Workforce Training: Almost Half of States Fund Employment Placement and Training through Employer Taxes and Most Coordinate with Federally Funded Programs
Published: 2004-02-13T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: As technological and other advances transform the U.S. economy, many of the nation's six million employers may have trouble finding employees with the skills to do their jobs well. Some experts indicate that such a skill gap already affects many employers. To help close this skill gap, both federal- and state-funded programs are providing training and helping employers find qualified employees. In 2002, the federal government spent about $12 billion on workforce programs, and there are various studies on these programs. States also raised revenues in 2002--from taxes levied on employers--to fund their own workforce programs. However, little is known about these state programs. GAO was asked to provide information on how many states use these employer taxes to fund their own employment placement and training programs, what services are provided, the extent to which these state programs coordinate with federal programs, and how states assess the performance of these programs.
section_title: What GAO Found
paragraphs: Twenty-three states reported using employer tax revenues in 2002 to fund their own employment placement and training programs, and states most often provided job-specific training for workers. States used various types of employer taxes and reported spending a total of $278 million to address state-specific workforce issues. States invested in a variety of industries, but manufacturing was the most frequently targeted. Most states with employment placement and training programs funded through employer taxes reported some coordination with federal workforce programs in 2002. States were most likely to coordinate with federal workforce programs by jointly promoting programs through outreach and referrals. According to most state officials, coordination with federal workforce programs raised awareness of their state-funded programs. Some state officials also reported that coordination improved the quality and availability of services. Twenty-two of the 23 states reported assessing the performance of their programs in 2002. However, none have used sufficiently rigorous research designs to allow them to make conclusive statements about the impact of their programs, such as their effect on worker wages or company earnings. Because these programs contribute to our nation's ability to provide comprehensive workforce development services to meet employers' needs for skilled workers, it would be helpful to have information on the impact of these efforts. The Department of Labor has valuable resources that might help states evaluate the impact of their programs.

section_title: Letter
paragraphs: As technological and other advances transform the U.S. economy, many of  the nation’s six million employers may have trouble finding employees  with the necessary skills. A recent study found that 46 percent of  employers who participated in a workforce survey had difficulty recruiting  qualified job applicants. To help close the gap between employer needs  and employee skills, both federal- and state-funded workforce programs  are providing skills training and helping employers find qualified  employees. Although many studies provide information on federally  funded programs operating throughout the country, little is known about  the state-funded programs. These state programs have the potential to  enhance the federal workforce system and upgrade the skills of the  nation’s workers.
The federal government funds 44 employment and training programs, such  as the Workforce Investment Act programs, that serve adults, dislocated  workers, and youth. Some of the services provided through federally  funded programs include: employment counseling and assessment, job  search and placement activities, and basic skills such as GED preparation  and basic adult literacy. In 2002, the federal government spent about   $12 billion on employment and training activities. States have also raised  their own funds to help upgrade the skills of their workforces and match  employers with qualified employees. States often raise revenues for these  programs through taxes levied on employers. While some states use these  revenues to supplement federally funded services, like job training  provided through the Workforce Investment Act, other states use these  revenues to fund their own employment placement and training programs.
Because of your interest in these state-funded employment and training  efforts, and their relationship with those that are federally funded, you  requested that we determine    how many states use employer taxes to fund their own employment  placement and training programs, and what type of services do they  provide; the extent to which these state employment placement and training  programs are coordinating with federal workforce programs; and   how states are assessing the performance of their employment placement  and training programs.
To address these questions, we surveyed all 50 states, the District of  Columbia, and Puerto Rico to determine how many used employer taxes  to fund their own employment placement and training programs in 2002.  We conducted a follow-up survey of the states that had these programs to  determine what services were provided, how they are assessed, and the  type and extent of coordination with federal workforce programs. To learn  more about state program assessments of the performance of the  programs, we analyzed recent assessments from the states that could  provide them to us. To gather more information about coordination, we  surveyed staff from workforce investment boards in 6 states that began to  fund their employment placement and training programs through  employer taxes in the 1980s. In addition, we visited 3 states—California,  Louisiana, and Rhode Island—where we interviewed officials from both  state and federally funded workforce programs. We selected these states  because they are geographically diverse and their employer-funded  programs vary in age and funding levels. We also reviewed existing studies  and literature on state employment and training programs. We conducted  our work between February and November 2003 in accordance with  generally accepted government auditing standards. (For a complete  description of our scope and methodology, see app. I.)
