Workforce Investment Act: Exemplary One-Stops Devised Strategies to Strengthen Services, but Challenges Remain for Reauthorization
Published: 2003-06-18T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: This testimony highlights findings from today's report on strategies that exemplary one-stop centers have implemented to strengthen and integrate services for customers and to build a solid one-stop infrastructure. It also shares findings and recommendations from our past work on challenges that states and localities have experienced as they implement WIA, which may be helpful as WIA is reauthorized.
section_title: What GAO Found
paragraphs: The workforce development system envisioned under WIA represents a fundamental shift from prior systems, and barely 3 years have passed since it was fully implemented. States and localities have found ways to use the flexibility in WIA to develop creative new approaches to providing services through their one-stop systems. In particular, a group of 14 one-stops, identified as exemplary by government officials and workforce development experts, developed promising strategies in several key areas. To streamline services for job seekers, they ensured that job seekers could readily access needed services, made sure that staff were knowledgeable about all of the one-stop services available, or consolidated case management and intake procedures. To engage and serve employers, the centers dedicated specialized staff to work with employers or industries, tailored services to meet specific employers' needs, or worked with employers through intermediaries. To build a solid one-stop infrastructure, the centers found innovative ways to develop and strengthen program partnerships and to raise additional funds beyond those provided under WIA. Our work on WIA implementation over the past 3 years has identified a number of issues that should be considered during WIA reauthorization. First, the performance measurement system is flawed--the need to meet certain performance measures may be causing one-stops to deny services to some clients who may most need them; there is no measure that assesses overall one-stop performance; and the outcome data are outdated by the time they are available and are not useful in day-to-day program management. Second, funding issues continue to plague officials. The funding formula used to allocate funds to states and local areas does not reflect current program design and often causes unwarranted fluctuations in funding levels from year to year. In addition, WIA provided no separate funding source to support one-stop infrastructure, and developing equitable cost sharing agreements has not always been successful. Third, many training providers consider the current process for certifying their eligibility to be overly burdensome, resulting in reduced training options for job seekers as providers have declined to serve WIA-funded clients. Finally, state officials have told us that they need more help from Labor in the form of clearer guidance and greater opportunities to share promising practices in managing and providing services through their one-stop centers.

section_title: Letter
paragraphs: Thank you for inviting me here today to present the findings from our  recent work on the Workforce Investment Act (WIA). As you know, WIA  represented a significant departure from earlier job training programs.  Passed in 1998 and implemented by most states in July 2000, it was  designed to unify a fragmented employment and training system and  create a single, universal system—a one-stop system that could serve the  needs of all job seekers and employers. WIA sought to streamline the  delivery of federally funded employment and training services, enabling  job seekers to make informed choices among training providers and  course offerings, and enhancing the private-sector role in the workforce  system. WIA gave states and localities flexibility in deciding how to  implement the one-stop system, allowing local one-stops to tailor their  systems to local needs. Four separate federal agencies—the Departments  of Labor, Health and Human Services (HHS), Education, and Housing and  Urban Development (HUD)—fund about 17 categories of programs that  are required to provide services through the one-stop system. In addition  to programs that are required to take part in the new system, Labor  encourages states and localities to include optional partners, such as  Temporary Assistance for Needy Families (TANF), in order to better meet  the specific workforce development needs of their local area. Labor takes  a lead role in this new system and is responsible for assessing the  effectiveness of Labor-funded programs and for providing guidance to  states and localities as programs deliver their services through the one- stop system.
Since WIA was enacted, we have issued numerous reports that addressed  state and local efforts related to WIA, including challenges in  implementing the new training provider system, new partnership  requirements, and the new performance measurement system, as well as  issues related to funding. While much of our past work has focused on  challenges pertaining to WIA implementation, today we are releasing a  report that examines how states and localities have used the flexibility in  WIA to develop promising approaches to streamline jobseeker services,  engage employers, and strengthen one-stop infrastructure. My testimony  today will discuss (1) promising strategies to improve one-stop services  and operations being implemented by a group of 14 one-stop centers that  were identified as exemplary and (2) challenges identified in our previous  work that states and localities have faced in implementing WIA.
In summary, in the barely 3 years since the full implementation of WIA,  states and localities have found ways to use the flexibility in WIA to  develop creative new ways to improve their one-stop systems. In  particular, a group of 14 one-stops, identified as exemplary by government  officials and workforce development experts, developed promising  strategies in the key areas of streamlining services for job seekers,  engaging and serving employers, and building a solid one-stop  infrastructure. However, despite the successes state and local officials are  having as they implement WIA and continue to build relationships among  the myriad partners in this new, and dramatically different system,  challenges remain. First, the performance measurement system is flawed,  causing some one-stops to deny services to some clients who may be most  in need of them. Moreover, outcome data are outdated and are, therefore,  not useful for day-to-day program management. Second, funding issues  also continue to plague the system. The funding formulas used to allocate  funds to states and local areas do not reflect current program design and  has caused wide and unwarranted fluctuations in funding levels from year  to year. In addition, WIA provided no separate funding source to support  one-stop infrastructure, and developing equitable cost sharing agreements  has not always been successful. Third, many training providers consider  the current provisions for certifying their eligibility to be overly  burdensome, which may reduce training options for job seekers as  providers have withdrawn from the WIA system. Finally, state officials  have told us that they need more help from Labor in the form of clearer  guidance and instructions and greater opportunities to share promising  practices in managing and providing services through their one-stop  centers.
