Employment and Training Program Grants: Labor Has Outlined Steps for Additional Documentation and Monitoring but Assessing Impact Still Remains an Issue
Published: 2008-09-23T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: Since 2001, Labor has spent nearly $900 million on the High Growth Job Training Initiative (High Growth), Community-Based Job Training Initiative (Community Based), and the Workforce Innovation in Regional Economic Development (WIRED). This testimony addresses 1) the intent of the grant initiatives and the extent to which Labor will be able to assess their effects; (2) the extent to which the process used competition, was adequately documented, and included key players; and (3) what Labor is doing to monitor individual grantee compliance with grant requirements. This testimony is based on GAO's May 2008 report (GAO-08-486) and additional information provided by the agency in response to the report's recommendations. For that report, GAO reviewed Labor's strategic plan, documents related to evaluations of the initiatives, internal procedures for awarding grants, relevant laws, and monitoring procedures, and conducted interviews.
section_title: What GAO Found
paragraphs: According to Labor officials, the grant initiatives were designed to shift the focus of the public workforce system toward the training and employment needs of high-growth, in-demand industries, but Labor will be challenged to assess their impact. Under the initiatives, Labor awarded 349 grants totaling almost $900 million to foster this change. However, the grant initiatives were not fully integrated into Labor's strategic plan or overall research agenda, so it is unclear what criteria Labor will use to evaluate their effectiveness. Labor lacks data that will allow it to compare outcomes for grant-funded services with those of other federally funded employment and training services. GAO recommended that Labor take steps to ensure that it could evaluate the initiatives' impact, but its response to our recommendation suggests that conditions remain much as they were when GAO did its audit work. While grants under all three initiatives are now awarded competitively, the initial noncompetitive process for High Growth grants was not adequately documented. Community Based and WIRED grants have always been awarded competitively, but more than 80 percent of High Growth grants were awarded without competition. Labor could not document criteria used to select the noncompetitive High Growth grants or whether these grants met internal or statutory requirements. In response to the report recommendation, Labor modified review forms used in its noncompetitive process to include documentation of statutory requirements; however, GAO has not evaluated the sufficiency of these changes. Another issue related to the process was that meetings Labor held to identify solutions for industry workforce challenges did not include the vast majority of local workforce investment boards. Labor provides some monitoring for grantees under all three initiatives and uses a risk-based monitoring approach for the High Growth and Community Based grants. However, when GAO conducted its audit work there was no risk-based monitoring approach for WIRED, and therefore recommended that Labor establish one. In response to the report recommendation, Labor documented steps it has taken to put a monitoring approach in place for WIRED grants. GAO has not reviewed the sufficiency of these steps.

section_title: Letter
paragraphs: I am pleased to be here today to discuss the High Growth Job Training  (High Growth), the Community Based Job Training (Community Based),  and the Workforce Innovation in Regional Economic Development  (WIRED) initiatives. Since 2001, the Department of Labor (Labor) has  spent almost $900 million on these three employment and training grant  initiatives to address what it perceived as shortcomings in the one-stop  service delivery system. My testimony today focuses on (1) the intent of  the grant initiatives and the extent to which Labor will be able to assess  their effects; (2) the extent to which the process used competition, was  adequately documented, and included key players; and (3) what Labor is  doing to monitor individual grantee compliance with grant requirements.  My testimony today is based primarily on findings from our May 2008  report, and additional information provided by the agency in response to  the report’s recommendations. Those findings were based on multiple  methodologies including a review of Labor’s strategic plan, documents  related to evaluations of the initiatives and their purpose, internal  procedures for awarding grants, relevant laws, and monitoring procedures.  We also interviewed relevant Labor officials and persons with recognized  workforce and training expertise. We conducted that performance audit  from May 2007 to May 2008 in accordance with generally accepted  government auditing standards.