subsections: section_title: Background
paragraphs: Technological advances continue to transform the U.S. workforce, and  workers must improve their skills to meet employers’ changing needs.  Many employers report difficulties in finding qualified workers, and many  unemployed workers lack the skills they need to find jobs. Training  programs can help workers gain the skills needed for today’s jobs, and  employment placement programs can help employers find qualified  employees.
subsections: section_title: Federally Funded Employment and Training Programs
paragraphs: In 2002, the federal government funded 44 employment and training  programs that provided services, such as job search assistance,  employment counseling, basic adult literacy, and vocational training, to  over 30 million people at a cost of approximately $12 billion. Although  these programs were administered by nine federal agencies, many of the  programs provided services to the public through one-stop centers in  communities throughout the country. When the Congress passed the  Workforce Investment Act (WIA) in 1998, it mandated that at least 17  federally funded programs provide employment and training services  through a one-stop center system (see table 1).
WIA also established workforce investment boards. Each state workforce  investment board is responsible for developing statewide workforce  policies and overseeing its local workforce investment boards. The local  workforce investment boards, in turn, are responsible for developing local  workforce policies and overseeing one-stop center operations (see fig. 1).
Some of the federal employment and training programs are not required to  provide services through the one-stop centers. These include the  Temporary Assistance for Needy Families program (TANF) and the H-1B  Technical Skills Training Grant Program. The TANF program is  administered by the Department of Health and Human Services and assists  needy adults with children in finding and retaining employment. The H-1B  Technical Skills Training Grants are administered by the Department of  Labor, and the funds are distributed to select local workforce investment  boards to increase the supply of skilled workers in occupations identified  as needing more workers.
section_title: State-Funded Employment and Training Programs
paragraphs: In addition to federally funded programs, states use their own revenues to  expand employment placement and training opportunities. For example,  states create unemployment insurance (UI) tax offsets by decreasing the  UI tax amount paid by employers and at the same time imposing a  separate tax on employers for the same amount as the UI tax deduction. In  addition, states use other employer taxes, and revenues from each states’  UI interest fund or from UI penalty fees imposed on employers. Employers  may be charged UI penalty fees for late payments, for failing to file a UI  return for an employee, or for failing to report an employee’s wages. While  all of these revenues are generated through employer taxes, states also  commit general revenue funds to expand employment placement and  training opportunities. A study for the National Governors’ Association  Center for Best Practices found that state-funded worker training  programs are operating in 48 states.
States have increased the availability of employment placement and  training opportunities in various ways. Some states have used their  revenues to expand federally funded programs. In fact, a recent national  study by National Association of State Workforce Agencies found that 19  states used these revenues to supplement WIA job training services. Other  states have used their revenues, including employer tax funds, to create  their own employment placement and training programs; however, little is  known about these programs.
section_title: Employer-Funded Training Programs
paragraphs: Some employers invest their own resources in training their workers. The  exact amount of money that employers spend every year to train their  workers is difficult to estimate; a study of trends in employer-provided  training suggests that employers’ financial commitment to training has  recently increased. Some individuals, as well, invest their own funds for  training as a way to either upgrade their job-related skills or to become  employable.
section_title: Types of Impact Evaluations for Public Programs
paragraphs: Impact evaluations for public programs, like employment and training  programs, produce findings that allow conclusions about the effectiveness  of the programs to be made. These evaluations may be implemented using  a few different design strategies. Two designs that are used to isolate a  program’s effects, such as those on participants, are experimental designs  and quasi-experimental designs.
Experimental designs. These are characterized by the use of random  selection and control groups. All individuals have an equal chance of being  assigned to either the intervention group or the control group. The  intervention group contains individuals who will receive the intervention,  or program’s services, while the control group does not receive the  intervention or services. This research design produces findings that allow  conclusions about the effectiveness, or impact, of the intervention to be  made. However, conducting experimental designs may be problematic  because of the need to treat intervention and control groups differently.  For example, to determine the impact of a training program on workers’  wages, a program would need to randomly provide services to some and  randomly deny services to others, and track subsequent earnings for both  groups of people. This approach requires services to be denied to some  workers who qualify for training. Due to these difficulties, as well as the  amount of time and money it takes to conduct experimental designs, quasi- experimental research designs are often preferable for their practicality.