subsections: section_title: Background
paragraphs: The Workforce Investment Act created a new, comprehensive workforce  investment system designed to change the way employment and training  services are delivered. When WIA was enacted in 1998, it replaced the Job  Training Partnership Act (JTPA) with three new programs—Adult,  Dislocated Worker, and Youth—that allow for a broader range of services,  including job search assistance, assessment, and training for eligible  individuals. In addition to establishing three new programs, WIA requires  that a number of other employment-related services be provided through a  one-stop system, designed to make employment and training services  easier for job seeker customers to access. WIA also requires that the one- stop system engage the employer customer by helping employers identify  and recruit skilled workers. While WIA gives states and localities flexibility  in implementing these requirements, the law emphasizes that the one-stop  system should be a customer-focused and comprehensive system. Such a  system gives job seekers the job search and support services they need  and provides services that better meet employers’ needs. (See fig. 1.)
The major hallmark of WIA is the consolidation of services through the  one-stop center system. Seventeen categories of programs—termed  “mandatory partners”—with appropriations totaling over $15 billion from  four separate federal agencies, are required to provide services through  the system. (See table 1.)
WIA allows flexibility in the way these mandatory partners provide  services through the one-stop system, allowing co-location in one building,  electronic linkages, or referrals to off-site partner programs. While WIA  requires these mandatory partners to participate, WIA did not provide  additional funds to operate one-stop systems and support one-stop  partnerships. As a result, mandatory partners are expected to share the  costs of developing and operating one-stop centers.
Beyond the mandatory partners, one-stop centers have the flexibility to  include other partners in the one-stop system. Labor suggests that these  additional, or optional partners, may help one-stop systems better meet  specific state and local workforce development needs. These optional  partners may include TANF or local private organizations. States have the  option of mandating particular optional partners to participate in their  one-stop systems. For example, in 2001, 28 states had formal agreements  between TANF and WIA to involve TANF in the one-stop system. In  addition, localities may adopt other partners to meet the specific needs of  the community.
About $3.3 billion was appropriated in fiscal year 2003 for the three WIA  programs—Adult, Dislocated Worker, and Youth. The formulas for  distributing these funds to the states were left largely unchanged from  those used to distribute funds under JTPA and are based on such factors  as unemployment rates, including the number of long-term unemployed,  and the relative number of low-income adults and youth in the population.  In order to receive their full funding allocation, states must demonstrate  the effectiveness of their three WIA programs by tracking and reporting a  variety of performance measures. These performance measures gauge  program results in the areas of job placement and retention, earnings  change, skill attainment and customer satisfaction. WIA requires states to  use Unemployment Insurance (UI) wage records to gather this information  about WIA participants. States are held accountable by Labor for their  performance in these areas and may suffer financial sanctions if they fail  to meet their expected performance standards. WIA did not establish any  comprehensive measures to assess the overall performance of the one- stop system.
WIA also requires that training providers wishing to serve individuals’  training needs through WIA’s Adult and Dislocated Worker Programs meet  key data reporting requirements, including completion rates, job  placement rates, and wages at placement for all students they serve,  including those not funded under WIA. WIA requires the collection of  these outcome data so that job seekers receiving training can use them to  make more informed choices about training providers. Unlike prior  systems, WIA requires that individuals eligible for training under the Adult  and Dislocated Worker Programs receive vouchers—called Individual  Training Accounts—which they can use for the training provider and  course offering of their choice, within certain limitations. WIA also  requires these data so that states and localities can assess training  providers’ performance. For example, a state might only allow training  providers’ courses with an 80-percent completion rate to remain on the  training provider list. If a course fails to meet that level, it would no longer  be allowed to serve WIA-funded individuals.
Finally, WIA called for the development of workforce investment boards  to oversee WIA implementation at the state and local levels. At the state  level, WIA requires, among other things, that the workforce investment  board assist the governor in helping to set up the system, establish  procedures and processes for ensuring accountability, and designate local  workforce investment areas. WIA also requires that boards be established  within each of the local workforce investment areas to carry out the  formal agreements developed between the boards and each partner and  oversee one-stop operations. WIA requires that private-sector  representatives chair the boards and make up the majority of board  members. This is to help ensure that the private sector is able to provide  information on the available employment opportunities and expanding  career fields and help develop ways to close the gap between job seekers  and labor market needs.
