 2003. 

Performance Goal Affected: 3.2A – Federal contractors achieve equal opportunity workplaces. 

Conducted by: Westat 

Findings: The Westat research findings suggest that OFCCP’s effect on the employment growth of non-favored 

groups is primarily through the review process, and not through the threat of review among all contractors. 

Because reviewed establishments were more likely to be discriminators (OFCCP targeted establishments based on 

expectations for finding discrimination), the results suggest that the OFCCP review process was highly effective. 

Recommendations: Of the 11 report recommendations, the most substantive was that OFCCP should use a 

model to predict discrimination among reviewed contractors and estimate predicted rates of discrimination for 

contractor establishments to rank them for the review process based on their predicted rate of discrimination. In 

addition, Westat advised OFCCP to consider: (1) defining labor markets by taking into consideration the most 

commonly used industry and occupation hiring practices; (2) improving the process of targeting contractors for 

review by tracking the history of establishments’ utilization of non-favored groups and findings of compliance 

reviews; (3) how the review process can be incorporated into the model to estimate the probability of 

discrimination because it is the review process that determines discrimination; (4) further research on the effect of 

equal employment opportunity and OFCCP review on changes in employment shares of non-favored groups; and 

(5) other measures to determine the effect of equal employment opportunity and OFCCP review. 

Actions Taken: OFCCP has incorporated methodologies Westat recommended into its Federal contractor 

selection system to improve targeting of Federal contractors for compliance evaluations. OFCCP plans to 

undertake research to: (1) improve the review targeting system by using newly available Census data in its data 
Significant Audits and Evaluations 

FY 2004 Performance and Accountability Report 325 

collection and audit procedures; and (2) design a set of metrics to best measure OFCCP performance in future 

years. 

Additional Information: Copies of the report may be obtained by contacting the Office of Federal Contract 

Compliance Programs, (202) 693-0101. 

20. Employment and Training Administration: Creating Partnerships for Workforce Investment: How 

Services Are Provided Under WIA, September, 2003. 

Performance Goal(s) Affected: 1.1A – Increase the employment, retention, and earnings of individuals 

registered under the WIA Adult program. 1.1F – Increase the employment, retention, and earnings 

replacement of individuals registered under the WIA dislocated worker program. 

Conducted by: Berkeley Policy Research Inc.

Findings: The Workforce Investment Act (WIA) of 1998 was the first major overhaul of the nation's workforce 

development system in more than 15 years. Among other things, the legislation expanded opportunity for public 

and private entities to deliver employment and training services through the public workforce investment system. 

This study explores local workforce investment system variation and how local boards use non-profit, for-profit, 

educational, and governmental agencies to deliver WIA services. Study findings are based on case studies of 

sixteen local boards across eight states conducted between December 2001 and September 2002. 

Recommendations: None 

Actions Taken: None 

Additional Information: http://www.doleta.gov/reports/searcheta/occ/ 

21. Employment and Training Administration: The Workforce Investment Act in Eight States: State Case 

Studies from a Field Network Evaluation: Volumes 1-2, February 2004.

Performance Goal(s) Affected: 1.1A – Increase the employment, retention, and earnings of individuals 

registered under the Workforce Investment Act Adult program. 1.1F – Increase the employment, retention, 

and earnings replacement of individuals registered under the WIA dislocated worker program. 

Conducted by: Rockefeller Institute of Government 

Findings: This two-volume set of state case studies is the result of eighteen months of work by the project’s 

researchers to understand how states and localities interpreted and operationalized the provisions of the 

Workforce Investment Act (WIA) of 1998. The project took a close look at the orientation, governance, structure, 

and services of the workforce investment systems in eight states, and two local areas in each state, to provide 

information for the reauthorization of WIA. Field researchers in each state conducted a series of interviews with 

members of state and local boards and their staff, state and local elected officials and their staff, state agency 

officials responsible for workforce development and welfare programs, service providers, advocates, and other 

interested parties. Researchers also studied sample One-Stop Career Centers in each state. The case studies for 

Maryland, Michigan, Missouri, and Oregon are included in the first volume. The case studies for the states of 

Florida, Indiana, Texas and Utah are included in the second volume. 

Recommendations: None 

Actions Taken: None 

Additional Information: http://www.doleta.gov/reports/searcheta/occ/ 

22. Employment and Training Administration: Internet Initial Claims Evaluation, October 2003

Performance Goal(s) Affected: 2.2A – Make timely and accurate benefit payments to unemployed workers. 

Conducted by: HeiTech Services, Inc. and Mathematica Policy Research, Inc. 

Findings: Over the past five years, 33 State Workforce Agencies have implemented systems which allow 

unemployed workers to file their initial unemployment insurance claim over the internet. In addition to providing 

unemployed workers with extended hours of access, these systems have reduced administrative costs and 
Appendices 

326 United States Department of Labor

provided a more convenient service method for unemployed workers to file an unemployment insurance initial 

claim. Policymakers chose to evaluate state Internet UI claim filing systems, with a focus on service delivery, 

security, fraud and abuse controls, and cost effectiveness. The report concludes that Internet-filed claims are 

convenient for users, low-cost to states, and have no apparent adverse impacts on timeliness or accuracy. 

Recommendations: Although the report made no formal recommendations, it gives an excellent overview of 

Internet claims filing, and supports ETA’s decision to promote states’ use of the Internet for UI administration. 

The report does caution, however, that states need to be vigilant to protect against fraudulent exploitation and 

system security compromises. 

Actions Taken: ETA continues to support development of Internet-based operations. It funded claims-taking 

systems through implementation grants to 42 states. It is currently funding state systems to enable employers to 

register and submit tax and wage reports through the Internet. 

Additional Information: http://www.doleta.gov/reports/searcheta/occ/ 

23. Occupational Safety and Health Administration: Evaluation of OSHA’s Impact on Workplace Injuries 

and Illnesses in Manufacturing Using Establishment-Specific Targeting of Interventions, July 2004. 

Performance Goal(s) Affected: 3.1D – Reduce occupational injuries and illnesses. 

Conducted by: Eastern Research Group (ERG) 

Findings: The impact of High Hazard Notification/Cooperative Compliance Program letters to employers 

without any subsequent OSHA inspections on the number of Lost Workday Injury and Illness (LWDII) cases over 

three years was estimated to be a 4.8 -5.1 percent reduction. (This estimated reduction in the number of LWDII 

cases over three years would also reflect the positive effects of employers’ safety and health initiatives in response 

to the greater likelihood of an OSHA inspection, including seeking OSHA-funded on-site consultation services.) 

When the letters were followed by Site Specific Targeting or Interim Targeting Program inspections, the 

reduction was between 12.0 and 13.8 percent. The analysis controlled for industry-wide declines in injury and 

illness rates, so that these reductions were in addition to the declines in injury and illness rates in manufacturing. 