Quasi-experimental designs. These designs are characterized by  comparison groups that are not randomly selected. For training programs,  a quasi-experimental design would compare a group of people who have  elected to take the training courses with nonparticipants who may have  characteristics, such as wage or education levels, that are comparable to  the group receiving services. Comparing the two groups allows  researchers to account for other factors, such as the local economy, that  may have influenced outcomes.
section_title: Evaluation Resources at the Department of Labor
paragraphs: The Department of Labor’s Employment and Training Administration  (ETA) Office of Policy Development, Evaluation and Research has  valuable resources related to designing and implementing evaluations.  Labor has established evaluation coordination liaisons in each state to  help with evaluations of federal programs. These liaisons can help states  access logistical support and technical assistance for program evaluations.  Such resources include ETA’s recent review of alternative research  methodologies, which contains guidance on conducting experimental and  quasi-experimental evaluations of workforce programs to determine the  social and economic values of the programs.
section_title: Nearly Half of All States Used Employer Taxes to Fund Their Own Employment Placement and Training Programs, and States Most Often Provided Job-Specific Training
paragraphs: Twenty-three states reported using employer tax revenues in 2002 from a  variety of employer taxes to fund their own employment placement and  training programs. States most often provided job-specific training for  workers. States reported spending a total of $278 million to provide these  training and employment placement services. Some states established  their programs as a way to address a variety of specific workforce and  economic issues, such as chronic shortages of skilled workers.
subsections: section_title: States Used a Variety of Employer Taxes to Provide Services to Address Unique State Workforce Issues
paragraphs: Twenty-three states reported using a variety of employer taxes in 2002 to  fund employment placement and training services to address specific  workforce issues (see fig 2). These states reported spending a total of $278  million on their workforce programs. Expenditures in 2002 varied  dramatically from state to state, ranging from $100,000 in Kansas to over  $84 million in California (see fig. 3). In 18 of the states, employer tax  revenues completely funded these employment and training programs,  while in 3 of the states employer tax revenues made up at least 50 percent  of the funding for these programs. Only 1 state reported that employer tax  dollars constituted less than 50 percent of its program’s funds. (For more  information on individual state employment placement and training  program budgets in 2002, see app. II.)
States used various types of employer taxes to fund employment  placement and training services (see table 2). Eleven states reported using  a UI tax offset. Eight states funded their programs through a separate state  employer tax. For example, Delaware employers were taxed $12.75 for the  first $8,500 of each employee’s annual salary. Similarly, Massachusetts’s  employers were taxed up to $8.10 per employee annually. Five states used  UI penalty and interest funds. One state, California, reported combining  funds from more than one employer tax source and funded its program  through revenues generated by a UI tax offset and a separate state  employer tax of up to $7 per employee. (For more information on the total  funds collected by states through these employer taxes in 2002, see app.  II.)
California was the first state to use employer taxes for employment  placement and worker training in 1982 and other states have followed suit  (see fig. 4). In addition to California, 6 other states started using employer  taxes to fund employment placement and training services by the end of  the 1980s. New Hampshire most recently started to use these tax revenues  to fund its program in 2001. Texas is the only state in our survey of  programs operating in 2002 that has since terminated its worker training  program.
Some states established their programs as a way to address a variety of  specific workforce and economic issues, such as chronic shortages of  skilled workers. For example, Louisiana used $1.3 million to create an  emergency medical services training program at a local community college  after one of the state’s largest providers of paramedics and emergency  medical care staff reported needing to hire most of its staff from out of  state due to a lack of qualified workers. Similarly, to increase the supply of  elder care providers, California funded training to certified nurses’  assistants so that they could become vocational nurses.
In addition, other states noted that their employment placement and  training programs address service and eligibility gaps in federally funded  workforce programs. For example, Rhode Island officials said that  because federal funds could not be used to provide training to employed  workers prior to the passage of WIA, their employer tax-funded program  provided employers with training funds specifically to improve employed  worker skills. New Jersey and Washington officials also noted that their  states used employer tax funds to provide employment placement and  training services that are not offered through federally funded workforce  programs. Other states, such as Louisiana, used employer taxes to fund  training services for individuals who do not meet the income eligibility  requirements used in WIA programs.
Most states focused on certain industries, particularly manufacturing,  because of their overall benefit to the state’s economy. California’s worker  training program specifically targets manufacturing industries because  these industries tend to offer high-paying, stable employment. Other  industries that were also frequently targeted for training include:  information; health care or social assistance; professional, scientific, or  technical; and construction. Our earlier study examining how states and  local areas are training employed workers found similar results:  manufacturing along with health care and social assistance are two of the  most commonly targeted economic sectors for training workers. Our  survey of employer tax-funded state programs also showed that industries  that were least often targeted included wholesale and retail trade, finance  and insurance, and accommodation and food service (see fig. 5).