section_title: States and Localities Have Embraced WIA’s Flexibility to Develop Promising Approaches to Serving Job Seekers and Employers
paragraphs: States and localities have found ways to use the flexibility in WIA to  develop creative new ways to serve job seekers and employers. In  particular, a group of 14 one-stops, identified as exemplary by government  officials and workforce development experts for our study of promising  one-stop approaches, has developed strategies for streamlining services  for job seekers, engaging and serving employers, and building a solid one- stop infrastructure. All of the 14 centers in the study streamlined services  for jobseekers by ensuring that they can readily access needed services, by  educating program staff about all of the one-stop services available to job  seekers, or by consolidating case management and intake procedures. In  addition, to engage employers and provide them needed services, all of the  centers used strategies that included dedicating specialized staff to work  with employers or industries, tailoring services to meet specific employers’  needs, or working with employers through intermediaries, such as  Chambers of Commerce or economic development entities. Finally, to  provide the infrastructure needed to support better services for job  seekers and employers, many of the one-stops we visited found innovative  ways to develop and strengthen program partnerships and to raise  additional funds beyond those provided under WIA. (Figure 2 shows the  locations of the 14 one-stop centers we visited.)
subsections: section_title: Selected One-Stops Used Strategies to Streamline Services for Job Seekers
paragraphs: All of the one-stop centers in our recent study focused their efforts on  streamlining services for job seekers by ensuring that job seekers could  readily access needed services, educating program staff about all of the  one-stop services available to job seekers, or consolidating case  management and intake procedures. To ensure that job seekers could  readily access needed services, one-stops we visited allocated staff to help  them navigate the one-stop system, provided support to customers with  transportation barriers, and expanded services for one-stop customers.  For example, managers in Erie, Pennsylvania, positioned a staff person at  the entrance to the one-stop to help job seekers entering the center find  needed services and to assist exiting job seekers if they did not receive the  services they sought. In addition to improving access to one-stop center  services on-site, some of the one-stops we visited found ways to serve job  seekers who may have been unable to come into the one-stop center due  to transportation barriers or other issues. For example, in Boston,  Massachusetts, the one-stop placed staff in off-site locations, including  family courts, correctional facilities, and welfare offices, to give job  seekers ready access to employment and program information. Finally,  one-stops also improved job seeker access to services by expanding  partnerships to include optional service providers—those beyond the  program partners mandated by WIA. These optional partners ranged from  federally funded programs, such as TANF, to community-based  organizations providing services tailored to meet the needs of local job  seekers. The one-stop in Dayton, Ohio, was particularly proactive in  forming optional partnerships to meet job seekers’ service needs. At the  time of our visit, the Dayton one-stop had over 30 optional partners on- site.
To educate program staff about one-stop services, centers used cross- training sessions in order to inform staff about the range of services  available at the one-stop. Cross-training activities ranged from conducting  monthly educational workshops to a shadow program to help staff  become familiar with other programs’ rules and operations. Officials in  Salt Lake City, Utah, reported that cross–training improved staff  understanding of programs outside their area of expertise and enhanced  their ability to make referrals. The Pikeville, Kentucky, one-stop supported  cross-training workshops in which one-stop staff from different partner  programs educated each other about the range of services they could  provide. After learning about the other programs, Pikeville staff  collaboratively designed a service delivery flow chart that effectively  routed job seekers to the appropriate service providers, providing a clear  entry point and a clear path from one program to another. In addition, the  Vocational Rehabilitation staff at the Pikeville one-stop told us that cross- training other program staff about the needs of special populations  enabled them to more accurately identify hidden disabilities and to better  refer disabled customers to the appropriate services.
Centers also sought to reduce the duplication of effort across programs  and the burden on job seekers navigating multiple programs by  consolidating case management and intake procedures across programs  through the use of shared service plans for customers and shared  computer networks. Ten of the 14 one-stops we visited consolidated their  intake processes or case management systems. This consolidation took  many forms, including having case workers from different programs work  as a team developing service plans for customers to having a shared  computer network across programs. For example, in Blaine, Minnesota,  caseworkers from the various one-stop programs met regularly to  collaborate in developing and implementing joint service plans for  customers who were co-enrolled in multiple programs. To efficiently  coordinate multiple services for one-stop customers in Erie, Pennsylvania,  one-stop staff used a networked computer system with a shared case  management program, so that all relevant one-stop program staff could  share access to a customer’s service plan and case file. In Kansas City,  Missouri, the Youth Opportunity Program and the WIA Youth Program  staff shared intake and used a combined enrollment form to alleviate the  burden of multiple intake and assessment forms when registering  participants.
section_title: Selected One-Stops Developed Strategies to Engage and Provide Services to Employers
paragraphs: All of the one-stops we visited engaged and served employers by  dedicating specialized staff to establish relationships with employers or  industries, by working with employers through intermediaries, or by  providing specially tailored services to meet employers’ specific workforce  needs. One-stop officials told us that engaging employers was critical to  successfully connecting job seekers with available jobs. In order to  encourage employers’ participation in the one-stop system, specialized  staff outreached to individual employers and served as employers’ primary  point of contact for accessing one-stop services. For example, the one-stop  in Killeen, Texas, dedicated specialized staff to serve not only as the  central point of contact for receiving calls and requests from employers  but also to identify job openings available through employers in the  community. In addition to working with individual employers, staff at  some of the one-stops we visited also worked with industry clusters, or  groups of related employers, to more efficiently meet local labor  demands—particularly for industries with labor shortages. For instance,  the one-stop in Aurora, Colorado, dedicated staff to work with specific  industries, particularly the healthcare industry. In response to a shortage  of 1,600 nurses in the Denver metro area, the Aurora one-stop assisted in  the creation of a healthcare recruitment center designed to provide job  seekers with job placement assistance and healthcare-related training.