Comparison to previous studies of OSHA’s previous industry-level targeting shows that establishment-specific 

targeting is more effective. 

Recommendations: ERG recommended that OSHA continue and refine its site-specific targeting system. 

Further research that OSHA could conduct to meet this goal would include determining: (1) which interventions 

(such as High Hazard Notification Letters, inspections, and onsite consultation visits) are most effective at 

reducing injuries and illnesses at establishments with given sets of characteristics; and (2) whether multiple 

interventions in combination with High Hazard Notification Letters have a cumulative positive effect. ERG also 

suggested that related analyses could be conducted to find out whether there is an optimal combination of types 

and numbers of interventions to maximize reduction in injuries and illnesses. This refinement might allow OSHA 

to estimate injury and illness reductions due to specific combinations of strategically timed OSHA interventions 

and would help improve the cost-effectiveness of its use of resources. 

Actions Taken: OSHA is continuing its site-specific targeting system and is looking into the possibility of 

obtaining funding to find out whether there is an optimal combination of interventions to maximize reduction in 

injuries and illnesses. 

Additional Information: Call (202) 693-2165 for a copy 

24. Occupational Safety and Health Administration: Lookback Evaluation of OSHA’s Standard for 

Presence Sensing Device Initiation (PSDI) of Mechanical Power Presses, May 2004 

Performance Goal(s) Affected: 3.1D – Reduce occupational injuries and illnesses. 

Conducted by: ICF

Findings: The technology for PSDI systems has not changed since the PSDI standard was adopted in 1988, but 

the technology for controlling mechanical power presses has changed considerably since OSHA promulgated that 

standard. A number of operating modes that are not addressed in OSHA’s standard for mechanical power presses 

are now used, such as computer-controlled press operation. The PSDI Standard has never been implemented and 
Significant Audits and Evaluations 

FY 2004 Performance and Accountability Report 327 

so it has been ineffective and has not produced the benefits sought by OSHA, namely, allowing industry to use a 

system that would increase productivity and improve safety for employees. 

Recommendations: If the benefits OSHA sought in the PSDI standard are to be gained (i.e., improved worker 

safety and employer productivity), the standard needs to be changed. 

Actions Taken: OSHA has decided to update its Mechanical Power Presses Standard to the most current version 

of the industry consensus standard or something similar. 

Additional Information: The complete report can be found on the Federal Register website at 

http://a257.g.akamaitech.net/7/257/2422/06jun20041800/edocket.access.gpo.gov/2004/pdf/04-12761.pdf 

25. Veterans’ Employment and Training Service: Assessment of Unemployed Veterans’ Needs for the 

Department of Labor’s Veterans’ Employment and Training Service, December 2003 

Performance Goal(s) Affected: 1.1E – Increase the employment and retention rate of veteran job seekers 

registering for public labor exchange services. 

Conducted by: Battelle Memorial Institute – Centers for Public Health Research and Evaluation 

Findings: This study collected data from a set of seven participating States on individual veteran registrants, 

including demographic characteristics, services provided, and subsequent earnings experiences. The primary 

analyses examined the extent to which different sets of services resulted in different earnings experiences for 

different subgroup of veterans. The overall findings are: (1) Strong evidence was obtained indicating that "the 

overwhelming majority" of unemployed veterans register with the Public Labor Exchange. (2) About nine-tenths 

of the registered veterans receive at least one service, while about two-thirds receive two or more services. (3) 

The relatively high rate of unemployment recorded for young veterans is very similar to the pattern observed for 

other new entrants to the civilian labor force, such as recent high school graduates. (4) The average quarterly 

earnings of veteran registrants during the year following registration are lower than their average earnings during 

the quarter prior to registration, which is typical for workers who experience a spell of unemployment. (5) 

Traditional labor exchange services, such as job search and referral, are associated with relatively positive 

subsequent earnings for veterans who are: (a) young (under 25); and (b) recently separated. (6) Case 

management is associated with relatively positive subsequent earnings for veterans who are: (a) older (over 44); 

and (b) recently separated. (7) For those registered veterans who are not recently separated, who are 25-44, who 

are typical UI (as opposed to UCX) claimants, there is no consistent association between any service or 

combination of services received and subsequent earnings. 

Recommendations: Recommendations focused on two areas, with specific suggestions within each area: (1) 

Restructuring of service delivery philosophy: Public Labor Exchange services were found to typically involve 

brief interventions with job seekers who frequently return for services. To counteract that tendency, it was 

suggested that VETS consider a more holistic, as opposed to episodic, approach to service delivery. Such an 

approach might include provision of greater support following entry to employment to reduce the recurrence of 

unemployment. (2) Introduction of new services and linkages: Case Management might be more successful if 

linkages with other service providers were strengthened in an “integration of services” approach. 

Actions Taken: VETS is planning to use data compiled by this study as a basis for developing preliminary 

baseline estimates of Earnings Gain, in anticipation of the application of that performance measure under the 

Common Measures. In addition, VETS is considering convening a work group to undertake a policy 

development initiative in light of the recommendations from this study. 

Additional Information: To obtain copies of this report, contact the Veterans’ Employment and Training 

Service at 200 Constitution Ave. NW, Room S-1325, Washington, DC 20210 or call (202) 693-4749. 

26. Veterans’ Employment and Training Service: Measuring Strategies to Achieve Performance Goals, 

February 2004 

Performance Goal(s) Affected: 1.1E – Increase the employment and retention rate of veteran job seekers 

registering for public labor exchange services. 

Conducted by: The Bradson Corporation 
Appendices 

328 United States Department of Labor

Findings: With the advent of UI wage record based reporting, VETS is seeking performance measures that are 

linked to employment outcomes, but can be measured in something closer to real time. VETS needs reliable 

leading indicators that are clearly linked to performance and that can be used as a management tool to improve the 

return on the VETS budget in any given budget execution year. A proven management framework, the Balanced 

Scorecard (BSC) has been developed for this reason. BSC for public sector organizations generally includes four 

perspectives: (1) Customer Perspective; (2) Financial Perspective; (3) Internal Business Process Perspective; and 

(4) Organizational Capacity/Employee Perspective. 

Recommendations: Study recommendations are based on the four perspectives identified above. (1) Customer 

Perspective: One proxy for EER that can be measured at the state level in something close to real time, based on 

BLS data is the Veterans’ Relative Unemployment Rate, which is the ratio of the unemployment rate for veterans 

to the unemployment rate for non-veterans. State Directories of New Hires also are a potential source of leading 

indicators of EER. Some states already use this resource as a leading indicator, but additional exploration will be 

required before VETS can implement an indicator based on New Hire Reporting. (2) Financial Perspective: 

Until Efficiency Measures can be fully implemented, it is recommended that the VETS BSC include a measure of 

planned versus actual costs for DVOPs and LVERs. (3) Internal Business Process Perspective: The internal 

process perspective measures activities, efforts and workflow for those processes that are key to the organization’s 

strategy. For the VETS BSC, the key categories identified are: (a) Defining the Input Stream; (b) Providing 

Services; (c) Providing Outreach; and (d) Implementing Priority of Service. (4) Organizational 

Capacity/Employee Perspective: The organizational capacity perspective addresses whether an organization has 

the right resources to implement its strategy. In the case of VETS, the key resources to be measured here are the 

DVOPs and LVERs. Four indicators are proposed that address capacity and occupancy for DVOP and LVER 

staff: (a) DVOP slots filled; (b) DVOP slots vacant; (c) LVER slots filled; and (d) LVER slots vacant. 

