Senior Community Service Employment Program: Labor Has Made Progress Implementing Older Americans Act Amendments of 2000, but Challenges Remain
Published: 2006-04-06T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: The aging of the baby boom generation and increased life expectancy pose serious challenges for our nation. Older adults often must re-enter the workforce in order to remain self-sufficient. The Senior Community Service Employment Program (SCSEP) is the only federal program that is specifically designed to assist low-income older adults by providing part-time community service jobs and training to prepare for employment. Since passage of the 2000 Older Americans Act Amendments (OAA), SCSEP has also increasingly focused on promoting economic self-sufficiency through placement in unsubsidized employment. In 2005, Congress appropriated about $439 million to serve about 100,000 older workers. Administered by the Department of Labor (Labor), SCSEP is implemented through 69 grantees, including 13 national organizations and 56 state and territorial agencies. The Chairman of the Senate Special Committee on Aging asked GAO to (1) determine what effect the OAA Amendments have had on the distribution of SCSEP funds to national and state grantees, (2) describe the progress Labor has made in implementing the enhanced performance accountability system, and (3) identify the challenges faced by national and state grantees in managing the SCSEP program.
section_title: What GAO Found
paragraphs: The 2000 OAA Amendments have had little impact on the distribution of funds between national and state grantees, with national grantees continuing to receive approximately 78 percent of the funding and states about 22 percent. However, the distribution of funding among national grantees has changed substantially as a result of Labor's 2002 open competition for the national grants portion of SCSEP funding. Labor has taken steps to establish an enhanced performance accountability system for SCSEP, but has yet to implement some features. For example, Labor introduced the new performance measures required by the OAA Amendments, but program year 2005--which ends on June 30, 2006--is the first year that grantees will be held accountable for meeting their goals. Labor has implemented an early version of a data collection system to track grantee performance, but the final Internet-based version is not yet available. Changes to the SCSEP eligibility criteria and difficulties coordinating with the Workforce Investment Act (WIA) one-stop system have posed challenges to SCSEP grantees. Labor modified some eligibility criteria to target limited program funds to individuals it believes are most in need of SCSEP services. However, grantees expressed concern that these changes had made it more difficult for them to meet their enrollment goals. Finally, GAO found that despite provisions in the OAA Amendments to strengthen connections between SCSEP and WIA, problems persist in coordinating with WIA providers and obtaining intensive and training services for older workers at one-stop centers.

section_title: Letter
paragraphs: I am pleased to be here today to discuss the Older Americans Act (OAA)  Amendments of 2000 as they relate to the Senior Community Service  Employment Program (SCSEP).   GAO has conducted several studies  related to older worker issues, and my testimony today is based on work  that you requested concerning how the OAA Amendments have affected  SCSEP.
The U.S. economy is experiencing a dramatic demographic change with  the aging of the baby boom generation (people born between 1946 and  1964), the oldest of whom are turning age 60 this year.  Older Americans  are expected to represent a growing share of the population and have a  longer life expectancy than previous generations.  Many older adults may  choose to remain in the workforce or need to continue working for  financial reasons.  Furthermore, the number of older adults living in  poverty is expected to increase significantly.   By 2008, the U.S. Census  Bureau estimates that 6.7 million persons aged 55 and older will be below  the poverty level, a 22 percent increase over the number living in poverty  in 2000.  This number is expected to jump to 9 million by 2015.
SCSEP is the only federal employment and training program targeted to  low-income older adults.  Originally authorized in 1965 by Title V of OAA,  SCSEP is administered by the Department of Labor (Labor) to promote  part-time community service activities for unemployed, low-income  individuals 55 years and older who have poor employment prospects.   Under the OAA Amendments, the program has evolved from being  primarily focused on community service to a program that increasingly  emphasizes economic self-sufficiency through unsubsidized employment.   The amendments also made other changes to SCSEP including revising the  funding distribution formula and establishing a performance  accountability system.  Furthermore, in anticipation of the upcoming  reauthorization of Title V of OAA, the administration has proposed  additional changes to SCSEP.  In fiscal year 2005, Congress appropriated  approximately $439 million for SCSEP that Labor distributed to 69  grantees: 13 national grantees (consisting of 12 national nonprofit  organizations and 1 federal agency) and 56 state and territorial agencies.   These funds support about 61,000 SCSEP positions, through which  approximately 100,000 participants are served each year. The grantees  typically place older workers in part-time community service positions,  such as nurse’s aides, teacher aides, librarians, clerical workers, and day  care assistants, so that these older workers can gain on-the-job experience  and prepare for unsubsidized employment.
