Workforce Training: Employed Worker Programs Focus on Business Needs, but Revised Performance Measures Could Improve Access for Some Workers
Published: 2003-02-14T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: Although training for employed workers is largely the responsibility of employers and individuals, the Workforce Investment Act (WIA) allowed state and local entities to use federal funds for training employed workers. Similarly, welfare reform legislation created Temporary Assistance for Needy Families (TANF) block grants and gave states greater flexibility to design training services for TANF clients to help them obtain and retain jobs. To better understand how the training needs of employed workers, including low-wage workers, is publicly supported, GAO was asked to determine (1) the extent to which local areas and states provide assistance to train employed workers, including funding training; (2) the focus of such training efforts and the kind of training provided; and (3) when targeting training to low-wage workers, the approaches state and local officials identified to address challenges in training this population.
section_title: What GAO Found
paragraphs: Nationwide, two-thirds of the 470 local workforce boards responding to our survey provided assistance to train employed workers, such as partnering with employers to develop training proposals or funding training. Nearly 40 percent specifically budgeted or spent funds on training these workers. The number of boards that reported funding training for employed workers varied by state, but most states had at least one workforce board that targeted funds on such training. At the state level, all 16 states that GAO contacted also funded training for employed workers. These states and local workforce boards reported funding training that addressed specific business and economic needs. Although many types of training for employed workers were funded, most often occupational training to upgrade skills, such as learning new computer applications, and basic skills training, such as in English and math, were emphasized and community or technical colleges were most frequently used to provide these services. In targeting training specifically for low-wage workers, state and local officials identified approaches to challenges that hindered individuals' and employers' participation in training. Officials developed approaches to address some of the personal issues that low-wage workers face that made participating in training difficult. They also developed ways to gain support from employers who were reluctant to participate in low-wage worker training, such as by partnering with employers to develop career paths that help retain employees within companies. However, officials reported that challenges to implementing successful training still exist. For example, they explained that the WIA performance measure that tracks the change in adult earnings after 6 months could limit training opportunities for employed workers, including low-wage workers. The wage gain for employed workers would not likely be as great as that for unemployed job seekers, and this might provide a disincentive to enrolling employed workers into training because their wage gain may negatively affect program performance.

section_title: Letter
paragraphs: Technological advances continue to transform the U.S. workforce and  economy. To keep pace, workers must periodically improve their skills,  and, as a result, training for employed workers has become an essential  part of the new workplace. In fact, according to data from the U.S. Bureau  of Labor Statistics, for almost 70 percent of all occupations, work-related  training is the primary source of education or training. Such training can  enable employed workers to advance in their jobs, opening up entry-level  positions for others. Furthermore, low-wage workers who receive training  can achieve wage gains leading to self-sufficiency—a goal of both welfare  reform and the Workforce Investment Act (WIA).
When the Congress passed WIA in 1998, it allowed state and local  governments to use federal funds for training employed workers, instead  of primarily funding services designed to help the unemployed. Similarly,  welfare reform legislation in 1996 created Temporary Assistance for Needy  Families block grants (TANF) that sought to move welfare recipients into  jobs and gave states greater flexibility to design training services— including postemployment training—for TANF clients. Little is known,  however, about the extent to which state and local governments are  funding training for employed workers because options to train these  workers under WIA and TANF are relatively new.
To better understand how states and local areas are training employed  workers, including low-wage workers, you requested that we determine  (1) the extent to which local areas and states provide assistance to train  employed workers, including funding training; (2) the focus of such  training efforts and the kind of training provided; and (3) when targeting  training to low-wage workers, the approaches state and local officials  identified to address challenges in training this population.
To respond to these questions, we obtained a national perspective on local  efforts to specifically fund training for employed workers using a mail  survey to all 595 local workforce investment boards that were created  under WIA to establish local workforce development policies. We received  responses from 79 percent of the workforce boards surveyed. To  determine how states provided assistance for training employed workers,  including low-wage workers, we conducted telephone interviews with  officials in 16 states who were responsible for workforce development,  economic development, and TANF funds used for education and training.  We selected these states because, between 1998 and 2001, most of them  had used federal funds, such as demonstration grants, for training  employed workers. In obtaining information from state officials and local  workforce investment boards, we focused on program years 2000 and  2001. To obtain more in-depth information about the approaches state and  local officials use to address challenges in providing training specifically  for low-wage workers, we visited local areas in four of the states—Florida,  Texas, Oregon, and Minnesota; these were chosen from the states whose  officials we interviewed by telephone. We selected these states for site  visits largely because experts and others had identified them as having  specific efforts for training employed workers, especially initiatives to help  low-wage workers retain employment and advance in their jobs. We also  discussed efforts to train employed workers with officials from the  Departments of Labor, Health and Human Services (HHS), and Education,  and representatives of associations such as the National Governors’  Association, National Association of Workforce Boards, and the U.S.  Chamber of Commerce. We conducted our work from October   2001 through December 2002 in accordance with generally accepted  government auditing standards. For further information on our scope and  methodology, see appendix I.
subsections: section_title: Background
paragraphs: Although training for employed workers is largely the responsibility of  employers and individuals, publicly funded training seeks to fill potential  gaps in workers’ skills. In recent years, the federal government’s role in  training employed workers has changed. In 1998, WIA replaced the Job  Training Partnership Act after 16 years and, in doing so, made significant  changes to the nation’s workforce development approach. Before  implementation of WIA, federal employment and training funds were  primarily focused on helping the unemployed find jobs; the WIA legislation  allowed state and local entities to use federal funds for training employed  workers. TANF block grants to states also allowed more flexibility to  states in serving low-wage workers and, like WIA funds, federal funding  authorized under TANF can now be used for training employed workers,  including low-wage workers.
subsections: section_title: WIA Funding for Training Employed Workers
paragraphs: WIA funds provide services to adults, youth, and dislocated workers and  are allocated to states according to a formula. States must allocate at least  85 percent of adult and youth funds to local workforce areas and at least  60 percent of dislocated worker funds to local workforce areas. For  training employed workers, the WIA funds used are from those  appropriated to provide services to all adults as well as dislocated  workers, funded at about $2.5 billion for program year 2001. WIA also  permits states to set aside up to 15 percent of WIA funds allocated for  adults, youth, and dislocated workers to their states to support a variety of  statewide workforce investment activities that can include implementing  innovative employed worker programs. These funds can also be spent for  providing assistance in the establishment and operation of one-stop  centers, developing or operating state or local management information  systems, and disseminating lists of organizations that can provide training.  In a previous GAO report, we reported that several states used these state  set-aside funds specifically for implementing employed worker training.
