Trade Adjustment Assistance: Reforms Have Accelerated Training Enrollment, but Implementation Challenges Remain
Published: 2004-09-22T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: The Trade Adjustment Assistance (TAA) Reform Act of 2002 consolidated two programs serving trade-affected workers and made changes to expand benefits and decrease the time it takes for workers to get services. GAO was asked to provide information on (1) how key reform provisions have affected program services, (2) what have been the challenges in implementing new provisions, (3) whether demand for TAA training has changed and how states are meeting this demand, and (4) what is known about what the TAA program is achieving.
section_title: What GAO Found
paragraphs: Most workers are enrolling in services more quickly than in prior years, partly because of a new 40-day time limit Labor must meet when processing a request, or petition, for TAA coverage. Labor reduced its average petition-processing time from 107 days in fiscal year 2002 to 38 days in fiscal year 2003 after the Reform Act took effect. Also, most states reported that workers are enrolling in training sooner because of a new deadline requiring workers to be enrolled in training by the later of 8 weeks after petition certification or 16 weeks after a worker's layoff. However, this deadline may have negatively affected some workers--especially during large layoffs--as it does not always leave enough time to assess workers' training needs. States reported challenges implementing some new provisions of the TAA Reform Act. Officials in most of the states we visited reported an increased administrative workload from issuing training waivers to allow workers to qualify for the Health Coverage Tax Credit (HCTC)--over 40 percent more waivers were issued in fiscal year 2003 than in 2002. While officials in all the states we visited said workers are or are likely to be interested in the wage insurance provision (Alternative TAA, or ATAA) that supplements the wages of certain workers aged 50 and over, it is still unclear how many workers will take advantage of this benefit. However, some found the provision's eligibility criteria problematic, partly because they require workers to lack easily transferable skills yet find reemployment within 26 weeks of layoff. Demand for TAA training increased substantially in fiscal year 2002, prior to the implementation of the reforms. States have struggled to meet this higher demand with available TAA training funds, even though TAA training funds available nationally doubled between fiscal years 2002 and 2003. Most states have responded by using other federal employment and training resources. Information on TAA program results has been limited, but Labor is making improvements by requiring states to use wage records to track TAA outcomes. Labor also initiated a new, 5-year evaluation study.

section_title: Letter
paragraphs: Economists generally agree that international trade has benefited  Americans in a number of ways, for example, through making a broader  range of goods and services available. However, international trade has  also contributed to layoffs in a range of industries, including the  manufacture of textiles, paper products, and electronic equipment. The  share of all United States employment that is in manufacturing has  declined fairly steadily over the last several decades.  Recently, the  number of manufacturing employees in the United States fell by almost   2.1 million over a 2-year period between 2000 and 2002, representing   12 percent of the manufacturing sector. The sharp decline in  manufacturing employment in the United States has focused attention on  the costs to workers of increased global competition, and on federal  efforts to assist these workers—workers who, some evidence suggests,  tend to be older with fewer transferable skills than other dislocated  workers. These factors may complicate trade-affected workers’ transition  to reemployment, and make federal efforts to help them reintegrate into  the workforce especially important.
The federal government has a number of programs to assist workers who  have been dislocated from their jobs. The primary program for workers  dislocated from manufacturing because of international trade is the Trade  Adjustment Assistance (TAA) program, established in 1962 and currently  funded at about $1.3 billion annually. Under this program, workers may  receive a variety of services, including training and income support while  they are in training for up to 2 years after they exhaust their  Unemployment Insurance (UI) benefits. In our previous reviews of the  TAA program, we found weaknesses in the program’s structure and  operations. For example, the program allowed some workers to delay  entering training for several years after being laid off, raising questions  about the timeliness of the program’s assistance. Partly in response to  these concerns, Congress passed the Trade Adjustment Assistance (TAA)  Reform Act of 2002. The act consolidated two former programs that served  trade-affected workers—the TAA and the North American Free Trade  Agreement Transitional Adjustment Assistance (NAFTA-TAA) programs— and made a number of key changes designed to expand benefits and  decrease the time it takes to get workers into services. The law required  that most of these changes take effect in November 2002, but it allowed  some provisions to be implemented as late as August 2003. Among the  changes, the act    shortened from 60 days to 40 days the time Labor is given to process  petitions filed on behalf of groups of workers to determine their potential  eligibility for services;   established a deadline for workers to enroll in training, after they have  been laid off or their petition has been approved, in order to maintain  eligibility for extended income support payments;   created a Health Coverage Tax Credit (HCTC) to help trade-affected  workers who are enrolled in or have completed training, or have a waiver  from this requirement, pay for health insurance;   created a wage insurance benefit for workers age 50 and older, subsidizing  the difference between the prior and new wages of some trade-affected  workers who find reemployment quickly; and   expanded the eligibility criteria for secondary workers—defined as those  who are indirectly affected by international trade, because they supply  component parts to or perform finishing work for directly affected firms.
In light of recent changes to the program, you asked us to examine   (1) how key provisions of the TAA Reform Act have affected program  services, (2) what have been the challenges in implementing the TAA  Reform Act’s new provisions, (3) whether demand for TAA training has  changed, and how states are meeting this demand, and (4) what is known  about what the TAA program is achieving. To address these questions, we  conducted a Web-based survey of the 50 states and Puerto Rico in March,  2004, and received responses from all 50 states. We collected  administrative data from the Department of Labor (Labor) on TAA  petitions, participants, services, performance, and expenditures from  fiscal year 1999 through 2003. We assessed all data for reliability and found  them to be sufficiently reliable for the purposes of our reporting  objectives. We conducted site visits to 5 states—Maine, North Carolina,  Pennsylvania, Texas, and Washington. We selected these states according  to several criteria, including recent experience with large numbers of TAA  participants; representation of a range of adversely affected industries  and, according to Labor officials, a range of experiences implementing  TAA; and geographic diversity. On our site visits, we interviewed state  officials, local service delivery staff, employers, and TAA program  participants. We conducted our work between August 2003 and August  2004 in accordance with generally accepted government auditing  standards. (See app. I for more details on our objectives, scope, and  methodology.)
subsections: section_title: Background
paragraphs: To assist workers who are laid off as a result of international trade, the  Trade Expansion Act of 1962 created the Trade Adjustment Assistance  program. Historically, the main benefits available through the program  have been extended income support and training. Participants are  generally entitled to income support, but the amount of funds available for  training is limited by statute. For fiscal year 2004, about $1.1 billion was  appropriated for income support and about $269 million for training and  other benefits. Labor certifies groups of laid-off workers as potentially  eligible for TAA benefits and services by investigating petitions that are  filed on the workers’ behalf. Workers are eligible for TAA if they were laid  off as a result of international trade and were involved in the production of  an article; workers served by the TAA program have generally been laid off  from the manufacturing sector.
Congress has amended the TAA program a number of times since its  inception. For example, in 1974 Congress eased program eligibility  requirements, and in 1988 Congress added a requirement that workers be  in training to receive income support. In 1993 Congress created a separate  North American Free Trade Agreement Transitional Adjustment  Assistance program specifically for workers laid off because of trade with  Canada or Mexico.
subsections: section_title: Changes Included in TAA Reform Act of 2002
paragraphs: The most recent amendments to the TAA program were included in the  TAA Reform Act of 2002 (Pub. L. No. 107-210), which was signed into law  in August 2002. The Reform Act consolidated the former TAA and NAFTA- TAA programs into a single TAA program and doubled the amount of  funds available for training annually. The act also    changed some administrative requirements in an effort to accelerate the  process of enrolling workers in the program; increased the maximum number of weeks of income support available, to  match the maximum number of weeks of training available;   added two new benefits, a Health Coverage Tax Credit and a wage    expanded program eligibility to include some secondary workers affected  by trade with countries other than Canada and Mexico as well as more  workers affected by a shift in production (see table 1).
Most of the changes included in the act—including the petition-processing  time limit, the training enrollment deadline, and the expanded group  eligibility criteria—took effect for petitions filed on or after November 4,  2002. Congress allowed more time for the implementation of the new  benefit programs created by the act, giving Labor until August 2003 to  implement the wage insurance program and certain components of the  Health Coverage Tax Credit.