My testimony today will address (1) changes in the distribution of SCSEP  funds to national and state grantees as a result of the OAA Amendments,  (2) the progress that Labor has made in implementing an enhanced  performance accountability system, and (3) the challenges that national  and state grantees face in managing SCSEP.
In summary, our work shows that the OAA Amendments have had little  effect on the distribution of funds between national and state grantees,  with the national grantees continuing to receive approximately 78 percent  of the funding and state grantees about 22 percent.  Since the amendments  took effect in 2000, SCSEP appropriations have experienced only minor  fluctuations, and correspondingly, the total number of positions  authorized for participants has remained generally constant.  However, the  distribution of funding and positions among national grantees has changed  substantially as a result of an open competition that Labor held in 2002.   Further, although the amendments were passed in 2000, Labor has yet to  fully establish a performance accountability system.  For example,  program year 2005—which ends on June 30, 2006—is the first year for  which grantees will be held accountable for their performance, and the  final Internet-based version of Labor’s data collection system is not yet  online.  Labor modified several eligibility criteria to target SCSEP’s limited  funds to individuals it believes are most in need of program services.  However, most national and state grantees in our survey expressed  concern that these changes had made it more difficult for them to meet  their enrollment goals. Finally, we found that despite provisions in the  OAA Amendments to strengthen connections between SCSEP and the  Workforce Investment Act (WIA), problems coordinating with WIA  providers and obtaining intensive and training services for older workers  at one-stop centers persist.
We based our work, in part, on a survey of the 13 national organizations  and 52 state grantees (including the District of Columbia and Puerto Rico).   We received responses from all national and state grantees.  We also  interviewed Labor officials and representatives from four national  organizations that received nearly two-thirds of the SCSEP funds allocated  to national organizations in program year 2005: AARP, Experience Works,  Mature Services, and Senior Service America.  In addition, we visited five  states—California, Florida, Idaho, Ohio, and Oregon—and interviewed  officials responsible for administering SCSEP.  We used several criteria in  selecting site visit locations, including geographic dispersion within the  United States, relative size of the state population, proportion of the state  population that is both elderly and below the poverty level, proportion of  the state population that is over the age of 55, and the amount of SCSEP  funding allocated to each state during program year 2004 (July 1, 2004, to  June 30, 2005).  We performed our work between July 2005 and March  2006 in accordance with generally accepted government auditing  standards.
subsections: section_title: Background
paragraphs: SCSEP, as authorized under the OAA Amendments, promotes part-time  opportunities in community service for unemployed low-income persons  who are at least 55 years old and have poor employment prospects. The  program is also designed to foster economic self-sufficiency by assisting  older workers in transitioning to unsubsidized employment.  Administered  by Labor for over 30 years, the program operates in every state, the  District of Columbia, Puerto Rico, Virgin Islands, American Samoa, Guam,  and the Northern Mariana Islands.  The program is administered through  grants awarded to national organizations as well as state and territorial  agencies. (See app. I for a listing of national grantees and funds and  positions awarded in program year 2005.)  In program year 2005,  approximately $439 million was appropriated to support about 61,000  SCSEP positions, through which approximately 100,000 participants are  served. (See app. II for a listing of funds and positions awarded by state in  program year 2005).
SCSEP serves unemployed persons who are 55 years or older whose  family incomes are no more than 125 percent of the federal poverty level.   Participants are placed in part-time community service assignments in a  local nonprofit organization or public-sector agency to gain on-the-job  experience and prepare for unsubsidized employment.  Program  participants receive training and work experience in a wide variety of  occupations, including nurse’s aides, teacher aides, librarians, clerical  workers, and day care assistants.  Program participants are paid the  highest federal, state, or local applicable minimum wage, or the prevailing  rate of pay for persons employed in similar occupations by the same  employer.  The OAA Amendments require that at least 75 percent of  SCSEP funds be used to subsidize participants’ wages and fringe benefits  and no more than 13.5 percent of the funds may be used for administrative  expenses.  The remaining funds may be used for other program costs such  as assessments, training, job placement assistance, and supportive  services.
The OAA Amendments were designed to make a number of changes to  SCSEP.  The amendments contained provisions to    establish unsubsidized employment as a program goal, while  maintaining the community service aspect of the program;   establish a performance accountability system that held grantees  accountable for meeting specific performance measures,  including  placement and retention of participants in unsubsidized  employment, community services provided, customer satisfaction,  and number of persons served—-particularly those with the greatest  economic and social need or those with poor employment history or  prospects, and those over age 60;   improve coordination between SCSEP and WIA; and    strengthen administrative procedures by defining administrative  and program costs and applying uniform cost principles.