In addition to dedicating specialized staff, all of the one-stops we visited  worked with intermediaries to engage and serve employers.  Intermediaries, such as a local Chamber of Commerce or an economic  development entity, served as liaisons between employers and the one- stop system, helping one-stops to assess the workforce needs of  employers while connecting employers with one-stop services. For  example, the one-stop staff in Clarksville, Tennessee, worked with  Chamber of Commerce members to help banks in the community that  were having difficulty finding entry-level employees with the necessary  math skills. To help connect job seekers with available job openings at  local banks, the one-stop developed a training opportunity for job seekers  that was funded by Chamber members and was targeted to the specific  skills needed for employment in the banking community. Specialized staff  at many of the one-stops we visited also worked with local economic  development entities to recruit new businesses to the area. For example,  the staff at the Erie, Pennsylvania, one-stop worked with a range of local  economic development organizations to establish an employer outreach  program that developed incentive packages to attract new businesses to  the community.
Finally, all of the one-stops we visited tailored their services to meet  employers’ specific workforce needs by offering an array of job placement  and training assistance designed for each employer. These services  included specialized recruiting, pre-screening, and customized training  programs. For example, when one of the nation’s largest cabinet  manufacturers was considering opening a new facility in the eastern  Kentucky area, the one-stop in Pikeville, Kentucky, offered a tailored set  of services to attract the employer to the area. The services included  assisting the company with pre-screening and interviewing applicants and  establishing an on-the-job training package that could use WIA funding to  offset up to 50 percent of each new hire’s wages during the 90-day training  period. The Pikeville one-stop had responsibility for administering the  application and assessment process for job applicants, including holding a  3-day job fair that resulted in the company hiring 105 people through the  one-stop and a commitment to hire 350 more in the upcoming year.  According to a company representative, the incentive package offered by  the one-stop was the primary reason the company chose to build a new  facility in eastern Kentucky instead of another location.
section_title: One-Stop Centers Built a Solid Infrastructure by Strengthening Program Partnerships and Raising Additional Funds
paragraphs: To build the solid infrastructure needed to support better services for job  seekers and employers, many of the one-stops we visited developed and  strengthened program partnerships and raised funds beyond those  provided under WIA. Operators at 9 of the 14 one-stops we visited fostered  the development of strong program partnerships by encouraging  communication and collaboration among partners through functional  teams and joint projects. Collaboration through teams and joint projects  allowed partners to better integrate their respective programs and  services, as well as pursue common one-stop goals and share in one-stop  decision-making. For example, partners at the Erie, Pennsylvania, one- stop center were organized into four functional teams—a career resource  center team, a job seeker services team, an employer services team, and  an operations team—which together operated the one-stop center. As a  result of the functional team meetings, partners reported that they worked  together to solve problems and develop innovative strategies to improve  services in their respective functional area.
One-stop managers at several of the sites in our study told us that the co- location of partner programs in one building facilitated the development of  strong partnerships. For this reason, one-stop managers at several of the  centers reported that they fostered co-location by offering attractive  physical space and flexible rental agreements. For example, in Pikeville,  Kentucky, the local community college donated free space to the one-stop  on its conveniently located campus, making it easier to convince partners  to relocate there. Partners were also eager to relocate to the Pikeville one- stop because they recognized the benefits of co-location for their  customers. For instance, staff from the Vocational Rehabilitation Program  said that co-location at the one-stop increased their customers’ access to  employers and employment-related services. Several one-stops that did  not co-locate found ways to create strong linkages with off-site partners.  For example, in addition to regular meetings between on-site and off-site  staff, the one-stop in Aurora, Colorado, had a staff person designated to  act as a liaison and facilitate communication between on-site and off-site  partners. Nationwide, co-location of partner services has been increasing  since WIA was enacted. For example, in 2000, 21 states reported that  Education’s Vocational Rehabilitation Program was co-located at the  majority of their one-stops; this number increased to 35 states by 2001.  Similarly, TANF work services were co-located in at least some one-stops  in 32 states in 2000, increasing to 39 states by 2001.