Actions Taken: VETS is consulting with BLS regarding the Veterans’ Relative Unemployment Rate measure 

because the use of this measure requires application of data with statistical error that is very high for small States. 

VETS seeks to determine the “cut point” in terms of State population, above which use of the measure would be 

appropriate. 

Additional Information: To obtain copies of this report, contact the Veterans’ Employment and Training 

Service at 200 Constitution Ave. NW, Room S-1325, Washington, DC 20210 or call (202) 693-4749. 

27. Veterans’ Employment and Training Service: Strategies for Implementing Priority of Service to 

Veterans in Department of Labor Programs, September 2004 

Performance Goal(s) Affected: 1.1E – Increase the employment and retention rate of veteran job seekers 

registering for public labor exchange services. 

Conducted by: The Urban Institute 

Findings: A range of program strategies are used to provide priority of service to veterans, as well as strategies 

used in serving non-veteran populations. Two categories of program strategies were identified: (1) Procedural 

Strategies: Workforce development offices currently use several strategies to serve veterans within their regular 

office operations. Five types of procedural strategies were identified: (a) outreach activities; (b) intake and 

registration procedures; (c) client flow adaptations; (d) role of DVOPs and LVERs; and (e) integration and 

collaboration with other programs. (2) Electronic web-based and other self-service strategies: Given the 

increased reliance on the Internet in recent years, there has been an explosion in web-based, self-service strategies 

in the publicly-funded workforce development system. These strategies fit within two categories: informational 

strategies and job-matching strategies. Four prototypical web-based models were identified for informational 

strategies. For job-matching strategies, the study found that many state job-matching websites provide veterans 

with the option of self-identifying, which allows for various priority options within the job-matching system. 

Recommendations: The Jobs for Veterans Act gives states and localities latitude in implementing priority of 

service for veterans. There are three approaches that program administrators may consider: (1) Establish service 

goal priorities; performance measurement and goal-setting can help to clarify the intent of priority of service and 

serve as a motivating force for all program staff. (2) Consider local office procedural modifications that can be 

tailored to local operations to improve priority of service to veterans. (3) Improve self-service resources and 

electronic strategies. For example, state workforce development websites can be redesigned to improve access 

and information for veterans, using the following criteria: (a) visibility of information; (b) types of information; 

(c) active as well as passive features; and (d) evaluation component. 
Significant Audits and Evaluations 

FY 2004 Performance and Accountability Report 329 

Actions Taken: Since the public labor exchange has historically observed priority of service, the impact of the 

new priority of service provision falls primarily upon other workforce development programs funded by ETA. In 

response to the new requirement, ETA has issued overall guidance and the individual ETA programs have 

developed guidance specific to their missions. General information about the overall ETA guidance and the 

related program-specific guidance can be accessed at: www.doleta.gov/programs/VETs/ 

Additional Information: To obtain copies of this report, contact the Veterans’ Employment and Training 

Service at 200 Constitution Ave. NW, Room S-1325, Washington, DC 20210 or call (202) 693-4749. 
Appendices 

330 United States Department of Labor

3. Improper Payments Information Act Reporting Details 

I. Risk Assessment 

The Department’s initial risk assessment for FY 2004 was developed by reviewing all major programs, 

identifying the significant activities, and performing a risk assessment. 

To conduct the initial risk assessment, the Department proceeded to calculate each program’s FY 2003 outlays. 

These resources represent the program’s total dollars at risk for potential improper payments. Using these 

resources, the Department then based its assessment on an examination of the internal control environment and 

the level of program outlays for FY 2004. The criteria for determining susceptible risk within the program 

inventory were defined as follows: 

• For those programs whose outlays did not exceed the susceptibility threshold $10 million, no risk was 

assessed. 

• For those programs whose outlays were greater that $10 million, but did not exceed $50 million, the 

Department deemed it unlikely that improper payment error rates exceeded the significant improper 

payments threshold of $10 million. 

• Programs were deemed to be susceptible if outlays exceeded $200 million and if a review of the programs 

identified known weaknesses existed in program management based on reports issued by oversight 

agencies such as the Office of Inspector General and/or the General Accountability Office that indicated 

that the program might potentially exceed errors by $10 million.

• Programs were also deemed susceptible if required as part of the OMB A-11 Budget Submission under 

Section 57.

Due to the challenges posed by the grant programs, the DOL conducted an additional level of assessment in an 

effort to more accurately determine its non-direct grant programs’ susceptibility to improper payments. The DOL 

utilized analysis conducted by the OIG and conducted additional evaluation of Single Audits conducted for the 

grant programs. In reviewing all Single Audits conducted for the DOL in FY2002 (the most recent available), as 

well as additional work conducted by the OIG related to its grant programs, the audits indicated that the grant 

programs presented few findings. Additionally, as part of this analysis the Department reviewed internal control 

environments and conducted detailed interviews with grant program offices to better understand their efforts to 

prevent and deter improper payments. This analysis demonstrated that its grant programs do not demonstrate a 

risk for improper payments, save for the Workforce Investment Act. 

The table below lists the Programs/Activities designated as susceptible to erroneous payments, and considered for 

sampling: 

Programs and Activities Susceptible to Improper Payments FY 2004 

Benefit Programs 

Agency Program/Activity 

ETA Unemployment Insurance Program (UI) 

ESA Federal Employees Compensation Act (FECA) 

ESA Black Lung Disability Trust Fund 

ESA Energy Employees Occupational Illness Fund 

Other Programs 

ETA Workforce Investment Act (WIA) (Including 

Adult, Youth, and Dislocated Worker 

activities) 

ETA Job Corps 

Other Department of Labor Salaries 

Other Department of Labor Expenses 
Improper Payments Information Act Reporting Details 

FY 2004 Performance and Accountability Report 331 

II. Statistical Sampling 

Unemployment Insurance Program 

Sampling Methodology: Improper payment rates are obtained from the Benefit Accuracy Measurement (BAM) 

program. It is designed to determine the accuracy of paid and denied claims in the three largest permanently 

authorized unemployment compensation (UC) programs: State Unemployment Insurance (UI), Unemployment 

Compensation for Federal Employees (UCFE), and Unemployment Compensation for Ex-Service Members 

(UCX). BAM provides two rates of improper payments. The first, the annual overpayment rate, includes 

estimates of nearly every divergence from what state law and policy dictate the payments should have been. The 

second rate, the operational overpayment rate includes only recoverable overpayments states are most likely to 

detect using current BPC (Benefit Payment Control) procedure. These overpayments are the most likely to be 

detected and established for eventual recovery and return to the Trust Fund. 