In addition, the amendments revised the distribution formula by specifying  that the first $35 million in funding above the amount to maintain current  level of program year 2000 activities be allocated 75 percent to state  grantees and 25 percent to national grantees.  Any additional funds above  $35 million will be allocated evenly between state and national grantees.
section_title: OAA Amendments Have Had Minimal Impact on Funding Distribution between National and State Grantees
paragraphs: The OAA Amendments have had little effect on the distribution of funds  between national and state grantees, with the national grantees continuing  to receive approximately 78 percent of the funding and state grantees  about 22 percent.  Since the amendments took effect in 2000, the SCSEP  appropriation has experienced only minor fluctuations, and  correspondingly, the total number of positions has remained largely  constant.  However, the distribution of funding and positions among  national grantees has changed substantially.  An open competition for  national SCSEP positions held in 2002 increased the total number of  national grantees from 10 to 13 (eliminating 1 incumbent grantee and  introducing 4 new grantees) and reshuffled funding and positions among  existing grantees.  In program year 2005, national grantees operated in all  states (including the District of Columbia and Puerto Rico) except Alaska,  Delaware, and Hawaii.  Approximately two-thirds of both national and  state grantee positions are located in metropolitan areas.  However, the  percentage of positions in metropolitan areas varied widely among  national grantees.  For example, three national grantees administered  more than 90 percent of their SCSEP positions in metropolitan counties,  while two have about 40 percent of their positions in metropolitan  counties.
subsections: section_title: OAA Amendments Have Had Little Effect on the Distribution of SCSEP Funds
paragraphs: The revision of the funding formula outlined in the OAA Amendments has  had little impact on the distribution of funds between national and state  grantees.  The formula takes effect only when SCSEP funding for national  and state grantees rises above program year 2000 levels of approximately  $423 million.  Because the SCSEP appropriation has remained relatively  constant over the past 5 years, the distribution of funds between national  and state grantees has also experienced little change.  In each program  year since 2000, approximately 78 percent of the SCSEP funding for  grantees was allocated to national grantees and 22 percent was allocated  to state grantees (see fig. 1).
For program year 2005, SCSEP appropriations funded 61,047 positions— 160 fewer than were funded in program year 2000.  Slight funding increases  from program years 2002 to 2004 provided for as much as $4.6 million in  additional annual funding for national and state grantees.  Labor allotted  approximately 75 percent of this amount to state grantees and 25 percent  to national grantees in accordance with the revised distribution formula.   However, these funding increases did not markedly alter the overall  distribution between national and state grantees.
section_title: 2002 Competition Reshuffled Funds and Positions among National Grantees
paragraphs: Labor’s 2002 open competition for the national grants portion of SCSEP  funding increased the number of national grantees administering SCSEP  and substantially reshuffled positions and funding among existing  grantees.  Labor decided to conduct the competition in order to ensure  that the most qualified organizations were awarded grants, to open the  grantee community to new organizations, and to provide better services to  SCSEP participants.  The competition—the first of its kind in SCSEP’s  history—yielded 68 applications.  A three-member Labor review panel  evaluated each application and scored it according to the applicant’s plan  for program design and services, coordination and oversight, and  management structure and fiscal integrity.  Based on these scores, Labor  ranked each applicant, deemed that 13 applicants scored in a competitive  range making them eligible to receive grant awards, and allotted positions  by county to grantees on a winner-takes-all basis.  Specifically, the highest  ranked applicant received all the positions it requested, and each  subsequent applicant received all positions not previously claimed by a  higher-ranked applicant.  All 13 competitive applicants were eventually  awarded positions.  The competition produced 4 new national grantees,  increasing the total number from 10 to 13.  One incumbent grantee, the  National Urban League, was not awarded a grant to continue  administering SCSEP.  The competition also resulted in a significant  reshuffling of funds and positions among incumbent grantees.  Of the nine  incumbent national grantees that were awarded continuing grants, two  gained positions, and seven lost positions (see table 1).
Labor determines the amount of funding to be allocated to grantees based  on a “cost per authorized position” outlined in the OAA Amendments.  As a  result, following the 2002 competition, each of the 13 successful grantees  received funding approximately equal to the number of positions it was  awarded times $7,153—the pre-determined cost per authorized position.   Among incumbent grantees, two gained additional funding and seven lost  funding.  AARP Foundation gained more than $24 million in additional  funds, while Experience Works, Inc. lost $20.5 million in funding.   Altogether, the four new grantees received approximately $54 million in  SCSEP funding (see table 2).