In summary, according to Labor officials, the grant initiatives were  designed to shift the focus of the public workforce system toward the  training and employment needs of high-growth, in-demand industries, but  Labor will be challenged to assess their impact. The grant initiatives were  not fully integrated into Labor’s strategic plan or overall research agenda,  making it unclear what criteria Labor will use to evaluate their  effectiveness, and Labor lacks data that will allow it to compare outcomes  for grant-funded services to those of other federally funded employment  and training services. We recommended that Labor take steps to ensure  that it could evaluate the impact of the initiatives. Labor’s response to our  recommendation suggests that conditions remain much as they were when  we did our audit work. While grants under all three initiatives are now  awarded competitively, more than 80 percent of High Growth grants were  awarded without competition. Moreover, Labor could not document  criteria used to select the noncompetitive High Growth grants or whether  these grants met internal or statutory requirements. In response to a report  from its Inspector General, Labor took steps to strengthen the  noncompetitive process, but these procedures did not explicitly require  documentation of compliance with statutory program requirements. In  response to our recommendation, Labor modified its review forms used in  its noncompetitive process to include such documentation. We have not  reviewed the sufficiency of these changes. Another issue related to the  process was that meetings Labor held to identify solutions for industry  workforce challenges did not include the vast majority of local workforce  investment boards, even though WIA makes these boards central to the  workforce system. Finally, Labor provides some monitoring for grantees  under all three initiatives and uses a risk-based monitoring approach for  the High Growth and Community Based grants. When we conducted our  audit work, there was no risk-based monitoring approach for WIRED, and  we recommended Labor establish one. In response to our  recommendation, Labor documented steps it has taken to put a monitoring  process for WIRED in place. We have not reviewed the sufficiency of these  steps.
subsections: section_title: Background
paragraphs: When it was enacted in 1998, WIA created a new, comprehensive  workforce investment system designed to change the way employment  and training services are delivered. Under WIA, each state designates local  workforce investment areas across the state. Each local area is governed  by local workforce investment boards that make decisions about the  number and location of one-stop career centers, where partner programs  make their services and activities available. Local boards are required to  promote employers’ participation in the workforce investment system and  assist them in meeting hiring needs. Training services provided must be  directly linked to occupations in demand in the local area. WIA requires  states and localities to track the performance of WIA-funded activities and  Labor to hold states accountable for their performance in the areas of job  placement, employment retention, and earnings change.
The Employment and Training Administration (ETA) oversees the High  Growth, Community Based, and WIRED grant initiatives. The vast majority  of these grants are awarded under a provision of WIA, which provides  authority for demonstration, pilot, multiservice, research, and multistate  projects, and a provision of the American Competitiveness and Workforce  Improvement Act (ACWIA), which provides authority for job training  grants funded by the H-1B visa program.
Labor is required to conduct impact evaluations of its programs and activities  carried out under WIA, including pilot and demonstration projects. While  impact evaluations make it possible to isolate a program’s effect on  participants’ outcomes, there are several ways to conduct them, including  experimental and quasi-experimental methods. In 2004 and 2007, GAO  recommended that Labor comply with WIA requirements to conduct an  impact evaluation of WIA services to determine what services are most  effective for improving employment-related outcomes. Labor agreed with our  recommendation. In December 2007, the agency announced it had begun a  quasi-experimental evaluation⎯an impact evaluation that does not use a  control group—of the WIA Adult and Dislocated Worker programs, with a  final report expected in November 2008.
Federal law recommends, but does not require, that all grants be awarded  through competition. The Federal Grant and Cooperative Agreement Act  encourages competition in grant programs, where appropriate, to ensure  that the best possible projects are funded. In addition, Labor’s own  guidance governing procurement and grant operations—the Department  of Labor Manual Series—states that competition is recommended, unless  one or more of eight exceptions apply. Further, a guide on improving  grant accountability developed by the Domestic Working Group Grant  Accountability Project recommends grants be awarded competitively  because competition facilitates accountability, promotes fairness and  openness, and increases assurance that grantees have the systems in place  to efficiently and effectively use funds to meet grant goals.
Effective monitoring is also a critical component of grant management.  The Domestic Working Group’s suggested grant practices state that  financial and performance monitoring is important to ensure  accountability and the attainment of performance goals. Labor monitors  most grants through a risk-based strategy based on its Core Monitoring  Guide. A key goal is to determine compliance with specific program  requirements. In addition, entities receiving Labor grants are subject to the  provisions of the Single Audit Act if certain conditions are met. A single  audit is an organization-wide audit that covers, among other things, the  recipient’s internal controls and its compliance with applicable provisions  of laws, regulations, contracts, and grants.
section_title: Grants Are Intended to Change the Workforce System, but Labor Will Be Challenged to Evaluate Their Impact
paragraphs: According to Labor officials, the grant initiatives are designed to change  the focus of the public workforce system to emphasize the employment  and training needs of high-growth, high-demand industries, but Labor will  be challenged in assessing their impact. For the three grant initiatives,  Labor awarded 349 grants totaling almost $900 million that were intended  to bring about this change by identifying the workforce and training needs  of growing, high-demand industries; engaging workforce, industry, and  educational partners to develop innovative solutions to workforce  challenges, such as worker shortages; leveraging a wide array of resources  to fund the solutions; and integrating workforce and economic  development to transform regional economies by creating good jobs.  However, 7 years after awarding the first grant, Labor will be challenged to  evaluate the effect of the grants. We recommended that Labor take steps  to ensure that it could, but its response to our recommendation suggests  that conditions remain much as they were when we did our audit work.