BAM reconstructs the UI claims process for randomly selected weekly samples of payments and denied claims 

using data verified by trained investigators. For claims that were overpaid, underpaid, or improperly denied, 

BAM determines the amount of benefits the claimant should have received, the cause of and the party responsible 

for the error, the point in the UI claims process at which the error was detected, and actions taken by the agency 

and employer prior to the error. 

In reconstructing each sampled payment, the BAM program retroactively investigates the accuracy of the UI 

claim’s monetary and separation determination, as well as all information relevant to the payment that was 

sampled, 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. 

Sample Selection: The universe of the population is the payments and denials under the UI program in the testing 

period, July 1, 2003, to June 30, 2004. Since State UI, UCFE and UCX account for approximately 95% of UC 

programs, BAM is designed to determine the accuracy of paid and denied claims in the three programs. The 

sample selected consisted of 24,749 items for the year ending June 30, 2004. For Denied Claims Accuracy 

(DCA), states sample 150 cases for each of the monetary, separation, and non-separation denials; the allocated 

sample for each type is 7,800 cases per test per year. A total of 48,081 items were selected and tested for both the 

BAM and DCA samples for FY04 UI sampling. 

Federal Employees Compensation Act 

Sampling Methodology: A stratified sampling approach was applied to estimate improper payments for both 

medical bill payments and compensation payments. The medical bill payment sampling was designed to test 

payment issues such as duplicate payments, appropriate receipts, and billing consistent with regional allowances, 

payment made for appropriate procedures, and eligibility at date of service. The compensation payment sampling 

was designed to test issues such as compensation payments consistent with identified injury, current medical 

evidence supporting continued compensation payments, eligibility requirements, and calculations of 

compensation amounts. 

Sample Selection: The universe of the population is both the compensation and medical payments paid out of the 

FECA program in the testing period, October 1, 2003, to March 31, 2004. The population was stratified in 

compensation payments and medical payments. Samples of 279 items from compensation payments and of 358 

items from medical payments were selected. A total of 637 items were selected and tested for the FY04 FECA 

sample. 

Black Lung Disability Fund 

Sampling Methodology: A stratified sampling approach was applied to estimate improper payments for both 

medical bill payments and benefit payments. The population was stratified into medical payments and benefit 

payments. The medical bill payment sampling was designed to test payment issues such as duplicate payments, 

eligibility at date of service, procedure covered by program, and appropriate receipts and paperwork. The 

compensation payment sampling was designed to test issues such as eligibility requirements, calculations of 

compensation amounts, and calculations of compensation offsets due to dependants. 
Appendices 

332 United States Department of Labor

Sample Selection: The universe of the population is both the medical and benefit payments paid out of the Black 

Lung program in the testing period, October 1, 2003, to June 30, 2004. The sample consisted of 100 benefit 

payments and 67 medical bill payments. A total of 167 items were selected and tested for the FY04 Black Lung 

sample. 

Energy Employees Occupational Illness Fund 

Sampling Methodology: The sampling approach consisted of Monetary Unit Sampling (MUS) to estimate 

improper payments. In the sampling process, the population was stratified into compensation and medical bill 

payments. The medical bill payment sampling was designed to test payment issues such as duplicate payments, 

eligibility at date of service, procedure covered by program, and appropriate receipts and paperwork. For 

compensation payments, sample testing was more limited as the compensation within the program is limited to 

lump sum payments of $150,000 or $50,000 depending on the underlying illness. As such, testing criteria focused 

on testing eligibility criteria and the correctness of lump sum payment amounts paid to appropriate recipients. 

Sample Selection: The universe of the population consisted of both the medical and compensation payments made 

under EEOICP in the testing period, October 1, 2003, to April 30, 2004. MUS was then applied to select 105 

medical bill payments from the medical bill population. Using MUS, 119 compensation payments were selected 

the compensation population. A total of 224 items were selected and tested for FY04 Energy Employees 

Occupation Illness Program sample. 

Job Corps 

Sampling Methodology: The sampling approach consisted of a stratified sampling effort to estimate improper 

payments. The population was first stratified between Job Corps center operating costs and student allowances. 

Sampled Selection: The universe of the population of Job Corps center operation costs is all of the operating 

expenses reported by Job Corps centers in the testing period, October 1, 2003 to March 31, 2004. The sample 

selected consisted of 130 payroll items and 229 non-personnel expense items. Additionally, 100% of nonpersonnel expenses with amounts greater than $5000 were selected totaling 194 items. A total of 553 items were 

selected and tested for FY04 Job Corps Center sample. The universe of the population of Job Corps student 

allowances is the entire student living and transition allowances made by Job Corps centers in the testing period, 

October 1, 2003, to March 31, 2004. The sample selected consisted of 319 living allowances and 365 transition 

allowances. A total of 684 items were selected and tested for FY04 Job Corps student allowance sample. 

Department of Labor Salaries 

Sampling Methodology: DOL Salaries consists of the department payrolls of the national office and two regional 

offices, Dallas and San Francisco. To accomplish the sampling for the payroll, simple random sampling (SRS) 

was applied. The testing criteria consisted of testing items such as employee’s eligibility, earnings and leave 

tracked correctly, time card consistent with payment, and pay rate calculated correctly. 

Sampled Selection: The universe of the population of Department salaries is comprised of the payroll transactions 

in the testing period, October 1, 2003, to March 31, 2004. A sample of 133 items from the Department’s payroll 

transactions was selected for testing. 

Department of Labor Expenses 

Sampling Methodology: DOL expenses consist of department expenses related to the operation and 

administration of programs’ and headquarters’ activities. Expense transactions were stratified into seven groups 

and samples were then statistically drawn from each stratum. For non-payroll costs, sample testing focused on 

testing criteria such as: (1) appropriate contracts used, (2) competitive bidding occurred and supporting 

documentation existed, and (3) payments supported with invoices, (4) invoices correct, and (5) the purchase was 

allowable under program costs. 

Sampled Selection: The universe of the population of expenses is comprised of DOL expense payments in the 

testing period, October 1, 2003, to June 30, 2004. A total of 164 items were selected and tested. 
Improper Payments Information Act Reporting Details 

FY 2004 Performance and Accountability Report 333 

WIA Grant Programs 

The WIA grant program continues to demonstrate a high risk of “susceptibility” to improper payments. The 

Department is designing a grant pilot to establish a sampling plan for this program. For more detail regarding the 

Department’s efforts, refer to Section IX. 

