Trade Adjustment Assistance: One-Time Grants Awarded to Trade- Impacted Communities; Results Will Not Be Known until after 2013
Released: 2012-09-26T00:00:00


Highlights: section_title: Why GAO Did This Study
paragraphs: Congress established the CTAA program in February 2009 through the Trade and Globalization Adjustment Assistance Act (TGAAA), passed as part of the American Recovery and Reinvestment Act. The CTAA program was designed to supplement other Trade Adjustment Assistance programs by providing assistance through grants to trade-impacted communities to help them become more competitive in the global economy. In 2010, EDA awarded $36.8 million in CTAA grants to 36 communities. The administration proposed to discontinue the program, contending that EDA could provide similar assistance to communities at a lower cost through its EAA program. Congress responded by repealing the CTAA program in 2012.

TGAAA mandated that GAO review the operation and effectiveness of Trade Adjustment Assistance programs. This is one of several reports responding to that mandate. For this report, GAO determined (1) how EDA made grant award decisions, (2) what mechanisms EDA established to monitor the grants and evaluate their effectiveness, and (3) how the CTAA program compared with other EDA community grant programs. GAO reviewed agency documents, conducted a file review, and interviewed EDA officials.

section_title: What GAO Found
paragraphs: The Department of Commerce's Economic Development Administration (EDA) used its standard grant award process to announce, receive, and review applications for the Community Trade Adjustment Assistance (CTAA) program, with modifications related to program eligibility. To comply with legislative requirements, EDA reached out to eligible communities by identifying those with workers or firms already certified as trade impacted by other trade adjustment assistance programs. EDA awarded the grants in accordance with the review and selection process outlined in the CTAA federal funding opportunity--the program's grant application announcement. More than half of the grants were for construction projects, such as building roads and installing broadband fiber for industrial parks. Although EDA was able to adapt standard procedures already in place for its other grant programs, EDA officials cited some CTAA-specific challenges: first, the effort required to set up the new program for CTAA grants; second, a relatively limited time for the outreach and application process; and third, the development of a list of eligible communities for outreach, which proved to be a complex undertaking.

EDA regional staff said that they monitor the grants using tools such as periodic progress and financial reports. GAO's review of a nonprobability sample of 12 of the 36 CTAA grant files found no gaps in the regional offices' collection of required reports. Many of the projects will not be completed until after 2013, but grantees with construction projects are required to report on certain EDA performance measures 3, 6, and 9 years after the award. Thus, in 2013, those grantees will be required to report measures relating to jobs created, jobs retained, and level of new private investment. The grantees will submit final nineyear project reports in 2019 that will help the agency determine whether the projects met their goals.

GAO's review of how the CTAA program compared with other EDA grant programs shows that although the CTAA grants targeted trade-impacted communities, some grantees might have been eligible for other EDA grant programs. EDA officials identified two other programs that target economically distressed communities--EDA's Economic Adjustment Assistance (EAA) and Public Works programs--that may have been able to provide assistance to CTAA communities. GAO found that, through CTAA grants, EDA assisted some trade-impacted communities that may not have qualified for EDA's other community grant programs due to differences in eligibility and cost-share requirements. However, EDA officials provided some specific examples of CTAA grantees that may have qualified for the EAA or Public Works programs. Although officials credited the CTAA program with providing additional funding to assist more communities, some officials suggested that funding for tradeimpacted communities could have been designated within, and similar services could have been delivered through, EDA's existing programs.

section_title: What GAO Recommends
paragraphs: GAO is not making recommendations in this report. Commerce concurred with GAO's findings and provided additional information on grantee performance reports and planned improvements to performance measures.

section_title: Letter
paragraphs: From 2001 to 2011, U.S. imports of goods and services almost doubled  from $1.4 trillion to $2.7 trillion. During the same period, the United States  entered into free trade agreements with 14 partner countries, and the World  Trade Organization admitted 13 members. The increase in imports and the  ongoing trade liberalization have resulted in the loss of certain U.S. jobs, as  companies that cannot compete with lower priced imports have closed or  relocated to lower wage countries. The federal government has recognized  that, although the benefits of free trade are widely dispersed across the  economy, worker dislocation can have an adverse effect on communities.  The Trade and Globalization Adjustment Assistance Act of 2009 (TGAAA),  passed as part of the American Reinvestment and Recovery Act in  February 2009, reauthorized and amended trade adjustment assistance  (TAA) programs that assist trade-impacted workers, farmers and  fishermen, firms, community colleges, and communities. The TGAAA  reestablished the TAA for Communities programs, including the  Community Trade Adjustment Assistance (CTAA) program and two other  programs. In late June 2009, Congress appropriated $40 million in funding  for the CTAA program. For fiscal year 2010, the Department of  Commerce’s Economic Development Administration (EDA) awarded $36.8  million in CTAA grants to 36 communities to develop a strategic plan to  help the community adjust to trade impacts and to promote economic  diversification or to implement programs and projects as part of a strategic  plan. The administration proposed to discontinue the program, contending  that EDA could provide similar assistance to communities at a lower cost  through its Economic Adjustment Assistance (EAA) program. Congress  responded by repealing the CTAA program in 2012.