Under the current revised TAA program, eligible participants have access  to a wider range of benefits and services than before, including  Training. Participants may receive up to 130 weeks of training, including  104 weeks of vocational training and 26 weeks of remedial training (e.g.,  English as a second language or literacy).
Extended income support. Participants may receive up to 104 weeks of  extended income support benefits beyond the 26 weeks of UI benefits  available in most states. This total includes 78 weeks while participants  are completing vocational training and an additional 26 weeks, if  necessary, while participants are completing remedial training. The  amount of extended income support payments in a state is set by statute at  the state’s UI benefit level.
During their first 26 weeks of extended income support, participants must  either be enrolled in training, have completed training, or have a waiver  from this requirement; to qualify for more than 26 weeks of extended  income support, participants must be enrolled in training. The TAA statute  lists six reasons why a TAA participant may receive a waiver from the  training requirement, including that the worker possesses marketable  skills or that the approved training program is not immediately available.  States must review participants’ waivers at least every 30 days, and if  necessary may continue to renew participants’ waivers each month  throughout the initial 26 weeks of extended income support.
Job search and relocation benefits. Payments are available to help  participants search for a job in a different geographical area and to  relocate to a different area to take a job. Participants may receive up to a  maximum of $1,250 to conduct a job search. The maximum relocation  benefit includes 90 percent of the participant’s relocation expenses plus a  lump sum payment of up to $1,250.
Health Coverage Tax Credit. Eligible participants may receive a tax  credit covering 65 percent of their health insurance premiums for certain  health insurance plans.  To be eligible for the credit, trade-affected  workers must either be receiving extended income support payments, or  they must be eligible for extended income support but are still receiving  UI payments, or they must be recipients of benefits under the new wage  insurance program. As a result, trade-affected workers who are still  receiving UI rather than extended income support may register for the  HCTC only if they are in training, have completed training, or have a  waiver from the training requirement. The Internal Revenue Service (IRS)  along with other federal agencies administers the tax credit; states are  required to regularly submit to the IRS lists of potentially eligible TAA  participants.
Wage insurance. The wage insurance program—known as the Alternative  TAA (ATAA) program—is a demonstration project designed for older  workers who forgo training, obtain reemployment within 26 weeks, but  take a pay cut. Provided the participant’s annual earnings at his or her new  job are $50,000 or less, the benefit provides 50 percent of the difference  between the participant’s pre- and postlayoff earnings up to a maximum of  $10,000 over 2 years. In order for the workers covered by a petition for  TAA assistance to qualify for the benefit, the petition must include a  specific request for ATAA eligibility. The petition must stipulate that a  significant proportion of the workers covered by the petition are age 50  and older and that the workers lack easily transferable skills.
section_title: Certification Process and Eligibility Requirements
paragraphs: The process of enrolling trade-affected workers in the TAA program  begins when a petition for TAA assistance is filed with Labor on behalf of  a group of laid-off workers. Petitions may be filed by entities including the  employer experiencing the layoff, a group of at least three affected  workers, a union, or the state or local workforce agency. The law requires  Labor to complete its investigation, and either certify or deny the petition,  within 40 days after it has received the petition.
Labor investigates whether a petition meets the requirements for TAA  certification by taking steps such as contacting company officials,  surveying a company’s customers, and examining aggregate industry data.  When Labor has certified a petition, it notifies the relevant state, which has  responsibility for contacting the workers covered by the petition,  informing them of the benefits available to them, and telling them when  and where to apply for benefits.
The TAA statute lays out certain basic requirements that all certified  petitions must meet, including that a significant proportion of workers  employed by a company be laid off or threatened with layoff. In addition  to meeting these basic requirements, a petition must demonstrate that the  layoff is related to international trade in one of several ways. Table 2  summarizes these statutory eligibility requirements for the TAA program.
If Labor denies a petition for TAA assistance, the workers who would have  been certified under the petition have two options for challenging this  denial. They may request an administrative reconsideration of the decision  by Labor. To take this step, workers must cite reasons why the denial is  erroneous according to the facts, the interpretation of the facts, or the law  itself, and must mail their request to Labor within 30 days of the  announcement of the denial. Workers may also appeal to the United States  Court of International Trade for judicial review of Labor’s denial. Workers  must appeal a denial to the U.S. Court of International Trade within   60 days of either the initial denial or a denial following administrative  reconsideration by Labor. (See app. II for a summary of final decisions  made by the U.S. Court of International Trade since fiscal year 1999 on  TAA appeals.)
section_title: Integration with One-Stop System and Workforce Investment Act Program
paragraphs: The Workforce Investment Act (WIA) of 1998 encouraged greater  coordination between the TAA program and other federal employment and  training programs. WIA required the use of a consolidated service delivery  structure—called the one-stop center system—and mandated that services  for about 17 categories of federal employment and training programs,  including TAA, be accessible through this system. These programs must  ensure that certain services, such as eligibility determination and  assessment, are available through at least one one-stop center in each  local area.
The WIA dislocated worker program, also a mandated partner in the one- stop delivery system, is the federal government’s primary employment and  training program designed for laid-off workers. Funded at almost   $1.5 billion in fiscal year 2004, the dislocated worker program includes two  components: formula funds that Labor annually distributes to states  (about $1.2 billion) and the national reserve (about $300 million). Labor  uses part of the national reserve to award national emergency grants to  states, based on their requests throughout the year, to help them respond  to disasters and major layoffs. Labor also uses part of the national reserve  to award national emergency grants specifically to serve trade-affected  workers who are also eligible for the TAA program.
section_title: Most Workers Are Enrolling in Services Sooner, but Some May Be Negatively Affected by the Enrollment Deadline
paragraphs: States report that most trade affected workers are enrolling in services  sooner than in prior years because of some of the key provisions of the  TAA Reform Act, but the new training enrollment deadline has had  unintended consequences for some workers. The new 40-day time limit for  Labor to process petitions has enabled workers to receive services more  quickly after being laid off. In addition to setting the new petition  processing time limit, the act also established a new training enrollment  deadline for workers, and states reported to us that most workers are now  enrolling in training sooner as a result of this deadline. However, states  reported that some workers have been negatively affected by the deadline.
For example, some workers may not enroll in the most appropriate  training or may miss the deadline and lose extended income support.  These problems are heightened in the case of large layoffs, some states  reported.
subsections: section_title: Training Enrollment is Accelerated by Certain Provisions of the Reform Act
paragraphs: Most workers are enrolling in TAA services sooner than in prior years  because of two key provisions of the TAA Reform Act, the new petition- processing time limit and the new training enrollment deadline. The  Reform Act reduces by one-third, from 60 days to 40 days, the time period  in which Labor must review a petition. The purpose of the reduced time  frame is to enable workers to receive benefits and services more quickly.  In the past, Labor sometimes had difficulty meeting the 60-day time limit  for petition processing. But it reduced the average processing time from  107 days in fiscal year 2002, before the new time limit took effect, to   38 days in fiscal year 2003 (see fig. 1). Also, Labor improved the  percentage of petitions processed in 40 days or less from 17 percent in  fiscal year 2002 to 62 percent in fiscal year 2003 after the act went into  effect. According to a Labor official, management changes helped the  agency reduce the average petition-processing time. For example, Labor  developed a step-by-step timeline for staff, laying out when they must  complete specific steps in the petition review process in order to meet the  40-day requirement. In addition, Labor increased the number of petition  investigators by adding more contractors. Officials also have plans to  reengineer the petition reviews in part to expedite the process.