Managers at all but 2 of the 14 one-stops we visited said that they were  finding ways to creatively increase one-stop funds through fee-based  services, grants, or contributions from partner programs and state or local  governments. Managers said these additional funds allowed them to cover  operational costs and expand services despite limited WIA funding to  support one-stop infrastructure and restrictions on the use of program  funds. For example, one-stop operators in Clarksville, Tennessee, reported  that they raised $750,000 in fiscal year 2002 through a combination of fee- based business consulting, drug testing, and drivers’ education services.  Using this money, the center was able to purchase a new voicemail and  computer network system, which facilitated communication among staff  and streamlined center operations. Centers have also been proactive  about applying for grants from public and private sources. For example,  the one-stop center in Kansas City, Missouri, had a full-time staff person  dedicated to researching and applying for grants. The one-stop generated  two-thirds of its entire program year 2002 operating budget of $21 million  through competitive grants available from the federal government as well  as from private foundations. This money allowed the center to expand its  services, such as through an internship program in high-tech industries for  at-risk youth. One-stop centers also raised additional funds by soliciting  contributions from local or state government and from partner agencies.  For instance, the Dayton, Ohio, one-stop received $1 million annually from  the county to pay for shared one-stop staff salaries and to provide services  to job seekers who do not qualify for services under any other funding  stream. Dayton one-stop partners also contributed financial and in-kind  resources to the center on an as-needed basis.
section_title: Despite Successes, Some Aspects of WIA Have Stymied Officials’ Efforts to Implement WIA as Intended
paragraphs: Despite the successes state and local officials are having as they  implement WIA, some key aspects of the law, as well as Labor’s lack of  clear guidance in some areas, have stymied their efforts. First, the  performance measurement system is flawed—the need to meet certain  performance measures may be causing one-stops to deny services to some  clients who may be most in need of them; there is no measure that  assesses overall one-stop performance; and the data used to measure  outcomes are outdated by the time they are available and are, therefore,  not useful in day-to-day program management. Second, funding issues  continue to plague the system. The funding formulas used to allocate  funds to states and local areas do not reflect current program design and  has caused wide fluctuations in funding levels from year to year. In  addition, WIA provided no separate funding source to support one-stop  infrastructure and developing equitable cost sharing agreements has not  always been successful, largely because of the limitations in the way funds  for some of the mandatory programs can be spent. Third, the current  provision for certifying training providers as eligible is considered overly  burdensome by many providers and may reduce training options for job  seekers as providers have withdrawn from the WIA system. Finally, state  officials have told us that they need more help from Labor in the form of  clearer guidance and instructions and greater opportunities to share  promising practices in managing and providing services through their one- stop centers.
subsections: section_title: WIA’s Performance Measurement System May Be Causing Some Clients to Be Denied Services and Does Not Provide an Accurate Picture of WIA’s Effectiveness
paragraphs: The performance measurement system developed under WIA may be  causing some clients to be denied services and does not allow for an  accurate understanding of WIA’s effectiveness. First, the need to meet  performance levels may be the driving factor in deciding who receives  WIA-funded services at the local level. Officials in all five states we visited  for one study told us that local areas are not registering many WIA  participants, largely because local staff are reluctant to provide WIA- funded services to job seekers who may be less likely to find employment  or experience earnings increases when they are placed in a job. For  example, one state official described how local areas were carefully  screening potential participants and holding meetings to decide whether to  register them. As a result, individuals who are eligible for and may benefit  from WIA-funded services may not be receiving services that are tracked  under WIA. We found similar results in our studies of older workers and  incumbent workers.
Performance levels for the measures that track earnings change for adults  and earnings replacement for dislocated workers may be especially  problematic. Several state officials reported that local staff were reluctant  to register already employed adults or dislocated workers. State and local  officials explained that it would be hard to increase the earnings of adults  who are already employed or replace the wages of dislocated workers,  who are often laid off from high-paying, low-skilled jobs or from jobs that  required skills that are now obsolete. In addition, for dislocated workers,  employers may provide severance pay or workers might work overtime  prior to a plant closure, increasing these workers’ earnings before they are  dislocated. Many dislocated workers who come to the one-stop center,  therefore, have earned high wages just prior to being dislocated, making it  hard to replace —let alone increase —their earnings. If high wages are  earned before dislocation and lower wages are earned after job placement  through WIA, the wage change will be negative, depressing the wage  replacement level. As a result, a local area may not meet its performance  level for this measure, discouraging service to those who may need it.
Second, outcomes are measured largely using unemployment insurance  (UI) wage data, but these data suffer from time delays of up to as much as  14 months, making the data outdated by the time they are available. For  example, we asked states in a survey we conducted in 2001, how quickly  job placement outcome data would be available to them from UI wage  records. We found that for 30 states, the earliest time period that job  placement data would be available was 6 months after an individual  entered employment, with 15 states reporting that it may take 9 months or  longer. Similarly, over half of states reported that obtaining the necessary  information on employment retention could take a year or longer. In fact,  current available data on the wage-related measures reflects performance  from the previous program year. While UI wage records are the best data  source currently available for documenting employment, the lack of timely  data makes it difficult for state and local officials to use the performance  measures for short-term program management, including improving one- stop services. Some states and localities have developed other means,  sometimes adding additional performance measures, to fill this  information gap.