States also targeted their services to certain employers as part of their  workforce and economic development strategies. Over 11,000 employers  were provided training services, and most states provided services for  employers with 100 or fewer employees (see fig. 6). Rhode Island, for  example, offered employers with 100 or fewer employees training grants  of up to $10,000. Rhode Island officials said that they targeted smaller  employers because these employers often do not have the resources to  provide their workers with training and that smaller employers make up  the majority of the companies in the state.
States provided services in a variety of ways. States reported providing  worker training either directly or through grants awarded to employers or  training providers. For example, Louisiana generally awarded grants in  amounts that covered an employer’s entire training costs. Employers could  use these funds to provide training themselves, hire private training  contractors, or contract with public training providers. Funded training  could occur either during normal working hours or off the clock.  Louisiana officials noted that they encouraged employers to use public  training providers, most often the state’s technical colleges. On the other  hand, California required employers to contribute to training-related costs.  Employers were expected to match up to 100 percent of the training grant  to pay for related expenses, such as worker wages during training or  training materials. Officials from California reported that most training  grants are awarded contingent upon workers being trained on the job, as  opposed to off the clock. States funding employment placement services,  such as interview technique and resume writing workshops, provided  services directly or through other service providers.
section_title: Training Services More Often Funded Than Employment Placement Services
paragraphs: States most often reported that worker training was the primary emphasis  of their employer tax-funded programs and spent more on worker training  services than on employment placement services (see fig. 7). Fourteen  states reported that worker training was the primary emphasis of their  programs, and 10 of these states funded worker training exclusively. States  spent approximately $202 million on worker training services; this  represents 72 percent of the total funds spent on employment placement  and training services (see fig. 8). States used these funds to provide a  variety of training services. For example, in Louisiana funds were used to  provide training related to automobile services and repairs, welding,  painting, and sandblasting. Funds were also used in Louisiana to purchase  training equipment, such as a Bridge Resource Management Simulator,  which was used for river navigation training. States reported providing  training services to about 200,000 people and were more likely to focus on  the provision of training services to employed workers as opposed to  dislocated workers or those receiving UI benefits (see fig. 9). (For a  detailed review of states’ primary service focus, expenditures by service  area, and the number of individuals served in 2002, see app. III.)
States were most likely to provide job-specific training—such as on new  production methods and computer software—and 17 states reported  funding these types of services with employer tax revenues (see fig. 10).  Officials from Louisiana said that they focus on job-specific training  because this type of training contributes to increased worker productivity  and company growth. State officials also noted that fostering company  growth creates new jobs that can lower state unemployment rates.
States were less likely to use employer taxes to provide nonjob-specific  training, including conflict resolution, team building, or how to dress  appropriately for the workplace. Twelve of the 23 states reported  providing this type of training. These findings echo our previous study on  worker training that found similar trends: states were more likely to focus  state and federal funds on occupational training as compared to nonjob- specific training. Basic skills training—such as math, GED preparation,  and English as a second language—is least often provided, with only 10  states reporting they used employer tax revenues to fund this type of  training.
Fewer state employer tax-funded programs emphasized employment  placement services, such as career counseling, skill assessments, and self- access employment services like Internet job listings and career planning  videos. Eight states reported that employment placement was their  primary focus, and 6 of these states funded employment placement  services exclusively. States reported spending approximately $77 million  to provide employment placement services to approximately 1.17 million  individuals. Despite the fact that fewer states reported emphasizing  employment placement services, the total number of individuals receiving  employment placement services is approximately six times as great as the  total number of individuals receiving training services. The difference in  the number of people served may be attributed to the time and resource  intensity of training services compared with employment placement  services. For example, Louisiana awards training grants that are up to 2  years in length. In comparison with training services, many of the  employment placement services that states reported providing are far less  time- and resource-intensive.
section_title: Most States with Employment Placement and Training Programs Funded through Employer Taxes Reported Some Coordination with Federal Workforce Programs
paragraphs: Twenty-one of the 23 states with employment placement and training  programs funded through employer taxes reported some coordination  with federal workforce programs in 2002. The most common coordination  activity reported by states was the joint promotion of state and federally  funded workforce programs through outreach or referrals (see fig. 11).  These promotion activities occurred in various ways. For example, in  California, a local workforce investment board and its one-stop center  hired staff to make cold calls to companies advertising the benefits of  participating in the state-funded training program. In Louisiana, on the  other hand, state officials provided information packets to employers  about how to upgrade their employees’ skills or fill job openings using  state and federally funded workforce programs.