IPIA Reporting Requirements Summary 

For the programs for which statistical sampling was feasible, Table 1 provides a summary of the IPIA reporting 

status based on the estimates of annual amounts of improper payments. 

Table 1 

Inventory of Programs and Estimated Improper Payments 

Program Title 

Estimated 

Improper Payment 

Rate 

Estimated Annual 

Improper Payment 

Amount (millions) 

Meets IPIA $10 

Million Reporting 

Threshold 

Unemployment Insurance 9.70% $ 3,622 Yes 

Federal Employees 

Compensation Act 0.25% $6.4 No 

Black Lung 2.18% $7.7 No 

Energy Employees 

Occupational Illness 2.01% $5.0 No 

Job Corps 0.88% $8.4 No 

DOL Salaries 0.43% $6.7 No 

DOL Expenses 0.98% $9.8 No 

III. Corrective Actions 

Unemployment Insurance (UI) 

For the past several years, the causes of overpayments have remained fairly constant. The principal cause is 

“Benefit Year Earnings” (BYE)—payments received by claimants who continue to claim benefits despite having 

returned to work. These constitute about a quarter of overpayments using the broad Employment Training 

Administration (ETA) Annual Overpayment measure (defined as nearly every divergence from what state law and 

policy say the payment should have been) and greater than 40% of the narrower Operational Overpayment 

measure (defined as only overpayments that can subsequently be recovered if formally established as 

overpayments and are most likely to be detectable through the tools state integrity operations [called Benefit 

Payment Control operations] typically use to detect overpayments after the payment has occurred). The next 

largest cause is errors associated with the reasons claimants separate from work; these errors are over a fifth of the 

broad definition and nearly 30% of the narrower definition of overpayments. Because of their prominence, ETA 

has devoted a significant proportion its integrity efforts in the past few years to preventing or detecting benefit 

year earnings overpayments. ETA’s major integrity initiatives are as follows: 

• Implementation of the Denied Claim Accuracy measurement program (DCA) to assess the accuracy of denial 

decisions (September 2001); 

• Development of a Detection of Overpayments measure to assess how well the system is detecting and 

establishing overpayments for recovery to the Trust fund (first incorporated into the Strategic and Annual 

Performance Plans in FY 2003, with targets of establishing 59% of detectable/recoverable overpayments for 

FY 2003 and 2004). This measure is based on the Operational Overpayments definition, of which BYE 

overpayments are nearly one half; 

• Continuing analyses of the causes and costs and benefits of prevention or establishing and recovery 

operations (posted to the Office of Workforce Security Web site, 

http://workforcesecurity.doleta.gov/unemploy). 

• Encouragement and funding for states to implement benefit integrity developments, including the use of data 

on new hires to detect and prevent BYE overpayments. States initially began to implement the State 

Directory of New Hires (SDNH) for this purpose, and ETA estimates suggest that savings from their use of 
Appendices 

334 United States Department of Labor

this tool—largely, prevention of overpayments due to unreported work while in payment status—increased 

from approximately $55 million in CY 2002 to $74 million in CY 2003. 

• Enhancement of states’ ability to detect BYE violations by UI claimants working in other states or for certain 

multi-state employers who may post all new hires to only one state. Based on draft legislation proposed by 

the Department, the President signed P.L. 108-295 on August 9th granting state UI agencies access to the 

National Directory of New Hires. 

• ETA has also promoted and funded states to provide connectivity to systems to exchange data with the Social 

Security Administration on a real-time basis. This will give states the ability to verify claimants’ identity and 

will help prevent many, if not most, overpayments due to fraudulent or mistaken use of SSNs. Since 2002 the 

Department worked with States to establish electronic communications with SSA and on implementation 

plans. On March 5, 2004, the ETA and the Social Security Administration (SSA) signed a memorandum of 

understanding formalizing the data exchange agreement. 

• The Department provided funds to states to establish crossmatches with other state governmental agencies, 

such as with state department of motor vehicles, to facilitate fraud and overpayment reduction. 

ETA is also working with states to ensure recovery of improperly paid benefits. As a result of these activities, the 

Operational Overpayment rate, of the overpayments the states expects to recover, has risen from 57% of the 

Annual Overpayments for FY 2003 to approximately 60% for the 12 months ending March 31, 2004. The 

Operational Overpayment rate includes only recoverable overpayments states are most likely to detect using 

current Benefit Payment Control (BPC) procedures. These overpayments are the most likely to be detected and 

established for eventual recovery and return to the Trust Fund. This increase indicates that states are increasing 

their efforts to detect and establish overpayments for recovery. For the year ending March 31, 2004, the average 

State recovery rate for fraud overpayments was about 48%, and it was about 51% for overpayments that did not 

involve fraud (nonfraud). 

For FY 2005 and beyond, ETA has proposed a state level implementation of the overpayments measure used for 

the Government Performance and Results Act (GPRA). This will enable greater emphasis on this aspect of 

integrity through the State Quality Service Plan system that is used to promote performance achievement. ETA is 

also conducting a pilot test of adding a post-audit crossmatch component to the BAM paid claim review. This 

component would use data on UI wage records or new hires to supplement the BAM investigative procedure and 

better detect and estimate overpayments due to BYE violations. The Administration’s FY 2005 budget includes 

authority to collect overpayments by offset from Federal income tax refunds. It also includes a request for 

funding to station UI staff in state One-Stop centers to facilitate linkage of UI beneficiaries with reemployment 

services and to review their on-going eligibility for UI benefits. This initiative should result in the detection of 

separation-from-work overpayments as well as claimants who fail to meet the state’s conditions for weekly 

eligibility for benefits, such as being able to work and available for work. 

UI will evaluate these corrective action initiatives through the design of an Unemployment Insurance performance 

measurement metrics pilot to understand the degree to which each initiative is reducing improper payments. This 

pilot will enable the sharing of best practices and comparative performance metrics among states by quantifying 

the successes associated with each initiative. Such data will allow states to prioritize funding to the initiatives 

with the largest impact on improper payments. 

Federal Employees Compensation Act (FECA) 

Most of the improper payments identified occurred due to start-up problems with the new medical bill processing 

service and incorrect billing by medical providers. Previously FECA medical bills were paid by each District 

Office. The Employment Standards Administration’s Office of Workers’ Compensation Programs (OWCP) 

contracted for bill processing services in 2002, and in September 2003, the Central Bill Processing (CBP) service, 

started processing FECA medical bills. The CBP 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 as a component of the CBP to screen professional medical 

and outpatient hospital bills to check for certain improper billing practices. Providers whose bills are denied by 

these edits are notified of the reason for the denial and instructed to resubmit the bill, if appropriate. Results are 

monitored in the OWCP National Office for patterns and trends which may require action such as improved 

instructions to the medical providers, intervention directed at individual providers, potential need of stronger 

software edits, etc. 
Improper Payments Information Act Reporting Details 

FY 2004 Performance and Accountability Report 335 

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) OWCP errors including 

mistakes in judgment or interpretation in making decisions, (3) miscalculations in making payments, and (4) 

claimant fraud or misrepresentation. OWCP’s integrity initiatives to address these issues are as follows: 

• Medical bill processing performance is reviewed as a routine function of FECA National Office oversight of 

the central bill processing contract and is used to score against performance requirements specified in the 

contract. 