Workers are also enrolling in services sooner because of the new training  enrollment deadline. The deadline requires workers to be enrolled in  training or have a training waiver by the later of two dates: either 16 weeks  after being laid off or 8 weeks after the petition is certified. Workers who  fail to meet this deadline become ineligible to receive extended income  support benefits. Forty-one of the 50 states surveyed reported that  workers are now enrolling in training sooner as a result of this deadline.  Most states also reported that the deadline accelerates the processes of  determining eligibility and notifying and assessing workers. Prior to the  TAA Reform Act, workers were required to be in training or have a  training waiver in order to start collecting extended income support  benefits after exhausting their UI eligibility—26 weeks in most states.  Now, because of the new deadline, workers may be required to either be in  training or possess a training waiver while still collecting regular UI  benefits.
section_title: Training Enrollment Deadline May Have Unintended Consequences for Some Workers
paragraphs: Although the new training enrollment deadline gets most workers into  training sooner, it has also had unintended consequences. For example,  officials from the majority of states reported that as a result of the training  enrollment deadline, some workers might not be enrolling in the most  appropriate training because less time is available to assess workers’  training needs. In order to meet the training enrollment deadline, officials  may feel pressured to assess workers more quickly. State officials in some  of the states we visited told us that some TAA program participants are  not able to carefully select training programs because of rushed  assessments.
Another negative effect of the new time limit is that some workers miss  the deadline and lose their eligibility for extended income support. Thirty- six states report that workers at least occasionally miss the deadline and  consequently lose their eligibility for extended income support beyond  what is available through UI benefits. A local official from North Carolina  said that some certified workers in the local area who would like to enter  the TAA program miss the deadline, either because they do not come in  for TAA enrollment until after the deadline has passed or they come into  the one-stop before the deadline but do not leave themselves enough time  to enroll in training or obtain a training waiver. For example, this official  told us that in the case of a recent layoff of 120 workers, 20 workers did  not come into the one-stop until after their deadline had passed. Other  officials in North Carolina said that workers who lose their eligibility for  extended income support generally are not allowed to enter training,  because state and local officials are concerned that with no other source  of income, workers will drop out of training.
The ability of workers to meet the new training enrollment deadline may  be negatively affected by delays in program operations. These delays, as  well as delays by workers themselves in registering for TAA services, may  contribute to some workers having insufficient time for an assessment of  their training needs or missing the training enrollment deadline. One of the  program operation delays occurs as a result of the time it takes Labor to  notify states about certification decisions. After Labor has certified a  petition, it waits several days before informing the state, to give relevant  members of Congress advance notification. Twenty-one states reported  that the time it takes Labor to notify states about certifications at least  occasionally causes workers to miss the deadline. Another delay may  occur as a result of the time it takes for states to receive lists of affected  workers from companies. After a state receives notification from Labor of  a certification, it obtains from the company a list of the workers affected  by the certified layoff and sends a letter to these workers informing them  of their potential eligibility for TAA. Sometimes companies are unable or  unwilling to provide these lists in a timely manner. In these cases, some  workers miss the deadline because they don’t receive the notification soon  enough or may have insufficient time for an assessment of their training  needs. Twenty-seven states reported that the time it takes states to receive  the list of affected workers at least occasionally causes workers to miss  the deadline. In addition to these program delays, laid-off workers may  have insufficient time for assessment or miss their enrollment deadline  because of their own delays in seeking assistance. Some state and local  officials in the sites we visited told us it often takes time for dislocated  workers to process the emotional shock of being laid off and accept the  need for assistance, which may cause them to miss the training enrollment  deadline. Thirty-seven states reported on our survey that workers’ delays  in reporting to one-stop centers for counseling at least occasionally cause  them to miss the deadline and lose their eligibility for extended income  support.
Figure 2 illustrates the program delays, using the timeline of an actual  layoff that began in December 2002 in one of the states we visited. In this  example, Labor notified the state 6 days after certifying the petition (step  5). Almost another month elapsed before the state received a complete list  of affected workers from the company (step 6). As a result, by the time the  state mailed notification letters, affected workers had, at most, 3 weeks to  register for services and enroll in training or receive a training waiver.
The delays described above are heightened in the case of large layoffs,  because the volume of workers who need services within a very short time  period overwhelms the program’s capacity to provide workers with  appropriate assessment. Processing a large number of affected workers  quickly may be especially challenging for program administrators in rural  areas, which do not have many staff to perform case management. Ten  states reported that processing large layoffs often or very often causes  workers to miss the training enrollment deadline, and an additional 9  states said processing large layoffs occasionally causes workers to miss  the deadline. For example, Texas officials told us that when dealing with  very large layoffs, states may need more time to assess and process  workers than is allowed by the new training enrollment deadline. Officials  in a rural area in Maine that experienced a large trade-related layoff said  that it was challenging to get all affected workers to register for training  within the deadline. This area hired additional workers to perform  outreach to affected workers and encourage them to register for services.
In an effort to prevent workers from missing the new deadline and losing  eligibility for extended income support, some officials are issuing training  waivers to workers who reach their deadlines without having enrolled in a  training program. For example, officials in Maine reported that during a  large layoff in a rural area, local staff granted mass waivers to workers so  they would meet the deadline and preserve their extended income support  benefits. According to a Maine official, staff in this rural area could not  provide appropriate assessment within the training enrollment deadline to  all affected workers, so waivers were necessary to prevent workers from  losing eligibility for extended income support.
section_title: New Health Care Provision Has Caused Increased Administrative Workload for Some Officials, While Other Provisions Have Been Difficult to Fully Implement
paragraphs: Officials in some states and local areas reported an increased  administrative workload associated with issuing more training waivers,  primarily to accelerate Health Coverage Tax Credit enrollment, and noted  that some other new provisions in the TAA Reform Act were difficult to  fully implement. State officials are issuing more training waivers than in  the past, in order to ensure that workers are able to access the HCTC after  being laid off, and some officials told us that this increase in waivers has  caused a significant administrative workload. States also reported that the  provision that extends TAA eligibility to secondary workers and the one  that provides a wage insurance benefit have been challenging to fully  implement.
subsections: section_title: Most States Are Issuing More Waivers to Enable Workers to Receive HCTC
paragraphs: Almost all states reported issuing an increased number of training waivers  since the TAA Reform Act took effect. Three states reported in our survey  that before the Reform Act took effect they issued training waivers to over  50 percent of TAA-eligible workers. Since the Reform Act took effect,   29 states have issued waivers to over 50 percent of eligible workers, and   15 of these issued waivers to over 75 percent of eligible workers. Labor’s  national data indicate that overall states issued over 40 percent more  training waivers in fiscal year 2003 than in 2002 (see fig. 3).
Most states reported to us that the reason they have issued more training  waivers is to ensure that workers are eligible for the HCTC.  Thirty-eight  states reported on our survey that to a great or very great extent, they have  issued more training waivers since the TAA Reform Act took effect in  order to allow workers to qualify for the HCTC. To activate eligibility for  the HCTC, even while they are still receiving UI benefits, workers must  meet the eligibility criteria for extended income support, including the  requirement that they must be in training, have completed training or have  a training waiver. Officials in all the states we visited told us that many  state and local officials are issuing waivers so that workers can quickly  become eligible for the HCTC. Officials in two of these states noted that  workers need waivers to enroll in the HCTC even before they reach their  training enrollment deadline. Furthermore, officials in two other states  told us that workers are receiving waivers to allow them to enroll in the  HCTC even before these workers exhaust their UI benefits.
According to officials in four of the five states we visited, issuing waivers  to enable workers to qualify for the HCTC causes a significant  administrative workload. The administrative workload associated with  issuing training waivers is considerable, in part because training waivers  have to be issued individually and must be reviewed monthly. Officials in  one state noted that the workload associated with issuing waivers is  especially burdensome during a very large layoff, when a large volume of  workers must be processed. Furthermore, the increased administrative  workload associated with issuing and reviewing training waivers may be  compounded for states that choose to issue extensions to workers whose  waivers expire before they exhaust their UI benefits.