subsections: section_title: Labor Said the Grants Are Designed to Make the Workforce System More Focused on High-Growth, High-Demand Industries
paragraphs: According to Labor officials, the High Growth, Community Based, and  WIRED initiatives are designed to collectively change the focus of the  workforce investment system by giving greater emphasis to the  employment and training needs of high-growth, high-demand industries.  They characterized High Growth as a systematic change initiative designed  to make the system more demand-driven (i.e., focused on the needs of  growing and high-demand industries) and to make the system’s approach  to workforce development more strategic by engaging business, industry,  and education partners to identify workforce challenges and solutions.   As a related effort, the Community Based grants were designed to build  the training capacity of community colleges for high-growth, high-demand  occupations. The goal of third grant initiative, WIRED, was to “catalyze”  the creation of high-skill and high-wage opportunities for workers within  the context of regional economies, to test models for integrating  workforce and economic development, and to demonstrate that workforce  development is a key driver in transforming regional economies. From  2001 through 2007, Labor awarded 349 grants totaling almost $900 million  for these initiatives (see table 1).
Labor officials said a number of indicators show that the initiatives are  changing the system. According to Labor, they have seen a “system-shift”  in the approach to implementing workforce solutions through an increase  in demand-driven topics at conferences since the roll out of the initiatives.  Labor said this shift has been driven by partnerships between the  workforce investment system, business, industry, and educators using the  High Growth framework. Labor also said it is seeing demand-driven  strategies in state and local strategic plans and in states using their own  money to fund High Growth-like projects. Labor pointed out that the  system has evolved to the point where high performing local workforce  boards with demand-driven practices are mentoring lesser performers.  Lastly, Labor said the content on its Web site, Workforce3 One, was also  evidence of change. For example, Labor held an interactive seminar  broadcast on this site to train participants to use an online tool to share  curricula developed through the initiatives.
However, experts identified a number of challenges states face in pursuing  demand-driven practices. These included insufficient funding, limited  flexibility in how funds can be used, statutory requirements to target  services to certain groups of workers, and the need to respond to local  economic conditions. Commenting on workforce boards’ ability to form  strategic partnerships, one expert noted that there are no funds to support  such endeavors and no performance standards to measure them. With  regard to regional economic development, experts said boards are  structured around local areas, not regions, regional economies are highly  variable, regional governance structures can make achieving buy-in  difficult and that rural areas can be particularly challenged in pursuing  regional approaches.
section_title: Seven Years After Awarding the First Grant, Labor Will Be Challenged to Evaluate Their Impact
paragraphs: Despite the money invested and emphasis placed on these initiatives,  Labor did not fully integrate them into its strategic plan or ETA’s research  plan from the start. The Government Performance and Results Act states  that strategic plans shall contain strategic goals and objectives, including  outcome-related, or performance goals, and objectives for an agency’s  major functions and operations. However, the strategic plan includes  performance goals only for the Community Based initiative. High Growth  and WIRED—the two initiatives where Labor spent the most money⎯are  mentioned in the strategic plan, but not specifically linked to a  performance goal; therefore, it is unclear what criteria Labor will use to  evaluate their effectiveness. Moreover, the data needed to assess the  performance of these initiatives are not specified. Labor officials said the  strategic plan did not address the initiatives because it focuses on budget  issues. Just as the initiatives are not fully integrated into the strategic plan,  neither are they fully integrated into ETA’s research plan, which cites  plans for future evaluations, but it does not specify an assessment of their  impact. In responding to recommendations made in our May 2008 report,  Labor said only that it would consider inclusion of the initiatives in its next  5 year research agenda due for revision in 2009.
Not fully incorporating the initiatives into its strategic or research plans  may have limited Labor’s ability to collect consistent outcome data. Labor  said that, prior to 2005, it consistently collected data from grantees on the  number of participants enrolled in and completing training funded under  High Growth—the only one of the three grant initiatives operating at that  time. However, it did not collect performance outcomes similar to those  being collected for its other training and employment services.