On March 2, 2006, Labor announced an open competition for program year  2006 national grantee funding.  This announcement is consistent with  Labor’s current proposal for the reauthorization of SCSEP, which  recommends eliminating performance sanctions in favor of holding a  competition for grants every 3 years.  Using similar criteria to those used  in the 2002 competition, Labor plans to award no more than 20 grants to  national grantees, including at least 1 grant to an Indian and Native  American organization and at least 1 grant to an Asian Pacific Islander  organization.  Labor is specifically seeking organizations that are able to  foster partnerships with one-stop career centers and community colleges  and that promote private employment through high-growth job  opportunities.  In order to increase program effectiveness and achieve  economies of scale, Labor has consolidated the geographic areas over  which grantees will administer SCSEP for the upcoming program year.   When requesting positions, potential grantees must apply for at least   10 percent of a state’s allocation, or $1.6 million, whichever is greater.
Furthermore, applicants that apply for more than one county in a state  must request contiguous counties, and except in the cases of very large  counties, they must apply for all the positions in a county.
section_title: Equal Share of National and State Positions Located in Metropolitan Areas
paragraphs: For program year 2005, slightly more than two-thirds of both national and  state grantee positions are located in metropolitan areas.  National  grantees administer SCSEP in every state except Alaska, Delaware, and  Hawaii, while state grantees operate SCSEP in all 50 states, the District of  Columbia, and Puerto Rico.  Individual national grantees operate in as  many as 39 states (Experience Works, Inc.) and as few as 2 states (Mature  Services, Inc.).  The share of positions in metropolitan areas varies widely  among national grantees.  Three grantees administer more than 90 percent  of their SCSEP positions in metropolitan counties, while two grantees  have fewer than half of their positions in metropolitan counties (see   table 3).
section_title: Labor Has Yet to Fully Implement an Enhanced Performance Accountability System
paragraphs: Labor has taken steps to establish an enhanced performance  accountability system for SCSEP, but has yet to implement some features  fully.  While Labor has introduced the new performance measures that the  OAA amendments required, program year 2005—which ends on June 30,  2006—is the first year for which grantees will be held accountable for their  performance.  Labor has also implemented an early version of a data  collection system to capture performance information, but the final  version is not yet available to grantees in its intended online format.  In  addition, Labor has recently undertaken a broad assessment of SCSEP on  such issues as participant outcomes, program costs, and grantee  challenges, but has not yet issued a report.
subsections: section_title: New Performance Measures Were Recently Implemented
paragraphs: Labor has implemented new performance measures, as required by the  OAA Amendments, and will begin sanctioning grantees that demonstrate  poor performance for the current program year —2005 —which ends on  June 30, 2006.   After Labor issued final regulations for SCSEP in April  2004, it instituted practice measures for program year 2004, as grantees  transitioned to the new data collection and reporting requirements.  Labor  used the resulting performance data to help set baseline goals for grantees  to meet during program year 2005.
For program year 2005, according to Labor, four SCSEP measures will  contribute to a grantee’s overall performance assessment:    Placement: the number of participants attaining unsubsidized  employment, either full-time or part-time, for at least 30 days of the  first 90 days after exiting the program, divided by the number of  authorized SCSEP positions.
Employment Retention: the rate of retention in unsubsidized  employment 6 months after placement.
Service Level: the number of a grantee’s participants divided by the  number of the grantee’s authorized positions.
Service to Most-in-Need: the percentage of participants who are at  least 60 years old and who have at least one of several additional  barriers to employment, such as language barriers, poor  employment history, or a physical or mental disability.
Labor officials told us they plan to assess grantees on their aggregate  performance across these four SCSEP performance measures.  A grantee  satisfies its overall performance goal if it attains an average score across  the four measures of at least 80 percent of the target goals.  Thus, a  grantee could meet its performance requirements by attaining less than 80  percent of some goals but more than 80 percent of the others.  For  example, Labor’s data show that one state achieved 47 percent of its  placement goal but performed well enough on the other measures to  receive an average score well above the 80 percent threshold for  satisfactory performance.  According to Labor, grantees varied in their  ability to meet goals for individual measures during the transitional period  of program year 2004.  (See app. III for a listing of the program year 2004  results compared to the performance goals for each grantee.)  However,  Labor officials said that most grantees managed to meet the 80 percent  threshold for their overall performance goal. (See appendix IV for results  for each of the grantees.)   They also stated that, based on Labor’s  assessment of data from the first 2 quarters of the current year, most  grantees appear to be on track for meeting their performance goals for  program year 2005.