Despite officials’ efforts to ensure that workers are eligible for the HCTC,  the actual rate of HCTC participation is difficult to determine because  reliable data on the total number of individuals actually eligible for HCTC  are not available. For example, according to an October 2003 survey for  the IRS, some of those identified as potentially eligible for, but not  enrolled in HCTC, were in fact ineligible because they had other coverage,  such as Medicare or through a spouse’s employer, that made them  ineligible for the tax credit. Although there are no reliable national data on  the HCTC participation rate, officials in states we visited told us that  workers might not be taking advantage of the HCTC because eligible  individuals lack affordable health care insurance options from which to  choose. Furthermore, officials in one state also noted that some workers  may not take advantage of the HCTC because they cannot afford to pay  their entire health care insurance premium while they wait to enroll in the  HCTC.
section_title: States Reported Difficulties Implementing Other New Provisions
paragraphs: States reported having difficulties with the implementation of two other  reform provisions—the provision that extends TAA eligibility to an  additional category of secondary workers and the new wage insurance  provision.
subsections: section_title: Secondary Workers Provision
paragraphs: The TAA Reform Act extended eligibility to a new category of secondary  workers—workers who supply parts to any company directly affected by  trade, not just those affected by trade with Canada or Mexico, as was true  under the previous NAFTA-TAA program—and the number of secondary  workers covered by certified TAA petitions increased somewhat in fiscal  year 2003. However, it is unclear whether the number of secondary  workers certified after the TAA Reform Act represents a small or large  proportion of all secondary workers who are now potentially eligible for  the TAA program, particularly because most states reported difficulties in  identifying secondary workers and only some have increased their efforts  to do so. According to Labor’s data, the estimated number of secondarily  affected workers covered by approved TAA petitions increased from about  3,600 workers in fiscal year 2002, before the Reform Act took effect, to  about 4,700 workers in fiscal year 2003 (see fig. 4).
Secondary workers have also increased as a proportion of all TAA- certified workers, from about 1 percent in fiscal year 2002 to about  2 percent in fiscal year 2003 (see fig. 5). However, the total number of  secondary workers who are potentially eligible for the TAA program under  the new eligibility guidelines is not known. As a result, it is unclear what  proportion of secondary workers potentially eligible for services have  been certified under the Reform Act.
States reported facing challenges in identifying secondary workers. More  than half of all states reported having at least some difficulty identifying  secondarily affected workers. States reported using a range of methods to  identify secondary workers eligible for the TAA program. For example,  according to our survey, states are most likely to identify secondary  workers by asking trade-affected employers for lists of their suppliers or  finishers or by asking employers if their layoff was as a result of losing  business from other firms that may have been trade affected. However,  officials in most of the states we visited told us that some trade-affected  employers are reluctant or find it difficult to provide the names of  suppliers that may also be affected by their shutdown or reduced  production. For example, officials in North Carolina told us that  employers are sometimes hesitant to share this information because they  do not want their suppliers to know that they are having financial  difficulties. Also, officials in Maine told us that smaller employers may find  it difficult to provide information on their suppliers or finishers because  they do not have this information readily available. In addition, some  trade-affected employers may no longer be in operation or may be difficult  to contact. None of the state officials we talked with had developed  procedures to identify workers in other states who are secondarily  affected by layoffs in their own states—so workers in one state who are  secondarily affected by a trade-related layoff in another state might never  learn they may qualify for TAA services. Labor has also not developed a  strategy to assist states in identifying workers who are secondarily  affected by a layoff in a different state.
More states are making significant efforts to identify secondary workers  now than in the past, but this number remains relatively small. While only  5 states reported on our survey that they sought to identify eligible  secondary workers to a great extent prior to the TAA Reform Act, 13 states  reported that since the Reform Act took effect, they have sought to  identify secondary workers to a great extent.
section_title: Wage Insurance Provision
paragraphs: Officials in all of the states we visited told us either that workers have  expressed an interest in or they expect workers to be interested in the new  Alternative TAA program—a 5-year demonstration project providing a  wage insurance subsidy to older workers who find reemployment quickly  but at a lower wage. Most states also reported having difficulty  implementing this new program. Thirty-eight states reported that they had  at least some difficulty implementing the new wage insurance provision.  One of the most commonly reported problems was the difficulty of  developing new payment systems for issuing workers’ monthly checks.  For example, an official in one state we visited told us that the state’s  existing UI payment system, which is used to issue payments to wage  insurance beneficiaries, could not be readily modified to issue payments to  wage insurance beneficiaries. Furthermore, an official from another state  told us the state’s current UI payment system program prohibits it from  issuing checks to individuals identified in the system as employed. As a  result, the state uses an off-line payment system to issue wage insurance  checks. States also reported that a lack of guidance from Labor on this  new provision hampered their efforts to implement it. Labor did not  provide states with formal guidance on how to implement the provision  until August 6, 2003, the same day that workers were first able to apply for  the wage insurance program.
In addition, some officials and employers found the wage insurance  eligibility criteria problematic.  The TAA statute clearly indicates that for a  group of workers to be certified as eligible for the wage insurance  program, the workers must lack easily transferable skills and a significant  number of the workers must be age 50 or over.  Petitioners must apply for  wage insurance coverage when the petition is submitted to Labor, and as  part of the investigation process, employers must confirm that their  workers lack easily transferable job skills.  The TAA statute also clearly  states that to be individually eligible for wage insurance payments,  workers must obtain reemployment within 26 weeks of layoff and may not  receive TAA-funded training. According to Labor, it has been difficult to  implement the wage insurance provision because of eligibility criteria that  include the requirement that workers must lack easily transferable job  skills. As a result of these eligibility requirements, according to Labor, the  only workers who are likely to qualify for payments are those who take  low-skill jobs at significant pay cuts, and for whom the $10,000 maximum  subsidy falls far short of compensating them for their wage loss. On the  other hand, some workers who have some transferable skills, can find jobs  paying closer to their prelayoff wage, and need only temporary financial  assistance may be denied access to the program. According to Labor, most  denied wage insurance requests result from failure to meet this eligibility  requirement. Officials in one state and employers in two other states also  found the wage insurance eligibility criteria problematic. For example,  officials in one state we visited told us that the eligibility criteria requiring  workers to lack transferable job skills yet still find employment exclude  workers who can find reemployment quickly but at lower wages, and who  therefore could be well served by a wage insurance benefit.  In another  case, an employer told us that several administrative workers were laid off  because of a plant closure and were able to find new jobs that required the  same job skills, but at a much lower pay level because they no longer had  job seniority. These workers could have benefited from the program,  according to their employer, but were denied the subsidy because they  had transferable skills. In addition, a state official we visited reported that  an employer found that it was difficult to assess the skill levels of an entire  group of affected workers who often possess a diverse set of skills and  skill levels.
At this stage of implementation, it is unclear how many workers will take  advantage of the wage insurance benefit. Most states did not fully  implement their wage insurance programs in calendar year 2003, and some  do not expect to have their systems implemented until September 2004.  Only 19 states implemented their wage insurance programs during 2003;  most of the remaining states have implemented or expect to implement  their programs during 2004 (see fig. 6). In addition, it is unknown how  many workers are currently utilizing wage insurance benefits. Of 1,962  TAA petitions approved during fiscal year 2003, 60 included approved  requests for the wage insurance program—but at the time we conducted  our data collection, Labor’s Division of Trade Adjustment Assistance had  no data on the number of older workers enrolled in the wage insurance  program. Labor is now collecting data on the number of workers enrolled  in the wage insurance program and will assess the implementation issues  associated with the wage insurance provision.
section_title: Demand for TAA Training Has Increased, and States Have Responded by Supplementing Limited TAA Funds with Other Federal Resources
paragraphs: Demand for TAA services has increased in recent years, and states have  responded by using other federal resources to supplement available TAA  funds. States have struggled to meet the higher demand with the TAA  resources available to them, and some states have temporarily  discontinued enrolling TAA-eligible workers in training, partly because of  funding shortfalls. A perception that all TAA-eligible workers are entitled  to training has contributed to problems with managing TAA training funds.  However, Labor has encouraged states to take various steps to manage  their limited TAA resources more effectively and to avoid treating training  as the best option for all participants, and many states have taken steps to  control their TAA training expenditures through efforts such as a more  careful screening of workers’ training needs. Most states’ primary  response to the increased demand for training has been to supplement  their TAA funds with other federal resources, although some barriers  remain to the integration of TAA with other federal programs.
subsections: section_title: Demand for TAA Services Increased during a Period of Manufacturing Job Loss, and States Have Struggled to Meet This Demand with Available TAA Funds
paragraphs: Demand for TAA assistance increased substantially between fiscal years  2001 and 2002, as measured by the estimated number of workers certified  and the number of workers entering training. After increasing in fiscal  year 2002, the number of workers certified and the number of workers  entering training did not experience a further substantial increase in fiscal  year 2003. According to Labor’s data, an estimated 270,000 workers were  certified as eligible for TAA services in fiscal year 2002, a roughly   65 percent increase from 2001 and the largest number in any year since at  least fiscal year 1995. The estimated number of certified workers then fell  to about 200,000 in fiscal year 2003 (see fig. 7).