TGAAA mandated that we report on the operation and effectiveness of  the amended TAA programs. In response to your interest in a report on  the repealed CTAA program and, more specifically, on how EDA awarded  the CTAA grants and how those grants fit in with other EDA grant  programs, we examined the CTAA program to determine (1) how EDA  made grant award decisions, (2) what mechanisms EDA established to  monitor the grants and evaluate their effectiveness, and (3) how the  CTAA program compared with other EDA community grant programs.

To determine how EDA made grant award decisions, we reviewed  relevant laws, guidance, and regulations. We also reviewed a  nonprobability sample of 12 grant files, selected to provide a variety of  grant awards on the basis of region, grant amount, and grant type (i.e.,  whether the purpose of the grant was to help a community develop a  strategic plan or implement part of an existing strategic plan). As part of  our file review, we developed an instrument to determine whether EDA’s  process met the requirements outlined in the CTAA federal funding  opportunity—the program’s grant application announcement. We  interviewed EDA officials at headquarters in Washington, D.C., and in the  six regional offices, and we conducted a site visit to the Philadelphia  Regional Office to gain an understanding of its CTAA grant solicitation  and selection processes. To identify the mechanisms that EDA  established to monitor the grants and evaluate their effectiveness, we  reviewed program information, agency documentation, and data on the  status of the grants. We also interviewed EDA regional officials regarding  their grant monitoring practices and how they plan to evaluate the  effectiveness of the program. To determine how the CTAA program  compared with other EDA community grant programs, we obtained  agency information on the goals, eligibility criteria, activities, and targeted  recipients of the CTAA program and other EDA community grant  programs and interviewed agency officials. (See app. I for a more detailed  description of our scope and methodology.)

We conducted this review from March 2012 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: Background
paragraphs: CTAA is one of three programs under TAA for Communities. EDA  administered the CTAA program and currently administers several other  grant programs that promote economic growth throughout the United  States, helping communities and regions prepare for growth and success  in the global economy. The Department of Labor administers the other  two TAA for Communities programs—the Community College and Career  Training Grants and the Industry or Sector Partnership Grants. The  Community College and Career Training Grants are ongoing. Congress  did not appropriate funds for the Industry or Sector Partnership Grants  and repealed the program in fiscal year 2012.

CTAA grants were aimed at helping small and medium-sized  communities develop long-term strategic plans to address economic  development challenges in regions experiencing the loss of firms and jobs  due to competition from imports or to implement the projects in such  plans. The CTAA program was designed to supplement other TAA  programs by providing assistance specifically to trade-impacted  communities. EDA awarded CTAA grants to 36 communities throughout  the United States (see fig. 1). The grants, which totaled $36.8 million, are  administered by EDA’s six regional offices located in Atlanta, Austin,  Chicago, Denver, Philadelphia, and Seattle.

EDA awarded two types of CTAA grants—(1) grants to develop a  strategic plan to help the community adjust to trade impacts and to  promote economic diversification and (2) grants to implement projects or  programs in an existing strategic plan. (See table 1 for examples of these  grants.grants and 80 percent were implementation grants.  ) About 20 percent of the 36 CTAA grants were strategic planning  the Department of Labor’s TAA for Workers,  the Department of Commerce’s TAA for Firms, and  the Department of Agriculture’s TAA for Farmers (which also covers  fishermen).

However, there were no certifications under the TAA for Farmers program  from January 1, 2007, through January 31, 2010, and certifications under  this program therefore were not a factor in identifying trade-impacted  communities. According to the CTAA federal funding opportunity, EDA  deemed communities significantly impacted by trade if they had at least  8.25 workers per 1,000 workers impacted by TAA program certifications.

