Trade Adjustment Assistance: Changes to the Workers Program Benefited Participants but Little Is Known about Outcomes
Published: 2012-09-28T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: While international trade has benefited Americans in a number of ways, it has also contributed to layoffs in a range of industries. To assist trade-displaced workers, Labor administers the TAA for Workers program, which provides income support, job training, and other benefits. The Trade Globalization and Adjustment Assistance Act of 2009, enacted as part of the American Recovery and Reinvestment Act, made substantial changes to the TAA program, such as extending eligibility to workers in the service sector and increasing benefits levels. The Act also required GAO to report on the operation and effectiveness of those changes. Specifically, GAO examined (1) the challenges Labor faced in implementing the 2009 legislation, (2) selected state officials' assessment of the 2009 legislation's effect on participants and state and local administrators, and (3) the extent to which participants received program benefits and services established by the 2009 legislation and achieved employment outcomes. GAO interviewed officials at Labor and in six states, selected for having a high level of TAA activity and geographic diversity. GAO also reviewed Labor's internal controls for investigating petitions, which are filed on behalf of workers and are the starting point for determining their TAA eligibility. GAO analyzed participant data on specific benefits and services received and employment outcomes, as available.
section_title: What GAO Found
paragraphs: The Department of Labor (Labor) was challenged to process the substantial increase in petitions filed for the Trade Adjustment Assistance (TAA) for Workers program after related legislation was enacted in 2009. Labor initially had insufficient capacity to handle this increased workload, leading to processing delays and data recording errors. For example, in the quarter after the 2009 legislation took effect, Labor took an average of 153 days to process a petition—nearly four times the statutory limit. Labor responded with corrective action, including hiring new staff and adding additional quality control steps for processing petitions. Partly as a result of these efforts, processing times fell substantially. Moreover, GAO found that Labor's petition investigation process, as of June 2012, generally conformed to best practices for internal controls.
According to selected state officials, virtually all of the 2009 changes benefited participants, and some also helped administrators serve participants. Officials in all six states GAO interviewed expressed the view that both participants and administrators benefited from the simplified and extended training enrollment deadline. Some officials said the new deadline was easier for eligible workers to understand and provided administrators with more time to advise participants on their training and employment options. Moreover, officials said participants who enrolled in training benefited from other program changes, including increased training funds, the option to attend training part-time, and a longer period for income support. Some state officials said that the additional weeks of income support allowed participants to consider longer-term training options, such as health care programs.
Over 107,000 participants received benefits and services as established by the 2009 law, but little is yet known about their employment outcomes. Nationally, all the participants received case management and reemployment services and about half enrolled in training, most commonly occupational skills training. Less than 8 percent of participants used other benefits. Little is known about employment outcomes because nearly two-thirds of the participants were still enrolled as of September 30, 2011, and employment and earnings information was often not available for those who had exited the program. While this information will eventually be available, other factors, including the overall state of the economy, affect these outcomes so isolating the effects of the 2009 legislative changes would be difficult.
section_title: What GAO Recommends
paragraphs: GAO is not making recommendations in this report. Labor generally agreed with the report's findings.

section_title: Letter
paragraphs: During the recession of 2007 to 2009, the national unemployment rate  peaked at 9.5 percent. The U.S. manufacturing sector was particularly  hard hit by the recession, losing 17 percent of its workforce and reaching  its lowest employment level since 1941. Further, while international trade  has benefited Americans in a number of ways, it has also contributed to  layoffs in a range of industries. Since such trade-displaced workers tend  to be older, less-educated, and have fewer transferable skills than other  displaced workers, they often have difficulty finding jobs in other  industries without additional training.
The Trade Adjustment Assistance (TAA) for Workers program, which is  administered by the Department of Labor (Labor), is the nation’s primary  program assisting workers who have been adversely affected by  international trade, providing income support, job training, and other  benefits. Since the TAA program was first established at Labor by the Trade Act of 1974, it has been amended a number of times. In August  2002, the Trade Adjustment Assistance Reform Act of 2002 added  several new benefits to the program. In February of 2009, the program  was reauthorized and substantially amended and expanded by the Trade  and Globalization Adjustment Assistance Act of 2009, which was a part of  the American Recovery and Reinvestment Act. The legislation changed  a number of program elements, such as expanding eligibility to additional  types of workers, extending the benefit period of income support,  increasing the level of assistance provided for payment for qualified  health plan premiums, and more than doubling the amount of training  funding available. To accommodate both the cost of these program  enhancements and higher program demand driven by the recession,  Congress increased the overall funding level for the program by about  $859 million, bringing funding to $1.8 billion in fiscal year 2010.
Although these changes were set to expire on December 31, 2010, the  Omnibus Trade Act of 2010 generally extended them through February  12, 2011. ,  After that date, the program reverted to the pre-expansion  provisions until October 21, 2011, when the Trade Adjustment Assistance  Extension Act of 2011 was signed into law. This law reauthorized TAA  and reinstated most of the 2009 program provisions, such as the eligibility  for service sector workers. However, some benefit levels, such as the  level of assistance provided for paying for health plan premiums, were  reduced. The expanded provisions of the 2011 law are set to expire on  December 31, 2013.
The 2009 Act mandated that GAO report on the operation and  effectiveness of the changes made by that Act no later than the end of  fiscal year 2012. Accordingly, we addressed three research questions:  1.  What challenges did Labor face implementing the 2009 legislation?  2.  What effect do selected state government officials say the 2009  legislative changes had on participants and on state and local  administrators?  3.  To what extent have participants received TAA benefits and services  as established by the 2009 legislation and what is known about their  employment outcomes?
