Reemployment Services: DOL Could Better Support States in Targeting Unemployment Insurance Claimants for Services
Released: 2018-09-05T00:00:00

Letter

Background

Enacted in July 2014, WIOA emphasizes the alignment and integration of workforce programs, primarily administered by the departments of Labor and Education, that provide education and training services to help job seekers obtain employment and advance in the labor market. WIOA also provides for state workforce development boards to help oversee a system of local workforce development boards that, in turn, deliver services through a network of one-stop centers. In its guidance on implementing WIOA, DOL states that this network is a shared responsibility of states, local boards, and other partners, including one- stop programs. It also encourages integration of services across one-stop programs to promote seamless service delivery.

The public workforce system is available to all job seekers, including UI claimants, and through it claimants may access reemployment services from a variety of federally funded workforce programs. At one-stop centers, states make services such as job search assistance and career counseling available to UI claimants and other job seekers using programs including the DOL-administered Wagner-Peyser Employment Service, the WIOA Adult program, and the WIOA Dislocated Worker program. The WIOA Adult program and WIOA Dislocated Worker program may also be used to provide training (see table 1).

UI claimants may also access services from other programs offered through the public workforce system. One such program, RESEA, is designated for the provision of reemployment services to UI claimants specifically. Established as a discretionary grant program in 2015, RESEA makes funding available to states for reemployment services to UI claimants identified by their state as most likely to exhaust their benefits, as well as veterans who receive UI benefits through the Unemployment Compensation for Ex-Servicemembers (UCX) program. During fiscal year 2017, 49 states and the District of Columbia participated in RESEA, and DOL made $115 million in grant funds available through the program. In February 2018, legislation was enacted that established RESEA as a formula grant program with incentive payments for states meeting or exceeding outcome goals, and authorized up to approximately $3.9 billion in funding for the program through fiscal year 2027. In July 2018, DOL announced that it was developing an implementation plan for the new RESEA program provisions, and would provide details on this plan in the coming months.

RESEA aims to link UI claimants to the public workforce system, address their individual reemployment needs, and help states prevent and detect improper payments by conducting UI eligibility reviews. Once a UI claimant is selected for RESEA, the claimant is required to attend a one- stop orientation and meet one-on-one with a caseworker, who conducts a UI eligibility assessment, helps the claimant develop an individualized reemployment plan, and provides or refers the claimant to other reemployment services, as appropriate (see fig. 1). In some states, claimants participate in a second caseworker meeting to receive follow-up services, either in person or by phone.

UI Claimant Profiling Requirements

Since 1994, states have been required by law to develop and use profiling systems to identify UI claimants who are likely to exhaust their benefits, and to refer such claimants to reemployment services. In response to this legislation, DOL launched a Worker Profiling and Reemployment Services (WPRS) initiative in 1994. Currently, most states provide services to such claimants through their RESEA programs, using the profiling systems they developed under the WPRS initiative.

DOL issued WPRS guidance in 1994 describing minimum profiling requirements for all states and listing two profiling options:

Statistical profiling systems predict each UI claimant’s likelihood of exhausting benefits based on claimant characteristics (such as education level, prior claims history, and industry or occupation) and other factors. The system produces a ranked list, and claimants with the highest predicted likelihood of exhausting benefits are selected for reemployment services.

Non-statistical characteristic screens sort claimants into two groups, based on the presence of certain characteristics. Claimants with one or more of these characteristics are considered not likely to exhaust their benefits, and are excluded from selection for services. Remaining claimants are considered likely to exhaust their benefits, and a subset is randomly selected for reemployment services.

This guidance also specifies characteristics that states must, may, and are forbidden to use in their profiling systems. Specifically, states are required to include certain characteristics to identify UI claimants who are permanently laid off and unlikely to return to their previous industry or occupation. States may also use a claimant’s education, tenure at a previous job, and the state unemployment rate. States are prohibited from using claimant age, race or ethnic group, sex, disability, religion, political affiliation, and citizenship, among others. DOL determined that use of these characteristics could produce discriminatory effects, as UI claimants selected for reemployment services through the profiling process are required to attend services, or may lose their eligibility to receive UI benefits.