WIA also required that all states and localities offer most employment and  training services to the public through the one-stop system—about   17 programs funded through four federal agencies provide services  through this system. For this system, WIA created three sequential levels  of service—core, intensive, and training. The initial core services, such as  job search assistance and preliminary employment counseling and  assessment, are available to all adults and WIA imposes no income  eligibility requirements for anyone receiving these core services. Intensive  services, such as case management and assistance in developing an  individual employment plan, and training require enrollment in WIA and  generally are provided to persons judged to need more assistance. In order  to move from the core level to the intensive level, an individual must be  unable to obtain or retain a job that pays enough to allow the person to be  self-sufficient, a level that is determined by either state or local workforce  boards. In addition, to move from the intensive level to the training level,  the individual must be unable to obtain other grant assistance, such as  Department of Education grants, for such training services. Under WIA,  states are encouraged to involve other agencies besides workforce  development—including the agencies responsible for economic  development and the Department of Health and Human Services’ TANF  program—in the planning and delivery of services in the one-stop center  system.
section_title: WIA Performance Measures
paragraphs: WIA performance measures are designed to indicate how well program  participants are being served by holding states and local areas accountable  for such outcomes as job placement, employment retention, and earnings  change. WIA requires the Department of Labor and states to negotiate  expected performance levels for each measure. States, in turn, must  negotiate performance levels with each local area. The law requires that  these negotiations take into account such factors as differences in  economic conditions, participant characteristics, and services provided.  WIA holds states accountable for achieving their performance levels by  tying those levels to financial sanctions and incentive funding. States  meeting or exceeding their measures may be eligible to receive incentive  grants that generally range from $750,000 to $3 million. States failing to  meet their expected performance measures may suffer financial sanctions.  If a state fails to meet its performance levels for 1 year, Labor provides  technical assistance, if requested. If a state fails to meet its performance  levels for 2 consecutive years, it may be subject to up to a 5 percent  reduction in its annual WIA grant.
section_title: TANF Funding for Training Employed Workers
paragraphs: In fiscal year 2000—the latest for which data are available—states  reported spending $121.6 million in federal TANF funds specifically for  education and training. Prior to WIA, welfare reform legislation created  the TANF block grant, which provided flexibility to states to focus on  helping needy adults with children find and retain employment. The TANF  block grant is a fixed amount block grant of approximately $16.7 billion  annually. Although the TANF program was not required to be part of WIA’s  one-stop system, states and localities have the option to include TANF  programs. As we have previously reported, many are working to bring  together their TANF and WIA services. The TANF block grants allow  states the flexibility to decide how to use their funds—for example, states  may decide eligibility requirements for recipients, how to allocate funds to  a variety of services, and what types of assistance to provide. Work-related  activities that can be funded under TANF encompass a broad range of  activities including subsidized work, community service programs, work  readiness and job search efforts, as well as education and training  activities such as on-the-job training, vocational education, and job skills  training related to employment.
TANF funds available to states can be used for both pre- and  postemployment services. Because of the increased emphasis on work  resulting from welfare reform and time limits for receiving cash  assistance, state offices responsible for TANF funds may focus largely on  helping their clients address and solve problems that interfere with  employment, such as finding reliable transportation and affordable child  care, especially for those in low-paying jobs.
section_title: Other Federal Funds Available for Training Employed Workers
paragraphs: In recent years, several federal demonstration or competitive grants were  available for training employed workers. For example, the Department of  Labor’s Welfare-to-Work state and competitive grants were authorized by  the Congress in 1997 to focus on moving the hardest-to-employ welfare  recipients and noncustodial parents of children on welfare to work and  economic self-sufficiency. Overall, welfare-to-work program services were  intended to help individuals get and keep unsubsidized employment.  Allowable activities included on-the-job training, postemployment services  financed through vouchers or contracts, and job retention and support  services. In addition, shortly after WIA was enacted, Labor gave all states  an opportunity to apply for $50,000 planning grants for employed worker  training. States were instructed to develop policies and program  infrastructures for training employed workers and to indicate their  available resources, anticipated needs, and plans for measuring success.  The Secretary of Labor also awarded larger, 2-year competitive  demonstration grants, operating from July 1, 1999, to June 20, 2001, for  training employed workers.
In addition, HHS is supporting the Employment Retention and  Advancement (ERA) study of programs that promote stable employment  and career progression for welfare recipients and low-income workers. In  1998, for the planning phase of this project, HHS awarded 13 planning  grants to states to develop innovative strategies. HHS has contracted with  the Manpower Demonstration Research Corporation to evaluate 15 ERA  projects in eight states, comparing the outcomes of those who received  services with a control group that did not.
About the same time as the enactment of WIA, the Congress passed the  American Competitiveness and Workforce Improvement Act of 1998,  which authorized some funding for technical skills training grants as part  of an effort to increase the skills of American workers. This legislation  raised limits on the number of high-skilled workers entering the United  States with temporary work visas, imposing a $500 fee on employers— later raised to $1,000—for each foreign worker for whom they applied.  Most of the money collected is to be spent on training that improves the  skills of U.S. workers. Labor awards the skill grants to local workforce  investment boards, thereby linking the skill grant program with the  workforce system. The workforce boards may use the funds to provide  training to both employed and unemployed individuals. In a previous GAO  report on these grants, we reported that, for grantees that collected  participant employment data (39 of 43 grantees), approximately three- fourths of the skills training grant participants are employed workers  upgrading their skills.
section_title: State Funds for Training Employed Workers
paragraphs: In addition to being able to use WIA state set-aside funds for different  activities including training employed workers, states can authorize funds  from other available sources, such as state general revenue funds or funds  related to unemployment insurance trust funds. States can also fund such  training in conjunction with other federal funding grants, such as the  Department of Housing and Urban Development’s Community  Development Block Grant. This grant can be used for economic  development activities that expand job and business opportunities for  lower-income persons and neighborhoods. These state training programs  serve primarily to help businesses address a variety of issues including  skill development, competitiveness, economic development, and  technological changes.