Labor will face challenges in obtaining the data necessary to make  meaningful comparisons. In 2005, Labor instituted what were called  common measures to assess the effectiveness of one-stop programs and  services. The common measures include participant employment  outcomes, earnings, and job retention after receiving services. At the time,  Labor could not require High Growth and Community Based grantees to  provide data on the common measures because it did not have Office of  Management and Budget (OMB) approval. In anticipation of OMB  approval, starting in 2006, Labor included information on the common  measures in all new solicitations for High Growth and Community Based  grants, notified grantees of its goal for standardizing performance  reporting, and provided technical assistance to help grantees prepare for  it. Labor also encouraged grantees to work with local workforce system  partners to leverage their experience in tracking and reporting  performance outcomes. According to Labor, it has an OMB approved  reporting format in place and expects data collection to begin in early  program year 2008. However, because some of the first grantees have  already completed their projects, obtaining information about workers  that have left the program may prove difficult and costly. According to  Labor, it can collect common measures for WIRED grantees, but it has not  yet done so.
As a result, Labor may not have consistent data for individuals  participating in the programs funded under the grant initiatives. In  addition, it may lack data that will allow it to compare outcomes for  individuals served by grant-funded programs with those served by  employment and training programs offered through the one-stop system.  Having comparable outcome data is important because the goal of an  impact evaluation is to determine if outcomes are attributable to a  program or can be explained by other factors.
Labor has some plans underway to evaluate the initiatives but may face  challenges drawing strong conclusions from them. Labor has conducted  an evaluation of the implementation and sustainability of 20 early High  Growth grantees. It is now evaluating the impact of the training provided  by High Growth grantees. Labor anticipated the final report in December  2008, but now expects it in spring 2009. Labor experienced a number of  challenges in evaluating the initiatives. These include having to limit its  evaluation to only 6 grantees of 166, because only 6 had sufficient  participants to ensure a statistically significant evaluation. They also  include problems gaining access to workers’ earnings data and  inconsistent outcome data from grantees.
Labor officials said they plan to conduct a comprehensive evaluation of the  Community Based initiative. The first phase of the evaluation will examine the  extent to which the Community Based grants addressed the stated workforce  objectives and challenges funded projects were intended to address, as well as  document the role of business and the workforce investment system in the  overall success of the grants, according to Labor. This phase will also include  an examination of the feasibility of performing an impact evaluation and will be  completed in late 2008. Depending on the results of this phase, Labor officials  said an impact evaluation will begin in 2009.
For its evaluation of the WIRED initiatives, Labor says it is examining the  implementation and cumulative effects of WIRED strategies, including  change in the number and size of companies in targeted high-growth  industries and whether new training led to job placement in the targeted  industries. It contracted with the Berkeley Policy Associates to conduct  the evaluation for the first 13 grantees, and a final report is expected by  June 2010. It also contracted with Public Policy Associates to similarly  evaluate the 28 remaining WIRED grantees.
Labor officials said these initiatives are not included in the agency’s  broader WIA impact study. According to Labor, none of the three  initiatives is considered to be a research project or designed to compare  participant outcomes with the participant outcomes achieved under WIA.  Labor said it does not plan to include them in the assessment of the impact  of WIA services because the initiatives have their own independent  evaluations.
section_title: The Initial Noncompetitive Process Was Not Adequately Documented and Did Not Include Key Players
paragraphs: While Labor now awards grants under all three grant initiatives  competitively, initially almost all High Growth grants were awarded  without competition. Labor also did not document the criteria for selecting  noncompetitive High Growth grants or whether they met Labor’s internal  requirements or the requirements of the laws under which the grants are  authorized. In response to recommendations we made in our May 2008  report, Labor said it had modified its noncompetitive process so it now  includes documentation of statutory program requirements. We have not  evaluated the sufficiency of the modified forms for ensuring statutory  compliance. Another issue with the process was that meetings Labor held  to identify workforce solutions did not include most of the state and local  workforce investment boards.
subsections: section_title: All Three Types of Grants Are Now Awarded Competitively, but the Vast Majority of High Growth Grants Were Awarded Without Competition
paragraphs: The Community Based and the WIRED grants have always been awarded  through a competitive process but, until 2005, Labor did not award High  Growth grants competitively even though federal law and Labor’s internal  procedures recommend competition. While Labor had discretion in  awarding High Growth grants without competition, the extent to which it  did so raises questions about how Labor used this method of awarding  grants. Competition facilitates accountability, promotes fairness and  openness, and increases assurance that grantees have systems in place to  meet grant goals. Yet Labor chose to award 83 percent of the High Growth  grants, which represented almost 90 percent of the funds, without  competition between fiscal years 2001 and 2007 (see table 2). Congress  required that High Growth grants funded by H-1B fees be awarded  competitively for fiscal years 2007 and 2008. Prior to that time, there were  no provisions requiring Labor to award High Growth grants competitively.