Research on Effectiveness of Reemployment Services

DOL-commissioned research suggests that reemployment services may help UI claimants find work more quickly and reduce UI program expenditures, though results have differed across states reviewed. A 2008 study found that the Reemployment and Eligibility Assessment (REA) program, the predecessor to RESEA, was effective in reducing the average duration of UI benefits in one of two states reviewed. Specifically, this study found that the REA program led to a statistically significant reduction in the duration of UI benefit claims of about a week for claimants with multiple caseworker meetings in Minnesota, but did not find statistically significant effects for claimants in North Dakota. A subsequent 2011 study found significant reductions in UI benefit duration and amount of benefits received among REA participants in three of four states reviewed, with the largest effects exhibited in Nevada. A more in- depth 2012 evaluation of Nevada’s REA program during the 2007 to 2009 Great Recession found that, on average, REA participants exited the UI program about three weeks sooner and used $873 less in benefits than non-participants as a result. This impact on UI benefit duration and benefit amounts includes both reductions in regular UI benefits and in Emergency Unemployment Compensation (EUC) benefits. Additionally, REA participants were nearly 20 percent more likely to obtain employment in the first two quarters after entering the program.

Selected States Provide Services to Help UI Claimants Find Work Using a Variety of Key Approaches Selected States All Provide Reemployment Services to Connect UI Claimants to Jobs Quickly

Officials from all six of our selected states said they provide reemployment services designed to help UI claimants get back to work quickly. These services include assessing claimant skills and service needs, providing job search assistance and referrals, and conducting interviewing and resume workshops, among others. State officials said they may also refer claimants with more extensive needs to additional services, such as longer-term case management or retraining.

Selected States Vary in How They Deliver Services through their Primary Reemployment Programs for UI Claimants

Officials from all six of our selected states described operating reemployment programs that connect many UI claimants to the state’s public workforce system; we refer to these as primary reemployment programs. While the services available through these programs are similar, state approaches to selecting participants for and delivering services through these programs vary. According to information from state officials, these selected states’ primary reemployment programs generally follow the RESEA model of a one-stop center orientation and one-on-one meeting with a caseworker.

Officials in all six of our selected states said they served UI claimants identified as most likely to exhaust their benefits, as required by law, through their primary reemployment programs, but some select additional claimants for these programs as well. Officials in two states, Massachusetts and Nebraska, said they believe it is important for all claimants to have access to reemployment services and that they require all claimants to report to a one-stop center for an orientation and meeting with a caseworker. (See text box.)

State Spotlight: Service Goals In 2015, Nebraska expanded its primary reemployment program, called NEres, to all unemployment insurance claimants, with state officials noting that all claimants can benefit from the high-quality services it offers.

In contrast, officials from three selected states said they prioritize claimants who are most likely to exhaust their benefits for reemployment services, and noted that these claimants have the greatest service needs. Officials from Wisconsin, for example, said claimants who are not selected for the state’s RESEA program are considered job ready and typically do not need in-person services. In addition to prioritizing claimants who are most likely to exhaust their benefits, our sixth selected state, Nevada, randomly selects additional claimants to participate in a state-funded reemployment program that is similar to the state’s RESEA program. Officials in Nevada said they believe their state-funded program allows them to serve claimants with less intensive needs more efficiently and builds upon the success of the state’s prior REA program.

Officials in the six selected states described varying approaches to providing reemployment services online versus in person. Officials in two states said their state strongly encourages the use of online services. For example, officials in Utah said all UI claimants are required to fill out an online needs assessment when filing a claim, and based on their responses, are required to complete up to five additional online workshops. These officials said leveraging online self-service options helps UI claimants adapt to using technology in the workplace and helps the state preserve limited financial resources (see text box). Similarly, officials in Wisconsin said claimants are required to complete an online needs assessment and orientation, and claimants can access various online workshops to address identified service needs. These officials believe this emphasis on online services will help claimants become more self-sufficient and in control of their job search.