Finally, there are no measures to gauge the performance of the one-stop  system as a whole. At least 17 programs provide services through the one- stop system and most have their own performance measures. Although  these performance measures may be used for assessing outcomes for  individual programs, they cannot be used to measure the success of the  overall system. For example, no program has a measure to track job  seekers who use only self-service or informational activities offered  through the one-stop, which may constitute a large proportion of job  seekers. Not knowing how many job seekers use the one-stop’s services  limits the one-stop’s ability to assess its impact. Furthermore, state and  local officials told us that having multiple performance measures has  impeded coordination among programs. There has been limited progress  in developing overall performance measures for the one-stop system.  Labor convened a working group in September 2001 to develop indicators  of the one-stop system’s performance, but they have not yet issued them.
section_title: Funding the System Envisioned under WIA Is Hampered by Flawed Funding Formulas and the Lack of a Specific Funding Source for the One-Stop Infrastructure
paragraphs: As states and localities have implemented WIA, they have been hampered  by funding issues, including flawed funding formulas and the lack of a  funding source dedicated specifically to the one-stop infrastructure. We  identified several issues associated with the current formulas. Formula  factors used to allocate funds are not aligned with the target populations  for these programs, there are time lags in the data used to determine these  allocations, and there is excessive funding volatility associated with the  Dislocated Worker Program that is unrelated to fluctuations in the target  populations. As a result, states’ funding levels may not always be  consistent with their actual need for services. In addition, no funding  source exists with which to fund the one-stop infrastructure, and the  volatile funding levels that states have experienced in the past 3 years have  limited their ability to plan and develop their one-stop systems under WIA.
subsections: section_title: Formulas Used to Allocate Funds Have Limitations
paragraphs: Some of the factors used in the formulas to allocate funds are not clearly  aligned with the programs’ target populations. For example, the Youth  program targets a specific group of low-income youth with certain barriers  to employment. However, two-thirds of its funds are distributed based on  two factors that measure general unemployment rather than youth  unemployment. The remaining third is distributed according to the  number of low-income youth in states, but even this factor does not  measure low-income youth who face barriers to employment. The target  population and formula for the WIA Adult program also are misaligned.  Basic services provided through the Adult program are open to all adults  regardless of income, while low-income adults and public assistance  recipients have priority for training and other more intensive services.  However, the WIA Adult allocation formula is more narrowly focused on  states’ relative shares of excess unemployment, unemployment in Areas of  Substantial Unemployment (ASUs), and low-income adults. Finally, the  Dislocated Worker Program is targeted to several specific categories of  individuals, including those eligible for unemployment insurance and  workers affected by mass layoffs. The factors used to distribute Dislocated  Worker funds are not, however, specifically related to these populations.  Two-thirds of program funds are distributed according to factors that  measure general unemployment. One-third is distributed according to the  number of long-term unemployed, a group that is no longer automatically  eligible for the program.
In addition to formula misalignment, allocations may not reflect current  labor market conditions because there are time lags between when the  data are collected and when the allocations are available to states. The  oldest data are those used in the Youth and Adult program formulas to  measure the relative numbers of low-income individuals in the states. The  decennial Census is the source for these data, and allocations under this  factor through 2002 are based on data from the 1990 Census. The data  used to measure two of three factors for both the Youth and Adult  programs are more recent, but are still as much as 12 months out of date.  The time lags for the data used to calculate Dislocated Worker allocations  range from 9 months to 18 months.
Finally, funding for the Dislocated Worker Program suffers from excessive  and unwarranted volatility—significantly more volatile, as much as 3 times  more so, than funding for either the Youth or Adult program. Some states  have reported that this volatility makes program planning difficult. While  some degree of change in funding is to be expected due to changing  dislocations in the workforce, changes in funding do not necessarily  correspond to these changes. For example, changes in the numbers of  workers affected by mass layoffs from year to year—one measure of  dislocation activity—ran counter to changes in Dislocated Worker  allocations in several states we examined. In New York, for example,  dislocations due to mass layoffs increased by 138 percent in 2001, but  funding allocations that year decreased by 26 percent. Conversely, in 1999,  New York’s dislocations decreased by 34 percent, while funding  allocations actually increased by 24 percent.
Several aspects of the Dislocated Worker formula contribute to funding  volatility and to the seeming lack of consistency between dislocation and  funding. The excess unemployment factor has a “threshold” effect—states  may or may not qualify for the one-third of funds allocated under this  factor in a given year, based on whether or not they meet the threshold  condition of having at least 4.5 percent unemployment statewide. As a  result, small changes in unemployment can cause large changes in  funding, and when the economy is strong and few states have  unemployment over 4.5 percent, the states that do qualify for this pot of  funds may experience large funding increases even if their unemployment  falls. In addition, the Dislocated Worker formula is not subject to the  additional statutory provisions that mitigate volatility in Youth and Adult  program funding. These provisions include “hold harmless” and “stop  gain” constraints that limit changes in funding to within 90 and 130 percent  of each state’s prior year allocation and also “small state minimums” that  ensure that each state receives at least 0.25 percent of the total national  allocation. While these provisions prevent dramatic shifts in funding from  year to year, they also result in allocations that may not as closely track  changes in the program target populations.