section_title: EDA Awarded CTAA Grants Using Its Standard Grant Process but Reported Some Program- Specific Challenges
paragraphs: We found that EDA announced and reviewed CTAA grant applications  using the standard process it uses for awarding other grants, with  modifications related to CTAA program eligibility. EDA officials in each  regional office conducted a merit review using six award criteria. Our file  review and interviews with EDA regional offices show that EDA awarded  the grants using the process outlined in the CTAA federal funding  opportunity—the grant application announcement. While they followed a  process that was standard for the agency, EDA officials reported several  challenges in administering the program. First, officials highlighted the  upfront effort required to set up the new program. Second, officials said  they had a relatively short amount of time to conduct outreach to potential  applicants and receive applications. Third, officials said they experienced  problems in creating and maintaining an accurate list of counties that  would be eligible for the program on the basis of TAA for Workers  certifications.
subsections: section_title: EDA Used Its Standard Process to Announce, Review, and Award Grants
paragraphs: EDA outlined its process for awarding the CTAA grants in its federal  funding opportunity and program regulations. EDA officials said that this  process was similar to the standard process they use to administer other  EDA grant programs, but with some modifications to address the unique  aspects of the CTAA program. In our sample of 12 of the 36 CTAA  grants, we found that EDA followed the process outlined in the federal  funding opportunity to announce, review, and award CTAA grants.

After Congress established the CTAA program in February 2009, EDA  took steps to start up the program and provide guidance to EDA regional  office staff and applicants. EDA developed new regulations and designed  the CTAA federal funding opportunity, which incorporated the key  eligibility requirement that communities must be significantly impacted by  trade. The agency issued program implementation regulations in August  2009 and announced the CTAA federal funding opportunity in January  2010. EDA regional office staff said that EDA headquarters officials  provided guidance on program implementation by holding conference  calls and providing training on how to assess the merits of the  applications. In addition, EDA issued responses to a list of frequently  asked questions to provide additional guidance to regional office staff and  applicants.

To help coordinate assistance to communities through the implementation  of the CTAA program, the TGAAA required EDA to establish and  participate in an Interagency Community Assistance Working Group.  The working group consisted of participants from EDA’s Trade  Adjustment Assistance Division, the Department of Labor’s TAA for  Workers Program, and the Department of Agriculture’s TAA for Farmers  program. The working group held periodic discussions on CTAA  implementation in 2010, with much of the focus on coordinating the  process for certifying communities as eligible to apply for CTAA funding.  Each agency also provided updates and shared best practices on  implementation of the newly reauthorized TAA programs. EDA officials  said that even though the program was repealed, they plan to continue to  work closely and regularly with the TAA for Workers program, sharing  information related to TAA for Firms and TAA for Workers certifications  and providing referrals across programs to ensure that agency officials  are aware of the benefits of each program.

We have previously reported on steps that agencies should take to  improve oversight and internal controls in the grant management process,  including steps within the preaward, award, implementation, and closeout  stages. EDA’s grant management process is very similar to the grant  management process described in our previous report. EDA regional  office staff described the steps they took and provided documents that  showed they followed their standard grant award process as outlined in  the CTAA federal funding opportunity to administer the program. Each  regional office reported having conducted outreach, provided technical  assistance, received grant applications, and reviewed the applications in  their respective states (see fig. 3).

Outreach and technical assistance. Because the eligibility  requirements were different for the CTAA program than for EDA’s  other grants programs, EDA headquarters officials developed a list of  counties that were eligible for the program and notified elected state  officials of the existence of the list. EDA regional staff also said that  they conducted outreach through their network of Economic  Development Districts. Some regional officials said that they also  reached out directly to communities they knew were negatively  affected by trade. EDA regional staff said that they provided technical  assistance to applicants as needed.

Receipt of applications and technical review. EDA regional offices  received more than 130 CTAA applications. Applicants were required  to submit full applications by April 20, 2010. In our review of 12 grant  files, we found that the applicants submitted their applications prior to  this date. EDA regional staff said that they conducted a technical  review of each application, verifying, among other things, the eligibility  of the applicant as outlined in the federal funding opportunity. EDA  regional staff said applications that did not pass the technical review  did not move forward to the next stage, the merit review.

Merit review. According to EDA regional staff and training documents,  EDA staff and other federal employees conducted a merit review of  applications that passed the technical review and scored the  applications on the basis of EDA’s award criteria (see table 2).  According to EDA documentation of the final rankings that we  reviewed, EDA used the scores to rank the applications within one of  the following categories: below average, average, good, or excellent.