State Spotlight: Online Services Officials in Utah described the one-stop center’s motto as “self-directed.” One-stop center staff encourage customers to access services independently through the state’s online portal in the computer lab so that they feel empowered to use online services at home.

In contrast, officials in three other selected states emphasized the benefits of in-person service provision. In Nebraska, officials said in- person meetings help one-stop center staff observe a claimant’s potential employment barriers that might otherwise be hard to identify. Officials provided an example of a claimant who seemed well-positioned on paper to obtain employment, but in person clearly lacked good interviewing skills, prompting the caseworker to refer the claimant to additional interviewing support. In Texas, officials said in-person service provision, where possible, also helps promote program integrity as it enables caseworkers to more easily set the expectation that claimants must search for work to qualify for UI benefits. Additionally, officials in Nevada said establishing a personal connection with claimants can help one-stop staff encourage those struggling with the experience of applying for dozens of jobs online without receiving any feedback from prospective employers (see text box).

Officials in the six selected states also described varying approaches in the extent to which they provide reemployment services in group settings or on an individual basis. In RESEA guidance, DOL has encouraged the use of group services as a way to enhance efficiency, and officials in four selected states said they conduct group orientations through their primary reemployment programs. For example, in Massachusetts, officials said that all UI claimants attend a group Career Center Seminar, where one- stop center staff provide an overview of available reemployment services and local labor market conditions, and UI claimants complete a needs assessment and career action plan. In Nebraska, a caseworker said the use of group orientations is a strength of the state’s program because it provides an opportunity for claimants to discuss shared challenges and network with each other. In contrast, Nevada provides all services through its primary reemployment program individually, which officials said they believe is more effective than group service provision. Officials said that during these individual meetings, caseworkers identify each claimant’s barriers to employment and assess whether the claimant needs ongoing individual case management or if additional service referrals would be appropriate.

Selected States Leverage Technology and Integrate Program Resources to Help Improve Services

Officials from all six selected states said they use technology and integrate resources from across federally funded workforce programs as strategies that help enhance efficiency and improve UI claimant customer experiences.

Leveraging Technology

To help provide services more cost-effectively and enhance service delivery capacity, officials in two selected states, Utah and Wisconsin, said they invested resources into expanding the array of online self- service options available to UI claimants. Utah officials said the state increased its use of technology to meet heightened service demand during the Great Recession, and continues to encourage online self- services as a cost-effective, fiscally sustainable means of maintaining service levels with fewer staff. Similarly, officials in Wisconsin said the state’s enhanced self-service options are central to its strategy for meeting current UI claimant needs and prepare the state for potential increases in UI claimant demand in an economic downturn.

Officials in five selected states said they have also used technology to help make services more customer-friendly, including the four selected states in which officials described improvements to their online job banks.

One of these states, Nebraska, added a mobile job bank application that, according to officials, has made it easier for UI claimants to use job bank features on their mobile devices and allows them to search for postings within a certain radius of their physical location. Nevada and Wisconsin officials also described other investments in mobile technology. Nevada, for instance, plans to implement a tool that will allow UI claimants to communicate with caseworkers via text message, such as by sending a picture of their first paystub to document that they found a job. Additionally, Wisconsin implemented a self-scheduling feature for initial RESEA meetings as part of broader upgrades to the state’s UI and workforce data systems.

Officials in all six selected states said they use technology to help caseworkers maximize their time. For example, officials in four states said integrating their state UI and workforce data systems has enabled them to automate some caseworker responsibilities. In Massachusetts and Wisconsin, officials said data system integration allows caseworkers to instantly transfer relevant information from the workforce data system to the UI data system, enabling them, for instance, to automatically trigger UI adjudication proceedings after a UI claimant fails to meet RESEA requirements. Officials from Wisconsin, Massachusetts, and Utah said their online self-scheduling features help save time that caseworkers would otherwise spend scheduling and rescheduling missed appointments. (See text box.) Officials in four selected states said they also use technological tools to help caseworkers focus their time on providing individualized services. For example, Nebraska developed a series of orientation videos designed to deliver clear, standardized information on job search requirements and available resources for claimants. As a result, caseworkers who manage in-person orientation sessions are able to focus on answering participant questions and emphasizing key information.