Sanctions for poor performance are similar for state and national grantees  and will begin after the first year of not meeting the 80 percent threshold  for overall performance.  If performance does not improve, sanctions will  increase in severity after the second and third consecutive years.  After the  first year of poor performance, a grantee must submit a corrective action  plan within 160 days of the end of the program year.  In addition, Labor  will provide the grantee with technical assistance to help correct the  problem.  A second consecutive year of failing to meet performance goals  will generate a competition for 25 percent of the grantee’s funds for the  following program year.  If a grantee continues to perform poorly for a  third year, another competition will result for the remaining amount of the  grantee’s funding.  Furthermore, in addition to meeting their own goals,  national grantees must meet the performance goals of each state in which  they administer the program.  If they fail to meet the state’s goals, Labor  will require a corrective action plan after the first year of poor  performance and may take other appropriate actions, including  transferring responsibility for the project to other grantees.  National or  state grantees that fall short of one performance target but otherwise meet  their aggregate goals will not be subject to sanction; Labor will instead  provide them with technical assistance related to that performance issue.
In addition, Labor requires grantees to report on the customer satisfaction  of participants, host agencies, and employers by surveying each group.   While poor performance on this measure will result in technical assistance  rather than sanctions, Labor officials told us that to date customer  satisfaction has been very high.  Grantees must also report the number of  community service hours participants contribute, but Labor officials told  us that they have struggled to create a measurable indicator for  community service and do not plan to sanction performance in this area.
SCSEP grantees must also collect data to support several common  measures as part of a governmentwide initiative to provide comparable  performance information across federal programs with similar goals and  operations.  For job training and employment programs serving adults, the  three common measures include entered employment, retention, and  average earnings.  Thus, between the SCSEP measures and the common  measures, grantees must collect and report on data for nine different  performance measures. The SCSEP placement and retention measures  overlap somewhat with the common measures for entered employment  and retention, although the SCSEP measures, as defined by the OAA  Amendments, are computed differently. (See table 4.)  Specifically, the  SCSEP placement measure is calculated relative to each grantee’s number  of authorized positions, while the common measure for entered  employment is based on the number of participants who exit the program.   Likewise, the SCSEP retention measure evaluates employment 6 months  after placement, while the common measure for retention assesses a  participant’s employment in both the second and third quarters after exit.
Grantees are not subject to sanction for performance on the common  measures, which the Office of Management and Budget will use to  evaluate the overall effectiveness of SCSEP.  However, the  administration’s legislative proposal for reauthorizing SCSEP supports  using the common measures.  Additional measures, such as community  services provided, could be tracked as secondary outcomes.
section_title: New Data Collection System Is in Interim Stage
paragraphs: Labor has designed a data collection system to capture performance  information, but has not yet implemented the Internet-based version.  The  agency is in the process of moving to an Internet-based system that  incorporates the new performance data required under the OAA  Amendments.  In order to capture baseline performance data in program  year 2004, Labor rolled out an early, non-Internet version of its data  collection system in time to receive data from the first quarter of that  program year.  Although it collects the required performance data, this  interim system is limited in its usefulness for helping to manage the  program.  For example, grantees are unable to access their quarterly  progress reports directly and must wait for Labor to process and send the  data to them.  Likewise, grantees receive reports that notify them of errors  in their data submissions, but the reports do not identify which records are  problematic.  Moreover, since the initial roll-out, Labor has incorporated  several modifications to the system and required data reporting elements.   Currently, grantees either use the early version of Labor’s new system or  continue to use their own databases while they wait for the new Internet- based data collection system to undergo testing and be rolled out.  If  procurement and technical processes go as planned, Labor hopes to fully  implement the Internet-based data collection system by mid-May 2006.
Labor has provided grantees with guidance and technical assistance on  implementing the new data collection system.  In addition to issuing  written guidance, Labor and its contractors have conducted  demonstrations and offer ongoing direct assistance, including an Internet- based forum for grantee questions on implementing the new system.
section_title: Labor Has Initiated an Assessment of SCSEP
paragraphs: Labor recently undertook an assessment of SCSEP, which it has yet to  complete.  In 2004, Labor contracted with DAH Consulting, Inc., and Social  Policy Research to conduct an assessment of SCSEP.  According to Labor,  in addition to assessing the ability of grantees to find useful community  service assignments and increase placements in unsubsidized  employment, the assessment was supposed to gather information on  participant training, the level of coordination with the one-stop system,  program costs, outcomes, and other challenges faced by grantees.   However, this study was not intended to be a true impact evaluation, but  rather a more general review of SCSEP program operations. As of March  2006, Labor officials had received a draft of the study but sent it back to  DAH Consulting with requested changes.  However, because Labor had  not provided us with preliminary results from the review, as of the date of  this testimony we are unable to describe what the assessment found, and  cannot provide an evaluation of the methodology used to generate the  report.