Grant award. EDA officials said that they awarded the CTAA grants in  accordance with the review panel and selection process outlined in  the federal funding opportunity. The Investment Review Committee at  each regional office, consisting of the office’s managers, reviewed and  discussed the merit review panel’s process and recommendations.  Our review of each regional office’s committee meeting records  showed that each committee approved the recommendations and  forwarded the ranked list of applications to the selecting official—the  Regional Director. The Regional Director in each office then reviewed  applications and could select applicants outside of the ranked order,  taking into consideration factors such as the availability of program  funding, the geographic distribution of grants, and the diversity of  applicants. After the Regional Director selected the grant award  recipients, EDA notified the recipients and issued grant award  documents.

section_title: EDA Officials Reported CTAA-Specific Challenges Related to the Grants Award Process
paragraphs: EDA officials cited several challenges that they faced in implementing the  CTAA program. First, they highlighted difficulties associated with setting  up the new program. EDA headquarters staff noted that setting up a new  program required considerable effort because they were required to  develop entirely new regulations instead of integrating CTAA funding into  an existing EDA program. After the TGAAA established the program in  February 2009, EDA issued program implementation regulations for  comment in May 2009 and finalized the program regulations in August  2009. EDA then issued its federal funding opportunity for public comment  in December 2009 and issued the final federal funding opportunity  announcement in January 2010. EDA officials said that they had to  incorporate the program’s complex trade-impact eligibility criteria into the  new program regulations and the federal funding opportunity, which  required that they modify standard processes and award criteria  appropriately. They noted that determining significant trade impact on  communities was complex and time consuming. Several EDA regional  officials also mentioned that there was an administrative burden in having  to learn the requirements and procedures of a new program. In addition,  four of the six regional offices hired a combined total of six new staff  members to administer the program, and EDA officials said existing staff  were pulled away from working on other EDA programs to respond to the  demands of administering CTAA.

A second challenge cited by EDA officials was having to obligate all  program funds by the end of fiscal year 2010. EDA officials said they had  a relatively short amount of time—a little over 3 months—to conduct  outreach to potential applicants in the period between the federal funding  opportunity announcement in January 2010 and the application deadline  of April 20, 2010. EDA officials from some of the regional offices said that  the short time frame may have led to EDA’s receiving fewer applications  than if the application period had been longer. They said that as a result,  some applicants may not have had enough time and resources to  develop their proposal, identify funds to meet the cost share  requirements, and build regional partnerships required to produce a  complete application.

Third, EDA headquarters officials expressed concern over the reliability of  a list of more than 450 eligible counties that they compiled and published  to assist communities in demonstrating trade impact. EDA used the list to  notify the communities that they were eligible to apply for the grant.  However, EDA reported in issuing an updated version of the list that  some eligible communities may not have been included, and the list may  have included some ineligible communities. EDA subsequently required  all counties that appeared on the list to provide TAA certification data to  establish eligibility. An EDA official said the list of eligible counties was  difficult to create. For example, the list depended on Department of Labor  data on TAA for Workers certifications; however, these data include city  and state information but not county information. In 9 of the 12 grant files  we reviewed, the applicants provided evidence that they were on the list  to show their eligibility, in addition to evidence of TAA for Workers  certifications. Despite the concerns that EDA identified with the list, we  noted that all 12 files we reviewed showed evidence of trade impact and  that EDA had determined that they were eligible for the program.

section_title: EDA Continues to Monitor Grants but Will Not Be Able to Assess Effectiveness until after 2013
paragraphs: EDA continues to monitor CTAA grants through its standard process of  reviewing periodic progress and financial reports that grantees are  required to submit. In our review of a sample of EDA grant files, we found  no gaps in the regional offices’ collection of required progress and  financial reports. Seven of the 36 projects had been completed as of the  publication of this report, with an additional 6 slated to conclude by the  end of September 2012. Grantees with construction projects are required  to report on certain EDA performance measures—such as the number of  jobs created and retained—3, 6, and 9 years after the award. In 2013,  those grantees will be required to report measures relating to jobs  created, jobs retained, and level of new private investment. At that point,  according to agency officials, EDA will have more information about  whether the projects are on track to meet their goals for jobs created, jobs  retained, and the amount of private investment leveraged. EDA noted in  its agency comments that it will not know the outcomes of the grants until  2019, when the grantees will submit final nine-year reports on project  impact.
subsections: section_title: EDA Continues to Monitor Grants through Standard EDA Monitoring Mechanisms
paragraphs: EDA has begun to disburse the funds associated with the 36 CTAA  grants and continues to monitor their progress by using a standard  process in which grantees must submit periodic progress and financial  reports (see fig. 4). After awarding the grants from July to October 2010,  EDA began disbursing CTAA funds in late 2010. Adhering to its standard  process, EDA provides CTAA funds in response to disbursement  requests from the grantees and will continue to disburse funds until the  projects are completed. EDA’s standard terms and conditions for any  grant specify that the communities will be reimbursed with grant funds  after grantees document payments of approved project expenses, up to  the full amount of the cost that EDA has agreed to share. As of the  publication of this report, 7 of the 36 projects had been completed, and  another 6 were expected to be completed by the end of September 2012.