Labor said that it used a noncompetitive process to promote innovation.  They also said that they awarded grants without competition to save the  time it would have taken to solicit grants through competition. In  hindsight, they said they could have offered the High Growth grants  competitively earlier because they recognized that the number of  noncompetitive awards created a perception that the process was unfair.  They said, however, that they always intended to award later grants  competitively.
In contrast to the High Growth grants, the Community Based and WIRED  initiatives have always been awarded through competition. These funding  opportunities were announced to potential applicants through a  solicitation for grant application that listed the information that an  application must include to compete for funding. These applications were  then reviewed and scored by a knowledgeable technical panel. These  solicitations were also reviewed by Labor attorneys for compliance with  procurement and statutory program requirements for awarding grants,  according to officials.
section_title: Labor Did Not Document the Criteria for Selecting Noncompetitive High Growth Grants or Whether They Met Labor’s Internal Requirements or Requirements of the Law
paragraphs: Because the initial High Growth process was noncompetitive,  documenting the decision steps was all the more important to ensure  transparency. However, Labor was unable to provide documentation of  the initial criteria for selecting grantees. As a result, it did not meet federal  internal control standards, which state that all transactions and other  significant events need to be clearly documented and that the  documentation should be readily available for examination. In addition, it  was unable to document that it met the statutory requirements for the laws  authorizing the grants. Finally, according to Labor’s Inspector General, it  did not adequately document that it had followed its own procedures for  awarding grants without competition.
Labor did not document the criteria used to select the early  noncompetitive High Growth projects. Labor officials told us there were  no official published guidelines specific to High Growth grants, only draft  guidelines, which were no longer available. In addition, Labor officials told  us that generally they were looking for grantees that pursued partnerships  and leveraged resources, but that attributes they sought changed over  time. Labor published general requirements for noncompetitive grants in  2005 and updated them in 2007. Officials said these were not requirements,  only guidelines for the kinds of information Labor would find valuable in  evaluating proposals.
In addition, while Labor said that it had discretion to award high growth  grants non-competitively under the WIA provision authorizing  demonstrations and pilot projects and under ACWIA before 2007, they  could not document that the grants fully complied with the requirements  of these provisions. For example, WIA requirements include providing  direct services to individuals, including an evaluative component, and  being awarded to private entities with recognized expertise, or to state and  local entities with expertise in operating or overseeing workforce  investment programs. Officials said that they were certain they had  ensured that the projects met all statutory requirements but acknowledged  they did not document that the requirements were met.
Labor’s Inspector General found the agency did not always document that  it followed its own procedures or always obtained required review and  approval before awarding grants noncompetitively. Labor officials said  most of the noncompetitive grant proposals were presented to Labor’s  Procurement Review Board for review and approval allowed under  exceptions for proposals that were unique or innovative, highly cost- effective, or available from only one source. However, in 2007, Labor’s  Inspector General reviewed a sample of the noncompetitive High Growth  grants awarded between July 2001 and March 2007 and found that 6 of the  26 grants, which should have undergone review, were awarded without  prior approval from the review board. Furthermore, they found that Labor  could not demonstrate that proper procedures were followed in awarding  the High Growth grants without competition.
Although they were unable to provide documentation, Labor officials said  they used considerable rigor in selecting grant recipients under the  noncompetitive process. Similar to a competitive process, the  noncompetitive grant proposals were highly scrutinized and reviewed to  ensure they made best use of scarce resources. They said that, in most  cases, staff created abstracts to highlight strengths and weaknesses, and  multiple staff and managers participated in reviews and decision-making.  In addition, Labor officials strongly disagreed with the majority of the  Inspector General’s findings. They said they followed established  procurement practices as required but agreed that additional  documentation would be valuable.