section_title: SCSEP Eligibility and Coordination with WIA Are among the Major Challenges Grantees Face
paragraphs: Changes to SCSEP eligibility criteria and coordination difficulties with  WIA and the one-stop system pose major challenges to SCSEP grantees in  managing the program.  Although the OAA Amendments did not contain  provisions changing the eligibility criteria for SCSEP, Labor modified  some eligibility criteria to target SCSEP’s limited funds to individuals it  believes are most in need of SCSEP’s intensive services. For example,  Labor modified the types of income it uses to determine an individual’s  eligibility for the program to include Social Security Disability Insurance  (SSDI) and unemployment compensation, so that only those with the  lowest incomes are targeted.  In addition, Labor changed its previous  policy of allowing low-income older adults who work part-time to enroll in  SCSEP, and revised the time period for which income is calculated. Most  national and state grantees told us that these changes decreased the pool  of eligible individuals, and were concerned that enrollments would decline  as a result.  Furthermore, the majority of the 13 national and 52 state  grantees surveyed also identified coordinating with WIA providers,  obtaining intensive and training services at one-stop centers, implementing  Labor’s new data collection system, and meeting new performance  measures as being major challenges to managing the SCSEP program.
subsections: section_title: Labor Changed Eligibility Criteria to More Closely Target Program
paragraphs: Labor estimated that SCSEP’s funding is only sufficient to serve less than  one percent of the eligible population and, as a result, changed the  eligibility criteria for SCSEP participation to target the program to those  older adults it believes are most in need of program services. Labor issued  guidance in April 2004 and again in January 2005 to reflect and clarify  policy changes to SCSEP eligibility criteria that were previously  established in guidance issued in December 1995.  Major eligibility policy  changes include what is to be counted as income, employment status at  time of application, and the time period to be used for the purposes of  calculating income.  (See table 5.)
While, the OAA Amendments do not define what constitutes income,  Labor decided to use the U.S. Census Bureau’s Current Population Survey  (CPS) as the standard for determining income eligibility for SCSEP.  In the  preamble to its April 2004 regulations, Labor set forth its intent to use the  income categories collected in the CPS as the SCSEP definition of income  for determining program eligibility.  After receiving feedback from  grantees, Labor decided to exclude certain forms of income.  For example,  Labor excluded disability benefits—except SSDI— as well as  supplementary security income, workers’ compensation, public assistance,  child support, and several other sources of income. Most national and  state grantees we surveyed expressed concern with the revised income  criteria.  For example, one national grantee told us that including SSDI is  especially onerous because individuals receiving SSDI are among the  hardest to serve.  A state grantee stated that SSDI should not be included  in determining program eligibility because other disability benefits were  not included in calculating income eligibility.  Another state grantee noted  that social security is the only source of income for many older adults and  including it provides a misleading picture of an individual’s actual income.
The administration’s proposal for the upcoming reauthorization of Title V  of OAA contains provisions for standardizing the income threshold.  Labor  believes that reauthorization provides an opportunity for Congress to align  SCSEP income eligibility criteria with those used by Labor and other  federal programs that are means-tested.  Labor noted that more uniformity  with respect to the types of income used to determine program eligibility,  such as Social Security benefits versus earned income, would increase  public confidence that these programs were being administered in a  consistent and equitable manner.
Most national and state grantees surveyed were also concerned with  Labor’s policy change requiring applicants to be unemployed at time of  application.  Labor officials stated that the Office of the Solicitor took a  strict interpretation of the OAA Amendments and determined that  applicants must be unemployed at the time of application to be eligible for  SCSEP.  Labor officials noted that this interpretation was consistent with  the department’s philosophy that SCSEP should be targeted to those most  in need of the program’s intensive services.  Prior to the OAA  Amendments, Labor permitted applicants who held part-time jobs and met  other eligibility criteria to be eligible for SCSEP services.  The OAA  amendments retained the language contained in the statement of purpose  from the authorizing legislation that the program was to provide services  to unemployed low income adults 55 years and older.  The amendments  further defined eligible individuals as those individuals who are 55 years  and older and have income not more than 125 percent of the poverty  guidelines, but did not refer to employment status.  Grantees told us that  the requirement that applicants be unemployed prevented some low- income older workers from receiving SCSEP services.  For example, a  state grantee noted that older workers who may work only 4 hours per  week have very low incomes but are not eligible for program services  because they are not unemployed.  Another state grantee noted that many  older workers who are not eligible for social security benefits often work  part-time, and thus would not be eligible under the employment test, but  would otherwise still meet the income eligibility criteria.