States can fund training for employed workers through various offices.  Workforce development offices have historically focused on training for  unemployed and economically disadvantaged individuals, while economic  development offices have typically focused on helping employers foster  economic growth for states. Economic development offices may also  provide employment and training opportunities to local communities,  generally by working with employers to meet skill shortages and long-term  needs for qualified workers. States have more often subsidized training  tailored for businesses through their economic development offices,  according to reports published by the National Governors’ Association.
section_title: Most Local Workforce Boards, and All States Contacted, Provided Assistance for Training Employed Workers
paragraphs: Most of the local workforce boards reported that they provided assistance  to train employed workers, including funding training, as did all 16 states  that we contacted. Two-thirds of the workforce boards responding to our  survey provided assistance to train employed workers in a variety of ways,  and nearly 40 percent of the workforce boards specifically targeted funds  on training for these workers. Furthermore, a greater percentage of  workforce boards reported funding employed worker training in program  year 2001 than in program year 2000. The 16 states we contacted all funded  training for employed workers and most of these states funded and  coordinated this training from two or more offices. Few states and local  workforce boards were able to provide information on the number of low- wage workers who participated in training because many did not  categorize training participants by wage or employment status. Generally,  local areas and states funded training for employed workers with various  federal, state, local, or other resources, although WIA and other federal  funds were the most common sources of funding for this training.
subsections: section_title: Most Local Workforce Boards Supported Training for Employed Workers
paragraphs: Two-thirds of the local workforce boards reported performing tasks that  facilitated the provision of employed worker training, such as partnering  with employers to develop training proposals and providing individual  services to employed workers. For example, one workforce board helped  a local manufacturer obtain a state grant to retrain its employees through a  project to upgrade skills. Another workforce board helped a local  company by arranging English as a Second Language (ESL) classes for its  employees through a community college. Other workforce boards helped  employed workers establish individual training accounts with eligible  training providers. However, some workforce boards responded that they  did not specifically target training for employed workers because their  overall funds were so limited that such training was not a priority. Several  respondents explained that their clients were served based on need and  that individuals with jobs were not a priority for services because of the  sizeable unemployed population served by the workforce boards.
Nearly 40 percent of the local workforce boards responding to our survey  specifically targeted funds for employed worker training. The number of  boards that reported budgeting or spending funds on such training in  program years 2000 or 2001 varied by state. (See fig. 1.) Most states had at  least one workforce board that targeted funds for such training.  Furthermore, a greater percentage of workforce boards reported funding  such training in program year 2001 than in the previous year. Of all the  workforce boards responding to our survey, 22 percent reported spending  funds specifically for training employed workers in 2000 and 31 percent  reported spending funds on training these workers in 2001. When they  funded training for employed workers, local workforce boards reported  doing so in a variety of ways. For example, in cooperation with the  economic development office, one workforce board in West Virginia  worked with local businesses to identify and fund training programs to  meet their business needs. At a workforce board we visited in Texas,  officials received a competitive state grant to fund employed worker  training to meet critical statewide industry needs in health care, advanced  technology, and teaching.
Some local workforce boards that had not specifically targeted training for  employed workers were planning to become involved in such training or  had begun discussions about developing policies for this type of training.  For example, a workforce official in California cited plans to use   $95,000 from a federal grant to train employed workers in information  technology. Another workforce board, in Minnesota, planned to open a  training center for employed workers that would focus on business needs  within the local community, such as health care, and provide training  through a local community college.
section_title: States Funded Training for Employed Workers, Usually through Two or More Offices
paragraphs: All of the 16 states we contacted funded training for employed workers. In  most of the 16 states, training for employed workers was not limited to the  efforts of a single state office, but was funded by two or more state offices  with training responsibilities. In fact, in 8 states, all three offices we  contacted funded training for employed workers. In addition to offices  responsible for workforce development, economic development, and  TANF funds used for education and training, state officials also identified  education departments—including those of higher education—within their  states as important funding sources for training employed workers. In  New York, for example, training funds were spread across about 20 state  agencies, according to one state official.
When more than one office within a state funded training for employed  workers, most state offices reported coordinating their training efforts  both formally and informally. Formal coordination methods that state  officials cited included workgroups and advisory boards (15 states),  memoranda of understanding or mutual referral agreements between  offices (12 states), or coordinated planning (12 states). For example,  Indiana’s economic development office noted that it had formal linkages  with the workforce office and that they collaborated on a lifelong learning  project. Offices in 9 of the 16 states also cited other means of  coordination, such as having common performance measures. For  example, Oregon’s workforce development office reported that state  agencies were held to a set of statewide performance measures. In  addition to these formal methods of coordination, all states cited informal  information sharing as a key means of coordination among offices within  their state. For example, an economic development official in one state  said he used his telephone speed dial to contact his workforce  development colleague, and a workforce development official in another  state told us she had frequent working lunches with the state official  responsible for TANF funds used for education and training.
In addition, in a few states, offices jointly administered training programs  within their states. In New York, for example, workforce development and  economic development offices comanaged a high-skill training grant  program for new and employed workers using $34 million in state general  revenue funds over 3 years. For this training program, begun in July   2001, both offices reviewed training proposals, and the workforce  department created contracts and reimbursed companies for part of the  training costs. Similarly, in Pennsylvania, five departments—Labor and  Industry, Public Welfare, Community and Economic Development,  Education, and Aging—jointly administered an industry-specific training  grant initiative that primarily funded training for low-wage health care  workers. This joint effort represented a new approach for Pennsylvania,  because previously the economic development office was responsible for  training that was tailored, or customized, to employers. Under this joint  program, a state committee with representatives from each of the five  departments reviewed grant proposals and each agency funded a portion  of approved grants.
Finally, several states had reorganized their workforce responsibilities and  funding, either by consolidating workforce development and economic  development responsibilities or combining responsibilities for WIA and  TANF funds. For example, Montana and West Virginia transferred WIA  responsibilities and funding from the workforce office to the economic  development office. According to state officials, this approach was  intended to better align and integrate workforce and economic  development goals for the state. In Texas, the workforce commission— which was created in 1995 to consolidate 10 agencies and 28 programs— was responsible for WIA and TANF block grants, among others. In Florida,  a public-private partnership, governed by the state’s workforce board,  became responsible in October 2000 for all workforce programs and funds  in the state, including WIA, TANF, and Welfare-to-Work grant funds; this  shift was intended to create a better link between workforce systems and  businesses in the state.