State Spotlight: Self-Scheduling Tool Wisconsin officials said their online self-scheduling tool for participants in the Reemployment Services and Eligibility Assessment (RESEA) program has both freed up staff time and increased RESEA attendance rates. According to data provided by state officials, the percentage of scheduled RESEA meetings attended by claimants increased from about 69 percent in 2014 to 87 percent in 2016. Officials attributed this increase to the implementation of the self-scheduling tool in March 2015.

Program Integration

Officials from all six selected states cited the benefits, such as improving UI claimant access to services, of enhancing program integration. Officials from four selected states said they aim to improve UI claimants’ customer experience using a “no wrong door” service delivery framework in which one-stop center staff guide claimants and other job seekers to the services they need without requiring them to approach different siloed programs for services (see text box). Additionally, officials from three selected states said state workforce agencies work behind the scenes using integrated budgeting, or “braided funding,” to align the appropriate federal resources so one-stop center staff can focus on service provision rather than funding source constraints. Officials in Utah and Wisconsin said integrated budgeting helped them support system-wide improvements, such as IT updates. For example, Wisconsin state officials said they strategically set aside funding from multiple programs to support the technology upgrades needed for a redesign of their reemployment program.

State Spotlight: Program Integration Massachusetts cross-trains one-stop center staff on available workforce programs to increase collaboration and make the experiences of “shared” customers—those who receive services from more than one program—more seamless.

Finally, officials from all six of our selected states said that the Wagner- Peyser Employment Service—a federally funded workforce program that can be used to support any job seeker—is a critical federal resource that they use in conjunction with other workforce programs to meet the needs of UI claimants specifically. These six selected states described using the Wagner-Peyser Employment Service for a wide range of functions, including expanding reemployment service provision to claimants, supporting one-stop center staff or computer labs, and maintaining continuity of RESEA operations in periods of funding uncertainty.

States Served UI Claimants through Four Key Federally Funded Workforce Programs, but Data on Reemployment Service Expenditures Are Not Available States Report that They Most Often Served UI Claimants through the Wagner-Peyser Employment Service

In program year 2015 (July 2015 through June 2016), states reported providing services to UI claimants through four key federally funded workforce programs, most often the Wagner-Peyser Employment Service, followed by RESEA, the WIOA Dislocated Worker program, and the WIOA Adult program (see fig. 2). (See appendix I for selected state participation data.)

States likewise served the largest number of all job seekers through the federally funded Wagner-Peyser Employment Service in program year 2015, followed by RESEA, the WIOA Adult program, and the WIOA Dislocated Worker program. The proportion of service recipients who were UI claimants, and the amount of DOL funding provided to states under these programs, also varied (see fig. 3).

The following sections discuss these programs in more detail.

Selected States Do Not Track All Reemployment Service Spending on UI Claimants, and DOL Officials Said Such Tracking Would Be Burdensome

Officials from all six of our selected states said their accounting systems did not generally track expenses by the UI claimant status of jobseekers served, and as a result, they could not isolate all reemployment service spending on UI claimants specifically. For instance, Utah officials said they allocated workforce system costs across multiple funding streams by surveying staff members about their activities at random moments in time. Officials said that while a jobseeker’s UI claimant status may be relevant to some staff time charges (such as helping a jobseeker apply for UI benefits), it would not be relevant, or even known, in other cases (such as providing computer lab assistance).

Officials from DOL said it would be burdensome for states to track and report workforce program expenditures on reemployment services provided to UI claimants specifically, as states have flexibility to use funds from multiple federal sources on services to both claimants and other jobseekers. DOL officials said they believe states mainly rely on RESEA, Wagner-Peyser, WIOA Dislocated Worker, and WIOA Adult funds to support UI claimant reemployment services. DOL has also reported that some states, including one of our selected states (Nevada), collect taxes designated for purposes that may include reemployment services.