• 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 to monitor ongoing entitlement to benefits and payment accuracy. For 

example, FECA’s Periodic Roll Management (PRM) units monitor cases receiving long-term disability 

benefits. Changes in medical condition or ability to return to work are identified by regular ongoing PRM 

review of the cases, and compensation benefits may be reduced or terminated. Benefit reductions also result 

from new information reported about changes in status, such as the death of a claimant. The key outcome 

measure for PRM is the annual amount of benefit savings generated from these case actions. Benefits savings 

can also be compared directly to PRM administrative costs. 

• Improvements in documentation quality and encouragement of faster transmission of notice of injury and 

claims for compensation from the agencies to OWCP. Progress in submitting these forms more quickly 

yields faster and more accurate adjudication and payment, and fewer customer service problems. More than a 

quarter of new claims are now received via Electronic Data Interchange from the Departments of Labor, 

Defense, Treasury, Transportation, Veterans Affairs, and Homeland Security, and that percentage is expected 

to grow in the future. 

Grant Programs 

It is difficult to understand root causes and develop specific corrective actions without the ability to statistically 

sample grant programs. However, the Department has made a concerted effort to improve grants management 

that will help to prevent improper payments. The ETA (the agency administering all susceptible grant programs) 

issued an order on April 17, 2003 stating its commitment to “Protecting Federal taxpayers’ investments from 

fraud, abuse, financial mismanagement and reducing erroneous payments...through improved processes 

throughout the grants cycle”. Consequently, ETA has recently enhanced technology solutions and revised many 

of its business processes to better support proper stewardship of federal funds. 

ETA currently has multiple technology projects underway in an effort to improve grants management. They 

include the web-based EIMS (Enterprise Information Management System), with its GEMS (Grants eManagement Solution) and EMILE (ETA Management Information and Longitudinal Evaluation) modules. EIMS 

is the Enterprise Information Management System, a web-based solution used to track and manage grants, 

including the capture of grant cost reporting meant to improve fiscal integrity. This system is meant to feed data 

into GEMS (Grants E-Management System) and the combination of the two will be part of the cradle-to-grave Egrants solution for all of DOL, expected to begin rollout in January of 2006. The GEMS system is an online 

grants management tool meant to provide web accessible, customizable, role based context access to grant related 

information from multiple sources. 

ETA is also supporting these new technologies with revised business processes to enhance monitoring. Through 

its recently revised regional administration standards, 50% of all formula grants now require an onsite annual 

review and 30% of all discretionary grants require an annual onsite review. The grants selected for review are 

determined using the risk-ranking tool contained within the GEMS system and GEMS also captures the results. 

Additionally, a major effort to train Federal Project Officers and to increase field monitoring is underway. 
Appendices 

336 United States Department of Labor

IV. Improper Payment Reduction Outlook FY 2003 – FY 2007 (show $ in millions) 

Improper Payment Estimates and Reduction Targets 

Program FY 04 

Outlays

FY 04 

IP % 

FY 04 

IP $ 

FY 05 

IP % 

FY 06 

IP % 

FY 07 

IP % 

Unemployment 

Insurance 

 (Annual 

Report Rate) 

$37,335 9.70% $3,622 

overpayment 9.5% 9.3% 9.0% 

Unemployment 

Insurance 

(Operational 

Rate)33

$37,335 5.07% $1,893 

overpayment 5.00% 4.75% 4.25% 

Unemployment 

Insurance 

Underpayment 

Rate 

$37,335 0.64% $239 underpayment 0.64% 0.64% 0.64% 

Federal 

Employees 

Compensation 

Act 

$2,544 0.25% $6.37 overpayment 0.250% 0.248% 0.244%

V. Recovery Auditing 

The Department conducted an inventory of existing contracts and determined that the total contract values do not 

exceed the $500 million recovery auditing threshold established by Section 831 of the FY 2002 Defense 

Authorization Act. As such, the Department is not required to implement recovery auditing activities. The 

Department will continue to evaluate the use of recovery auditing techniques as appropriate. 

VI. Management Accountability 

In FY2004, the Department launched an initiative based upon the Sarbanes-Oxley Act and Circular A-123 to 

improve financial internal controls and increase the awareness and accountability of Agency management. These 

activities, while focused on improving financial management and internal controls, will also coordinate program 

agency efforts to achieve compliance with IPIA. This initiative establishes an integrity assistance organization and 

a financial management control group. Specifically, responsibilities will include reviewing internal controls, 

remediating audit findings and setting policies and procedures to continually improve the quality, timeliness and 

accuracy of financial information. These activities will establish the infrastructure needed to ensure 

accountability. 

To further ensure accountability for achieving real reductions, the Department will also integrate IPIA efforts into 

the existing quarterly financial certification meetings with Agency heads. Furthermore, the Department will 

commence an IPIA working group to leverage successes and share best practices among program Agencies. The 

Department will continue to work diligently achieve tangible results articulated in the new IPIA section of the 

President’s Management Agenda Scorecard. Collectively, these activities will ensure successful results. 

VII. Information Systems and Infrastructure 

Unemployment Insurance 

ETA believes that in most cases the states have the information systems and infrastructure they need for improper 

payment reduction. States are implementing systems to exchange data with the Social Security Administration 

and interface with their State Directory of New Hires. Discussions are just beginning with the Department of 

 
Improper Payments Information Act Reporting Details 

FY 2004 Performance and Accountability Report 337 

Health and Human Services regarding use of the National Directory of New Hires (NDNH). It is not clear at this 

time whether information system enhancements are needed to use the NDNH. 

Federal Employees Compensation Act (FECA) 

OWCP is currently developing an integrated management information and compensation benefit system that will 

enhance both compensation payment accuracy and medical bill processing accuracy. Deployment is planned for 

FY 2005. Resources are included in the FY 2005 budget request for this system.

Grant Programs 

Many grant programs have not yet determined what specific information systems and other infrastructure might 

be needed, as the precise method by which the programs will respond to the demands of IPIA is not yet finalized. 

It may be that the most important systems and infrastructure are those that will capture data associated with the 

results of the single audits. The Department believes that additional funding to the current system that captures 

the results of the single audits, the Federal Audit Clearinghouse, would assist all Agencies in their efforts to meet 

IPIA requirements. The Department intends to gain additional information on these system needs for grant 

programs during FY05 through its grant pilot program. 