Few state officials or local workforce boards were able to report the  number of low-wage workers who participated in training, for various  reasons. For example, some officials told us they did not categorize  training participants by wage. Other officials reported that, although they  targeted low-wage workers for training, they did not categorize training  participants by employment status. Although states we contacted could  not always provide us with the number of low-wage workers participating  in training, 13 of 16 states we contacted reported that they funded training  targeted to low-wage workers. Additionally, when WIA funds are limited,  states and local areas must give priority for adult intensive and training  services to recipients of public assistance and other low-income  individuals.
section_title: WIA and Other Federal Funds Were the Most Common Sources of Funding for Training Employed Workers
paragraphs: Local workforce boards reported that WIA and other federal funds were  the most common source of funds used to support employed worker  training. Federal funding for these training efforts included WIA funding— both local and the state set-aside portion—TANF funds, and local Welfare- to-Work funds. (See fig. 2.) In addition, local boards described various  other important funding sources such as Labor’s demonstration grants for  training employed workers and the federal skills training grants intended  to train workers in high-demand occupations.
For those local workforce boards spending funds specifically for training  employed workers, their allocation of local WIA funds most often paid for  these training efforts, and more reported using local WIA funds in program  year 2001 than in the previous year. However, while nearly all workforce  boards responding to our survey were aware that WIA allowed funds to be  used for training employed workers, some reported that there were too  many priorities competing for the WIA funds. Two local officials also  noted that the federal funds allocated to states under WIA—the state set- aside funds—in their states were awarded competitively, which made it  difficult to consistently serve employed workers because they were  uncertain that they would receive these grants in the future.
Local workforce boards also combined funding from several sources— including federal, state, local and foundation support—to train employed  workers. For example, one workforce board in Pennsylvania combined  $50,000 in funds from the state WIA set-aside with about $1.8 million from  the state’s community and economic development department to fund  such training. Although financial support from local entities or  foundations was available to a lesser extent, some workforce boards were  able to mix these with funds from other sources. For example, in  California, one workforce board funded training for employed workers  with a combination of foundation grants and fees for services from  training for employers in addition to TANF funds, Welfare-to-Work and  other competitive grants from Labor, and state funds.
States reported that WIA and other federal funds were the most common  sources of funding used for training employed workers. (See fig. 3.)  Twelve of the 16 states we contacted used three or more sources of funds  for this purpose. Of the 16 states we contacted, 13 used their WIA state set- aside funds for training employed workers. For example, in Texas, nearly  $11 million was awarded competitively to 10 local workforce boards, and  the state projected that over 9,000 employed workers would receive  training. Eleven states also used TANF funds to train employed workers.  States also reported using state general revenue funds, funds related to  Unemployment Insurance (UI) trust funds, such as penalty and interest  funds or add-ons to UI taxes, and funds from other sources such as  community development block grants or state lottery funds. (See table in  app. III.)
section_title: Training for Employed Workers Focused on Addressing Business Needs and Certain Workplace Skills
paragraphs: In their training initiatives for employed workers, states and local  workforce boards focused on training that addressed specific business  needs and emphasized certain workplace skills. States and local  workforce boards gave priority to economic sectors and occupations in  demand, considered economic factors when awarding grants, and funded  training that was tailored or customized to specific employers. States and  local workforce boards focused most often on training provided by  community or technical colleges that emphasized occupational skills and  basic skills.
subsections: section_title: States and Local Workforce Boards Often Focused on Business Needs in Funding Training
paragraphs: Most of the 16 states we contacted focused on certain economic sectors or  occupations in which there was a demand for skilled workers. Twelve  states had at least one office, usually the economic development office,  which targeted the manufacturing sector for training initiatives. States also  targeted the health care and social assistance sector (which includes  hospitals, residential care facilities, and services such as community food  services) and the information sector (which includes data processing,  publishing, broadcasting, and telecommunications). New York took a  sector-based approach to training by funding grants to enable employees  to obtain national industry-recognized certifications or credentials, such as  those offered through the computer software or plastics industries. Other  training programs focused on occupations in demand. For example, in  Louisiana, two state offices funded training that gave preference to  occupations with a shortage of skilled workers, such as computer  scientists, systems analysts, locomotive engineers, financial analysts,  home health aides, and medical assistants.
Of the 148 local workforce boards that specifically funded training for  employed workers in 2001, the majority of workforce boards targeted  particular economic sectors for training these workers. As with the states,  most often these sectors were health care or manufacturing. (See fig. 4.)  For example, workforce boards we visited in Florida, Minnesota, Oregon,  and Texas became involved in funding or obtaining funding for local  initiatives to train health care workers, such as radiographers and certified  nursing assistants, that hospitals needed.
Some states considered local economic conditions, such as unemployment  rates, in their grant award criteria in addition to, or instead of, giving  priority to certain economic sectors and occupations. For example,  California’s Employment Training Panel must set aside at least $15 million  each year for areas of high unemployment. Similarly, in Illinois and  Indiana, the state economic development offices considered county  unemployment or community needs in awarding training funds. Florida’s  workforce training grants gave priority to distressed rural areas and urban  enterprise zones in addition to targeting economic sectors.
In addition, most state economic development offices (13 of 16) and more  than half of the state workforce development offices (9 of 16) we  contacted funded training that was tailored or customized to specific  employers’ workforce needs. For economic development offices, such  customized training was not new: these offices have typically funded  training for specific companies as a means of encouraging economic  growth within their states, and in some cases have done so for a long time.  For example, California has funded training tailored to specific employers’  needs since 1983 through its Employment Training Panel. This program  spent $86.4 million in program year 2000 to train about 70,000 workers;  nearly all of them were employed workers according to state officials.  However, for many state workforce development offices, funding  customized training was a shift in their approach to workforce training,  one that could strengthen the links between employees and jobs. With  customized training, local employers or industry associations typically  proposed the type of training needed when they applied for funding and  often selected the training providers. Examples of customized training  initiatives sponsored by workforce development offices include the  following:  In Indiana, the state workforce office has sponsored a high-skills, high- wage training initiative since 1998 to meet employers’ specific needs for  skilled workers in information technology, manufacturing, and health. This  effort is part of a statewide initiative for lifelong learning for the existing  workforce.  In Hawaii, the workforce office established a grant program for employer  consortiums to develop new training that did not previously exist in the  state.  In Louisiana, the workforce office has funded a training program  customized for employers who had been in business for at least 3 years. It  required that the company provide evidence of its long-term commitment  to employee training.