Similarly, the number of eligible workers entering training annually  increased in fiscal year 2002 to about 45,000, a 51 percent increase over  fiscal year 2001 (see fig. 8).
The increase in program demand in fiscal year 2002 coincided with a sharp  decline in manufacturing employment that preceded the implementation  of the TAA Reform Act of 2002. After having been relatively steady since  1995, manufacturing employment began to decline in 1999, and the  steepest decline occurred between fiscal years 2001 and 2002—from about  16.8 million to about 15.5 million employees, almost an 8 percent drop (see  fig. 9). According to the Congressional Budget Office, increased  competition from imports is at least partially responsible for this decline in  manufacturing employment, coupled with the recession in 2001 and other  factors such as productivity improvements and reduced demand for  manufactured goods. The increase in demand for TAA services may be  more directly linked to the decline in manufacturing employment, insofar  as it was related to international trade, than to the TAA Reform Act of  2002. While demand for TAA services increased substantially during fiscal  year 2002, most provisions of the TAA Reform Act of 2002 did not take  effect until early in fiscal year 2003.
Many states report that available TAA training funds are not sufficient to  meet the increased demand for services. Most states anticipate that in  fiscal year 2004 they will have difficulties meeting the demand for TAA  training with TAA training funds alone—even though the amount of funds  available nationally for TAA training was doubled from $110 million to  $220 million between fiscal years 2002 and 2003. According to our survey,  35 states expect that available TAA training funds for fiscal year 2004 will  not cover the amount they will obligate and spend for TAA-eligible  workers during the fiscal year. Eighteen states estimate this gap at over   $1 million.
A factor that has contributed to the difficulty states face in meeting  increased demand is the perception that training is an entitlement for TAA- eligible workers. According to the TAA statute, a TAA-eligible worker is  entitled to training if six training approval criteria are met, including the  requirements that there is no suitable employment available for the worker  and that the training is available at a reasonable cost. These criteria give  states some discretion in determining which TAA-eligible workers should  receive training. However, officials in four of the five states we visited said  training has historically been viewed as an entitlement for the majority of  TAA-eligible workers and that this perception persists among some case  managers and unions. For example, an official in one state said some case  managers responsible for the TAA program tend to approve training  whenever a certified worker requests it, because they think these workers  are entitled to training. This view may complicate efforts to manage  limited TAA training funds. Two officials we talked with said training is  seen as an entitlement because suitable employment has been defined  through regulation as employment paying at least 80 percent of a worker’s  prelayoff wages. Most TAA-eligible workers, according to one of these  officials, have high prelayoff wages but job skills that don’t readily transfer  to a new job, so they would need training to obtain employment paying   80 percent of their prelayoff wages.
Partly in response to the limited TAA training funds available to meet the  demand for training, some states have temporarily discontinued enrolling  TAA-eligible workers in training for periods of time. Nineteen states  reported that, at some point between fiscal years 2001 and 2003, they  temporarily discontinued enrolling TAA-eligible workers in training  because they lacked adequate TAA training funds.  Six states reported  that they have taken this step during fiscal year 2004. These periods of  enrollment deferral may make it more difficult for workers to complete  their training programs. Pennsylvania, for example, stopped enrolling  newly eligible workers in training for a 3-month period during fiscal year  2003 following more than a year of unusually high demand for TAA  services. Workers seeking training during this period were given training  waivers so they could continue to collect extended income support. When  the state received additional TAA training funds from Labor, it encouraged  these workers to register for training and many did so. However, those  workers who enrolled in training had used up 3 months of extended  income support payments while waiting for training funds to become  available. As a result, they had fewer months of income support remaining  to complete their training programs, and officials are concerned that they  could be forced to drop out of their programs when they run out of  extended income support payments.
Since 2002, Labor has taken several steps intended to help states better  manage their TAA training resources at a time of increased demand. Labor  has encouraged states to put more emphasis on up-front assessment of  workers’ employment and training needs, so they can provide workers  with job search assistance rather than long-term training when  appropriate. Also, Labor has changed its approach to distributing TAA  training funds among the states. In the past, states requested TAA training  funds from Labor throughout the fiscal year as their needs arose. In fiscal  year 2004, for the first time, Labor allocated a portion of TAA training  funds among the states according to a formula. It allocated 75 percent of  available TAA training funds among the states at the beginning of the fiscal  year, based on states’ historical training allocations and historical number  of participants, and held the remaining 25 percent in reserve to help  states that experience large and unanticipated trade-related layoffs.  Labor’s goals in developing this new allocation approach were to give  states a better idea of the training resources available to them, so they  could more effectively plan for and budget their training expenditures, and  to ensure that funds are distributed among states according to their needs.  (App. IV contains information on the training funds received by each state  in fiscal years 2001 through 2003, and each state’s fiscal year 2004 formula  allocation.) Finally, Labor has encouraged states to obligate the TAA  training funds they receive in a fiscal year only for training costs that will  actually be incurred during that fiscal year, rather than for the full costs of  training programs that span multiple fiscal years. One of the main goals of  this effort, according to Labor officials, is to discourage states from tying  up current year funds for future training costs that may not be incurred if  workers drop out of training.
Many states are now making efforts to more carefully manage their TAA  training expenditures. More than half the states have developed new  guidelines for enrolling participants since fiscal year 2001, including   21 that have taken this step during fiscal year 2004. Four of the five states  we visited told us that they are making an effort to have case managers  more carefully assess whether training is the most appropriate strategy for  each TAA-eligible worker.  Also, many states report that since 2001 they  have tried to control the amount of training funds expended per TAA- eligible worker. Almost half the states have tried to control training costs  by enrolling TAA-eligible workers in shorter-term training.  States are also  reducing the maximum amount that may be spent on training for each  TAA-eligible worker. According to our survey, 37 states have established a  cost limit on the amount that may be spent on training for each TAA  participant, ranging from $3,500 to $25,000 (see fig. 10). Nine of these  states reduced their cost limits between fiscal years 2001 and 2003 as a  way to manage their TAA training funds, and 6 states have taken this step  during fiscal year 2004. For example, Pennsylvania reduced its cost limit  per TAA participant from $20,000 to $16,000 during fiscal year 2003, as part  of its efforts to control costs.
About half the states reported that since 2001 they have changed their  approach to obligating TAA training funds and are now obligating current  year funds only for current year training costs.  Twenty-three states  reported that they have taken this step in fiscal year 2004 alone. (See fig.  11 for the number of states that have taken the steps discussed above. See  app. V for a detailed listing of steps taken by each state.)
section_title: States Are Using Other Federal Funds to Supplement Case Management and Training for TAA-Eligible Workers
paragraphs: In addition to making changes in how they manage their TAA funds, states  have also been turning to other federal resources to help provide case  management and training to TAA-eligible workers. Labor has encouraged  states to combine TAA with other federal programs to serve TAA-eligible  workers, through written guidance and a series of regional forums for  state officials. In response to limited TAA funds, almost all states—46— reported on our survey that they have been co-enrolling TAA participants  in the WIA program for job search or training since 2001. States are also  increasingly using WIA national emergency grant funds to provide  services, including training and case management, to trade-affected  workers. The amount of national emergency grant funds awarded  annually to states specifically to serve TAA-eligible workers more than  doubled from about $50 million per year in fiscal years 2001 and 2002 to  about $120 million in fiscal year 2003.
subsections: section_title: Use of Other Federal Resources to Supplement TAA Case Management Funds
paragraphs: States use several federal funding sources to support case management for  TAA-eligible workers, and increasingly are relying on WIA resources for  this purpose. States may use their TAA administrative funds—15 percent  of their TAA training formula allocations—for case management, but most  states we visited said TAA administrative funds were not their main  funding source for TAA case management. Only 12 states reported that  they distribute TAA administrative funds to local areas to support case  managers working directly with TAA participants. In most of the states we  visited, officials told us that state Employment Service (ES) staff members  have historically been the primary providers of direct case management  services to trade-affected workers, and most states also told us that  Wagner-Peyser grant funds have been the main funding source for these  services. Several states told us that in recent years, they have increased  their reliance on WIA to provide case management to TAA-eligible  workers, and in the majority of states nationwide WIA and ES staff are  now the primary providers of case management services including  assessment of workers’ interests and skills, recommendation of training  programs, and follow-up with workers during training. Officials in two  states said they are relying on WIA to support case management for TAA- eligible workers partly in order to serve the increased number of workers  eligible for the program. Officials in two other states said they are using  WIA case managers to help meet their goal of more carefully assessing  TAA-eligible workers’ training needs, because these case managers have  experience with this type of assessment.