To answer the first question, we interviewed officials at Labor to learn  how the agency was affected by the legislative changes, such as the  expanded eligibility criteria. We analyzed available data on TAA petitions,  which are submitted to Labor on behalf of a group of workers for Labor’s  determination of the workers’ eligibility to potentially receive TAA benefits.  We also compared determination data for a nongeneralizable number of  TAA petitions with determination letters published by Labor. In addition,  we reviewed the internal controls for the petition investigation process.  We also conducted an on-site review of seven case files. For the second  question, we interviewed state government officials from six states:  Massachusetts, Michigan, North Carolina, Oregon, Pennsylvania, and  Texas. These states were selected because they had a high fiscal year  2010 training fund allocation, a high volume of TAA certifications, and  geographic diversity. We also spoke with select local government officials  in three of these states (Michigan, North Carolina, and Oregon). Through  these interviews, we learned how selected state and local officials viewed  key amendments’ effects on participants and on their administration of the  program. For the third question, we analyzed Labor’s data on workers’  participation in specific activities as well as on their outcomes, as   For all research questions, we also reviewed relevant federal  available.laws, regulations, guidance and pertinent Labor reports and procedures.
We assessed the reliability of both petition data and participant data by  (1) performing manual and/or electronic testing of required data elements,  (2) reviewing existing information about the data and the system that  produced them, and (3) interviewing agency officials knowledgeable  about the data. We determined that the data reported were sufficiently  reliable for the purposes of our report, with the exception of data on the  eligibility categories for certified petitions. At the time of our review, we  had some reliability concerns about the data and, as a result, did not  include it in our report. See appendix I for additional details on our  objectives, scope, and methodology.
We conducted this performance audit from May 2011 to September 2012  in accordance with generally accepted government auditing standards.  Those standards require that we plan and perform the audit to obtain  sufficient, appropriate evidence to provide a reasonable basis for our  findings and conclusions based on our audit objectives. We believe that  the evidence obtained provides a reasonable basis for our findings and  conclusions based on our audit objectives.
subsections: section_title: Background
paragraphs: The TAA for Workers program covers workers whose jobs have been  threatened or lost due to changing trade patterns. While the specific  services and benefits available through the program have changed over  time, the primary forms of assistance that have been extended include  income support and training.
subsections: section_title: TAA Certification Process
paragraphs: In order for workers to apply for TAA benefits, Labor must certify that their   This certification process begins when  separation was trade-affected.workers or their representatives file a petition with Labor on behalf of a  group of laid-off workers. The agency then conducts fact-finding  investigations to determine whether the workers’ jobs were adversely  affected by international trade. In nearly all investigations, Labor contacts  company officials to gather information on the circumstances of the layoff.  This information is the basis for many petition decisions. As needed,  Labor may also gather information by surveying the company’s customers  or examining aggregate industry data.
The TAA statute lays out certain basic requirements that all petitions must  meet in order to be certified by Labor, including that a significant  proportion of workers employed by a company be laid off or threatened  with layoff. In addition, a petition must demonstrate that the layoff is  related to international trade in one of several ways—for example,  because the firm shifted production overseas or because increased  imports competed with its products.
By law, Labor is required to conclude its investigation and either certify or  deny a petition within 40 days of receiving it. Once Labor reaches a  decision on the investigation, it notifies the relevant state, which has  responsibility for contacting the workers regarding Labor’s decision. If the  workers are certified, the state informs the workers of the benefits  available to them, and when and where to apply for benefits. If a petition  is denied, a worker may challenge the decision through an appeals  process.
section_title: 2009 Changes to the TAA Program
paragraphs: The 2009 legislation made substantial changes to the TAA program,  including extending eligibility to workers in a greater variety of  circumstances. For example, the law extended coverage to workers at  firms that provide services—previously, eligibility was restricted to  workers in firms producing goods. It also changed eligibility rules for other  types of workers, such as those whose firms shifted production overseas,  as shown in figure 1. To reflect this broadened eligibility, Labor more than  doubled the number of categories by which it could certify a petition.
The 2009 legislation also generally enhanced TAA benefit levels. The  amount of funding available for training nationally more than doubled— from $220 million to $575 million for fiscal years 2009 and 2010.  Further, the legislation increased either the amount or duration of many  specific benefits and services, which are available to eligible workers  covered by certified petitions filed between May 18, 2009, and February  14, 2011. Specifically, these enhanced benefits and services include:
Extended deadline for enrollment. The 2009 legislation extended the  deadline by which workers must enroll in or receive a waiver from  training to be eligible to receive income-based support to the later of  26 weeks from the date of TAA certification or the date of separation  from employment. Previously, the deadline for enrolling in training was  the later of 8 weeks after TAA certification or 16 weeks after  separation from employment. The deadline was extended in part to  give laid-off workers more time to search for a job before deciding to  enroll in training.
Extended income support. Participants enrolled in full-time training  who have exhausted their unemployment insurance may receive a  continuation of income support equal to their final unemployment  insurance benefit. The 2009 legislation provided that participants may  receive up to 130 weeks of income support, up from 104 weeks under  the prior law. For participants who require remedial or prerequisite  courses, the maximum level of income support increased from 130 to  156 weeks. Income support was extended in part to enable workers to  participate in longer training programs.
Training. Under the 2009 program, participants have additional  training opportunities beyond those that were available under the  2002 program. The 2009 legislation authorized training for workers  threatened with a layoff that has not yet occurred in addition to  workers who have been laid off. The law also authorized participants  to attend training part-time, but limited eligibility for income support to  workers in full-time training.
Wage supplement. The 2009 legislation increased the income  eligibility threshold and maximum wage supplement benefit for some  older workers. TAA participants 50 years or older who secure a new,  lower paying job than their previous trade-impacted job may be  eligible to receive wage supplements. The 2009 legislation  eliminated the requirement that such workers find employment within  26 weeks of being laid off. It also allowed older workers receiving the  wage supplement to participate in full-time training if employed at  least 20 hours per week. Workers employed on a full-time basis who  were not enrolled in training maintained their eligibility for wage  supplements.
Job search and relocation allowances. The 2009 legislation increased  the amount of job search and relocation expenses for which state  workforce agencies could reimburse eligible participants.Specifically, the 2009 legislation provided that the lump sum of job  search and relocation expenses would cover 100 percent (up from 90  percent) of the costs, to a maximum of $1,500 (up from $1,250).
Health coverage benefit. The 2009 legislation increased the amount of  the tax credit TAA participants could receive through the Health  Coverage Tax Credit (HCTC) program from 65 percent to 80 percent  of qualifying monthly health plan premiums. The Internal Revenue  Service administers this program.