In the states we contacted, many customized training programs required  that grant applicants—usually employers—create partnerships with other  industry or educational organizations. For example, Oregon’s workforce  development office required local businesses to work with educational  partners in developing grant proposals. One local workforce board we  visited in Oregon collaborated with a large teaching hospital and its union  to obtain funding for training hospital employees, and local one-stop staff  partnered with nursery consortia and community colleges to obtain funds  to upgrade the skills of agricultural workers. Similarly, in its high-skill  training grant program, New York’s workforce development office  required employers to form partnerships with labor organizations, a  consortium of employers, or local workforce investment boards.
In at least 11 of the 16 states we contacted, the programs also required  employers to provide matching funds for training employed workers,  which can help offset costs to the state for training as well as indicate the  strength of the employers’ commitment to training. States that had  requirements for matching funds—often a one-for-one match—included  Indiana, Minnesota, Montana, New Hampshire, New York, Oregon,  Pennsylvania, Tennessee, Texas, Utah, and West Virginia. Utah’s economic  development office required a lower match from rural employers, and  Indiana’s match varied case-by-case. Sometimes states required other  kinds of corporate investments as a condition for obtaining funds for  training employees. For example, in Tennessee, companies participating in  a job skills training program for high technology jobs were required to  make a substantial investment in new technology. In addition, several  states included certain requirements in their eligibility criteria to address  potential concerns about whether public funds were being used to fund  training that businesses might otherwise have funded themselves. For  example, in Louisiana and West Virginia, the workforce office requires  employers to provide evidence satisfactory to the office that funds shall be  used to supplement and not supplant existing training efforts.
section_title: Employed Worker Training Focused on Occupational and Basic Skills Training Provided by Community and Other Colleges
paragraphs: Although states reported funding many types of training for employed  workers, occupational skills training and basic skills training were the  most prevalent. Fifteen of the 16 states we contacted funded  occupational skills training—such as learning new computer  applications—for employed workers. In Tennessee, for example, the  economic development office spent more than $27 million of state funds in  program years 2000 and 2001 on a job skills training initiative for workers  in high-skill, high-technology jobs, according to a state official. Nearly all  states also reported funding basic skills training, including in basic math  skills and ESL, for employed workers with low levels of education. For  example, Texas funded ESL training in workplace literacy primarily for  Vietnamese and Spanish speaking workers participating in health care  training.
Local workforce boards also reported funding many types of training;  however, occupational skills training was most frequently provided to  employed workers. (See fig. 5.) For example, of the local workforce  boards that spent funds to train employed workers, in program year   2001, 90 percent funded occupational training to improve and upgrade  workers’ skills. Forty-seven percent of the local workforce boards also  funded, in program year 2001, basic skills training for employed workers.  The next most prevalent type of training funded for employed workers  was in soft skills, such as being on time for work, and 34 percent of local  workforce boards funded this type of training in program year 2001.
Community or technical colleges were often used to train employed  workers, according to both state and local officials we contacted. For  example, 78 percent of local workforce boards that spent funds to train  employed workers reported that community or technical colleges were  training providers in program year 2001. (See fig. 6.) State and local  workforce officials also cited using private training instructors and  employer-provided trainers, such as in-house trainers.
section_title: In Targeting Training to Low-Wage Workers, Officials Addressed Several Challenges, though WIA Performance Measures Were an Issue
paragraphs: In targeting training to low-wage workers, state and local officials  addressed several challenges that hindered individuals’ and employers’  participation in training. Workforce officials developed ways to address  the personal challenges low-wage workers faced that made participating in  training difficult. In addition, workforce officials we visited identified ways  to address employer reluctance to support training efforts. Despite  attempts to address these issues, however, challenges to implementing  successful training still exist. For example, state and local officials  reported that the WIA performance measure that tracks adult earnings  gain and certain funding requirements that accompany some federally  funded training programs, may limit training opportunities for some low- wage workers.
subsections: section_title: Officials Found Ways to Accommodate Low-Wage Workers’ Needs
paragraphs: State and local officials developed a number of approaches to overcome  some of the challenges faced by low-wage workers. They noted that many  low-wage workers have a range of personal challenges—such as limited  English and literacy skills, childcare and transportation needs, scheduling  conflicts and financial constraints, and limited work maturity skills—that  made participating in training difficult. However, many officials also  reported several approaches to training low-wage workers.
Offering workplace ESL and literacy programs were some approaches  used by officials to address limited English and literacy skills among low- wage workers. For example, one workforce board in Minnesota used a  computer software program to develop literacy among immigrant  populations. Another state workforce official in Oregon reported  customizing ESL to teach language skills needed on the job. In addition,  some of the employers we visited provided training to their employees in  their native language or taught them vocational ESL. Officials we visited  in Texas offered a 5-week vocational ESL course before the start of the  certified nursing assistant training program primarily to help prepare  Vietnamese and Spanish speaking students who were not fluent in English.
Many low-wage workers faced challenges securing reliable transportation  and childcare, particularly in rural areas and during evening hours. Several  state and local officials noted that assisting low-wage workers with  transportation and childcare enabled them to participate in training. One  program in Florida provided childcare and transportation to TANF-eligible  clients. In Minnesota, local officials told us that they provided  transportation for program participants. Participants used the agency’s  shuttle bus free-of-charge until they received their second paycheck from  their employer. After the second paycheck, the individual paid a fee for the  shuttle and was encouraged and supported in finding transportation on  their own.
Providing on-site, paid, or flexible training were methods used to address  scheduling conflicts and financial constraints experienced by low-wage  workers. Many workforce boards that identified approaches on our survey  cited various methods of providing training to low-wage workers that  helped officials address some of the challenges faced by low-wage  workers. These methods included offering training at one-stops or through  distance learning and teleconferencing courses. For example, an employer  in California paid employees for 40 hours of work, but allowed 20 hours of  on-site training during that time. In addition, some hospitals permitted  flexible schedules for employees who sought additional training for career  advancement.