In response to the Inspector General’s report, Labor took steps to  strengthen the noncompetitive process. These included developing  procedures to review noncompetitive grant proposals for criteria including  support of at least one of ETA’s strategic goals and investment priorities.  The procedures also required ETA to document that required procedures  are followed and that required review and approval is obtained before  awarding grants noncompetitively. However, the newly developed  procedures did not explicitly identify the statutory program requirements  for which compliance should be documented. In response to a  recommendation in our May 2008 report, Labor provided modified forms  used in the noncompetitive process to include statutory program  requirements and said that grant officers and program officials must  confirm that the proposed grant is in compliance with these requirements.  We have not evaluated the sufficiency of the modified forms for ensuring  statutory compliance or reviewed how grant and program officers confirm  compliance using the forms.
section_title: Labor’s Process for Identifying Industry Workforce Challenges Did Not Include the Majority of Workforce Investment Boards
paragraphs: The vast majority of workforce boards—which oversee the workforce  investment system—were not included in the meetings that served as  incubators for grant proposals. After identifying 13 high-growth/high- demand sectors, Labor held a series of meetings between 2002 and 2005  with industry executives and other stakeholders to identify workforce  challenges and to develop solutions to them. According to Labor, they  first held meetings with industry executives—executive forums—for 13  sectors to hear directly from industry leaders about the growth potential  for their industries and to understand the workforce challenges they faced.  Second, they hosted a series of workforce solutions forums for 11 of the  sectors, which brought together industry executives (often those engaged  in human resources and training activities) with representatives from  education, state and local workforce boards, or other workforce-related  agencies. However, a review of Labor’s rosters for the solutions forums  shows that while there were more than 800 participants, 26 of the almost  650 local workforce boards nationwide were represented, and these came  from 15 states. (See fig. 1.)
Further only 20 of the 50 states had their state workforce investment  board or other agency represented (see table 3).
Labor officials said they went to great lengths to include workforce system  participants in solutions forums. Officials said they asked state workforce  agencies to identify a state coordinator to interface with Labor, work  collaboratively with industry partners, and identify potential attendees for  executive and solutions forums. Further, the state coordinators were to  help Labor communicate with the workforce system about High Growth  activities and were kept updated through routine conference calls and  periodic in-person meetings, according to Labor. Labor officials also said  the Assistant Secretary and other senior officials traveled frequently,  speaking to workforce system partners at conferences to gather  information about innovative practices. Labor officials said, even with  these efforts, they found only a few workforce boards operating unique or  innovative demand-driven programs.
However, most workforce board officials we spoke to in our site visits  reported becoming aware of the meetings and the grant opportunities after  the fact, even though they were pursuing the kinds of innovative practices  the meeting was supposed to promote. Some state board officials said that  they were often unaware that grants had been awarded, and at least one  local workforce board said it became aware of a grant only when the  community college grantee approached it for assistance in getting enough  students for their program. In addition, officials in states we visited said  they had been developing and using the types of practices that Labor was  seeking to promote at the meetings.
Being present at the meetings could have been beneficial to workforce  boards. Labor officials acknowledged that when meeting participants  suggested a solution to an employment challenge that they deemed  innovative and had merit, they encouraged them to submit a proposal for a  grant to model the solution. In addition, officials said that, in some cases,  they provided applicants additional assistance to increase the chances that  the proposal would be funded.
section_title: Labor Uses a Risk- Based Monitoring Approach for High Growth and Community Based Grants and Has Documented Steps for Monitoring WIRED Grants
paragraphs: For all three grant initiatives, Labor has a process to resolve findings  found in single audits, collects quarterly performance information, and  provides technical assistance as a part of monitoring. In addition, it has a  risk-based monitoring approach for High Growth and Community Based  grants. When we conducted our audit work, there was no risk-based  monitoring approach for WIRED. In response to our recommendation,  Labor has documented steps it has taken to put a monitoring approach in  place for WIRED grants.
subsections: section_title: Labor Has a Process to Ensure Grantees Resolve Findings in Single Audits, Collects Quarterly Performance Information, and Provides Technical Assistance
paragraphs: Labor said it has a process to work with grantees, including High Growth,  Community Based, and WIRED to resolve findings in single audits.  However, Labor’s Inspector General reported that Labor does not have  procedures in place for grant officers to follow up with grantees with past  due audit reports to ensure timely submission and thus proper oversight  and correction of audit findings. The Inspector General recommended that  Labor implement such procedures, and Labor has done so, but the finding  remains open because Labor’s Inspector General has not yet determined if  the procedures adequately address the recommendation.