The 2009 legislation also affected Labor’s operations by, for example,  establishing a new Office of Trade Adjustment Assistance and requiring  Labor to collect additional information on workers who receive TAA  benefits and services, as well as data on service sector workers, including  the service workers’ state, industry, and reason for certification.
Although the changes made by the 2009 legislation were set to expire on  December 31, 2010, Congress extended them through February 12,  2011. At that time, the TAA program reverted to provisions as authorized  by the prior law, the Trade Adjustment Assistance Reform Act of 2002.  Eight months later, in October 2011, Congress passed the Trade  Adjustment Assistance Extension Act of 2011, which reinstated many of  the program provisions established by the 2009 legislation, including  eligibility for service sector workers. However, this most recent  legislation also reduced some of the other benefits and services to the  levels set by the 2002 program, such as scaling back the maximum  number of weeks of income support from 130 to 104 for participants  enrolled in basic training and lowering allowances for job search and  relocation from $1,500 to $1,250. See appendix II for a detailed  comparison of the 2002, 2009, and 2011 program provisions.
section_title: TAA Funding
paragraphs: In addition to changes in participant benefits and services, the 2009  legislation added requirements regarding the allocation of TAA training  funds to the states. It required Labor to make an initial distribution of no  more than 65 percent of available funds, holding 35 percent in reserve for  additional distributions throughout the year, but ensuring a distribution of  at least 90 percent of funds no later than July 15 of the fiscal year. The  law specified a number of factors for Labor to take into account in making  distributions to the states, including factors Labor might consider  appropriate, and specified that a state’s initial distribution had to be at  least 25 percent of the distribution it received in the preceding fiscal  year.
The 2009 legislation required that, to cover states’ administrative costs  and employment and case management services, Labor distribute to  each state an additional amount equal to 15 percent of its annual training  allocation. States were required to use at least one-third of those  administrative funds for case management and employment services.  The 2009 legislation also required that each state be provided an  additional $350,000 for case management and employment services.  States have 3 years to expend these federal funds. As such, fiscal year  2009 funds had to be used by the end of fiscal year 2011.
section_title: Role of State and Local Workforce Agencies
paragraphs: State and local workforce agencies play key roles in the petition  certification process and help workers take advantage of the services and  benefits available through the TAA program. The agencies assist workers  and employers in filing petitions and can also file petitions on behalf of  workers. After a petition is certified, the agencies contact employers to  obtain a list of workers affected by the layoff and send each worker a  letter notifying him or her of potential eligibility. The agencies may also  hold orientation sessions to provide workers with detailed information on  the TAA program and other services and benefits available. In addition,  case managers provide vocational assessments and counseling to help  workers enroll in the program and decide which services or benefits are  most appropriate. Local case managers also refer workers to other  programs, such as the Adult and Dislocated Worker Programs under the  Workforce Investment Act, for additional services.
section_title: TAA Performance and Reporting Requirements
paragraphs: Labor is responsible for monitoring the performance of the TAA program.  Its primary reporting system, the Trade Activity Participant Report, is  intended to track information on TAA activity for individuals from the point  of TAA eligibility determination through post-participation outcomes.Prior to 2010, the TAA information was reported only on those who had  exited the program, as required by Labor. Each quarter, states are  required to submit data on participants who received TAA program  services. These data include participant demographics; information on  services and benefits received, such as case management and  reemployment services; income support; and participant outcomes such  as employment status and earnings after program exit. States primarily  track these outcomes using the Unemployment Insurance wage records.  Labor uses data submitted by states to report national outcomes on the  TAA performance measures for each fiscal year.
The 2009 legislation added a new requirement for states to report on all  participants who are enrolled in the TAA program and not just those who  exited the program, as required by Labor. As a result of this change,  Labor revised its reporting system and required states to submit  additional information to track individual benefits and services provided to  participants under the new law. In addition, the 2009 legislation required  states to report on program outcomes for a longer period after  participants exit the program.core measures of program performance: entered employment rate,  average earnings, and employment retention rate. For fiscal year 2012,  Labor’s performance goals for the TAA program were 59 percent for  entered employment, $13,248 for average earnings over a 6-month  period, and 83.2 percent for employment retention.
section_title: Related TAA Programs
paragraphs: The TAA for Workers program is one of four trade adjustment assistance  programs; the other three provide assistance to firms, farms, and  communities. The Department of Commerce administers a TAA program  that provides funds for manufacturing and other types of firms to develop  and implement a business recovery plan. The Department of Agriculture  administers the TAA for Farmers program, which provided help to  individual producers of raw agricultural commodities, such as farmers and  fishermen, to become more competitive in producing their current  commodity or transitioning to a different commodity. Under a TAA  program to assist trade-affected communities, Labor awards grants to  institutions of higher education for expanding or improving education and  career training programs for persons eligible for training under the TAA  for Workers program, and the Department of Commerce provides  technical assistance to trade-affected communities and awards and  oversees strategic planning and implementation grants. In addition to  mandating that GAO report on the TAA for Workers program, the 2009  Act mandated that GAO report on the other TAA programs as well. Our  report on the Farmers program was issued in July 2012 and our reports  related to the TAA programs that assist firms and communities were  issued in September 2012.
section_title: Labor Faced Initial Challenges in Implementing the 2009 Legislation and Took Steps to Address Them
subsections: section_title: 2009 Legislation Increased Volume and Processing Complexity of TAA Petitions
paragraphs: Labor took multiple steps to implement the 2009 legislation after it was  enacted. For example, it set up the Office of Trade Adjustment Assistance  established by the legislation, which took over administration of the TAA  program from the Office of National Response. Also, as required by the  legislation, Labor issued a regulation implementing the new requirements  for the distribution of training funds to states. Agency officials told us  that they also drafted a regulation on investigation standards, as required,  but did not publish the regulation because by the time it was ready for  publication, the 2009 provisions were set to expire.with the legislation, the agency updated its information technology system  to collect data on service sector workers and implemented a new  reporting system for states to collect data on participant activities and  outcomes. Labor also took implementation steps beyond those  specifically required by law, such as providing training and technical   Also, in accordance  assistance to state workforce agencies and issuing revised guidance on  program operations. According to the state officials we interviewed, this  assistance was generally both helpful and timely.