Most states are combining Wagner-Peyser funds, TAA administrative  funds, and different categories of WIA funds to support TAA case  management (see fig. 12). Most states—38—reported using three or more  different funding sources for TAA case management. Just four states  reported that they relied exclusively on a single funding source; two said  they used only Wagner-Peyser funds, and two said they used only TAA  administrative funds.
Officials from several local areas we visited said that within their local  areas, they are increasingly taking the same approach to serving all  dislocated workers, regardless of the programs in which they are  participating. In a local area in Maine, for example, all case managers at  the one-stop center—whether state ES or local WIA staff—have been  cross-trained on the TAA and WIA programs. Any case manager can serve  any dislocated worker, and dislocated workers receive the same case  management services regardless of whether they are enrolled in the TAA  program or the WIA dislocated worker program. A one-stop center in  North Carolina that we visited supports its TAA specialist, an ES staff  member, through several funding sources, including Wagner-Peyser grant  funds, local WIA funds, national emergency grant funds, and TAA  administrative funds. This staff member serves the TAA-eligible workers  who come to the one-stop center, as well as some dislocated workers who  are enrolled in WIA, and provides each one with similar case management  services. In another local area in Pennsylvania, trade-affected workers  initially meet with an ES staff member who determines their TAA  eligibility and provides an orientation to the benefits available through the  TAA program. They complete a set of case management activities,  including assessment and development of a training plan, which is  provided by a combination of ES and local WIA staff members and is  required of all dislocated workers.
Two local areas we visited that had recently experienced large trade- related layoffs relied on WIA’s national emergency grant funds to support  case management services for TAA-eligible workers. A local area in North  Carolina, for example, established a temporary one-stop center in a plant  that was shut down as a result of trade, and used a portion of its national  emergency grant funds to hire temporary ES staff members to help  operate this center. A local area in Maine used some of its national  emergency grant funds to temporarily hire peer support workers from  among the workers affected by the trade-related layoff. These peer  support workers provided a range of services, including outreach to  affected workers, counseling, and skill assessment. An official told us that  affected workers are more likely to trust peer support workers than other  case managers because they feel comfortable talking with a colleague who  has been through the same layoff experience.
section_title: Use of WIA to Supplement TAA Training Funds
paragraphs: In addition to providing case management for TAA-eligible workers, some  states also use WIA funds to supplement TAA training funds, and often use  the same lists of training providers for TAA as for WIA participants. For  example, North Carolina has encouraged its local areas to use their WIA  funds whenever possible to support the costs of TAA-eligible workers’  training. State officials feel their TAA training allocation is inadequate to  serve the large number of trade-affected workers in the state. A local area  in Texas reported that it sometimes combines TAA and WIA funds to pay  for a TAA-eligible worker’s training, for example, when the worker’s  training program costs more than the state’s cost limit for TAA training.  Three states we visited also use national emergency grant funds to support  training for TAA participants. According to our survey, 41 states have  applied for national emergency grant funds to supplement their TAA  training funds since 2001. In most states, workers are generally choosing  from the same list of training providers whether they are TAA or WIA  participants. Fourteen states reported that training programs approved for  TAA participants must be on the state’s WIA Eligible Training Provider  List, and an additional 23 states reported that most training programs  approved for TAA participants are on the state’s list.
section_title: Effect of WIA Performance Measures
paragraphs: While some states report making use of these other funding sources, some  officials also told us that WIA’s performance measures create an obstacle  to improved coordination between the programs. States and local areas  are held accountable for the employment outcomes of workers who  receive services through their WIA dislocated worker funds, including the  proportion of participants who obtain employment and the difference  between participants’ wages in their old and new jobs. States and local  areas receive financial incentives and sanctions based on their ability to  meet their goals on these performance measures. Officials in three states  we visited reported that WIA performance measures create a disincentive  to co-enroll TAA-eligible workers in WIA services. For example, an official  in one state said local WIA administrators often perceive trade-affected  workers as having high prelayoff wages but skills that are not readily  transferable, and therefore as having little chance of replacing their  prelayoff wages in a new job—one of several WIA performance measures.  Local officials are reluctant to enroll TAA-eligible workers in WIA, out of  concern that these workers will negatively affect their ability to meet their  WIA performance goals.
section_title: Information on Program Results Has Been Limited, but Labor Is Taking Steps to Collect Better Data
paragraphs: Information on TAA program results has historically been limited, but  Labor is making efforts to gather more complete outcome data and to  more accurately assess the program’s effectiveness. In 1999, Labor  introduced a new participant outcomes reporting system that was  designed to collect national information on TAA program outcomes and  uses these outcomes to track program performance against national goals.  However, in an earlier study we found that information captured by this  reporting system was often incomplete and many states did not validate  information reported to Labor. Labor has taken steps to improve the  accuracy of this information by requiring states to use UI wage records to  track outcomes. Some categories of workers, however, are not included in  these wage records and most states do little to supplement wage record  data with other data sources. As a result, program outcomes may be  understated. To evaluate the effects of the TAA program, Labor completed  a study of the program in 1993. However, because of methodological  issues and recent reforms to the program, the study’s conclusions are of  limited usefulness in assessing the current program. Labor recently  initiated a new 5-year study and expects the first of several interim reports  by mid-2005.
subsections: section_title: Labor Has Attempted to Improve Accuracy of TAA Data, But Information Gaps Remain
paragraphs: Labor has taken steps to improve the accuracy of TAA program  information captured by its participant outcomes reporting system, but  weaknesses persist. In an effort to improve information on the TAA  program, in fiscal year 1999 Labor introduced a new participant outcomes  reporting system, the Trade Act Participant Report (TAPR), that was  designed to collect national information on TAA program participants,  services, and outcomes, such as employment, employment retention, and  wages. States are required to submit quarterly summary reports on  participants who are no longer receiving any TAA program services. In an  earlier study, however, we found that some states reported incomplete  data on program outcomes and failed to validate participant information  reported to Labor. As a result, program information may have been  inaccurate. States reported that they relied heavily on participant surveys  to collect information on program outcomes such as employment and  earnings and that participants often did not return these surveys.  Furthermore, some states reported that they were unable to report more  complete information because they lacked the resources to expand their  data collection efforts to better capture program outcomes. Similarly,  Labor’s Inspector General also found that information on participants and  program outcomes collected in TAPR was inadequate for evaluating the  program’s performance against national goals.
In response to concerns about the reliability of data reported on TAA  participants, Labor has taken steps to improve the information captured in  its participant outcomes reporting system by incorporating wage records  data, but some states may not be accessing all available wage data. In  fiscal year 2001, Labor began requiring states to use UI wage records to  report outcomes for TAA program participants. While wage records  generally provide objective and accurate information to track workers’  employment and earnings, the data have limitations that may contribute to  understating of program outcomes. For example, state wage records only  capture information on workers who get jobs in that state and states  cannot easily access wage record information from other states. As a  result, states may not be able to provide outcome information for TAA  program participants who gained employment in another state.
To help track employment of TAA participants across state lines, some  states are using the Wage Record Interchange System (WRIS), a data  clearinghouse used under WIA that allows states to share their wage  record data. Since June 2002, states could use WRIS for reporting TAA  outcomes, but it is unknown how many states are using or plan to use this  system. While Labor officials told us that states are encouraged to use  WRIS to obtain more complete employment and earnings information on  TAA program participants, Labor could not provide information on how  many states are actually using this data clearinghouse to track former TAA  program participants because it does not have a mechanism in place to  identify these states. Officials in four of the five states we visited reported  that they are using WRIS to track program participants’ employment and  earnings outcomes.