Many grantees were also concerned that Labor revised the period on  which income is calculated. Prior to Labor’s regulations issued in 2004,  grantees had the option of calculating income using either the includable  income for the 12 months preceding application or annualizing the  includable income for the 6 months preceding application, that is doubling  the 6-month income to calculate an annual income.  Labor now requires  grantees to annualize an applicant’s income using the 6 months prior to  application. Labor officials told us that changing the period on which  income is calculated was intended to simplify the process and to reflect  the most current income information.  However, a national grantee and  two state grantees noted in their survey responses that annualizing 6  months of income could distort income for those who only had earnings  during that 6-month period.  For example, a state grantee noted that many  older individuals in their state work during the planting and harvesting  seasons but are unemployed for the remainder of the year.   They noted  that doubling the individual’s 6-month income made many of these  seasonal workers ineligible for SCSEP.  Conversely, doubling 6-month  earnings to calculate annual income can have the unintended consequence  of including some individuals who would not otherwise be eligible for the  program if a 12-month period was applied.
section_title: Other Challenges That Grantees Face
paragraphs: National and state grantees surveyed also identified other issues that  presented major challenges to managing the SCSEP program.  The  majority of both national and state grantees identified several issues in the  survey as being great or very great challenges, in particular coordinating  SCSEP activities with WIA services, obtaining intensive services and  training at one-stop centers, implementing Labor’s new data collection  system, and meeting performance measures (see fig. 2).
Although the OAA amendments sought to strengthen coordination  between SCSEP and WIA, national and state grantees surveyed identified  the coordination of SCSEP activities with WIA services and obtaining  intensive services and training at one-stops as major challenges.   For  example, several national and state grantees responded that many WIA  providers are hesitant to provide intensive services or training to SCSEP  participants because WIA providers are concerned that enrolling older  adults would negatively affect their performance measures.  Older adults  who receive intensive services or training from WIA providers are  included in the computation of WIA performance measures.  Another state  grantee stated that while coordination with one-stops for core services is  very good, access to training is very difficult.  We heard a similar theme  among states we visited.  For example, one state grantee we visited said  that WIA is so performance-driven that few SCSEP participants are able to  access intensive and training services under WIA.
The reported lack of coordination between SCSEP and WIA is especially  relevant in light of the administration’s proposal to increase the age of  SCSEP eligibility from 55 to 65, with limited exceptions for those between  the ages of 55 and 64.  Labor believes that WIA, not SCSEP, should be the  primary program for older adults age 55 to 64.  However, we have  previously reported that WIA has built in disincentives that discourage the  providing of in-depth services, such as training, to older adults.  We noted  that the Bureau of Labor Statistics and the Census Bureau data suggest  that older workers are 50 percent more likely  to work part-time and less  likely to become re-employed after being laid off than younger workers.   These characteristics may negatively affect outcomes on certain WIA  performance measures, and, as a result, create a barrier to enrolling older  workers into WIA intensive services and training.
While most of the 13 national and 52 state grantees surveyed also reported  challenges with Labor’s new data collection system, they noted that the  agency provided helpful assistance with system implementation.  Several  national and state grantees stated that implementation of the data system  was both time and labor-intensive.   In particular, one state grantee told us  that Labor rolled out the data collection system prematurely, resulting in a  loss of productivity at the grantee and subgrantee level.  Despite these  concerns, most grantees indicated that they received training or technical  assistance for the system from Labor or its contractors.  Moreover, while  several national and state grantees provided positive comments about  Labor’s assistance, with respect to staff responsiveness, others were less  than satisfied and indicated the need for more assistance.