Labor’s primary implementation challenge after the 2009 legislation was  addressing a substantial increase in its workload to process petitions. As  depicted in figure 2, the number of petitions the agency received in the  third quarter of fiscal year 2009, when the law took effect in May 2009,  was more than triple the number received the previous quarter. Multiple  factors contributed to this increase. According to agency officials, the  increase in petitions was caused by the 2009 legislation’s expansion of  eligibility to new categories of workers as well as the economic recession,  which may have increased trade-related layoffs. Another cause for the  spike in petitions is that in the months before the law took effect, Labor  allowed petitioners to withdraw and then resubmit petitions after the 2009  legislation took effect, so they could take advantage of the new,  enhanced benefit levels. As a result, an agency official estimated that  roughly 500 petitions were withdrawn before May 18, 2009, and then  resubmitted after the law took effect.
According to Labor officials, the 2009 legislation generally made it more  challenging to determine TAA eligibility. As described earlier, the law  expanded the number of categories for which petitions could be certified.  Agency officials told us that this expansion complicated investigators’  efforts because petitions needed to be evaluated against a greater  number of eligibility criteria than before. Further, some of the new  categories presented additional challenges. According to Labor officials,  the firms identified in service-related petitions tended to be more  dispersed geographically than manufacturing firms, making it more  difficult to evaluate certain service-related petitions. For example, in  cases where the work that was shifted abroad was performed by workers  in multiple locations, it may be difficult to determine exactly which workers  had been affected. In addition, some officials said that investigating  petitions in which workers produce finished articles that contain foreign  components, such as tubes used in televisions, proved challenging. Labor  said these petitions often require contact with foreign firms, which can  present communication challenges—for example, due to differences in  currencies and time zones. Further, they noted the absence of any legal  requirement for foreign companies to comply with Labor’s data requests.  In contrast to these challenges, Labor officials told us that the 2009  legislation made some investigations easier. Previously, TAA eligibility  standards were different for nations that did and did not have a free trade  agreement or preferential trade relationship with the United States. The  2009 legislation eliminated this difference, making it more straightforward  to investigate shifts in production.
section_title: Labor’s Processing Timeliness Adversely Affected by Increased Petition Volume and Initial Staff Shortage
paragraphs: Labor initially had insufficient capacity to handle its increased workload,  and thus, lagged in processing petitions. As described previously, Labor  is required to process a petition—that is, determine whether to certify or  deny it—within 40 days. The quarter after the 2009 legislation took effect,  on average, Labor took 153 days to process a petition—nearly four times  as long as the statutory limit (see fig. 3). Multiple factors contributed to the  lag, including an increased volume of petitions, initial staff shortages and  turnover, and the need for staff to become familiar with the new  provisions of the 2009 legislation. An official noted that initially, hiring  proved challenging because the 2009 legislation did not authorize funds  for implementation. As a result, Labor paid for new hires through the  agency’s general management funds. Most new staff members were  hired in July 2009, approximately 2 months after the law took effect.
During our review of TAA data and petition case files, we discovered that  Labor mislabeled the basis for several certifications in its records,  suggesting that data reported to Congress may contain inaccuracies.  These errors were likely caused by the high volume of petitions that  required processing, staff shortages and turnover, and gaps in internal  controls. Moreover, as described earlier, the number of categories by  which petitions could be certified more than doubled after the 2009  legislation. Labor told us that investigators’ unfamiliarity with these new  categories may have also contributed to errors. In one instance, Labor  certified a petition based on imports of goods, but the staff member who  entered this information into the information technology system  inaccurately recorded the eligibility category as imports of services. In  another case, Labor officials acknowledged that a certification based on  imports of goods was improperly documented as imports of services in  the petition case file itself. Among other gaps in internal controls, we  found that a single staff member was responsible for recording the reason  for each certification in Labor’s information technology system. The errors  we found do not necessarily indicate that petitions were wrongly  determined, and we did not examine whether any individual  determinations were correct. However, the errors indicate that some  petitions were mislabeled after they were certified. Agency officials  acknowledged that both types of errors occurred and told us that they  were most likely to occur in petitions filed during the first year of the 2009  program, a period in which approximately 4,000 petitions were processed.
section_title: Labor Took Corrective Action to Address Challenges in Processing Petitions
paragraphs: Labor took steps to address its implementation challenges, including  roughly doubling its staff. In the months after the 2009 legislation took  effect in May 2009, Labor hired approximately 30 new staff, some on a  permanent basis and others as temporary hires. Although most new staff  members were hired in July 2009, agency officials estimate that it takes  approximately 6 months to fully train a new investigator. As a result,  officials said the Office of Trade Adjustment Assistance reached its peak  operating capacity in January 2010, approximately 8 months after the  2009 legislation took effect. Labor’s efforts to increase staff were  hampered by frequent employee turnover. According to Labor officials,  many staff hired on a temporary basis left the agency when they found  permanent positions elsewhere, diminishing Labor’s overall capacity to  process petitions.
In tandem with its efforts to increase capacity, Labor took steps to  enhance its internal controls by adding quality controls to its petition  investigation process. As shown in figure 4, Labor incorporated these  controls over approximately 2 years. In December 2009, for example,  Labor began requiring a senior investigator to review each petition case  file before and after the determination was reached to ensure the file  included appropriate documentation. Previously, petitions were subject to  a single review by the certifying officer. Second, in May 2010, the agency  created a checklist that specified standard operating procedures and  accuracy checks for investigations. The final version of this checklist,  established in the spring of 2011, has specific targets for data entry  accuracy, timeliness of investigations, customer outreach, and more.  Finally, in the fall of 2011, Labor began quarterly tests to gauge how often  these targets were reached. In the first quarter that tests were conducted,  Labor told us that investigators met the quality control targets 87 percent  of the time on average, slightly below the agency’s internal goal of 90  percent.