In addition, many states reported that they coordinated with federal  workforce programs by sharing technical assistance and administrative  resources. Technical assistance involves the exchange of program  information to improve program practices. For example, in California,  staff from both state and federally funded workforce programs worked  together on a task force and provided each other with technical assistance  to improve services to small businesses. Sharing administrative resources,  on the other hand, can involve activities such as using a common  management information system, or sharing office space or staff. In Rhode  Island, for example, staff at the local workforce investment boards were  responsible for administering some of the training grants funded by the  state program. Fewer states reported co-funding employment and training  services or jointly developing policies with federal workforce programs.
The number of partnerships between employer tax-funded programs and  the federal workforce system varied from state to state. Some state  programs coordinated with only one federal partner. For example, New  Hampshire’s program chose to coordinate exclusively with its state  workforce investment board. Other state programs coordinated with many  federal partners. For example, Delaware’s program coordinated with a  one-stop center, TANF, the H1-B technical skill grants program, and other  federal workforce programs. (For additional information on each state’s  partnerships with federal programs, see app. IV.)
Although state employer tax-funded programs vary in their relationships  with federal workforce programs, some patterns are evident regarding the  most common federal partners. The majority of the states (19) reported  coordinating with at least one one-stop center during 2002. However,  several one-stop centers can operate in a state, and we do not know if  states coordinated with more than one of these centers. Thus, it is difficult  to gauge the degree of coordination between state-funded programs and  one-stop centers within each state. Nevertheless, we do know that many  states also reported coordinating with state workforce investment boards,  of which there is only one per state (see fig. 12). The number of federal  partners that state employer-funded programs have does not seem to be  closely associated with the number of years that the state programs have  operated. Although Delaware’s program is older than New Hampshire’s  and coordinated with more federal workforce programs, this is not a  consistent pattern across the country. For example, Kansas reported fewer  federal partners than Louisiana, despite the fact that Kansas’s employer  tax-funded program has been in existence for about a decade longer.
As a result of their various partnerships with workforce investment boards  and one-stop centers, almost all states reported an increase in awareness  of their employer tax-funded programs. In addition, some state officials  noted that coordination had improved service quality and availability. For  example, officials from Michigan and New Jersey’s state programs, as well  as an official from an Oregon workforce investment board, noted that co- locating staff from the state-funded programs at the one-stop centers  improved the services delivered to individuals. By co-locating these  programs, state officials said that they can help these individuals learn  about a broader range of employment and training services and job  opportunities. The Oregon official also pointed out that such co-location  can reduce transportation and child care barriers for clients. Coordination  can also assist states in improving services to employers. For example, a  state official from Idaho reported that having staff members who are  knowledgeable about both the state-funded program and WIA programs  enables them to better meet the needs of employers looking to expand  their businesses or move to the state. Although many state officials noted  that coordination had improved services, they were less likely to report  increases in funding for employment and training services as a result of  these collaborative relationships (see fig. 13).
section_title: Almost All States Reported Regularly Assessing the Performance of Their Programs, but Program Impact Cannot be Determined
paragraphs: Twenty-two of the 23 states with employer-funded employment placement  and training programs reported assessing the performance of their  programs in 2002, though program impacts could not be determined.  States reported using a range of approaches to assess their employment  placement and training programs, including variations in who conducted  the assessments, data collection methods used for the assessments, and  the frequency of the assessments. Of the 18 states that could provide  assessments of their individual employment placement and training  programs, 4 assessed their programs exclusively using process-oriented  indicators, while the other 14 used outcome-oriented indicators in their  assessments. However, none of the states used sufficiently rigorous  research designs to allow them to make conclusive statements about the  impact of their programs.
subsections: section_title: Almost All States Reported Regularly Assessing the Performance of Their Programs in 2002
paragraphs: Twenty-two of the 23 states with employer-funded employment placement  and training programs reported assessing the performance of their  programs in 2002. States reported using a variety of data collection  methods for their assessments, and most states used a combination of data  sources for their assessments. For example, Tennessee’s assessment was  based on data collected from site visits to training locations and surveys  administered to employers, while self-reported feedback and a fiscal audit  were the data sources used for Texas’s assessment. The most commonly  used data sources were: surveys, self-reported feedback, and on-site visits.  Only 2 states relied solely on quantitative data, such as program  expenditures and employment statistics. For example, Alabama used its UI  wage database to track how program participants fared in finding jobs.