Developing alternative funding formulas to address the issues we have  identified is an important but challenging task. This task is complicated by  the need to strike an appropriate balance among various objectives, such  as using formula factors that are best aligned with program target  populations and reducing time lags in data sources, while also using  available data sources to measure these factors as accurately as possible.  In addition, there have been proposals for reauthorizing WIA that would  substantially modify the program target populations and funding streams,  which in turn would have consequences for revising the funding formulas.
section_title: Funding One-Stop Infrastructure Has Been Challenging
paragraphs: Many of WIA’s mandatory partners have identified resource constraints as  a major factor in their ability to participate in the one-stops. In fact, the  participants in a GAO-sponsored symposium identified insufficient  funding levels as one of the top three WIA implementation problems.  Labor also found that in many states, the agencies that administer the  Employment Service program had not yet been able to co-locate within the  one-stops. We were told by Employment Service officials and one-stop  administrators we spoke with that this was often because they still had  leases on existing facilities and could not afford to incur the costs of  breaking those leases. Limited funding made it even more difficult to  assign additional personnel to the one-stop or to devote resources to  developing electronic linkages with the one-stop. In the states we visited,  mandatory partners told us that limited funding was a primary reason that,  even when they co-located staff at the one-stop, they did so on a limited  basis. As a result, mandatory partners had to employ a wide range of  methods to provide the required support for the operation of the one- stops. Across all the sites we visited for an early implementation study,  WIA’s Adult and Dislocated Worker programs and, across most sites,  Employment Service, were the only partners consistently making  monetary contributions to pay for the one-stops’ operational costs. Other  mandatory partners tended to make in-kind contributions—for example,  Perkins and Adult Education and Literacy partners provided computer or  GED training.
Mandatory partners also noted that restrictions on the use of their funds  can serve as another constraint affecting their ability to contribute  resources to the one-stops. Some programs have caps on administrative  spending that affect their ability to contribute to the support of the one- stop’s operations. For example, WIA’s Adult and Dislocated Worker  programs have a 10-percent administrative cap that supports both the one- stops’ operation and board staff at the local level. In addition, as we have  reported in the past, regulations often prohibit states from using federal  program funds for acquisition of real property or for construction. This  means partners, such as those carrying out Perkins, cannot provide funds  to buy or refurbish a one-stop building. Moreover, Adult Education and  Literacy and Perkins officials noted that under WIA they can only use  federal funds for the purpose of supporting the one-stop, though only a  small portion of their funds come from federal sources.
section_title: WIA’s System for Certifying Training Providers May Reduce Training Options for Job Seekers
paragraphs: Training options for job seekers may be diminishing rather than  improving, as training providers reduce the number of course offerings  they make available to WIA job seekers. According to training providers,  the data collection burden resulting from participation in WIA can be  significant and may discourage them from participating. For example, the  requirement that training providers collect outcome data on all students in  a class may mean calling hundreds of students to obtain placement and  wage information, even if there is only one WIA-funded student in that  class. Even if they used other methods that may be less resource-intensive,  training providers said privacy restrictions might limit their ability to  collect or report student outcome data. Training providers also highlighted  the burden associated with the lack of consistency between the states use  for WIA and for other mandatory partners. For example, the definition a  state establishes for “program completer” for students enrolled in WIA can  be different from the definition a state establishes for students enrolled in  Education’s Carl D. Perkins Vocational Education Program (Perkins).  Training providers find the reporting requirements particularly  burdensome given the relatively small number of individuals who have  been sent for training. Guidance from Labor and Education has failed to  address how training providers can provide this information cost- effectively.
section_title: States and Localities Seek More Help from Labor
paragraphs: In addition to challenges arising from implementing portions of the law,  state and local officials often cite the need for more help from Labor in  terms of clearer guidance and definitions and greater opportunities for  information sharing. Although Labor has provided broad guidance and  technical assistance to aid the transition from JTPA to WIA, some  workforce officials have told us that the guidance has not addressed  specific implementation concerns. Efforts to design flexible programs that  meet local needs could be enhanced if Labor addressed the concerns of  workforce officials with specific guidance and disseminated information  on best practices in a timely manner. A number of our studies have  recommended that Labor be more proactive and provide better guidance  and clearer definitions    on participant registration policies and on performance measure  definitions to allow for accurate outcome tracking and better program  accountability    on how to better administer the WIA dislocated worker program,  including how to provide additional assistance to local areas using  rapid response funds    on how to more effectively administer the WIA youth program,  including how to recruit and engage parents, youth, and the business  community; improve competition in contracts for services to youth;  determine eligibility; and retain out-of-school youth    on a definition of unliquidated obligations so that it includes funds  committed at the point of service delivery, specifies what constitutes  an obligation and the timeframe for recording an obligation in order to  improve financial reporting.