It took some time for the benefits of increased staffing and improved  quality controls to take effect. By the end of fiscal year 2010, petition  processing times had fallen substantially, although by this time the  number of petitions Labor received had declined. Moreover, in June 2012,  we reviewed Labor’s petition investigation process and found that it  generally conformed to best practices for internal controls.
Further, in September 2012, Labor conducted an internal audit to  determine how often the basis for a certification was improperly recorded  in either the petition case file or the agency’s information technology  system. This review covered the period from May 18, 2009, until May 31,  2010, when Labor introduced additional quality control steps. Through an  audit of 351 randomly selected petitions, Labor estimated the error rate to  be 1.4 percent, with a margin of error of plus or minus 5 percent.  According to Labor, this audit suggests that errors were more likely to be  present in the information technology system than in the petition case file  itself. Labor concluded that this low percentage of error had a minimal  impact on the petition data reported in its 2010 annual report to Congress.  Labor said it has corrected all errors found in its audit findings, and as  part of new quality control procedures, has established a more frequent  internal audit system that will identify and correct such errors throughout  each quarterly reporting cycle.
section_title: Nearly All of the Changes Benefited Participants and Some Helped Administrators As Well
paragraphs: Participants benefited from nearly all of the 2009 legislative changes,  some of which also helped administrators better serve the participants,  according to the state officials we interviewed. For example, the  expanded eligibility for workers, such as for those in the service sector,  benefited participants by providing access to program benefits for trade- affected workers under a wider array of circumstances, such as call  center employees whose jobs were moved overseas. Figures 5 and 6  summarize the views of officials in the six states we examined.
Both participants and administrators benefited from a simplified and  extended training enrollment deadline—which must be met to qualify for  TAA-based income support—according to officials from all six states.  Previously, eligible workers had to enroll in training within 8 weeks of their  petition’s certification or 16 weeks of their separation, whichever was  later. The 2009 legislation extended the training enrollment deadline to 26  weeks after the later of certification or separation. An official from one  state told us that the new extended deadline was easier for eligible  workers to understand since the period of time within which individuals  had to enroll in training was the same, regardless of whether that period  began at the date of separation or certification. According to several  officials we interviewed, the extended deadline allowed participants to  more fully consider their employment and training options, and therefore  facilitated better decision making. The longer enrollment period also  positively affected administrators. Some state officials noted that the  extension provided case managers with more time to assess participants’  skills and abilities and advise them on employment and training options.
subsections: section_title: Dedicated Funding for Case Management and Employment Services
paragraphs: In addition to extending time frames for participants, the 2009 legislation  provided dedicated funding to states for case management and  employment services, which indirectly benefited participants, according to  several state officials. Previously, states did not receive funds for case  management and employment services, and so resources from other  programs were often used to support TAA participants. Several state  officials said that dedication of these funds allowed case managers to  better serve participants. Generally, these funds were used to pay the   In some cases, this built capacity,  salaries of TAA case managers., such as when the funds were used to hire new TAA staff who provided  these services. In other cases, the TAA funds replaced funding from other  sources, for example, when services were provided through the  Workforce Investment Act, according to several state officials. Officials  from several states said that the dedication of these funds reduced the  financial burden the TAA program had previously placed on other  workforce programs.
section_title: New Authority to Waive Deadlines
paragraphs: Under a rule Labor published on April 12, 2010, states were required, no later than  February 12, 2011, to use state government employees covered by a merit system of  personnel administration to perform TAA funded functions undertaken to carry out TAA  provisions. 75 Fed. Reg. 16, 988 (April l 2, 2010) (codified at 20 C.F.R. §618.890). (The  Omnibus Trade Act of 2010 extended the initial regulatory deadline of December 15,  2010, to February 12, 2011. Pub. L. No. 111-344, §102, 124 Stat. 3614.) As a result,  officials from one state told us that they calculated exactly how many TAA staff they could  support with the TAA funding and then used funds from other sources to pay non-merit  staff providing case management. waive deadlines for TAA-based income support and enrollment in  training. Similarly, it also provided an exception to the training enrollment  deadline in cases where an eligible worker missed the deadline because  he or she was not given timely notification of the deadlines. Both  participants and administrators benefited from these changes, according  to the officials from five of the six states we interviewed. Officials from one  of these states told us that the waivers reduced the administrative burden  of processing appeals from eligible workers who missed the enrollment  deadline.
section_title: Enhanced and Expanded Training Benefits
paragraphs: Further, several of the changes made by the 2009 legislation benefited  participants who enrolled in training, according to most of the officials we  interviewed, including: an increase in the amount of training funds available.  the possibility of receiving income support for longer than previously  available;  the option to start training while threatened with job loss (prior to  actually losing their jobs);  the flexibility to attend training on a part-time basis; and  According to several officials, the additional 26 weeks of potential income  support while in training allowed program participants to consider longer- term training options, such as health care, a high-demand profession. In  addition, officials said that since participants often drop out of training  after income support expires, this change bolstered training program  completion. Some officials also said that in some cases, the flexibility to  attend training part-time may have contributed to higher training  completion rates. For example, some full-time training participants who  gained employment before their training program ended opted to finish  their training part-time. Officials said that without the part-time option,  such participants would have likely dropped out of training altogether.  Officials from five states said the shift allowing part-time training had a  neutral effect on administration. However, officials from one state  attributed their state’s relatively low part-time enrollment rates to the  requirement that TAA-based income is contingent upon full-time  enrollment in training.
section_title: Increase in Available Training Funds
paragraphs: Moreover, according to state officials, the increase in available training  funds from $220 million to $575 million per fiscal year benefited  participants. In one state, officials said that having access to additional  funds increased its statewide caps on training program costs, which  allowed them to keep pace with higher education institutions’ rising  tuitions. Officials in another state said that receiving these additional  funds allowed them to train all eligible participants rather than putting  some on waiting lists for training. Further, a few state officials noted that  the increased funds for training enabled them to serve an increased  volume of participants. As shown in figure 7, five of the selected six states  expended all of their fiscal year 2009 training funds—the only 3-year  spending period that has expired. Thus far, these states have drawn  down, on average, 76 percent of the training funds allocated to them for  fiscal year 2010.expenditures.
section_title: Over 107,000 Workers Received Benefits and Services, but Little Is Known About Their Outcomes
subsections: section_title: About Half of the Participants in the 2009 Program Enrolled in Training, but Other Benefits Were Less Utilized
paragraphs: TAA provides participants with a variety of benefits and services—some  were used more than others. As of September 30, 2011, 107,896  participants received services under the 2009 TAA program. As shown  in figure 9, the majority of these participants were male and most were  white. Nearly half the participants were age 50 or older and nearly two- thirds had a high school education or less.