Some individuals may not be captured by wage record data. Wage records,  which cover about 94 percent of workers, do not include some categories  of workers such as the self-employed, most independent contractors,  military personnel, federal government employees, and postal service  employees. Most states do little to supplement wage record data with  other data sources despite the fact that such information can be reported  to TAPR, and, as a result, program outcomes may be understated. Only 12  states reported that they collect data on outcomes such as employment,  earnings, or employment retention beyond what is required for TAPR.  Nine of these states reported collecting information on whether  participants find jobs after they leave the program (see fig. 13). This  information is generally collected through telephone interviews or mail  surveys of workers. Officials from two of these states reported that this  information is generally used as a local program management tool to  gauge the effectiveness of training programs or providers rather than to  collect more complete and accurate data for TAPR. In contrast, in a recent  study of WIA outcomes, we found that 39 states collect additional data to  more completely track the outcomes of WIA participants and to help them  manage their programs locally.
Labor tracks TAA program outcomes against national goals, but the TAA  program has not met all of its goals in any given year. Since fiscal year  2000, Labor has used outcomes that states report to TAPR to track  program performance against national goals related to employment,  wages, and job retention. For example, performance goals set for fiscal  year 2003 included having 78 percent of all participants find employment.  While Labor has exceeded some of its goals in previous years, it has never  met all of its goals in any given year. Furthermore, according to Labor’s  outcome data, none of the TAA performance goals set for fiscal year 2003  were met (see table 3).
In fiscal year 2004, Labor announced its new initiative to implement a  reporting system that would collect and report program performance for  all workforce programs administered by Labor, including TAA. This single  system is intended to reduce barriers to greater service integration across  federal workforce programs, and Labor also expects it will increase the  reliability of its performance data by standardizing measurements such as  employment, job retention, and earnings across all programs. The majority  of outcomes data will still be collected from wage records. However,  Labor officials also reported that states would be able to submit  supplemental information on program participants whose employment  status and wages are not captured in wage records. These supplemental  data, however, will not be included in annual performance outcomes  calculations.
section_title: No Recent Data Exist on Program Effectiveness, but Labor Is Initiating a New Impact Study
paragraphs: No information is currently available to accurately measure program  effectiveness. However, Labor has recently taken steps to better evaluate  the effect of TAA services on participants. While outcomes measures are  an important component of program management in that they assess  whether a participant is achieving an intended outcome—such as  obtaining employment—they cannot, by themselves, measure whether the  outcome is a direct result of program participation. Other influences, such  as the condition of the local economy, may affect an individual’s ability to  find a job as much or more than participation in an employment and  training program. In order to determine whether participant outcomes are  the effects of a program, rather than of other factors, it is necessary to  conduct an impact evaluation.
Labor last completed an evaluation of the TAA program in 1993 when it  analyzed the impact of TAA services, particularly training, on participants’  employment, job retention and earnings outcomes. The study compared  TAA participants with a sample of dislocated worker non-participants with  similar prelayoff characteristics. According to the study’s findings, TAA  program participants tended to have longer periods of joblessness than  other dislocated workers. Furthermore the study found that among TAA  program participants, certain participants—including women or those  with limited education—experienced especially long periods of  unemployment (see app. VI for an overview of demographic  characteristics of recent TAA participants). However, methodological  issues resulted in inconclusive findings regarding the impact of training on  TAA program participants’ employment and earnings. In addition, Labor  officials told us that because program benefits and services were  significantly changed in 2002, the study’s conclusions are of limited use in  assessing the current program.
Labor initiated a new 5-year study of the TAA program in 2004, and while  details of this study are still being determined, the study is expected to  consist of three phases. The first phase will be a study of the initial  implementation of the TAA Reform Act.  The longer-term phases of the  study include a quasi-experimental impact study and an in-depth study of  program administration that will identify promising practices and data  collection issues.  The second phase of the study will measure the effects  of program services such as training on participants’ employment,  earnings, and employment retention. The current plans include collecting  data from interviews and administrative records for both TAA program  participants and a comparison group of UI claimants, which will be  matched to participants using a technique that allows researchers to more  readily identify appropriate comparison groups. According to Labor  officials, the methodology expected to be used in this study to identify  comparison groups is an improvement over the methodology used in the  previous study and should provide them with more conclusive findings  about the impact of TAA services on participants. Although this is a  long-term study, several interim reports are expected. The first of several  interim reports is anticipated in mid-2005, and Labor expects to issue the  final report in 2009.
section_title: Conclusions
paragraphs: International trade is at least partially responsible for the decline in  manufacturing over the last several years in the United States. Workers  affected by trade may face greater barriers to reemployment than workers  laid off for other reasons, for example because trade-affected workers are  often older than other dislocated workers. By providing training and  extended income support, the TAA program is intended to help workers  laid off because of international trade obtain reemployment.
The TAA Reform Act of 2002 changed the program in several ways that  were intended to improve and expand services for trade-affected workers.  At this early stage in implementation, several changes appear to be helping  trade-affected workers. The clearest positive effect so far is that trade- affected workers are enrolling in services sooner, because of the new time  limit on Labor’s processing of TAA petitions and the new deadline for  workers to enroll in training. It is too early to tell what will be the results  of some changes, for example, how many workers will take advantage of  the new wage insurance benefit.
Meanwhile, states report that certain provisions of the Reform Act have  presented implementation challenges. The new training enrollment  deadline may be causing some workers to lose their eligibility for  extended income support, making it more difficult for them to complete  the training they may need to obtain reemployment at wages comparable  to their prelayoff wages. The new enrollment deadline may also be  preventing some workers from receiving thorough assessments of their  training needs and enrolling in the most appropriate training. Furthermore,  these difficulties may be heightened in the cases of very large layoffs.  Some officials report that eligibility requirements for the new HCTC have  increased their administrative workload by causing them to spend more of  their resources issuing training waivers just to facilitate workers’ eligibility  for the tax credit. Resources spent on issuing training waivers may be  detracting from time invested in providing workers with needed job  placement and training assistance. Furthermore, some find the eligibility  criteria for the wage insurance program problematic, for example because  the criteria require workers to lack easily transferable skills yet find re- employment without TAA-funded training. These eligibility criteria could  be resulting in the denial of wage insurance payments to some workers  who could benefit from the program.
section_title: Recommendation for Executive Action
paragraphs: We recommend that Labor monitor issues related to the implementation of  certain provisions of the TAA Reform Act that may have had unintended  consequences for some workers, and propose legislative changes as  deemed necessary. In particular, Labor should track over time the  following:  the ability of workers to meet the new training enrollment deadline and of  states and local areas to provide appropriate assessments to all trade- affected workers within the deadline, especially when responding to very  large layoffs, and   whether the eligibility criteria for the new wage insurance program are  resulting in the denial of services to some older workers who could benefit  from the program.
section_title: Agency Comments
paragraphs: We provided a draft of this report to officials at Labor for their review and  comment. In its comments, Labor did not raise any issues with our  findings, conclusions or recommendations. Labor provided technical  comments, which we include as appropriate.  Labor’s comments are  reproduced in appendix VII.
We are sending copies of this report to the Secretary of Labor, relevant  congressional committees, and others who are interested. Copies will also  be made available to others upon request. The report is also available at no  charge on GAO’s Web site at http://www.gao.gov.