All of the national grantees and most of the state grantees that cited  meeting performance measures as a great or very great challenge in the  survey indicated that the program eligibility changes had the greatest  effect on the ability to meet the performance measure dealing with SCSEP  service level. A number of state grantees mentioned that the greater  difficulty in recruiting SCSEP participants translated into difficulty  meeting the service level performance measure.  Another of the state  grantees that we visited said that the service level measure would present  the greatest challenge because the income guidelines were too restrictive.   According to Labor data, 7 of the 13 national grantees and 21 of the 52  state grantees did not meet their service level goals for program year 2004.   Labor officials noted that some of the grantees who were concerned with  low enrollments may not perform sufficient outreach or marketing.
section_title: Concluding Observations
paragraphs: The aging of the baby boom generation presents serious challenges for the  nation’s workforce investment system.  The expected increase in the  number of low-income older adults means that, more and more, older  Americans will have to continue working in order to have sufficient  income.  Older adults often have difficulty re-entering the labor force and  may rely on federal employment and training programs to help them find  employment, with SCSEP being the only federal employment and training  program targeted exclusively to low-income older adults. While Labor has  made progress implementing the OAA Amendments—particularly in terms  of increasing the program’s focus on unsubsidized employment— challenges remain. More specifically, while Labor has taken steps to  establish an enhanced performance accountability system, as of March  2006 the system has still not been fully implemented. The delay in  implementing this system means that program year 2005 is the first year  that grantees will be held accountable for poor performance.  In this  respect, given the upcoming reauthorization of the OAA, only limited data  will be available to assess SCSEP performance.  In addition, while Labor’s  changes to the eligibility criteria seem to have resulted in SCSEP funds  being more targeted to those it believes are most in need of program  services, one aspect of how this targeting was operationalized may have  produced mixed outcomes. In particular, the requirement for grantees to  double an applicant’s income from the most recent 6-month period could  have the unintended result of excluding some individuals with very low  incomes from the program while including others with much higher  incomes, depending on when the work was performed. Those who are  excluded from participation in SCSEP may turn to other employment and  training programs such as WIA.  However, given the problems older adults  often experience in obtaining in-depth services such as training, it is  unclear whether the existing workforce system is able to provide the type  and level of services this population may need.  Thus, while the OAA  amendments were designed to enhance employment and training  opportunities for older adults, we believe that Labor has not done enough  to address unresolved issues concerning coordination between SCSEP and  WIA, and helping older adults obtain intensive and training services at one- stop centers.
Mr. Chairman, this completes my prepared statement.  I would be happy to  respond to any questions you or other Members of the Committee may  have at this time.
section_title: GAO Contact and Acknowledgments
paragraphs: For further information regarding this testimony, please contact me at  (202) 512-7215.  Jeremy Cox, Wayne Sylvia, Rebecca Woiwode, Drew  Lindsey, and Stuart Kaufman were key contributors to this testimony.
section_title: Appendix III: Summary of SCSEP Grantee Performance Data for Benchmark Year, Program Year 2004
paragraphs: The following baseline performance data for SCSEP grantees are from  benchmark program year 2004 (July 1, 2004, to June 30, 2005).  According  to the Department of Labor, four SCSEP measures will contribute to a  grantee’s overall performance in program year 2005, the first year for  which grantees will be held accountable for their performance.
The following measures are used:    Placement: the number of participants attaining unsubsidized  employment, either full- or part-time, for at least 30 days of the first  90 days after exiting the program, divided by the number of  authorized SCSEP positions.
Employment Retention: the rate of retention in unsubsidized  employment 6 months after placement.
Service Level: the number of a grantee’s participants divided by the  number of the grantee’s authorized positions.
Service to Most-in-Need: the percentage of participants who are at  least 60 years old and who have at least one of several additional  barriers to employment, such as language barriers, poor  employment history, or a physical or mental disability.
These figures were provided by the Department of Labor and are included  in this testimony for contextual purposes only.  GAO has not verified the  accuracy or reliability of these data.
section_title: Appendix IV: Aggregate SCSEP Grantee Performance for Benchmark Year, Program Year 2004
paragraphs: These figures were provided by the Department of Labor and are included  in this testimony for contextual purposes only.  GAO has not verified the  accuracy or reliability of these data.
section_title: Related GAO Products
paragraphs: Older Workers: Labor Can Help Employers and Employees Plan Better  for the Future. GAO-06-80. Washington, D.C.: December 5, 2005.
Workforce Investment Act: Labor and States Have Taken Actions to  Improve Data Quality, but Additional Steps Are Needed.  GAO-06-82.   Washington, D.C.: November 14, 2005.
Redefining Retirement: Options for Older Americans. GAO-05-620T.  Washington, D.C.: April 27, 2005.
Older Workers: Policies of Other Nations to Increase Labor Force  Participation. GAO-03-307. Washington, D.C.: February 13, 2003.
Older Workers: Employment Assistance Focuses on Subsidized Jobs and  Job Search, but Revised Performance Measures Could Improve Access to  Other Services. GAO-03-350.  Washington, D.C.: January 24, 2003.
Older Workers: Demographic Trends Pose Challenges for Employers and  Workers. GAO-02-85. Washington, D.C.: November 16, 2001.
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