All 107,896 participants who received services under the 2009 TAA  program received case management and employment services and  nearly half enrolled in training. Most of the participants who enrolled in  training had only one training activity, but some enrolled in two or three  training activities (see fig.10).
Participants can receive different types of training, but occupational skills  training—training in specific occupations typically provided in a classroom  setting—was the most common type of training provided (see fig. 11). In  addition to occupational training, participants received other types of  training, such as remedial training, which includes adult basic education  and English as a Second Language. These types of training were  provided less frequently than occupational training.
Participants in the 2009 TAA program received training in a variety of  occupational fields, most commonly related to computers, health, and  production occupations (see table 1).
As of the end of fiscal year 2011, approximately half of the 2009 program  participants who had enrolled in training were still in a training activity. For  those 24,568 participants who completed or withdrew from training, the  average amount of time spent in training was approximately 43 weeks. As  shown in figure 12, nearly one-third of these participants spent between a  half year and a full year in training.
While approximately 50,000 participants enrolled in training under the  2009 program, fewer participants took advantage of several benefits and  services that were added to, or expanded under, the 2009 program. For  example, the 2009 legislation added part-time training and pre-layoff  training for adversely affected incumbent workers. The legislation also  increased the job search and relocation allowances and modified the  program providing wage supplements for older workers. As shown in  table 2, fewer than 8 percent of the participants who received benefits  under the 2009 program used each of these benefits.
The wage supplement for older workers and the job search and relocation  allowances are benefits that have not been widely utilized in the past. For  example, we previously reported that fewer than 3,500 workers had  utilized this benefit each year between 2004 and 2006. Similarly, not  many participants have typically received job search and relocation  allowances. For example, the Congressional Research Service reported  that fewer than 500 workers received job search allowances each year  between fiscal years 2006 and 2008, while fewer than 800 received  relocation allowances during those years.
While not used extensively, about 13 percent of the 5,521 older workers  who participated in the wage supplement program also enrolled in  training—a benefit available to eligible older workers participating in the  2009 program. Under the 2002 program, workers who participated in the  wage supplement program for older workers were not eligible to receive  training.
Based on our prior work on HCTC, we found that participation in the  program initially increased after the 2009 legislation. HCTC was another  benefit that was enhanced under the 2009 legislation, increasing the tax  credit covering monthly health insurance premiums from 65 percent to 80  percent. Because HCTC is administered by the IRS, Labor does not  collect information on how many TAA participants used this benefit.  However, we reported in 2010 that during the 6 months after key changes  in the 2009 legislation took effect, the average monthly participation rate  for TAA individuals was about 10,000. This represented an increase in  participation compared to the 6 months prior to the passage of the  legislation.
Under the 2009 TAA program, participants could receive up to 130 weeks of income  support, plus an additional 26 weeks if they are also enrolled in remedial or prerequisite  education. In total, the number of weeks for which participants could receive income  support increased by 26 weeks. cases.expire, the number of participants receiving TAA income support and the  average duration of TAA income support may increase substantially.
section_title: Limited Outcome Data are Available
paragraphs: Little is yet known about the outcomes achieved by participants in the  2009 program largely because nearly two-thirds of the participants were  still enrolled in the program as of September 30, 2011. States are not  required to begin tracking employment outcomes for participants until  they exit the program. Of the 107,896 participants enrolled in the 2009  program, approximately 66 percent had not exited the program as of  September 30, 2011. The one-third of participants who exited the  program spent an average of about 37 weeks in the program.  Approximately 76 percent of those exiting were in the program for 1 year  or less (see fig.13).
In addition, little is known about participants’ outcomes because the  information needed to assess these outcomes was not yet available. For  the approximately 36,000 participants who had exited the program as of  September 30, 2011, information to calculate entered employment rates,  employment retention rates, and average earnings was not yet available  for many participants. For example, the entered employment rate is  based on the number of participants who were employed 6 months after  exiting the program. Yet, as of September 30, 2011, states had reported  the 6-month employment status on only about 60 percent of the  participants who had exited the program. Similarly, states reported the  earnings information needed to calculate the average earnings  performance measure for only about a third of the approximately 13,000  participants who would have been included in the calculation.result, few of the participants in the 2009 program would have been  included in calculating TAA performance outcomes through fiscal year  2011 (see fig. 14).
Incomplete outcome data for TAA participants is a longstanding issue.  The primary data source for outcome information is Unemployment  Insurance wage records. As we have previously reported, these wage  records provide a common yardstick for assessing performance across  states but suffer from time delays. We reported on these delays in 2006,  noting that most of the outcome data reported in a given program year  actually reflect participants who left the program up to 2 years earlier.
Another factor contributing to the unavailability of outcome data for the  2009 program participants at the time we analyzed the data is that the  2009 legislation required states to report on job retention and earnings for  a year after the participant exits the program—an additional 3 months  beyond what states had previously reported. Labor officials stated that  they were aware of the lack of outcome information being reported and  are requiring states to submit updated outcome information by September  2012.