As part of its monitoring, Labor requires High Growth, Community Based,  and WIRED grantees to submit quarterly financial and performance  reports. Financial reports contain information, such as total amount of  grant funds spent and amount of matching funds provided by the grantee.  Performance reports focus on activities leading to performance goals,  such as grantee accomplishments and challenges to meeting grant goals.  Labor officials said they review these reports and follow up with grantees  if there are questions. Labor officials acknowledge, however, that they are  still working to ensure the consistency of performance reports provided  by High Growth and Community Based grantees and are working with  OMB to establish consistent reporting requirements. In addition, while the  finding was not specific to these three grants, Labor’s Inspector General  cited high error rates in grantee performance data as a management  challenge. Labor is taking steps to improve grant accountability, such as  providing grantee and grant officer training.
All grantees receive technical assistance from Labor on how to comply  with laws and regulations, program guidance, and grant conditions. For  example, Labor issued guides for High Growth and Community Based  grantees that include information on allowable costs and reporting  requirements. In addition, Labor officials said they trained national and  regional office staff to address grantees’ questions and help High Growth  and Community Based grantees obtain assistance from experts at Labor  and other grantees. Labor officials said they hold national and regional  High Growth and Community Based grantee orientation sessions for new  grantees, present technical assistance webinars and training sessions  focused on specific high-growth industries, assist grantees with  disseminating grant results and products, such as curricula, and set up  virtual networking groups of High Growth grantees to encourage  collaboration.
Labor officials told us they have teams who provide technical assistance to  each WIRED grantee including weekly contact. During these sessions,  Labor staff work with WIRED grantees on grant management issues, such  as costs that are allowed using grant funds. Labor staff provide additional  assistance through conference calls, site visits, and documentation  reviews. In addition, Labor officials said they have held five webinars on  allowable costs and provided grantees with a paper on allowable costs in  July 2006, which was updated in July 2007. Finally, Labor officials  explained that they made annual site visits for the first 13 WIRED grantees  in spring and summer of 2007 to discuss implementation plans and  progress toward plan goals. In addition, Labor staff said they have  reviewed the implementation of the remaining WIRED grants to ensure  that planned activities comply with requirements of the law. However,  none of these reviews resulted in written reports with findings and  corrective action plans.
Labor has spent $16 million on contracts to provide technical assistance,  improve grant management, administration, and monitoring, and to assist  Labor with tasks such as holding grantee training conferences. The larger  of these contracts focus on providing technical assistance to WIRED  grantees. For example, one contract valued at over $2 million provides  WIRED grantees assistance with assessing regional strengths and  weaknesses and developing regional economic strategies and  implementation plans. Another grant, valued at almost $4 million, provides  a database and geographic information system that WIRED grantees can  use to facilitate data analysis and reporting, among other things.
While these monitoring and technical assistance efforts are useful to help  grantees manage their grants, they do not provide a risk-based monitoring  process to identify and resolve problems, such as compliance issues, in a  consistent and timely manner.
section_title: Labor Provides Risk-Based Monitoring for High Growth and Community Based Grants and Has Documented Steps for Monitoring WIRED Grants
paragraphs: Labor uses a risk-based strategy to monitor High Growth and Community  Based grant initiatives. For these initiatives, it selects grantees to monitor  based on indications of problems that may affect grant performance.  Labor’s risk-based approach to monitoring most grants reflects suggested  grant practices. Suggested grant practices recognize that it is important to  identify, prioritize, and manage potential at-risk grant recipients for  monitoring given the large number of grants awarded by federal agencies.  Through this process, Labor staff determine if grantee administration and  program delivery systems operate, the grantee is in compliance with  program requirements, and information reported is accurate.
Labor’s risk-based monitoring strategy involves conducting site visits  based on grantees’ assessed risk-levels and availability of resources,  among other things. These site visits include written assessments of  grantee’s management and performance and compliance findings and  requirements for corrective action. For example, Labor’s site visit guide  includes questions about financial and performance data reporting  systems, such as how well the grantee maintains files on program  participants.
Labor has monitored about half of the High Growth grants and over one- quarter of the Community Based grants. Labor officials said these  monitoring efforts have resulted in a number of significant findings which  have generally been resolved in a timely manner. (See table 4.) For  example, during a November 2006 site visit of a Community Based grantee,  Labor identified three findings: incomplete participant files, failure to  follow internal procurement procedures, and missing grant partnership  agreements. Similarly, during a site visit in spring 2006 to a High Growth  grantee, Labor found that the grantee did not accurately track participant  information and reported incorrect information on expenditures, among  other things. As of September 2007 Labor said these findings had been  resolved (see table 4).