Most states used a combination of internal and external evaluators for  their assessments (see fig. 14). For example, California used both in- house program staff and external evaluators from several state universities  to evaluate its program. On the other hand, 9 states used in-house  evaluators exclusively, while only 1 state, Indiana, used external  evaluators exclusively.
Furthermore, states conducted their assessments at varying intervals.  About two-thirds of the states (14) regularly conducted assessments— annually, quarterly, and monthly. Eight states conducted assessments once  training contracts were completed. For example, Tennessee sent surveys  to employers once the contracts it awarded were completed.
section_title: Results Regarding Program Impact from States’ Assessments Cannot Be Determined by Methodologies Used
paragraphs: None of the state assessments used sufficiently rigorous research designs  to allow them to make conclusive statements about the impact of their  programs. We asked states to provide us with copies of recent  assessments of their programs. Although 5 states could not provide us  with assessments of their individual employment and training programs,  18 of the 23 states shared recent assessments with us. On the basis of the  28 assessments received from 18 states, we examined indicators used by  the states and found that 4 assessed their programs exclusively using  process-oriented indicators. For example, Hawaii and New Hampshire  collected data on the number of businesses served. Likewise, Alabama and  Texas both collected data on how many people participated in their  programs. Process-oriented indicators help assess a number of factors,  including who uses the program, how funds are spent, and how well a  program is being implemented.
Fourteen states included outcome-oriented indicators along with process- oriented indicators in their assessments, with 11 states measuring worker  wages (see table 3). States also used a variety of other outcome-oriented  indicators, including job placement and retention rates of trainees.  Outcome-oriented indicators provide important data for states related to  changes, such as those in: worker wages, employment stability, and  advancement rates.
Although 14 states used outcome-oriented indicators, none used  sufficiently rigorous research designs to allow them to make conclusive  statements about the impact of their programs. Twelve of the 14 states  that used outcome-oriented indicators did not use comparison groups in  their evaluation design. Without comparing a program’s participants to  similar nonparticipants, it is not possible to account for other factors, such  as an upturn in the local economy, which may have influenced participant  outcomes. While 2 states used comparison groups, their methodological  design did not allow for the identification of conclusive impacts of these  programs because their comparison groups were not comparable enough  to their participant groups.
section_title: Concluding Observations
paragraphs: To help close the gap between employer needs and employee skills, both  federal- and state-funded workforce programs are providing skills training  to employees and helping employers find qualified employees. Twenty- three states used employer taxes in 2002 to fund their own employment  placement and training programs. These state programs have the potential  to enhance the federal workforce system by filling service and eligibility  gaps. However, the impact of these programs is unknown because states  have not adequately studied them. Because these programs contribute to  our nation’s ability to provide comprehensive workforce development  services to meet employers’ needs for skilled workers, it would be helpful  to have information on the impact of these efforts.
The Department of Labor’s Employment and Training Administration  (ETA) Office of Policy Development, Evaluation and Research has  valuable resources related to designing and implementing evaluations that  might help address this lack of information. Labor has established  evaluation coordination liaisons in each state and, although this position  was designed to help with evaluations for federal programs, the liaison  may be able to direct state program administrators to resources such as  ETA’s recent review of alternative research methodologies. Furthermore,  this liaison could help state administrators access other program  evaluation expertise, such as logistical support and technical assistance.
section_title: Agency Comments
paragraphs: We provided a draft of this report to the Department of Labor for its  review, and Labor provided technical comments.  Labor expressed an  interest in state employment placement and training programs funded by  employer taxes.  In addition, Labor acknowledged the importance of  collaboration between these state-funded programs and federally funded  programs, by noting that it may seek opportunities to better assist states in  coordinating their programs with federal Workforce Investment Act  programs.
We will send copies of this report to the Secretary of Labor, relevant  congressional committees, and other interested parties. Copies will be  made available to others upon request. In addition, the report will be  available at no charge on GAO’s Web site at http://www.gao.gov. Please  contact me on (202) 512-7215 if you or your staffs have any questions  about this report. Other major contributors to this report are listed in  appendix VII.
section_title: Appendix I: Objectives, Scope, and Methodology
paragraphs: We were asked to determine (1) How many states use employer taxes to  fund their own employment placement and training programs, and what  type of services do they provide; (2) The extent to which these state  employment placement and training programs are coordinating with  federal workforce programs; and (3) How states are assessing the  performance of their employment placement and training programs.