Even when employment and earnings information becomes available,  more information will be needed to assess the effectiveness of the  changes made by the 2009 legislation. First, Labor uses information on  employment rates and earnings to compare the TAA program to national  program goals, but the information is reported on a fiscal year basis and  combines data for participants under the 2002 and 2009 programs.  Therefore, these reports will not provide a complete or separate picture of  outcomes for 2009 program participants. However, Labor officials stated  that their annual report for fiscal year 2012 would primarily consist of  2009 participants. Second, a program’s effectiveness cannot be  determined solely by outcomes because they cannot show whether an  outcome is a direct result of program participation or whether it is a result  of other influences, such as the state of the local economy. Labor officials  told us they have no plans to conduct an impact evaluation of the 2009  program since the program is no longer in effect. However, Labor is  conducting a 5-year evaluation study of the 2002 TAA program, which is  expected to be completed by November 2012. The study will address the  operation and impacts of the program after the passage of the Trade  Adjustment Assistance Reform Act of 2002 and will include an impact  study on participants’ employment-related outcomes, overall and for key  worker subgroups, and a benefit-cost analysis.
section_title: Concluding Observations
paragraphs: The 2009 TAA legislation made extensive changes to the TAA for  Workers program benefitting program participants—training funds were  more than doubled, new benefits were added, eligibility was broadened,  and existing benefits were enhanced. This contributed to a substantial  increase in the number of petitions immediately following implementation  of the changes in May 2009. Yet, when confronted with the initial surge in  petition volume and faced with pressure to process these petitions  quickly, Labor made some errors in recording the reasons why petitions  were certified. Since that time, Labor has enhanced its quality controls for  investigating petitions and determined that the data errors we found were  not widespread.
In addition, because most participants were still enrolled in the program at  the time of our review, sufficient information was not available to  determine whether the program changes contributed to better  performance outcomes. However, even when outcome data become  available, it will be very difficult to isolate the effect of the 2009 legislative  changes because the results cannot differentiate program participation  from other outside factors, including the overall state of the economy.  While Labor plans to release the results of its 5-year evaluation study of  the 2002 program later this year, it will not include a definitive  determination of the effectiveness of the substantial changes made by the  2009 legislation. Further, the TAA program was modified again in October  2011, further complicating any future evaluation of the 2009 program.
section_title: Agency Comments and Our Evaluation
paragraphs: We provided officials from the Department of Labor a draft of this report  for review and comment. Labor provided written comments, which are  reproduced in appendix IV, as well as technical comments, which we  incorporated as appropriate. In its written comments, Labor generally  agreed with our findings. Labor noted that the report validated its efforts  to improve employment and retention outcomes for trade-affected  workers, made possible by the expansion of benefits and services under  the 2009 TAA program.
We will send copies of this report to the Secretary of Labor, relevant  congressional committees, and other interested parties and will make  copies available to others upon request. In addition, the report will be  available at no charge on GAO’s Web site at http://www.gao.gov.
A list of related GAO products is included at the end of this report. If you  or your staff have any questions about this report, please contact me at  (202) 512-7215 or at sherrilla@gao.gov. Contact points for our Offices of   Congressional Relations and Public Affairs may be found on the last page  of this report. Other contacts and staff acknowledgments are listed in  appendix V.
section_title: Appendix I: Objectives, Scope, and Methodology
paragraphs: Our objectives were to determine: (1) what challenges Labor faced in  implementing the 2009 legislation, (2) the effect selected state  government officials say the 2009 legislative changes had on participants  and on state and local administrators, and (3) the extent participants  received TAA benefits and services as established by the 2009 legislation  and what is known about employment outcomes. To address these  objectives, we reviewed relevant federal legislation, regulations, and  departmental guidance and procedures. We also interviewed Labor  officials and state government officials in six states—Massachusetts,  Michigan, North Carolina, Oregon, Pennsylvania, and Texas. We also  interviewed selected local government officials in three of these states  (Michigan, North Carolina, and Oregon). We obtained and reviewed  Labor data on petitions, training fund expenditures, and participant  activities. We conducted this performance audit from May 2011 through  September 2012 in accordance with generally accepted government  auditing standards. Those standards require that we plan and perform the  audit to obtain sufficient, appropriate evidence to provide a reasonable  basis for our findings and conclusions based on our audit objectives. We  believe that the evidence obtained provides a reasonable basis for our  findings and conclusions based on our audit objectives.
subsections: section_title: Selected States
paragraphs: We selected the six specific states because they had a high fiscal year  2010 training fund allocation, a high volume of TAA certifications, and  geographic diversity (see table 3).
We also spoke with select local officials in three states (see table 4).  Through these interviews, we obtained state and local officials’ opinions  on what effects key changes made by the 2009 legislation had on their  administration of the program and on participants.
We analyzed Labor’s data on petitions filed from fiscal years 2007 to  2011. We assessed the reliability of key data by interviewing Labor  officials knowledgeable about the data, reviewing related documentation,  manually and electronically testing the data, and assessing internal  controls at Labor. During our manual testing of this petition data, we  discovered Labor made errors in recording the reasons why several  petitions were certified, although the results of our review are not  generalizable. We brought this issue to the attention of Labor officials.  Because we did not know the extent of these errors during the period of  our review, we did not include information on certification categories in  this report. In late September 2012, Labor provided us with the results of  its internal audit, which indicated that this data was reliable. Moreover, we  determined that information regarding the number of petitions filed, the  dates petitions were received by Labor, and the dates Labor issued  determinations were sufficiently reliable for the purposes of this report.