Offering additional assistance and incentives were approaches identified  by officials for improving low-wage workers’ limited work maturity skills  such as punctuality and appropriate dress. Officials we visited in Texas  reported that they helped low-wage workers develop better skills for  workplace behavior. For example, they helped clients understand the need  to call their employer if something unexpected happens, like a flat tire,  that prevents them from coming to work. In addition, another workforce  board in West Virginia reported that they provided a $50.00 incentive to  the employee for perfect attendance during the first 6 weeks of work.
section_title: Officials Identified Ways to Gain Employer Support for Low-Wage Worker Training
paragraphs: State and local officials developed a number of ways to address the  concerns of employers who were reluctant to participate in low-wage  worker training. According to state and local officials, employers’  reservations about participation stemmed from different concerns,  including the fears that better trained employees would find jobs  elsewhere. Officials reported that other employers were hesitant to  participate in low-wage worker training because of paperwork  requirements or the time and expertise they believed were involved in  applying for state training grants. Despite these concerns, state and local  officials identified approaches to encourage employer participation.
According to officials we contacted, some employers said that if their  employees participated in training, they would seek jobs elsewhere.  Officials addressed this perception by forming partnerships with  employers and educators and offering training that corresponded to  specific career paths within a company. For example, a workforce board  we visited in Oregon partnered with a local nursery, a landscaping  business, and a community college to train entry-level workers in  agriculture and landscaping to move up into higher-skilled and better  paying positions at the same company. These career paths also addressed  the concern, expressed by some employers, that too few employees were  qualified to fill positions beyond the entry level. Officials found other ways  to alleviate employers’ fears. Officials in Oregon encouraged trainees at a  hospital to stay with their current employer by requiring them to sign a  statement of intent regarding training. The hospital trained employees  after they signed an agreement that asked for a commitment that they  remain with the employer for a specific amount of time in return for  training.
State and local officials noted that some employers were also reluctant to  have their employees participate in government-funded training programs  because they believed that certain data collection and reporting  requirements were cumbersome. For example, state workforce officials  we contacted reported that some employers found it difficult to get  employees to fill out a one-page form regarding income as required to  determine eligibility for certain funds, such as TANF. In an effort to ease  the funding paperwork burden, state officials we contacted in West  Virginia were working towards reducing the application paperwork  required for employers to obtain worker-training dollars.
Workforce officials also reported that some employers were hesitant to  apply for federally funded training grants because they believed that they  did not have the time or the expertise to apply for such grants. To address  this, workforce officials we visited in Oregon worked with union  representatives and training providers to co-write training grant proposals.  The workforce officials we visited told us that the involvement of the  union was a key factor in the training initiative’s success. Prior to this  cooperative effort, the employer had not been responsive to workers’  needs and the involvement of the union helped to bridge the gap between  worker and employer needs.
section_title: Performance Measures and Other Funding Requirements May Limit Training Opportunities for Low-Wage Workers
paragraphs: State and federal funding requirements—such as WIA performance  measures, time limits, and participant eligibility—may limit training  opportunities for some low-wage workers. Under WIA, performance  measures hold states accountable for the effectiveness of the training  program. If states fail to meet their expected performance levels, they may  suffer financial sanctions. State funding regulations for some training  initiatives, such as TANF-funded projects, required the funds to be used  within a specific time period. Because local areas must wait for states to  allocate and disburse the funding, local officials sometimes had less than  1 year to use the funding. Finally, individuals are sometimes eligible for  services based on their income, especially for TANF or WIA local funds.  Depending on the level at which local areas set eligibility requirements,  some low-wage workers may earn salaries that are still too high to be  eligible for services provided by these training funds.
WIA established performance measures to provide greater accountability  and to demonstrate program effectiveness. These performance measures  gauge program results in areas such as job placement, employment  retention, and earnings change. (See table 1.) Labor holds states  accountable for meeting specific performance outcomes. If states fail to  meet their expected performance levels, they may suffer financial  sanctions; if states meet or exceed their levels, they may be eligible to  receive additional funds. A prior GAO report noted that the WIA  performance levels are of particular concern to state and local officials. If  a state fails to meet its performance levels for one year, Labor provides  technical assistance, if requested. If a state fails to meet its performance  levels for two consecutive years, it may be subject to up to a five percent  reduction in its annual WIA formula grant. Conversely, if a state exceeds  performance levels it may be eligible for incentive funds.
State and local officials reported that the WIA performance measure that  tracks the change in adult earnings after six months could limit training  opportunities for employed workers, including low-wage workers. Some  workforce officials were reluctant to register employed workers for  training because the wage gain from unemployment to employment tended  to be greater than the wage gain for employed workers receiving a wage  increase or promotion as a result of skills upgrade training. For example, a  state official from Indiana noted that upgrading from a certified nursing  assistant to the next tier of the nursing field might only increase a worker’s  earnings by 25 cents per hour. Yet, for the purposes of performance  measures, workforce boards may need to indicate a change in earnings  larger than this in order to avoid penalties. For example, one workforce  official from Michigan reported that the performance measure requires the  region to show an increase that equates to a $3.00 per hour raise. In a  previous GAO study, states reported that the need to meet these  performance measures may lead local staff to focus WIA-funded services  on unemployed job seekers who are most likely to succeed in their job  search or who are most able to make wage gains instead of employed  workers.
Time limits for some funding sources were a challenge for some officials  trying to implement training programs, according to some state and local  workforce officials. In Florida, for example, officials we visited reported  that they had a state-imposed one-year time limit for using TANF funds for  education and training, which made it difficult for officials to plan a  training initiative, recruit eligible participants, and successfully implement  the training program. Similarly, state and local officials we contacted in  Oregon expressed frustration with the amount of effort required to ensure  the continuation of funding for the length of their training initiative. They  noted that funding for a one-year training grant for certified medical  assistants and radiographers expired seven months before the training  program ended. The local workforce board identified an approach to fund  the training for the remainder of the program by using other funding  sources. Although this workforce board was able to leverage other funds,  this solution is not always feasible.