As another part of Labor’s risk-based monitoring strategy, Labor’s internal  requirements specify that Labor staff are to make site visits to all new  grantees, including High Growth, Community Based, and WIRED, within  12 months of beginning grant activity and to new grantees rated as “at  risk” within 3 months. Labor officials said they consider “new grantee” site  visits to be orientation visits and had not made visits to most new  grantees. They said they broadly interpret this requirement to include a  variety of methods of contact and generally use teleconference and video  conference training sessions rather than site visits, based on the  availability of resources. For example, Labor calls each new Community  Based grantee to schedule new grantee training. Labor is taking steps to  update its internal requirements to better reflect the purpose of the new  grantee monitoring.
According to Labor, in response to a recommendation we made in our May  2008 report, it has initiated the process for monitoring the financial and  administrative requirements of the WIRED grants. Labor says it developed  a WIRED Supplement to the Core Monitoring Guide which it is using to  conduct reviews of WIRED grants. Labor also stated that it is developing a  schedule of reviews that will provide for the monitoring of all WIRED  grants prior to September 30, 2008, to be followed by reviews of remaining  WIRED grants.
Labor said the monitoring reviews are being conducted by four teams of  ETA staff, consisting of experienced Regional Office financial staff,  National Office staff, and the Federal Project Officers assigned to the  grant. All of the teams have been provided training to maximize the results  of the initial review. ETA will utilize standard procedures for issuance and  resolution of any monitoring report issues.
While Labor has said it has taken steps to implement our recommendation  on documentation and monitoring, we have not assessed the sufficiency of  those efforts. Labor has said it is taking steps to ensure that it can evaluate  the impact of the initiatives, and this is an area that warrants continued  oversight.
Madam Chairman, this completes my prepared statement. I would be  happy to respond to any questions you or other Members of the  Subcommittee may have at this time.
section_title: GAO Contact and Staff Acknowledgments
paragraphs: For further information regarding this testimony, please contact me at  (202) 512-7215. Individuals making key contributions to this testimony  include Patrick di Battista, Julianne Hartman Cutts, Karen A. Brown, and  Nancy Purvine, Senior Analysts, and Stephanie Toby, Analyst. Jean  McSween provided methodological assistance, and Jessica Botsford  provided legal assistance. The team also benefited from key technical  assistance from Susan Aschoff, Pat L. Bohan, Paul Caban, Jessica Orr,  Michael Springer, and Charles Willson.
section_title: Related GAO Products
paragraphs: Workforce Investment Act: Additional Actions Would Improve the  Workforce System. GAO-07-1061T. Washington, D.C.: June 28, 2007.
Veterans’ Employment and Training Service: Labor Could Improve  Information on Reemployment Services, Outcomes, and Program  Impact. GAO-07-594. Washington, D.C.: May 24, 2007.
Workforce Investment Act: Employers Found One-Stop Centers Useful in  Hiring Low-Skilled Workers; Performance Information Could Help  Gauge Employer Involvement. GAO-07-167. Washington, D.C.: December  22, 2006.
National Emergency Grants: Labor Has Improved Its Grant Award  Timeliness and Data Collection, but Further Steps Can Improve Process.  GAO-06-870. Washington, D.C.: September 5, 2006.
Discretionary Grants: Further Tightening of Education’s Procedures for  Making Awards Could Improve Transparency and Accountability.   GAO-06-268. Washington, D.C.: February 21, 2006.
Workforce Investment Act: Labor and States Have Taken Actions to  Improve Data Quality, but Additional Steps Are Needed. GAO-06-82.  Washington, D.C.: November 14, 2005  Workforce Investment Act: Substantial Funds Are Used for Training, but  Little Is Known Nationally about Training Outcomes. GAO-05-650.  Washington, D.C.: June 29, 2005.
Workforce Investment Act: Labor Should Consider Alternative  Approaches to Implement New Performance and Reporting  Requirements. GAO-05-539. Washington, D.C.: May 27, 2005.
Workforce Investment Act: Employers Are Aware of, Using, and Satisfied  with One-Stop Services, but More Data Could Help Labor Better Address  Employers’ Needs. GAO-05-259. Washington, D.C.: February 18, 2005.
Public Community Colleges and Technical Schools: Most Schools Use  Both Credit and Noncredit Programs for Workforce Development.   GAO-05-4. Washington, D.C.: October 18, 2004.
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 Assess  Performance, but Labor Could Do More to Help. GAO-04-496. Washington,  D.C.: April 16, 2004.
Workforce Investment Act: Labor Actions Can Help States Improve  Quality of Performance Outcome Data and Delivery of Youth Services.  GAO-04-308. Washington, D.C.: February 23, 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.
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.
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