We also assessed what internal controls were present in Labor’s petition  investigation process as of June 2012. We compared Labor’s written  procedures with GAO-published standards for internal controls and  conducted an onsite review of seven petitions to assess whether Labor  followed its written procedures when conducting investigations. We  selected petitions filed from May 2009 to February 2011. They are  nongeneralizeable and used only for illustrative purposes. The selected  petitions were diverse with respect to the month/year petitions were  received; whether petitions were certified or denied; whether petitions  represented manufacturing or service sector workers; and other factors,  such as the reason for the layoff (i.e., a shift in production overseas  versus an increase in imports).
section_title: Analysis of Labor’s Training Funds Expenditure Data
paragraphs: We analyzed Labor’s data on TAA training fund expenditures for fiscal  years 2009 through 2011, with data current through the second quarter of  fiscal year 2011 (March 31, 2011). This data included expenditures by  state for training, administration (inclusive of employment/case  management), job search and relocation, income support, and the wage  supplement program for older workers. We assessed the reliability of  these data by electronically testing for errors and by interviewing  knowledgeable agency officials. Further, we compared these expenditure  data with fund allocation data published in Labor’s annual reports to  Congress. Overall, we found that the data were sufficiently reliable for the  purposes of this report.
section_title: Analysis of Labor’s Participant Data
paragraphs: We analyzed Labor’s participant data file containing data elements on  characteristics, activities, and outcomes for TAA participants. We  conducted our analyses on those participants who were covered by  petitions filed between May 18, 2009 and February 14, 2011—the dates  covered by the 2009 legislative changes. We assessed the reliability of  these data by interviewing Labor officials about the internal controls in  place to assure the quality of data reported by states and reviewed the  edit checks Labor established to identify inconsistencies and data errors.  We also performed electronic testing of individual data elements to  remove duplicate entries and ensure that the data being entered were  consistent with instructions provided by Labor to the states. We  determined that information related to participant characteristics and  activities was sufficiently reliable to be used in the report. However, our  testing of the outcome data surfaced issues with information being  reported on employment status and earnings for participants who had  exited the program. Specifically, we found that the employment status  and earnings information for many participants who had exited the  program was not identified. We believe that reporting outcomes would be  misleading when two-thirds of the participants in the 2009 program were  still enrolled as of September 30, 2011, and outcome information for  many participants who had exited the program was not yet available. As a  result, we did not include entered employment rates, employment  retention rates, and average earnings in this report.
section_title: Appendix II: Comparison of Key 2002, 2009, and 2011 TAA Statutory Provisions
subsections: section_title: 2002 TAA Program
paragraphs: Waivers may be issued because  the worker:  1.  Cannot participate in training  due to a health condition  2.  Enrollment date is not  3.
Available only for workers  earning less than $50,000 per  year in reemployment
Maximum benefit of $10,000
Requires full-time employment within 26  over a period of up to 2 years  (104 weeks) weeks of separation  Available only for workers earning less  than $50,000 per year in reemployment
Workers may participate in TAA-approved  training and receive employment and case  management services  Allows for part-time employment if enrolled in  training  Eliminates deadline for reemployment  Available only for workers earning less than  $55,000 per year in reemployment
Maximum benefit of $12,000 over a period of  up to 2 years (104 weeks)
section_title: 2002 TAA Program
section_title: ADMINISTRATIVE CHANGES Training Fund Amount
section_title: 2002 TAA Program Employment and Case Management Services
section_title: Office Responsible for Administering TAA • No statutory provision. TAA was
paragraphs: The deadline to submit a report  to Senate Finance and House  Ways and Means Committees  was extended to February 15  The 2011 legislation required Labor, with regard to petitions filed between February 13, 2011, and  October 21, 2011, to consider petitions and automatically reconsider denied petitions using the 2011  eligibility provisions.
Although the Omnibus Trade Act of 2010 extended the effective date of the expiration of the 2009  amendments to February 12, 2011, Labor interpreted this to mean petitions filed on or before 11:59  PM EST on Monday, February 14, 2011, the next business day after February 12, which was a  Saturday.  Suppliers produce and supply component parts directly to other firms, which produced articles that  were the basis for a TAA certification. Downstream producers perform additional, value-added  production processes for firms producing articles that were the basis for a TAA certification. If a  worker’s firm is a supplier, and component parts it supplies to the primary firm accounted for at least  20 percent of production or sales of the worker’s firm, then the loss of business from the primary firm  by the worker’s firm is not required to have contributed importantly to the separation or threatened  separation.   See third statement in table note c.   The training fund amount was $143,750,000 for October 1, 2010 to December 31, 2010.  The training fund amount will be $143,750,000 for October 1, 2013 to December 31, 2013.
section_title: Appendix III: TAA Training Fund Expenditures by State, as of March 31, 2012
section_title: Appendix IV: Comments from the Department of Labor
section_title: Appendix V: GAO Contacts and Staff Acknowledgments
subsections: section_title: GAO Contacts
section_title: Staff Acknowledgments
paragraphs: In addition to the contacts named above, Laura Heald, Assistant Director;  Kathryn O’Dea, Ellen Ramachandran, and Wayne Sylvia made key  contributions to this report. Also contributing to this report were James  Bennett, Jessica Botsford, Susannah Compton, Daniel Concepcion,  Kathy Leslie, Jean McSween, and Vanessa Taylor.
section_title: Related GAO Products
paragraphs: Trade Adjustment Assistance: States Have Fewer Training Funds  Available than Labor Estimates When Both Expenditures and Obligations  Are Considered. GAO-08-165. Washington, D.C.: November 2, 2007.
Trade Adjustment Assistance: Industry Certification Would Likely Make  More Workers Eligible, but Design and Implementation Challenges Exist.  GAO-07-919. Washington, D.C.: June 29, 2007.
Trade Adjustment Assistance: Changes Needed to Improve States’ Ability  to Provide Benefits and Services to Trade-Affected Workers.  GAO-07-995T. Washington, D.C.: June 14, 2007.
Trade Adjustment Assistance: Program Provides an Array of Benefits and  Services to Trade-Affected Workers. GAO-07-994T. Washington, D.C.:  June 14, 2007.
Trade Adjustment Assistance: Changes to Funding Allocation and  Eligibility Requirements Could Enhance States’ Ability to Provide Benefits  and Services. GAO-07-701, GAO-07-702. Washington, D.C.: May 31,  2007.
Trade Adjustment Assistance: Labor Should Take Action to Ensure  Performance Data Are Complete, Accurate, and Accessible.  GAO-06-496. Washington, D.C.: April, 25, 2006.
Trade Adjustment Assistance: Most Workers in Five Layoffs Received  Services, but Better Outreach Needed on New Benefits. GAO-06-43.  Washington, D.C.: January 31, 2006.
Trade Adjustment Assistance: Reforms Have Accelerated Training  Enrollment, but Implementation Challenges Remain. GAO-04-1012.  Washington, D.C.: September 22, 2004.