VIII. Statutory or Regulatory Barriers 

With regards to the FECA program, legislation does not currently permit FECA to verify employment earnings 

with the Social Security Administration (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 UI program, as well, has several legislative barriers. Firstly, by statute, States administer UI program and set 

operational priorities; the Department has limited ability to ensure they pursue improper payment reduction 

activities. Sec. 3304(a) (3) of the Federal Unemployment Tax Act, which states that monies in the fund can only 

be used for benefit payments, may preclude the use of recovery auditing techniques. The “immediate deposit” 

requirement (Sec. 3304(a)(3) of the Federal Unemployment Tax Act (FUTA) and Sec 303(a)(4), SSA) and the 

“withdrawal standard” (Sec. 3304(a)(4), FUTA and Sec 303(a)(4), SSA) both affect recovery efforts. The 

immediate deposit requirement dictates that dollars for benefits must be paid immediately into the trust fund and 

the withdrawal standard says that money in the trust fund can only be used for benefits. There are certain 

exceptions to the immediate deposit requirement, but they do not apply to recouped benefit overpayments. These 

requirements preclude Unemployment Insurance from using funds recovered from overpayments to be used 

towards administrative or operational efforts to improve prevention, detection, and recovery efforts. 

IX. Additional Comments 

To achieve IPIA compliance for susceptible grant programs, the Department faces challenges similar to many 

other Agencies. In numerous instances, grants are structured to provide federal funds that empower local entities 

to operate programs based on local need. The Federal government provides the monies to states, cities, counties, 

private non-profits, and other organizations to distribute these federal funds; the Federal agencies capture 

information related to only the first level of grantee and rely on the Single Audit Act to monitor grantees. To 

investigate how the single audits might be used to meet IPIA compliance in FY04, the Department examined 

single audits with DOL-related findings from the Federal Audit Clearinghouse and the corresponding single audit 

reports returned to the Department as the cognizant agency responsible for resolving the identified findings. The 

Department’s review of single audits indicated a low level of risk for susceptible grant programs. While the 

rigorous analysis of these sources offered insight into the relative risk of grant programs, none offered the detailed 

information necessary for statistical estimation. However, of the available data sources for IPIA statistical 

estimation, single audits offer the most efficient means to gather data from these recipients of federal funds. 

Using data from the single audit analysis, the Department has identified potential modifications to the Circular A133 Compliance Supplement that may help Agencies to bridge the “gap” between the currently available data and 

the data required for IPIA compliance. Possible modifications for consideration are discussed below: 

1. CDFA sub-groups: As some CFDA codes encompass multiple programs, Agencies should consider 

defining discrete tests and reporting requirements for each applicable program. This could be done by re-
Appendices 

338 United States Department of Labor

structuring CFDA codes as needed, or by including more specific program tests for each program 

contained in a CFDA code to address IPIA needs. 

2. Audit Thresholds: 

a. Major Program Threshold: Agencies may consider defining what constitutes a major program 

through the Compliance Supplement to provide needed program coverage. For example, Circular A133, Subpart E—Auditors, provides several opportunities for Federal agencies to define major 

programs as needed for their oversight purposes. Agencies may want to consider submitting to OMB 

the requirement that all Section 57 programs, or all programs deemed high risk through the initial 

IPIA risk assessment, be included as major programs. 

b. Finding Threshold: Establish uniformity for IPIA related audit finding definitions to enable 

aggregation of said findings. 

3. View of Sub-Grantees: Modifications to the A-133 reporting requirements should be considered to allow 

the cognizant agency access to all single audit reports (to the terminal dollar), conducted for a particular 

program, including those performed for its sub-grantees. This access may be best gained via the Federal 

Audit Clearinghouse; however, changes would have to be made to the data that are currently captured in 

order to provide the detail necessary for IPIA purposes. 

4. Depth and Detail: 

a. Depth of testing: Compliance Supplements may require considerable more testing criteria to achieve 

IPIA compliance. The OMB Circular A-133 provides that Federal agencies must annually inform 

OMB of any updates needed to the Supplement. Consequently, OMB should encourage Agencies to 

define testing requirements, clear improper payment definitions, and minimum sample sizes through 

their program specific compliance supplements to ensure single audits achieve sufficient depth in 

analysis. Such modifications to testing criteria could be done multiple ways within the confines of 

the current provisions. Agencies could take advantage of the current compliance test “N-Special 

Tests and Provisions” and establish a comprehensive test to meet IPIA requirements, or they could 

consider utilizing current, more myopic compliance tests and modifying their structure to better meet 

IPIA needs. For example, changes to the five compliance tests with the greatest potential for IPIA 

relevance (e.g. “A-Activities Allowed or Unallowed” or “M-Subrecipient Monitoring”) would be 

more constructive if redefined with IPIA specificity. 

b. Detail of reporting: Agencies and OMB should consider increasing the reporting requirements in the 

Compliance Supplement. For the statistical estimation of error rates required by IPIA, it is necessary 

to identify the entire universe tested (to establish the equation’s denominator). Current requirements 

that only findings are reported means that agencies are unable to properly define the sampled 

population. Consider altering reporting requirements so that for all testing conducted (regardless of 

findings) specifics as sample size, total dollars tested, tests failed, dollars associated with failed tests, 

etc. are reported. This would include modifying data capture in the Federal Audit Clearinghouse to 

reflect the enhanced reporting requirements.

Additionally, it is imperative that the federal community work together to develop cost effective methods of data 

gathering. This is best accomplished by leveraging the current infrastructure when working to capture data needed 

to achieve IPIA compliance for grant programs. Should each agency individually attempt to gather information 

through a variety of means, grantees may face an undue administrative burden. As such, the Department believes 

that using the single audit process already in place is an approach that benefits much of the federal government. 

Moreover, the current method of single audit data submission, the Federal Audit Clearinghouse, should also be 

enhanced to assist agencies in meeting the challenges of grant programs. The Federal Audit Clearinghouse could 

be used to capture additional depth and detail that would further assist agencies in their efforts to statistically 