EDA regional officials said that they monitor grants in several ways, which  are consistent with EDA grants management guidance and procedure.  For example, they receive financial reports, performance reports, budget  documents, and requests for disbursement from the grantee. The  requirements for each grant are specified in the conditions of the grant  award contracts. EDA officials reported that they review all of these  documents, which contain information such as whether the design of the  project is complete or construction has started and whether the grantees  are able to fund their portion of the project. EDA officials said that they  stay in contact with grantees mostly through phone calls and e-mails and  that they conduct site visits, although these are relatively limited due to  budget constraints. Within the EDA regional offices, engineers perform  the monitoring of CTAA grants for construction projects, and EDA project  managers monitor the grants for development of strategic plans. CTAA  grant monitoring has been absorbed into the routine workload of these  regional office officials. One engineer told us that on average he monitors  about 50 EDA grants at any given time, of which just one is a CTAA  grant. Another engineer agreed that this is a fairly standard monitoring  workload. In our review of 12 of the 36 grant files, we found no evidence  of deficiencies in the required performance and financial reports that EDA  regional offices received from grantees. The documentation also  corroborated the descriptions of follow-up activity provided by staff at  each regional office.

Because many of the CTAA grants funded construction projects that are  still in progress, EDA regional offices continue to monitor these grants  (see fig. 5 below). Several of the strategic planning projects have been  completed and were closed out by EDA regional offices. EDA closes out  a grant after it receives the final progress, financial, and audit reports.

EDA officials noted one challenge they experienced in implementing the  CTAA grants. All CTAA grant funds had to be obligated by the end of  fiscal year 2010, though they could be disbursed over several years.  Thus, EDA had to award its grants during a single fiscal year, which  limited the agency’s ability to amend grants, because any changes had to  be consistent with the original project intent, scope, and budget. EDA  officials stated that since other community grant program funding does  not expire at the end of the fiscal year, they can make changes to grants  for construction projects as long as these changes relate to the original  scope and are properly documented. Officials indicated the stricter  conditions on changing the terms of CTAA grant awards pose a particular  challenge with construction-related projects, because unforeseen  circumstances such as delays or changes in management may require  major changes in such projects. Officials stated that because EDA cannot  change CTAA grants, communities with construction projects that require  major changes may not be able to spend their grant money in time, which  could result in deobligated funds.

section_title: EDA Will Collect Performance Data on Projects, but It Is Too Early to Determine Their Effectiveness
paragraphs: All EDA grant recipients, including recipients of CTAA grants for  implementation projects, are required to provide data on jobs created,  jobs retained, and the amount of private investment leveraged. They  provide these data at 3, 6, and 9 years after the date of the grant award.  CTAA grantees with implementation projects will begin to report on these  measures starting in 2013. Consequently, EDA will not be able to  determine the effectiveness of the program until then or later. Using  estimates in the grant applications for the 36 CTAA awards, EDA projects  that the program will result in 6,586 jobs being created and 1,892 jobs  being saved once all the projects are implemented. EDA noted that it  does not have job creation projections for strategic planning grants,  although it expects those strategic plans to lead to job creation in the  future. EDA’s fiscal year 2011 annual report to Congress notes the results  of EDA’s economic development investments are often realized years  after the initial investment.

EDA provided some examples of projected potential job creation through  CTAA grant projects:

200 jobs may be created as a result of a project to develop a business  park in Lincoln County, North Carolina;

300 jobs may be created as a result of a project to expand and  improve facilities at a former Air Force Base in Blytheville, Arkansas;  and

311 jobs may be created and 255 retained as a result of a project to  create a business center to assist entrepreneurs in Boise, Idaho.

In its agency comments, Commerce noted that they will not know the  outcome of the projects until 2019, when the grantees submit their final  nine-year reports on project impact.

section_title: CTAA Targeted Trade- Impacted Communities; Some May Not Have Qualified for Other EDA Programs, and Some May Have
paragraphs: Our review of how the CTAA program compared with other EDA grant  programs shows that while the CTAA grants targeted trade-impacted  communities, some grantees might have been eligible for other EDA  grant programs. EDA officials identified two other programs that target  economically distressed communities—EDA’s Economic Adjustment  Assistance (EAA) and Public Works—which may have been able to  provide assistance to CTAA communities. We found that EDA, through  CTAA grants, assisted some trade-impacted communities that may not  have qualified for EDA’s other community grant programs due to  differences in eligibility and cost-share requirements. However, EDA  officials also provided some specific examples of CTAA grantees that  may have qualified for the EAA or Public Works programs. Although  officials credited the CTAA program with providing additional funding to  assist more communities, some officials suggested that funding for trade- impacted communities could have been designated within, and similar  services could have been delivered through, EDA’s existing programs.
subsections: section_title: CTAA Grants Targeted Some Trade-Impacted Communities That May Not Have Qualified for Other EDA Programs
paragraphs: EDA officials said that the CTAA grants targeted some trade-impacted  communities that may not have qualified for EDA’s other community grant  programs—EAA and Public Works. While CTAA and the EAA and Public  Works programs all funded similar activities, such as construction  projects, there are differences between CTAA’s eligibility and cost-share  requirements and those of the other two programs, which have the same  requirements. Table 3 provides a comparative overview of the three  programs.