Our six selected states also provided some UI claimant reemployment services through their primary reemployment programs, and five of these states were able to provide us with summary expenditure data from these programs. These five states chiefly leveraged RESEA funds to support these programs in state fiscal year 2017, and three states supplemented RESEA funds with funds from other sources (see fig. 8).

Of the three states that supplement RESEA funds with other sources, two (Nebraska and Wisconsin) used Wagner-Peyser funds, and one (Nevada) used state funds. Nebraska officials said they leveraged flexible Wagner- Peyser funds to enable the state to serve all UI claimants through its primary reemployment program. Wisconsin officials said that they, too, used Wagner-Peyser funds to expand the capacity of their state’s primary reemployment program, but did not aim to serve all UI claimants. Nevada officials said they used state funds from an employer payroll tax to provide reemployment services to randomly selected UI claimants not already selected for RESEA.

States Use Different Profiling Systems to Target UI Claimants for Services, but DOL Has Not Collected Needed Information or Fully Advised States about Profiling Options States Use a Range of Practices to Profile UI Claimants for Reemployment Services

Past national studies and our review of information from nine selected states indicate that the practices used by states to profile, or identify, UI claimants who are most likely to exhaust their benefits and need assistance returning to work differ. A 2007 DOL-sponsored study and a 2014 follow-up questionnaire to states found that, nationally, a large majority of states reported using statistical profiling systems, while a few states used a type of non-statistical profiling system known as a characteristic screen. (See text boxes.) The 2007 study also found that the performance of states’ profiling systems varied widely. Specifically, while some systems predicted claimants’ likelihood of benefit exhaustion relatively well, others did not perform much better than random chance. Accepted statistical practices recommend that profiling systems be updated regularly, and DOL has recommended that states update their profiling systems every 2 to 4 years. However, more than half of states that responded to the 2014 questionnaire reported that they had not updated their systems since before 2008.

Statistical Profiling Systems Statistical profiling systems predict each unemployment insurance (UI) claimant’s likelihood of exhausting benefits based on claimant characteristics (see examples below), which are each assigned weights through a statistical process. The system produces a ranked list, and claimants with the highest predicted likelihood of exhausting benefits are selected for reemployment services.

Sample Characteristics Used to Predict Benefit Exhaustion

Weeks of UI benefits used in the past 3 years Non-Statistical Profiling Systems (example: Characteristic Screen) Non-statistical profiling systems select claimants for services using a process that does not rely on statistical analysis. One example of these, characteristic screens, sort unemployment insurance (UI) claimants into two groups, based on the presence of certain characteristics (see examples below). Claimants with one or more of these characteristics are considered not likely to exhaust their benefits, and are excluded from service requirements. Remaining claimants are considered likely to exhaust their benefits, and a subset is randomly selected for reemployment services.

Of the nine selected states whose profiling systems we reviewed, six use statistical systems and three use non-statistical systems, and profiling practices vary widely, even among states using the same type of system. The six states with statistical systems have varying levels of system sophistication, and different system assessment and updating practices. For example, officials in one state said they invested substantial time and resources in building a sophisticated statistical profiling system and assessing its performance. To maintain the system, officials said they update it biannually through a yearlong, resource- intensive process. Officials described this process as important, noting that employer needs and the economy change over time, as do other factors that influence UI claimants’ likelihood of exhausting their benefits. State officials further said that as part of a large umbrella agency with oversight of numerous federal workforce programs, they have the resources needed to sustain a centralized data office with the capacity to build and maintain a sophisticated statistical system.

Officials in another state told us they had recently replaced their sophisticated statistical profiling system, which was based on the principles of machine learning, with a new, more straightforward, statistical system. While DOL officials said the state’s prior system was innovative, state officials said that after the person who developed it left the agency, they did not know how to update it. The official charged with developing the state’s new profiling system said he had to re-familiarize himself with statistical modeling practices in order to build it, and that it took months to complete. State officials said they had not yet established a performance assessment and updating process for the new system, and that they would need to gather additional data and determine how to address certain analytical challenges before doing so.