Please contact me on (202) 512-7215 if you or your staff have any  questions about this report. Other major contributors to this report are  listed in app. VIII.
section_title: Appendix I: Objectives, Scope, and Methodology
paragraphs: We were asked to provide information on (1) how key provisions of the  Trade Adjustment Assistance (TAA) Reform Act have affected program  services, (2) what have been the challenges in implementing the TAA  Reform Act’s new provisions, (3) whether demand for TAA training has  changed, and how states are meeting this demand, and (4) what is known  about what the TAA program is achieving. To address these questions, we  conducted a Web-based survey of all 50 state workforce agencies that  administer the TAA program and Puerto Rico. We conducted site visits to  5 states—Maine, North Carolina, Pennsylvania, Texas, and Washington— and interviewed state and local officials in each state. We reviewed data  and documents from the U.S. Department of Labor (Labor) and other  sources. We also interviewed officials from Labor, the AFL-CIO, the  National Association of State Workforce Agencies, and the Congressional  Research Service.
subsections: section_title: Web-Based Survey
paragraphs: To collect broad information on TAA Reform Act implementation and  states’ management of their training funds, we surveyed state officials  from the 50 states and Puerto Rico in March, 2004. Washington, D.C. was  not surveyed because it did not have a TAA program. This structured  survey was administered via e-mail and the Internet and had a 98 percent  response rate, including responses from all 50 states. The survey was  designed to obtain information on the following: Labor and state efforts to  reach out to new categories of eligible workers such as secondary  workers, the effect of new training enrollment deadlines on services to  participants, and obstacles that states faced in implementing new  provisions in the TAA Reform Act, including the Health Coverage Tax  Credit and the wage insurance provision. The survey also included  questions on other sources of funds used to support services for TAA  participants and the extent to which states collect outcome data that is  more up to date and accurate than the data required by Labor.
Because this was not a sample survey, there are no sampling errors.  However, the practical difficulties of conducting any survey may introduce  other errors, commonly referred to as nonsampling errors. For example,  difficulties in how a particular question is interpreted, in the sources of  information that are available to respondents, or in how the data are  entered into a database or were analyzed can introduce unwanted  variability into the survey results. We took steps in the development of the  questionnaire, the data collection, and the data analysis to minimize these  nonsampling errors. For example, GAO survey specialists designed the  questionnaire in collaboration with GAO staff with subject matter  expertise. Then, the draft questionnaire was pretested with three state  officials to ensure that the questions were relevant, clearly stated, and  easy to comprehend. When the data were analyzed, a second, independent  analyst checked all computer programs. Since this was a Web-based  survey, respondents entered their answers directly into the electronic  questionnaire. This eliminates the need to have the data keyed into a  database, thus removing an additional source of error.
section_title: Site Visits
paragraphs: We selected 5 states for site visits according to several criteria, including  experience with large numbers of TAA participants in recent years,  representation of a range of adversely affected industries, states  recommended by Labor either as models in implementing TAA or as states  facing implementation challenges, and geographic diversity (see table 4).  In each state we interviewed state officials on topics including TAA  Reform Act implementation, management of TAA training funds, and  coordination between TAA and other federal programs.
Combined, the 5 states constituted about 36 percent of the national total of  TAA participants from fiscal years 2000 through 2002 (see fig. 14).
We judgmentally selected two local areas in each state and visited a mix of  urban and rural areas (see table 5). We met with local officials, program  participants, employers, and workforce investment board members. We  collected information on how local areas are implementing provisions of  the TAA Reform Act and how they are coordinating Workforce Investment  Act and TAA funds.
section_title: Review of Data from Labor and Other Sources
paragraphs: We reviewed data from Labor on petitions, participants, services,  performance, and expenditures from fiscal year 1999 to fiscal year 2003.  For fiscal year 2003, we broke out data on petition-processing times  between workers served prior to the TAA Reform Act and those served  after implementation of the Reform Act in an attempt to isolate the effects  of program changes. We assessed the reliability of key data by  interviewing Labor officials, reviewing Labor documentation, and  performing edit checks of computer-based data. We found some  limitations in these data but judged the data to be sufficiently reliable for  the purposes of our reporting objectives. In particular, some data on  certified workers and on the number of workers entering training annually  may have inaccuracies, but we believe these data to be sufficiently reliable  for the purpose of demonstrating trends over time, the main focus of our  reporting objective. Data that were used for background purposes and  provided in app. VI were not independently verified.
section_title: Appendix II: Final Decisions Rendered by the U.S. Court of International Trade on Appealed TAA Cases, Fiscal Years 1999-2004
paragraphs: Workers whose petitions for certification of TAA eligibility are denied by  the U.S. Department of Labor may seek judicial review of Labor’s decision  by filing an appeal with the U.S. Court of International Trade. Workers  may file such an appeal either after Labor’s negative determination on the  initial petition or after Labor’s negative determination on a reconsideration  of its determination. The U.S. Court of International Trade may affirm the  action of the Department of Labor, set it aside in whole or in part, or  return—termed remand—the case to Labor to take further evidence.
section_title: Appendix III: Certified Workers, Benefit Recipients, and Expenditures
paragraphs: Appendix III: Certified Workers, Benefit  Recipients, and Expenditures  The data used for this table are estimates of the number of workers certified as eligible for TAA,  based on estimates of the number of affected workers submitted by companies at the time TAA  petitions are filed with the Department of Labor. At the time petitions are submitted, companies may  not know exactly how many workers will be affected. We use these estimates because the  Department of Labor does not collect data on the number of workers ultimately certified.
This figure is an underestimate of the total number of workers entering training, because some states  do not capture all workers entering training in the data they submit to Labor.
Includes costs of tuition, transportation, subsistence, and related expenses for all workers who  received training during the year. States may pay some of these costs through funding sources other  than TAA, such as WIA funds.
section_title: Appendix IV: State Training Allocations, Fiscal Years 2001-2004
paragraphs: Prior to fiscal year 2004, Labor awarded TAA training funds to states based  on their requests throughout the fiscal year. In fiscal year 2004, Labor  allocated 75 percent of available training funds among the states at the  beginning of the fiscal year according to a formula. The amounts allocated  to states at the beginning of fiscal year 2004 are their base allocations.  Labor held the remaining 25 percent of available training funds in reserve  to help states respond to large and unanticipated layoffs throughout the  year. States are eligible to submit requests for 25 percent reserve funds  only after they have expended 50 percent of their base allocations.
section_title: Appendix V: Detailed Listing of Steps States Report Taking in Response to Limited TAA Training Funds
paragraphs: X  year funds only  for current year            () indicates state anticipates taking step during fiscal year 2004.
The survey was fielded in March 2004, therefore these results reflect steps states have taken during  the first six months of fiscal year 2004 and steps states anticipate taking during the last six months of  fiscal year 2004.
section_title: Appendix VI: Demographic Characteristics of TAA Participants
paragraphs: Through the Trade Act Participant Report (TAPR), states regularly submit  data to Labor on the demographic characteristics of TAA participants. The  data provided below are for participants who completed program services  or stopped receiving services between July 1, 2001, and June 30, 2002.  These data include workers who received services under either or both the  TAA program and the NAFTA-TAA program.
section_title: Appendix VII: Comments from the Department of Labor
section_title: Appendix VIII: GAO Contacts and Staff Acknowledgments
subsections: section_title: GAO Contacts
section_title: Staff Acknowledgments
paragraphs: Irene J. Barnett and Eric Clemons made significant contributions to this  report in all aspects of the work throughout the assignment. In addition,  Stuart Kaufman assisted in the design of the state survey, George Quinn Jr.  assisted in the analysis of survey data, Ray Wessmiller assisted in the  analysis of data collected from the Department of Labor, and   Shana Wallace contributed to the development of the report’s overall  methodology. Jessica Botsford and Richard Burkard provided legal  support, and Corinna Nicolaou assisted in the message and report  development.
section_title: Related GAO Products
paragraphs: Workforce Investment Act: States and Local Areas Have Developed  Strategies to Assess Performance, but Labor Could Do More to Help.   GAO-04-657. Washington, D.C.: June 1, 2004.
National Emergency Grants: Labor Is Instituting Changes to Improve  Award Process, but Further Actions Are Required to Expedite Grant  Awards and Improve Data. GAO-04-496. Washington, D.C.: April 16, 2004.
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.
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: 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.
Trade Adjustment Assistance: Experiences of Six Trade-Impacted  Communities. GAO-01-838. Washington, D.C.: August 24, 2001.
Trade Adjustment Assistance: Trends, Outcomes, and Management  Issues in Dislocated Worker Programs. GAO-01-59. Washington, D.C.:  October 13, 2000.