To address these questions, we conducted three surveys, reviewed  program evaluations, and visited 3 states. First, we surveyed all 50 states  and the District of Columbia and Puerto Rico to identify those that were  using employer tax revenues to provide their own employment placement  or training programs in 2002. We then conducted a follow-up survey with  the 23 states that reported using employer taxes to fund their own  programs during state fiscal year 2002. Specifically, we surveyed the state  programs that reported receiving the largest portion of employer tax  revenues collected in their state to provide employment placement and  training services. To gain a perspective on service coordination with  federally funded workforce programs, we surveyed staff from workforce  investment boards in 6 states that began to fund their employment  placement and training programs through employer taxes in the 1980s. We  also requested recent assessments from the 23 states we surveyed and  reviewed the assessments from the 18 states that could provide them to  us. Finally, we conducted site visits to 3 states—California, Louisiana, and  Rhode Island.
subsections: section_title: Survey
paragraphs: To determine how many states used employer taxes to fund their own  employment placement and training programs, we surveyed workforce  officials from the 50 states, the District of Columbia, and Puerto Rico. This  structured survey was administered via e-mail and the telephone and had a  100 percent response rate. Twenty-three states reported that they used  employer tax revenues to fund their own employment placement and  training programs in state fiscal year 2002.
To determine the types of employment placement and training services  states offered, we conducted a second survey of the 23 states that reported  using employer taxes to fund these services in our first survey. This survey  was designed to obtain information related to program mission, services  provided, populations served (individuals and industries), budget size, and  expenditures. To determine if states assessed their programs, we also  asked questions related to the frequency of program performance  assessments and the types of methods used to measure program  performance. In addition, we requested copies of recent program  assessment reports.
To determine the extent to which state programs coordinated with federal  workforce programs, we also asked states to report how their employment  placement and training programs worked with federal organizations and  programs, including workforce investment boards, one-stop centers,  TANF, Welfare-to-Work, H1-B grants, employment placement and training  programs administered by the U.S. Department of Education, and other  federally funded programs.  In addition, we asked states how these  coordination efforts affected program awareness, quality of service,  available funding, and the amount of employment placement and training  services available.
To gain the perspective of officials from federally funded programs on  coordination with these state programs, we administered a structured  telephone survey to representatives from workforce investment boards  operating in 6 states that began their employer tax-funded employment  placement or training programs during the 1980s (see table 4). We chose  these states with older programs, because we believed that they would  have more established partnerships with federal programs and would be  able to provide in-depth information on coordination. We surveyed  representatives from 5 of the state workforce investment boards. We also  surveyed a total of 10 purposively and randomly selected local workforce  investment boards. At least one local workforce investment board was  surveyed from each state that began operating its employer tax-funded  program during the 1980s.
We included steps in both the survey data collection and data analysis  stages to account for and minimize the variability that occurs when  respondents interpret questions differently or have different information  available to them. For example, survey specialists along with subject  matter specialists designed each questionnaire, and we pre-tested each  questionnaire with the appropriate target audience to ensure that  questions were clear. We pre-tested our workforce investment board  survey with representatives from state workforce investment boards and a  local workforce investment board. We also reviewed survey questionnaire  responses for consistency and in several cases contacted respondents to  resolve inconsistencies. However, we did not otherwise verify the  information provided in the responses. In order to increase our response  rate for each survey, we followed up with program officials through e-mail  and telephone contact. We analyzed these survey data by calculating  descriptive statistics.
section_title: Review of State Program Assessments
paragraphs: We reviewed recent assessments from the 18 states that could provide  them to us. Two of those states shared more than one recent assessment  with us, all of which we used in our analysis. The assessments we  collected ranged from annual reports to budget briefings to strategic plans  to external evaluations.