Officials from a third state agency said they were using a statistical profiling system that had not been updated in over 25 years, and had asked DOL to help them develop a new statistical profiling system because they lacked the expertise to do so themselves. In March 2017, DOL provided the new system to the contractor that maintains the state’s UI data system and will be responsible for running the new system. However, in June 2018, state officials told us they had delayed implementing the new system until the state completed a UI modernization project. Further, while state officials said they plan to keep the system up-to-date once implemented, they acknowledged that they do not have staff with the skills to do so, and will likely need continued DOL support.

For the three selected states that use non-statistical profiling systems, state officials said that these systems generally require little effort to maintain. Officials in two of these states reported using characteristic screens, which sort claimants into two groups to identify and exempt from service requirements those claimants who meet certain conditions, such as being only temporarily unemployed or in an approved training program. An official from each state said they aim to serve all non-exempt claimants through their reemployment programs.

The third state recently implemented a non-statistical claimant needs assessment that replaced the state’s outdated statistical profiling system, which officials said had never been updated and was only used to comply with the federal profiling requirement. With the new needs assessment, claimant responses to questions such as, “Do you have a resume?” and “How many job interviews have you had in the last month?” are scored to determine whether the claimant is job-ready or needs reemployment services. (See text box.) Caseworkers can also use these responses to make more effective service referrals during their appointments with claimants. For instance, if a claimant reported not having a current resume, a caseworker might refer the claimant to a resume workshop. In addition, officials said that program administrators can easily adjust the scoring and weights used in the assessment, and that they review it each year for potential updates.

Sample Alternative Non-Statistical Profiling System (Needs Assessment) One selected state’s claimant needs assessment scores claimant responses to a questionnaire about job readiness to determine if claimants need reemployment services. Those responses also provide caseworkers with direct information about claimant needs.

How long have you been looking for work?

Do you have a cover letter?

Do you need help preparing for an interview?

Do you have the computer skills needed to complete online job applications?

DOL Has Not Systematically Collected Information on State Profiling Systems that Could Inform Its Oversight and Technical Assistance Efforts

Despite past research identifying weaknesses in state profiling systems, DOL has not systematically collected information on these systems, which limits its ability to oversee their performance. DOL officials said that they communicate with states about their profiling practices and gather some profiling system information in the course of their periodic UI and RESEA reviews. However, DOL technical staff do not review or maintain this profiling system information for oversight purposes, and DOL does not have a systematic method of tracking state profiling practices across states. DOL officials said that they view their primary role, related to profiling systems, as providing technical assistance; however, by law, DOL is also responsible for ensuring that states’ profiling systems meet federal requirements. Further, GAO recommended in a 2007 report that DOL take a more active role in ensuring profiling system accuracy, and federal internal control standards state that agencies should obtain timely and relevant data to conduct effective monitoring. Without such data, DOL’s ability to effectively oversee state profiling practices is limited.

In addition, DOL provides technical assistance—which can range from answering specific questions to developing a new statistical profiling system on a state’s behalf—to individual states only upon request, rather than identifying and providing assistance to states at higher risk of poor profiling system performance. This approach necessitates that states recognize when they need technical assistance and request it. However, states may not know that their profiling systems are performing poorly and may not request needed technical assistance as a result. For example, officials from four of our six selected states with statistical systems told us that they do not currently have a process to assess their systems’ performance. As a result, these states may not be aware of potential issues they may need to address to improve their system performance. Additionally, officials responsible for maintaining another selected state’s profiling system had incorrectly identified the system type. As a result, officials may have difficulty identifying problems and seeking support.

DOL has an opportunity to use its new UI state self-assessment to systematically collect information that could inform its oversight of state profiling practices and technical assistance efforts. This questionnaire, which DOL designed to help states self-identify and correct UI system weaknesses, covers 15 functional areas. Self-assessment questions in one of these areas will collect some information on state profiling systems, such as system type and date of last update. However, as currently designed, the self-assessment will not solicit other information that could help DOL identify states at risk of poor system performance. For example, it does not ask whether states have experienced challenges maintaining their systems (for instance, due to staff turnover), or how states have assessed system performance. DOL officials told us regional staff will review state responses to the self-assessment, the first of which are due in March 2019, and which will be one piece of information used to identify states that DOL might prioritize for general UI program oversight.