Labor has taken limited steps to respond to these recommendations. It has  released revised guidance on the performance measurement system and  has allowed states to revise their negotiated performance levels, which  may address possible disincentives to serving certain job seekers. Labor is  also currently finalizing guidance for state and local areas on services for  dislocated workers. In response to our recommendations pertaining to the  WIA Youth Program, Labor agreed to issue a toolkit on effective youth  councils; reach out to new providers to enhance competition; simplify  eligibility documentation; and develop a best practices Web site on serving  out-of-school youth. In addition, Labor agreed with our findings and  recommendations related to providing clearer definitions of unliquidated  obligations; however, it declined to consider obligations in assessing WIA’s  financial position. Finally, Labor has convened a one-stop readiness  workgroup that included representatives from Education, HHS, and HUD.  This group has developed a set of suggested strategies for addressing  major WIA implementation issues and plans to disseminate a national  issuance, signed by the heads of all the federal partner agencies, that  would emphasize the commitment of these federal partners to the one- stop system.
We have also recommended that Labor be more proactive in sharing  various promising practices to help states and localities still struggling  with implementation challenges. Our reports have recommended that  Labor share promising practices in areas that include cost-effective  methods of collecting training provider information, addressing the  difficulties of using UI data in measuring outcomes, better ways to  coordinate services for TANF clients through the one-stop, and better  spending management strategies.
While Labor has developed several mechanisms for providing guidance  and allowing local one-stop administrators to share best practice  information, these efforts have been limited. Labor is establishing a new  unit within ETA—the Office of Performance and Results—whose function  will be to coordinate efforts to identify and share promising approaches in  areas such as the use of supplemental data sources to close gaps in UI  data. In addition, Labor’s primary mechanisms for distributing information  about promising practices at one-stop centers are a Web site, forums, and  conferences. The promising practices Web site, in particular, represents a  good step toward building a mechanism to support information sharing  among one-stop administrators. However, neither Labor nor the Web site’s  administrators have conducted a customer satisfaction survey or user  evaluation of the site, so little is known about how well the site currently  meets its objective to promote information sharing about promising  practices at one-stop centers. In addition to the Web site, Labor  cosponsors several national conferences to promote information sharing  and networking opportunities for state and local grantees and  stakeholders. Labor also hosted several forums during WIA  implementation to allow information exchanges to occur between the  department and state and local one-stop administrators. While these  conferences and forums provide a venue for one-stop managers to talk  with one another about what is and is not working at their centers,  participation is limited to those who can physically take part.
section_title: Concluding Observations
paragraphs: WIA represents a fundamental shift in the way federally funded  employment and training services are delivered to job seekers and  employers. It was, perhaps, a far more radical change than it initially  appeared. But, in just under 3 years, states and localities have learned to  embrace its flexibility, developing systems that meet local needs. They are  doing what WIA envisioned—bringing on new partnerships and forging  new relationships at all levels. They are actively working to engage the  employer community and involve intermediaries and others to address the  economic development needs of local communities. The process of  implementation has not been perfect, but it is moving forward. Some  aspects of the law that have caused difficulties may deserve attention  during reauthorization. But, given the significant changes brought about by  WIA, more time may be needed to allow a better assessment of what is  working and what is not before making major changes in WIA’s structure.
Mr. Chairman, this concludes my prepared statement. I will be happy to  answer any questions you or other Members of the Subcommittee may  have.
section_title: GAO Contact and Acknowledgments
paragraphs: For future contacts regarding this testimony, please contact Sigurd R.  Nilsen at (202) 512-7215. Individuals making key contributions to this  testimony included Dianne Blank, Elisabeth Anderson, Katrina Ryan, and  Tamara Harris.
section_title: Related GAO Products
paragraphs: Workforce Investment Act: One-Stop Centers Implemented Strategies to  Strengthen Services and Partnerships, but More Research and  Information Sharing is Needed. GAO-03-725. Washington, D.C.: June 18,  2003.
Workforce Investment Act: Issues Related to Allocation Formulas for  Youth, Adults, and Dislocated Workers. GAO-03-636. Washington, D.C.:  April 25, 2003.
Multiple Employment and Training Programs: Funding and  Performance Measures for Major Programs. GAO-03-589. Washington,  D.C.: April 18, 2003.
Food Stamp Employment and Training Program: Better Data Needed to  Understand Who Is Served and What the Program Achieves. GAO-03-388.  Washington, D.C.: March 12, 2003.
Workforce Training: Employed Worker Programs Focus on Business  Needs, but Revised Performance Measures Could Improve Access for  Some Workers. GAO-03-353. Washington, D.C.: February 14, 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.
Workforce Investment Act: States’ Spending Is on Track, but Better  Guidance Would Improve Financial Reporting. GAO-03-239. Washington,  D.C.: November 22, 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: Youth Provisions Promote New Service  Strategies, but Additional Guidance Would Enhance Program  Development. GAO-02-413. Washington, D.C.: April 5, 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.: Oct. 4, 2001.
Workforce Investment Act: Implementation Status and the Integration of  TANF Services. GAO/T-HEHS-00-145. Washington, D.C.: June 29, 2000.
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