We analyzed these reports by performing a content analysis in which we  coded the assessment indicators as outputs (process-oriented data) or  outcomes (outcome-oriented data). Furthermore, when provided, we  analyzed the research designs states used to assess their programs against  standard evaluation research design characteristics as described by Rossi  and Freeman (1993) and McBurney (1994).
section_title: Site Visits
paragraphs: We selected 3 states for site visits according to several criteria, including  the year employer taxes were first used to fund their employment  placement and training program. We chose states that were early, mid- and  late implementers. Site selection was also based on diverse program  funding levels and geographic diversity (see table 5). In each state, we  interviewed officials responsible for administering each state’s employer  tax-funded employment placement or training program to gain further  insight into the types of services provided and populations served by these  programs. To learn more about the extent to which these state-funded  employment placement and training programs coordinate with federally  funded workforce programs, we also interviewed officials from each  state’s workforce investment board. We also interviewed officials from  two one-stop career centers operating in each state we visited. We  purposively selected these one-stop career centers because they  coordinated with employer-funded state programs.
section_title: Appendix II: Employer Tax Collections and Employer Tax-Funded Program Budgets in 2002, as Reported by States
subsections: section_title: Total funds collected through employer taxes
paragraphs: Program solely  funded through  employer taxes  Yes  These states’ program budgets for state fiscal year 2002 were greater than the amount collected  through each state’s employer tax. Reasons for this disparity varied and included rollovers of unspent  funds from previous years. Some states, specifically Delaware, Indiana, Michigan, Oregon, and South  Dakota, also used other funding sources in addition to employer tax revenues to pay for these  programs. In Indiana, Michigan, and South Dakota at least 50 percent of the funding for these  programs came from employer taxes. However, in Oregon employer taxes constituted less than half  of the funds used for the program. Delaware did not specify the portion of its program budget funded  by employer taxes.
Our survey permitted states to report “DK” or “Don’t Know.”
section_title: Appendix III: Employer Tax-Funded Programs’ Primary Emphasis, Expenditures and Numbers Served, in 2002
subsections: section_title: Primary emphasis
paragraphs: Applicable data not provided.
Delaware, Indiana, Michigan, and South Dakota reported that their program budgets included funds  from other sources, making it difficult to isolate expenditures from their state employer tax revenues.  While Oregon also reported that its program budget included funds from other sources, Oregon  provided us with additional data. Oregon’s expenditures included in this figure are those that were  solely funded through employer tax revenues.
Texas was unable to provide us with the number of individuals that received training services in  2002.
Idaho reported its program emphasis as “other.”
Indiana and Michigan reported expenditures that exceeded their program budgets.
section_title: Appendix IV: Coordination between Federal Workforce Programs and State Programs Funded through Employer Taxes in 2002
subsections: section_title: Workforce Investment
paragraphs: Board(s)
In addition, 22 states responded to the survey questions regarding coordination with one-stop centers  and the H1-B program, while 20 states responded to the question regarding coordination with local  workforce investment boards.
N/A signifies not applicable and is listed for Del, N.H., S.Dak., and Wyo. These are states that have a  single workforce investment board, which functions as both the state and local board.
The Welfare-to-Work program is a mandated partner of the one-stop centers. While all states that  reported coordinating with the Welfare-to-Work program also reported coordinating with a one-stop  center, not all states that reported coordinating with a one-stop center also reported coordinating with  the Welfare-to-Work program. States had the option to list multiple programs under both the  “Department of Education Employment and Training” category and the “Other Federal Employment  and Training” category. For the “Department of Education” category, states noted programs such as  Adult Education and Literacy, and Vocational Education. For the “Other Federal Employment and  Training” category, programs ranged from Veterans’ Employment and Training Service to Job Corps.  Both the “Department of Education” category and the “Other Federal Employment and Training”  category included some programs that are mandated one-stop partners.
Denotes that a state did not respond to this question.
section_title: Appendix V: Assessment Approaches Used in 2002, as Reported by States
subsections: section_title: Quarterly, annually and as contracts are completed
paragraphs: In-house program staff and contract recipient staff  In-house program staff and contract recipient staff  In-house program staff and contract recipient staff  In-house program staff, external evaluators, and  contract recipient staff  In-house program staff and contract recipient staff  Michigan’s performance assessments were conducted against agreed upon goals and objectives for  each of the program’s local areas.
New Jersey is the only state that reported it did not regularly assess its program in 2002.
section_title: Appendix VI: Indicators Used in State Assessments
section_title: Appendix VII: GAO Contacts and Staff Acknowledgments
subsections: section_title: GAO Contacts
section_title: Staff Acknowledgments
paragraphs: Irene J. Barnett and Holly C. Ciampi made significant contributions to this  report, in all aspects of the work throughout the assignment. In addition,  Debra Waterstone and Shirley Hwang contributed to the administration of  our survey of state programs and Kevin Murphy assisted in the initial  planning of the assignment. Avrum Ashery, Michele Fejfar, Alison Martin,  Corinna Nicolaou, Audrey Ruge, Daniel Schwimer, and Shana Wallace  provided key technical assistance.