While DOL officials said it would make sense to use the information gathered to inform oversight of profiling systems as well, they did not have specific plans about how they would do so. Federal internal control standards state that agencies should identify, analyze, and respond to risks. Without collecting more detailed and consistent profiling system information and having a clearer plan for how to use it, DOL’s ability to conduct effective monitoring and respond to risks will continue to be limited. More specifically, DOL may miss opportunities to help states at risk of poor profiling system performance better identify UI claimants most in need of reemployment services.

DOL Guidance Does Not Fully Address State Options for Meeting Profiling System Requirements

DOL’s current profiling guidance does not clearly and comprehensively communicate the profiling system options available to states, which may prevent states from using the profiling systems that best suit their needs. While the law does not specify a particular type of profiling system states must use, DOL’s only formal profiling guidance, issued in 1994, describes only two state options: statistical systems and characteristic screens, a type of non-statistical system. Further the guidance encourages states to use statistical systems, which it asserts are more efficient and precise, and easier to manage and adapt, than non-statistical systems. DOL officials who provide technical assistance to states told us they also encourage all states to use statistical profiling systems for the same reasons. However, DOL officials acknowledged that, in practice, not all statistical profiling systems predict benefits exhaustion well, particularly outdated systems. The 2007 DOL-sponsored study similarly found that some state profiling systems did not predict benefit exhaustion much more accurately than random chance.

Additionally, statistical profiling systems may be more difficult for some states to develop and maintain than non-statistical systems. DOL officials acknowledged that states with technical capacity issues, such as staffing and data system limitations, may experience particular challenges. Officials we spoke to in four of our six selected states with statistical profiling systems told us that they have faced these challenges. In contrast, officials from all of our selected states with non-statistical profiling systems said their systems are easy to maintain. Officials from one state that uses a claimant needs assessment said this system also provides useful information that caseworkers can review prior to one-on- one meetings with claimants.

DOL officials told us they are supportive of state experimentation with alternative profiling approaches. However, officials in our selected states had differing perspectives on DOL’s views on state flexibility and options for pursuing experimentation. For example, an official in one state was interested in making a change to the outcome variable that the state’s statistical system predicted, believing it could reduce UI program expenditures. As a result, the state consulted with regional DOL staff about the possible revision and made the change with DOL’s support. In contrast, an official in another state who wanted to make a similar change to its statistical profiling system has not pursued the change or discussed it with DOL officials because he believes such a change would not be allowed.

Further, some of our selected states differed in their understanding of state flexibility to use the type of profiling system that works best for them. For example, officials in one of our selected states said they are switching to a statistical system after longstanding encouragement by DOL to do so, even though a key official expressed concern that a statistical system may not be useful, given the state’s goal of providing services to all UI claimants. In contrast, officials in another state said they had recently replaced their outdated statistical profiling system with a claimant needs assessment that differs from the options described in DOL’s 1994 guidance, after requesting DOL review of their revised approach.

The differences in states’ perspectives on allowable options for profiling systems may in part be due to the fact that DOL’s current profiling guidance is limited and outdated. The guidance was issued in 1994, and it does not clearly reflect all of the options available to states, such as using a different outcome variable in a statistical system, or implementing an alternative type of non-statistical system to meet worker profiling requirements. Further, while a key DOL official said they are open to reviewing alternative state profiling approaches, they do not have a formal process for doing so, nor does guidance address the option for DOL to review alternative approaches. DOL officials said they believe the existing guidance provides states relatively wide latitude in designing their profiling systems and, as a result, they have not found the need to change those guidelines. However, federal internal control standards emphasize the importance of periodically reviewing policy for continued relevance and effectiveness in achieving objectives. Without clearer, more current policy information from DOL on profiling requirements and available options, state officials may continue to have differing understandings of what they can do, and states may not pursue innovations that could improve their profiling systems, better suit their technical capacity, and, ultimately, better target claimants for reemployment services.