estimate improper payments.
Acronyms 

FY 2004 Performance and Accountability Report 339 

4. Acronyms 

ACSI American Customer Satisfaction 

Index

AJB America’s Job Bank 

ASP Office of the Assistant Secretary for 

Policy 

ATUS American Time Use Survey 

AWBA Average Weekly Benefit Amount 

BAM Benefit Accuracy Measurement 

BLS Bureau of Labor Statistics 

BRG Business Relations Group 

CAM Cost Analysis Manager 

CATARS Capital Asset Tracking and 

Reporting System 

CFO Chief Financial Officer 

CO Compliance Officer 

COOP Continuity of Operations Plan 

CPI Consumer Price Index 

CPS Current Population Survey 

CY Calendar Year 

DBA Davis-Bacon Act 

DOD U.S. Department of Defense 

DOE U.S. Department of Energy 

DOEd U.S. Department of Education 

DOJ U.S. Department of Justice 

DOL U.S. Department of Labor 

DOLAR$ Department of Labor Accounting 

and Related Systems 

DOT U.S. Department of Transportation 

DVOP Disabled Veterans’ Outreach 

Program 

EBSA Employee Benefits Security 

Administration

ECI Employment Cost Index 

EEO Equal Employment Opportunity 

EER Entered Employment Rate 

EIMS Enterprise Information Management 

System 

EMILE ETA Management Information and 

Longitudinal Evaluation 

EO Equal Opportunity 

ERISA Employee Retirement Income 

Security Act 

ES U.S. Employment Service 

ESA Employment Standards 

Administration 

ETA Employment and Training 

Administration 

EVMS Earned Value Management System 

FAIR Federal Activities Inventory Reform 

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 

FUTA Federal Unemployment Tax Act 

FY Fiscal Year 

GAO U.S. Government Accountability 

Office 

GISRA Government Information Security 

Reform Act 

GMRA Government Management Reform 

Act 

GPRA Government Performance and 

Results Act 

GSA General Services Administration 

HGJTI High Growth Job Training Initiative 

HHS U.S. Department of Health and 

Human Services 

HVRP Homeless Veterans’ Reintegration 

Project 

ILAB Bureau of International Labor 

Affairs 

ILO International Labor Organization 

IMIS Integrated Management Information 

System 

IPEC International Program for the 

Elimination of Child Labor 

IPIA Improper Payments Information Act 

IRS Internal Revenue Service 

IT Information Technology 

JFMIP Joint Financial Management 

Improvement Program 

JOLTS Job Openings and Labor Turnover 

Survey 

JTPA Job Training Partnership Act 

LMI Labor Market Information 

LMRDA Labor-Management Reporting and 

Disclosure Act 

LPD Lost Production Days 

LVER Local Veterans’ Employment 

Representative 

LWDII Lost Workday Injury and Illness 
Appendices 

340 United States Department of Labor

MOU Memorandum of Understanding 

MSHA Mine Safety and Health 

Administration 

MSPA Migrant and Seasonal Agricultural 

Worker Protection Act 

NAICS North American Industry 

Classification System 

NFC National Finance Center 

NIOSH National Institute for Occupational 

Safety and Health 

OASAM Office of the Assistant Secretary for 

Administration and Management 

OASP Office of the Assistant Secretary for 

Policy 

OATELS Office of Apprenticeship Training, 

Employer and Labor Services 

OCFO Office of the Chief Financial Officer 

OCIA Office of Congressional and 

Intergovernmental Relations 

OCIO Office of the Chief Information 

Officer 

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 

OPM Office of Personnel Management 

OPR Office of Policy and Research 

OSEC Office of the Secretary 

OSHA Occupational Safety and Health 

Administration 

OWCP Office of Workers’ Compensation 

Programs 

PART Program Assessment Rating Tool

PBGC Pension Benefit Guaranty 

Corporation 

PBSC Performance Based Service 

Contracting 

PMA President’s Management Agenda 

PPI Producer Price Index 

PRM Periodic Roll Management 

PY Program Year 

QCM Quality Case Management 

SESA State Employment Security 

Agencies 

SHIMS Safety and Health Information 

System 

SOL Office of the Solicitor 

SSA Social Security Administration 

SWA State Workforce Agencies 

TAA Trade Adjustment Assistance 

TAP Transition Assistance Program 

TAPR Trade Adjustment Participant 

Report 

UI Unemployment Insurance 

USDA U.S. Department of Agriculture 

USPS U.S. Postal Service 

UTF Unemployment Trust Fund 

VA U.S. Department of Veterans Affairs 

VETS Veterans’ Employment and Training 

Service 

VPP Voluntary Protection Programs 

WB Women’s Bureau 

WHD Wage and Hour Division 

WHISARD Wage Hour Investigator Support 

and Reporting Database 

WIA Workforce Investment Act 

YOG Youth Opportunity Grants 
Internet Links 

FY 2004 Performance and Accountability Report 341 

5. Internet Links 

The DOL home page is www.dol.gov. Some of the most interesting and frequently used sites are listed below: 

Employment Information (For Workers and Employers) 

America’s Career InfoNet http://www.acinet.org/acinet/ 

America’s Job Bank http://www.ajb.dni.us/ 

Occupational Outlook Handbook http://www.bls.gov/oco/ 

Job Corps http://jobcorps.doleta.gov/ 

Join the Team that Keeps America Working http://www.dol.gov/oasam/doljobs/main.htm 

DisabilityInfo.gov http://www.disabilityinfo.gov 

Job Accommodation Network (JAN) http://www.jan.wvu.edu/

Small Business and Self Employment Service (SBSES) http://janweb.icdi.wvu.edu/sbses/

Employer Assistance Referral Network (EARN) http://www.earnworks.com

Workplace Laws and Related Information 

elaws Advisors (Employment Laws Assistance for Workers and Small businesses advisors) 

http://www.dol.gov/elaws/ 

State Labor Offices and State Laws http://www.dol.gov/esa/programs/whd/state/state.htm 

Minimum Wage http://www.dol.gov/esa/minwage/q-a.htm 

Fair Labor Standards Act http://www.dol.gov/esa/regs/statutes/whd/allfair.htm 

Family & Medical Leave Act http://www.dol.gov/esa/whd/fmla/ 

Small Business Compliance Assistance http://www.dol.gov/osbp/sbrefa/ 

Statistical Information 

Consumer Price Indexes http://www.bls.gov/cpi/home.htm 

Bureau of Labor Statistics Most Requested Data http://www.bls.gov/data/home.htm 

Current Population Survey http://www.bls.gov/cps/home.htm 

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/home.htm 

Employment, Hours, and Earnings http://www.bls.gov/ces/home.htm

Safety and Health Information 

OSHA’s Partnership Page http://www.osha.gov/dcsp/partnerships/index.html 

The Workers’ Page http://www.osha.gov/as/opa/worker/index.html 

OSHA Regulations and Compliance Links http://www.osha.gov/comp-links.html 

OSHA Standard Industrial Classification Search http://www.osha.gov/oshstats/sicser.html 

OSHA Reading Room http://www.osha.gov/readingroom.html 

MSHA’s Accident Prevention Program http://www.msha.gov/Accident_Prevention/appmain.htm 

Health Hazard Information (MSHA) http://www.msha.gov/hhicm.htm 

To report a safety or health hazard to MSHA http://www.msha.gov/codeaphone/codeaphonenew.htm 

Labor Department History 

History at the Dept of Labor http://www.dol.gov/asp/programs/history/main.htm 

Annals of the Dept of Labor http://www.dol.gov/asp/programs/history/webannalspage.htm 

Labor Agencies 

Bureau of 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/
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