As shown in table 3, CTAA targeted trade-impacted communities, and  EAA and Public Works targeted economically distressed communities.  Communities that were eligible for the CTAA program had workers or  firms certified as trade-impacted by other TAA programs.EAA and Public Works assistance, communities must demonstrate  economic distress by documenting high unemployment levels or low per  capita incomes.

Some officials stated that CTAA funds were needed for trade-impacted  communities because those communities are not necessarily a subset of  economically distressed communities. For example, officials said  communities in western Montana that received CTAA grants might not  have been eligible for the EAA and Public Works programs, because they  have low unemployment levels. However, due to the increase in timber  imports from Canada, many communities in western Montana were trade  impacted. EDA officials also noted it takes time for trade impacts to be  reflected in the unemployment rates or per capita incomes, particularly in  urban areas. As a result, the city of Chicago or Orange County, California,  may have been less likely to receive grants under the other programs, but  EDA officials did award CTAA grants to these locations on the basis of  trade impacts.

The CTAA program also required recipients to contribute a much lower  percentage of their own funds to their projects. As shown in table 3, EDA  required communities in the CTAA program to provide between 5 and 25  percent of the costs of the grants, while EDA requires communities in the  EAA and Public Works programs to provide up to 50 percent of the costs.  The higher level of EDA funding provided through the CTAA program may  have led some communities to apply for grants and to implement projects  that they would not otherwise have been able to carry out.

section_title: EDA Officials Said CTAA Assisted Some Communities That Could Have Qualified for Other EDA Grant Programs
paragraphs: EDA officials said that some of the trade-impacted communities assisted  by the CTAA program could have qualified for and received similar  assistance from the EAA and Public Works programs. Although EDA  officials credited the CTAA program with providing a funding stream to  assist more communities, some officials suggested that funding for trade- impacted communities could have been designated within, and similar  services could have been delivered through, EDA’s existing programs, for  the following reasons:

CTAA communities met the primary eligibility requirements. Many of  the communities that applied for CTAA program assistance  demonstrated sufficiently high unemployment rates or low per capita  incomes. For example, EDA officials said one CTAA grantee was  located in one of the nation’s most economically depressed areas,  which also happened to be impacted by trade.

CTAA communities could qualify under the special need category. In  addition to the main eligibility requirements, the EAA and Public  Works programs can provide grants in special circumstances, which  can include the closing or restructuring of an industrial firm or loss of a  major employer and the negative effects from changing trade  patterns.

CTAA communities could implement similar projects. The EAA  program offers nonconstruction grants and the Public Works program  offers construction grants similar to those offered by the CTAA  program. For example, one grantee applied for both CTAA and Public  Works grants to make infrastructure improvements to a multitenant  manufacturing building. The grantee was eligible for both programs,  but EDA awarded the community a CTAA grant.

Additionally, EDA said that CTAA was duplicative of the EAA and Public  Works programs, since these programs could have met the needs of  trade-impacted communities. As noted above, the administration  proposed to discontinue the CTAA program in 2012, contending that EDA  could provide similar assistance to communities at a lower cost through  its EAA program (see table 4 for more on the funding of these programs).  Congress responded by repealing the CTAA program in 2012.

section_title: Agency Comments
paragraphs: We provided a draft of this report to the Department of Commerce for  comment. We received written comments from Commerce, which are  reprinted in appendix IV. In its comments, Commerce concurred with this  report and provided additional information clarifying that the outcomes of  the CTAA grants may not be known until 2019, when the final nine-year  reports on impact will be provided by the grantees. Commerce also  provided further information on planned improvements to EDA’s  performance measures.

We also received technical comments from Commerce that were  incorporated into the report.

We are sending copies of this report to the appropriate congressional  committees, the Department of Commerce, and other interested parties.  In addition, the report is available at no charge on the GAO website at  http://www.gao.gov.

If you or your staff have any questions about this report, please contact  me at (202) 512-4101 or gomezj@gao.gov. Contact points for our Offices  of Congressional Relations and Public Affairs may be found on the last  page of this report. GAO staff who made key contributions to this report  are listed in appendix V.

section_title: Appendix I: Scope and Methodology
paragraphs: To determine how Commerce made grant award decisions, we reviewed  relevant laws and regulations, the CTAA federal funding opportunity, and  grant files. We interviewed responsible EDA officials at headquarters and in  the six regional offices and conducted a site visit to the Philadelphia  Regional Office to gain an understanding of their grant solicitation,  approval, and oversight processes. We interviewed agency officials at  headquarters to gain an understanding of the agency’s establishment of  and participation in the Interagency Community Assistance Working Group.