Finally, several officials reported that eligibility requirements for the WIA  local funds are a challenge because they might exclude some low-wage  workers from training opportunities. States or local areas set the income  limit for certain employment and training activities by determining the  wage level required for individuals to be able to support themselves. When  funds are limited, states and local areas must give priority for adult  intensive and training services to recipients of public assistance and other  low-income individuals. Officials on several workforce boards said that  these eligibility guidelines for their local areas, particularly the income  limit, made it challenging to serve some low-wage workers. For example,  local workforce board officials from California indicated that they would  like more flexibility than currently allowed under state WIA eligibility  requirements to serve clients who may earn salaries above the income  limit. The officials noted that some workers in need of skills upgrade could  not be served under WIA because they did not qualify based on their  income. To address this challenge, officials we visited at a local workforce  board in East Texas told us that they set the income limit high enough so  that they can serve most low-wage workers in their area.
section_title: Conclusions
paragraphs: As of program year 2001, many states and local workforce boards were  beginning to make use of the flexibility allowed under WIA and welfare  reform to fund training for employed workers, including low-wage  workers. They used WIA state set-aside funds and local funds, as well as  TANF and state funds, as the basis for publicly funded training for  employed workers. In addition, they considered business needs in  determining how these funds were used to train employed workers.  Consequently, training for employed workers could better reflect the skills  that employers need from their workforce in a rapidly changing economy.  In addition, such skills may help employees better perform in their jobs  and advance in their careers.
Training for employed workers is particularly critical for workers with  limited education and work skills, especially those earning low wages. For  such workers, obtaining training while employed may be critical to their  ability to retain their jobs or become economically self-sufficient. While  training low-wage workers involves particular challenges, workforce and  other officials have developed ways to implement training initiatives for  low-wage workers that may help mitigate some of these challenges. This is  especially necessary in the economic downturn following the boom in the  1990s when TANF and WIA were created.
However, WIA’s performance measure for the change in average earnings  may create a disincentive for states and local workforce boards to fund  training for employed workers because employed workers, particularly  low-wage workers, may be less likely than unemployed workers to  significantly increase their earnings after training. To the extent that state  and local workforce investment areas focus on unemployed workers to  ensure that they meet WIA’s performance measure for earnings change— and thereby avoid penalties—employed workers, and especially low-wage  workers, may have a more difficult time obtaining training that could help  them remain or advance in their jobs. As currently formulated, this  performance measure supports earlier federal programs’ focus on training  unemployed workers and does not fully reflect WIA’s new provision to  allow federally funded training for employed workers.
section_title: Recommendation for Executive Action
paragraphs: To improve the use of WIA funds for employed worker training, we  recommend that the Secretary of Labor review the current WIA  performance measure for change in adult average earnings to ensure that  this measure does not provide disincentives for serving employed  workers. For example, Labor might consider having separate average  earnings gains measures for employed workers and unemployed workers.
section_title: Agency Comments
paragraphs: We provided the Departments of Labor and Health and Human Services  with the opportunity to comment on a draft of this report. Formal  comments from these agencies appear in appendixes IV and V.
Labor agreed with our findings and recommendation to review the current  WIA performance measure for change in the adult average earnings to  ensure that the measure does not provide disincentives for serving  employed workers. Labor stated that, in May 2002, the department  contracted for an evaluation of the WIA performance measurement system  and noted that one of the objectives of the evaluation is to determine the  intended and unintended consequences of the system. Labor believes that  GAO’s suggestion to have separate measures on earnings gains for  employed workers would be an option to consider for improving WIA  performance.
HHS also agreed with the findings presented in our report and noted that  the information in GAO’s report would help states develop and enhance  appropriate worker training programs, and provide services and supports  that address the barriers to such training.
As agreed with your offices, unless you publicly announce its contents  earlier, we plan no further distribution of this report until 30 days after its  issue date. At that time we will send copies of this report to relevant  congressional committees, and other interested parties. We will also make  copies available to others upon request. In addition, the report will be  available at no charge on the GAO Web site at http://www.gao.gov.
Please contact me on (202) 512-7215 if you or your staff have any  questions about this report. Other GAO contacts and staff  acknowledgments are listed in appendix IV.
section_title: Appendix I: Objectives, Scope, and Methodology
paragraphs: To provide the Congress with a better understanding of how states and  local areas were training employed workers, including low-wage workers,  we were asked to determine (1) the extent to which local areas and states  provide assistance to train employed workers, including funding training;  (2) the focus of such training efforts and the kind of training provided; and  (3) when targeting training to low-wage workers, the approaches state and  local officials identified to address the challenges in training this  population.
To obtain this information, we conducted a nationwide mail survey of all  local workforce investment boards, conducted semistructured telephone  interviews with state officials, and visited four states. We conducted a  literature search and obtained reports and other documents on employed  worker training from researchers and federal, state, and local officials. To  obtain information about the federal role in employed worker training, we  met with officials from the departments of Labor, Health and Human  Services (HHS), and Education. In addition, we interviewed researchers  and other workforce development training experts from associations such  as the National Governors’ Association, National Association of Workforce  Investment Boards, U. S. Chamber of Commerce, and American Society  for Training and Development.
subsections: section_title: Nationwide Survey of Local Workforce Investment Boards
paragraphs: To document local efforts to train employed workers, we conducted a  nationwide mail survey, sending questionnaires to all 595 local workforce  boards. We received responses from 470 boards, giving us a 79 percent  response rate. Forty-five states had response rates of 60 percent or more,  and 17 states, including all states with a single workforce board, had  response rates of 100 percent. The mailing list of local workforce boards  was compiled using information from a previous GAO study of local youth  councils, and directories from the National Association of Workforce  Investment Boards and the National Association of Counties. The survey  questionnaire was pretested with 6 local workforce boards and revised  based on their comments. Surveys were mailed on April 24, 2002, follow- ups were conducted by mail and phone, and the survey closing date was  August 16, 2002. We reviewed survey questionnaire responses for  consistency and in several cases contacted the workforce boards to  resolve inconsistencies but we did not otherwise verify the information  provided in the responses. In the survey, we collected data for the WIA  program years 2000 (from July 1, 2000—June 30, 2001) and 2001 (from July  1, 2001-June 30, 2002) so that we could compare and perceive trends. We  analyzed these data by calculating simple statistics and by performing a  content analysis in which we coded responses to open-ended questions for  further analysis.