Conclusions

With 5.7 million UI claimants receiving nearly $30 billion in unemployment benefits in 2017, reemployment services have the potential to substantially improve employment outcomes and conserve resources by shortening UI claimants’ periods of unemployment. Earlier this year, Congress authorized up to approximately $3.9 billion in funding over the next decade for the RESEA program, which states use to provide services to UI claimants most likely to exhaust their benefits. However, DOL has not taken key steps to help states effectively identify and select such claimants for the program. DOL has the opportunity to collect more systematic information on state practices for profiling UI claimants through its new UI state self-assessment, but the information it is planning to collect is limited and may not enable DOL to identify states that are having trouble identifying claimants in need of services. Further, DOL does not have a process for how it can use information on state risks of poor profiling system performance to guide its oversight and technical assistance efforts, choosing largely to assist individual states only when asked. Some states may not be equipped to identify weaknesses in their profiling systems, and as a result may not request the assistance they need. In addition, DOL encourages all states to use statistical profiling systems despite acknowledging that some states’ statistical systems, particularly outdated ones, may not perform well in practice. Moreover, its profiling guidance to states has not been updated since 1994, and may not reflect the flexibility afforded states to pursue alternative profiling options. Without clearer, more current information from DOL, states may not pursue innovations that could help them better identify the UI claimants who need reemployment services most.

Recommendations for Executive Action

We are making the following three recommendations to the Department of Labor:

The Secretary of Labor should systematically collect sufficient information on state profiling systems, possibly through DOL’s new UI state self-assessment process, to identify states at risk of poor profiling system performance. For instance, DOL could collect information on challenges states have experienced using and maintaining their profiling systems, planned changes to the systems, or state processes for assessing the systems’ performance. (Recommendation 1)

The Secretary of Labor should develop a process to use information on state risks of poor profiling system performance to provide technical assistance to states that need to improve their systems. DOL may also wish to tailor its technical assistance based on state service delivery goals and technical capacity. (Recommendation 2)

The Secretary of Labor should update agency guidance to ensure that it clearly informs states about the range of allowable profiling approaches. (Recommendation 3)

Agency Comments and Our Evaluation

We provided a draft of this product to the Department of Labor for comment. In its comments, reproduced in appendix II, DOL agreed with our recommendations and stated that it would take action to address them. DOL reiterated its commitment to providing technical assistance to states and strengthening the connection between the UI program and the public workforce system. DOL also provided technical comments, which we incorporated as appropriate. Additionally, we provided relevant excerpts of the draft report to officials in the selected states we included in our review. We incorporated their technical comments as appropriate.

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If you or your staff have any questions about this report, please contact me at 202-512-7215 or brownbarnesc@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 III.

Appendix I: Selected State Program Participation Data

We selected six states—Massachusetts, Nebraska, Nevada, Texas, Utah, and Wisconsin—for in-depth review. These six selected states all served unemployment insurance (UI) claimants through several key federally funded workforce programs in program year 2015 (July 2015 through June 2016). For the five states that confirmed the reliability of the data they reported to the Department of Labor (DOL) over this time period, the numbers of UI claimants served through each program and percent of all service recipients who were UI claimants varied. Summary data from each of these five states are presented in figures 9 through 13.

Appendix II: Comments from the Department of Labor

Appendix III: GAO Contact and Staff Acknowledgments

GAO Contact

Staff Acknowledgments

In addition to the contact named above, Rebecca Woiwode (Assistant Director), Ellen Phelps Ranen (Analyst-In-Charge), Caitlin Croake, Margaret Hettinger, Efrain Magallan, and Amrita Sen made key contributions to this report. Also contributing to this report were Lilia Chaidez, Alex Galuten, Thomas James, Nicole Jarvis, Serena Lo, Mimi Nguyen, Jessica Orr, Karissa Robie, Almeta Spencer, and Jeff Tessin.