To provide an in-depth review of the grant award process and monitoring,  including whether EDA followed its procedures, we obtained and  reviewed supporting documentation for the program. We selected a  nonprobability sample of 12 grant recipients for a file review. We used a  data collection instrument to review the sample of grant files against the  process and requirements outlined in the CTAA federal funding  opportunity, or the grant application announcement. In each file, we  reviewed applications, agency reviews of the applications, documentation  of the award process and decisions, and progress and financial reports.  Because we selected a nonprobability sample of grant recipients, the  information we obtained from these reviews cannot be generalized to the  whole group of 36 grant recipients. We selected the sample of 12 grant  recipients to provide a variety of grant awards on the basis of region,  grant amount, and grant type—whether the purpose of the grant was to  help a community develop a strategic plan or implement part of an  existing strategic plan. The characteristics of our sample are listed below.

To determine the number of grant files to select from each regional  office, we considered the distribution of CTAA funding. As a result, we  selected four grant files from Chicago; three from Atlanta; two from  Philadelphia; and one each from Seattle, Austin, and Denver.

We selected grants representing the range of grant award amounts.

The 36 CTAA grant award amounts ranged from $53,000 to $3.5  million. The grant award amounts in our sample ranged from $75,000  to $3 million.

To determine the number of implementation grants versus strategic  planning grants to select, we considered the proportion of each type  receiving grant awards. For the implementation grants, we also  selected recipients according to the proportion of implementation  grants with construction projects. As a result, we selected 10  implementation grants—4 with construction projects and 6 with  nonconstruction projects—and 2 strategic planning grants.

In addition, our sample contained a mix of urban and rural  communities as well as a mix of grantee types. The sample included  three grant recipients that were an Economic Development District,  five counties, three cities or towns, and one that was a combined  recipient of a county and an Economic Development District.

To identify the mechanisms that EDA established to monitor the grants  and evaluate their effectiveness, we reviewed program information,  agency documentation, and data on the status of the grants. We reviewed  monitoring documents, such as progress and financial reports, in our  grant file review. We also interviewed EDA regional officials regarding  their grant monitoring procedures, challenges they encountered in  monitoring the grants, and their plans for evaluating the effectiveness of  the program.

To determine how the CTAA program compared with other EDA  community grant programs, we obtained agency information on the goals,  eligibility, activities, and targeted recipients of the CTAA program and  other EDA community grant programs. We interviewed EDA officials to  gain an understanding of the client base for each program and to identify  examples of CTAA grantees that may have qualified and those that may  not have qualified for multiple programs.

We conducted this review from March 2012 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.

section_title: Appendix II: CTAA Grant Awards: Grantees, Amounts, and Grant Purpose
subsections: section_title: Grantee

section_title: Appendix III: TAA Programs at a Glance: Responsible Agencies, Service Structures, Types of Assistance, Number Assisted
paragraphs: Service structure  State and local workforce  agencies provide  assistance to workers  covered by certified  petitions.

Type of assistance  Provides funds for services  and benefits including:  training, case management  and reemployment services,  income support, job search  and relocation allowances,  wage supplement allowance  for older workers, and  eligibility for health coverage  tax credit.

The National Institute of  Food and Agriculture  develops and delivers  training and technical  assistance to groups of  farmers or fisheries.

Provides funds for technical  assistance (training and  business plan development)  and cash payments to  implement business plans.

EDA provides funding to 11  Trade Adjustment  Assistance Centers. The  Centers provide funds for  consultants, engineers,  designers or industry  experts to work with firms.

Provides funds to develop  adjustment proposals  (business recovery plans)  including work in such areas  as engineering, information  technology, management,  market development, quality  improvement, and sales.

The Economic  Development  Administration awards  grants to communities.

Provides grant funding for  strategic planning or  implementing a project or  program as part of a strategic  plan.

The Employment & Training  Administration awards  grants to institutions of  higher education.

Provides grant funding to  institutions of higher education  to develop or improve  education and career training  programs for persons eligible  for the Workers program.

2011: 32 institutions  of higher education  or consortia  Congress repealed the CTAA program in fiscal year 2012.  Congress did not fund the Industry Sector Partnership grant program and repealed it in fiscal year  2012.

section_title: Appendix IV: Comments from the Economic Development Administration

section_title: Appendix V: GAO Contact and Staff Acknowledgments
subsections: section_title: GAO Contact

section_title: Staff Acknowledgments
paragraphs: In addition to the contact named above, Kim Frankena (Assistant  Director), Christina Bruff, David Dayton, Leah DeWolf, David Dornisch,  Etana Finkler, Bradley Hunt, Ernie Jackson, Erin Preston and Jeremy  Sebest made key contributions to this report.