Because our national mail survey did not use probability sampling, there  are no sampling errors. However, the practical difficulties of conducting  any survey may introduce other types of errors, commonly referred to as  non-sampling errors. For example, differences in how a particular question  is interpreted, the sources of information available to respondents, or the  characteristics of people who do not respond can introduce unwanted  variability into the survey results. We included steps in both the data  collection and data analysis stages to minimize such non-sampling errors.  For example, survey specialists in combination with subject matter  specialists designed our questionnaire; we pretested the questionnaire to  ensure that questions were clear and were understood by respondents;  and to increase our response rate for the mail survey, we made a follow-up  mailing and called local workforce investment boards that did not respond  by a specified date.
section_title: Semistructured Telephone Interviews
paragraphs: To determine state efforts to train employed workers, including low-wage  workers, we conducted semistructured telephone interviews in   16 judgmentally selected states with state officials responsible for  workforce development, economic development, and TANF funds used for  education and training. We selected these states in part because they were  geographically dispersed and represented about one-half of the U.S.  population.
In addition, we selected these states because between 1998 and 2001, most  of them used federal funds available for training employed workers,  including demonstration and planning grants, which potentially indicated  the state’s interest in training these workers. Thirteen of the selected  states received States’ Incumbent Worker System Building Demonstration  Grants in 1998 from the Department of Labor; 10 of the selected states  were identified in previous GAO work as having used WIA state set-aside  funds for current worker training, and 8 of the selected states were among  those receiving Employment Retention and Advancement (ERA)  demonstration grants from the Department of Health and Human Services.  (See table 2.)
In each state, we interviewed state officials responsible for workforce  development and economic development. We also interviewed state  officials responsible for TANF funds used for education and training to  obtain information about training for low-wage workers. To identify these  state officials, we initially called the state contact for the WIA program.  These officials then provided us with the names of officials or their  designees who represented workforce development and economic  development perspectives in their state. We similarly identified state  officials responsible for TANF funds used for education and training. Since  states structure their programs and funding differently, sometimes state  officials we interviewed were located in different agencies while others  were located in different offices within the same agency. For this reason  we used the term “office” throughout the report to represent their different  perspectives.
We used survey specialists in designing our interview questions and  pretested them in several states to ensure that they were clear and could  be understood by those we interviewed. In our interviews, we asked state  officials for information about training efforts for the program year   2000, which ended on June 30, 2001, and asked if there were any  significant changes in program year 2001, which ended June 30, 2002. Our  interviews with state officials were conducted between March and  October 2002. In analyzing our interview responses from state officials, we  calculated frequencies in various ways for all close-ended questions and  arrayed and analyzed narrative responses thematically for further  interpretation. We did not independently verify data, although we  reviewed the interview responses for inconsistencies.
section_title: Site Visits
paragraphs: To obtain in-depth information about the challenges that local officials  have experienced in developing and implementing training programs  specifically for low-wage workers, and promising approaches they  identified to address these challenges, we made site visits to four states– Florida, Minnesota, Oregon, and Texas. We selected these four states for  site visits to provide geographic dispersion and because federal and state  officials and other experts had identified these states as having specific  efforts for training employed workers, especially initiatives to help low- wage workers retain employment and advance in their jobs. Furthermore,  each of the four states received federal HHS Employment Retention and  Advancement grants. In our view, these demonstration grants served as  indications of the state’s interest in supporting job retention and  advancement, including training, for low-wage workers. We visited a  minimum of two localities in each state, representing a mix of urban and  rural areas in most cases. We chose local sites in each state on the basis of  recommendations from state officials about training initiatives with a low- wage focus. Teams of at least three people spent from 2 to 4 days in each  state. Typically, we interviewed local officials, including employers, one- stop staff, local workforce board staff, and training providers such as  community colleges and private training organizations. We toured training  facilities and observed workers and students receiving training. We also  obtained and reviewed relevant documents from those we interviewed.  (See table 3.)
We reviewed surveys and telephone interview responses for consistency  but we did not otherwise verify the information provided in the responses.  Our work was conducted between October 2001 and December 2002 in  accordance with generally accepted government auditing standards.
section_title: Appendix II: Workforce Boards’ Survey Information
section_title: Appendix III: Information on State Funding Sources
paragraphs: Appendix III:  Information on State Funding  Sources  While these states were awarded Employment Retention and Advancement grants from HHS, state  officials we contacted did not identify these grants as sources of funding for employed worker training.
section_title: Appendix IV: Comments from the Department of Health and Human Services
section_title: Appendix V: Comments from the Department of Labor
section_title: Appendix VI: GAO Contacts and Staff Acknowledgments
subsections: section_title: GAO Contacts
section_title: Staff Acknowledgments
paragraphs: Natalie S. Britton, Ramona L. Burton, Betty S. Clark, Anne Kidd, and  Deborah A. Signer made significant contributions to this report, in all  aspects of the work throughout the assignment. In addition, Elizabeth  Kaufman and Janet McKelvey assisted during the information-gathering  segment of the assignment. Jessica Botsford, Carolyn Boyce, Stuart M.  Kaufman, Corinna A. Nicolaou, and Susan B. Wallace also provided key  technical assistance.
section_title: Related GAO Products
paragraphs: 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.
High-Skill Training: Grants from H-1B Visa Fees Meet Specific  Workforce Needs, but at Varying Skill Levels. GAO-02-881. Washington,  D.C.: September 20, 2002.
Workforce Investment Act: States and Localities Increasingly Coordinate  Services for TANF Clients, but Better Information Needed on Effective  Approaches. GAO-02-696. Washington, D.C.: July 3, 2002.
Workforce Investment Act: Coordination between TANF Programs and  One-Stop Centers Is Increasing, but Challenges Remain. GAO-02-500T.  Washington, D.C.: March 12, 2002.
Workforce Investment Act: Better Guidance and Revised Funding  Formula Would Enhance Dislocated Worker Program. GAO-02-274.  Washington, D.C.: February 11, 2002.
Workforce Investment Act: Improvements Needed in Performance  Measures to Provide a More Accurate Picture of WIA’s Effectiveness.  GAO-02-275. Washington, D.C.: February 1, 2002.
Workforce Investment Act: Better Guidance Needed to Address Concerns  Over New Requirements. GAO-02-72. Washington, D.C.: October 4, 2001.
Workforce Investment Act: Implementation Status and the Integration of  TANF Services. GAO-/T-HEHS-00-145. Washington, D.C.: June 29, 2000.
Welfare Reform: Status of Awards and Selected States’ Use of Welfare-to- Work Grants. GAO/HEHS-99-40. Washington, D.C.: February 5, 1999.