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

Letter

Background

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.

TAA Certification Process

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.

2009 Changes to the TAA Program

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.

TAA Funding

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.

Role of State and Local Workforce Agencies

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.

TAA Performance and Reporting Requirements

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.

Related TAA Programs

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.

Labor Faced Initial Challenges in Implementing the 2009 Legislation and Took Steps to Address Them

2009 Legislation Increased Volume and Processing Complexity of TAA Petitions

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.

Labor’s Processing Timeliness Adversely Affected by Increased Petition Volume and Initial Staff Shortage

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.

Labor Took Corrective Action to Address Challenges in Processing Petitions

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.

Nearly All of the Changes Benefited Participants and Some Helped Administrators As Well

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.

Dedicated Funding for Case Management and Employment Services

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.

New Authority to Waive Deadlines

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.

Enhanced and Expanded Training Benefits

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.

Increase in Available Training Funds

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.

Over 107,000 Workers Received Benefits and Services, but Little Is Known About Their Outcomes

About Half of the Participants in the 2009 Program Enrolled in Training, but Other Benefits Were Less Utilized

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.

Limited Outcome Data are Available

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.

Concluding Observations

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.

Agency Comments and Our Evaluation

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.

Appendix I: Objectives, Scope, and Methodology

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.

Selected States

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).

Analysis of Labor’s Training Funds Expenditure Data

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.

Analysis of Labor’s Participant Data

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.

Appendix II: Comparison of Key 2002, 2009, and 2011 TAA Statutory Provisions

2002 TAA Program

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)

2002 TAA Program

ADMINISTRATIVE CHANGES Training Fund Amount

2002 TAA Program Employment and Case Management Services

Office Responsible for Administering TAA • No statutory provision. TAA was

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.

Appendix III: TAA Training Fund Expenditures by State, as of March 31, 2012

Appendix IV: Comments from the Department of Labor

Appendix V: GAO Contacts and Staff Acknowledgments

GAO Contacts

Staff Acknowledgments

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.

Related GAO Products

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.