Question-summary annotations: questions: question: What has EDA used its grant award process for?
answer: The Department of Commerce's Economic Development Administration (EDA) used its standard grant award process to announce, receive, and review applications for the Community Trade Adjustment Assistance (CTAA) program, with modifications related to program eligibility.
child_questions: question: How did EDA reach out to eligible communities?
answer: To comply with legislative requirements, EDA reached out to eligible communities by identifying those with workers or firms already certified as trade impacted by other trade adjustment assistance programs.

question: What kind of review process did EDA use?
answer: EDA awarded the grants in accordance with the review and selection process outlined in the CTAA federal funding opportunity--the program's grant application announcement.

question: What kinds of projects were the grants for?
answer: More than half of the grants were for construction projects, such as building roads and installing broadband fiber for industrial parks.

question: What CTAA-specific challenges were identified?
answer: Although EDA was able to adapt standard procedures already in place for its other grant programs, EDA officials cited some CTAA-specific challenges: first, the effort required to set up the new program for CTAA grants; second, a relatively limited time for the outreach and application process; and third, the development of a list of eligible communities for outreach, which proved to be a complex undertaking.

questions: question: How does EDA monitor its grants?
answer: EDA regional staff said that they monitor the grants using tools such as periodic progress and financial reports.
child_questions: question: What is the timeline for grant reporting?
answer: Many of the projects will not be completed until after 2013, but grantees with construction projects are required to report on certain EDA performance measures 3, 6, and 9 years after the award. Thus, in 2013, those grantees will be required to report measures relating to jobs created, jobs retained, and level of new private investment. The grantees will submit final nineyear project reports in 2019 that will help the agency determine whether the projects met their goals.

question: What did GAO's review of the reports find?
answer: GAO's review of a nonprobability sample of 12 of the 36 CTAA grant files found no gaps in the regional offices' collection of required reports.

questions: question: What did GAO determine in their comparison of CTAA with other EDA grant programs?
answer: GAO's review of how the CTAA program compared with other EDA grant programs shows that although the CTAA grants targeted trade-impacted communities, some grantees might have been eligible for other EDA grant programs.
child_questions: question: What other programs did EDA identify?
answer: EDA officials identified two other programs that target economically distressed communities--EDA's Economic Adjustment Assistance (EAA) and Public Works programs--that may have been able to provide assistance to CTAA communities.
child_questions: question: What did EDA identify among other CTAA grantees?
answer: However, EDA officials provided some specific examples of CTAA grantees that may have qualified for the EAA or Public Works programs.

question: What did officials identify within existing EDA programs?
answer: Although officials credited the CTAA program with providing additional funding to assist more communities, some officials suggested that funding for tradeimpacted communities could have been designated within, and similar services could have been delivered through, EDA's existing programs.

question: What was GAO's finding in their report?
answer: GAO found that, through CTAA grants, EDA assisted some trade-impacted communities that may not have qualified for EDA's other community grant programs due to differences in eligibility and cost-share requirements.

questions: question: How did Congress establish the CTAA program?
answer: Congress established the CTAA program in February 2009 through the Trade and Globalization Adjustment Assistance Act (TGAAA), passed as part of the American Recovery and Reinvestment Act.
child_questions: question: What was the goal of the CTAA program?
answer: The CTAA program was designed to supplement other Trade Adjustment Assistance programs by providing assistance through grants to trade-impacted communities to help them become more competitive in the global economy.

question: What has characterized the economic activity of the CTAA program?
answer: In 2010, EDA awarded $36.8 million in CTAA grants to 36 communities.

question: Why did the CTAA program end?
answer: The administration proposed to discontinue the program, contending that EDA could provide similar assistance to communities at a lower cost through its EAA program.

question: How did the CTAA program end?
answer: Congress responded by repealing the CTAA program in 2012.

questions: question: Why did GAO review the Trade Adjustment Assistance programs?
answer: TGAAA mandated that GAO review the operation and effectiveness of Trade Adjustment Assistance programs. This is one of several reports responding to that mandate.
child_questions: question: What did GAO review in its report?
answer: For this report, GAO determined (1) how EDA made grant award decisions, (2) what mechanisms EDA established to monitor the grants and evaluate their effectiveness, and (3) how the CTAA program compared with other EDA community grant programs.

question: What was GAO's methodology?
answer: GAO reviewed agency documents, conducted a file review, and interviewed EDA officials.