VETS administers national programs to (1) ensure that veterans receive priority in employment and training opportunities from the employment service; (2) assist veterans, reservists, and National Guard members in securing employment; and (3) protect veterans' employment rights and benefits. VETS carries out its responsibilities through a nationwide network that includes representation in each of Labor's 10 regions and staff in each state. The Office of the Assistant Secretary for VETS administers the agency's activities through regional administrators and a VETS director in each state. The state VETS directors are the link between VETS and the states' employment service system, to whom the DVOP and LVER staff--as state employees--directly report, and which is overseen by Labor's ETA. In fiscal year 2005, VETS requested $220.6 million for all its programs, including $162.4 million for the DVOP and LVER programs. States plan to use this funding to support more than 2,100 DVOP and LVER positions. In September 2001, we identified some key areas in which VETS could better serve its clients by providing more flexibility and accountability in its programs. With its passage in November 2002, JVA amended the legislation that governs the DVOP and LVER programs by addressing many of the concerns we raised in our prior work. For example, JVA clarified the roles of DVOP and LVER staff, and gave states greater flexibility in determining how the staff are used. Under VETS guidance, the DVOP staff's duties now focus on providing intensive services--with priority given to disabled veterans--including assessing the veterans' special needs and skills, developing a plan of action, and coordinating any needed supportive services, such as training and job referrals. The DVOP staff also provide outreach activities to locate candidates who could benefit from intensive services, such as homeless veterans. As stated in VETS guidance, the LVER staff's duties now include developing regular contact with employers to promote employment and training for veterans, developing relationships with community leaders to further promote veterans' employment, and promoting and monitoring the participation of veterans in federally funded programs. The JVA legislation required states to develop plans that include details of the specific duties required of the DVOP and LVER positions and the strategy for their integration into the one-stop system. The legislation also required the establishment of a comprehensive performance accountability system to measure performance of the DVOP and LVER staff, using performance measures consistent with those of WIA. In addition, JVA established an incentive program to recognize eligible employees for excellence in providing veterans services and to encourage the improvement of services, with 1 percent of each state's annual grant allocation to be designated for incentive funding. In addition, JVA required VETS to establish a minimum standard for the rate at which veterans enter employment, a standard which all states are required to meet. The JVA legislation further required annual performance reviews of veterans' services, which VETS uses to monitor the DVOP and LVER programs to ensure proper accountability. VETS has taken action to implement the changes to the DVOP and LVER programs. VETS has issued policy guidance and conducted training on the DVOP and LVER staff's new roles and responsibilities. In addition, nearly half the states are taking advantage of JVA's flexibility to employ part-time DVOP staff. Although VETS has issued guidance on the performance incentive program to recognize exemplary staff as required by JVA, states have implemented this program differently, and 11 states do not plan to implement the incentive program because sometimes it conflicts with the state's policy if awards are given to individuals. In addition, integrating DVOP and LVER staff into one-stop centers continues to be challenging. Through its policy guidance letters, VETS has clarified the DVOP and LVER staff's new functions, along with new staffing and reporting requirements, including the use of part-time positions for DVOPs. In addition, shortly after JVA was enacted, NVTI held a series of implementation seminars covering DVOP and LVER staff's new roles and responsibilities that were attended by representatives from all states. NVTI also conducts case management training aimed at DVOP staff. At the end of its first training year in October 2004 following passage of JVA, NVTI reported training 282 DVOPs and estimated that an additional 144 would be trained each year in the future. Similarly, NVTI conducts employer outreach training focused on LVERs. Because this class is new, NVTI estimates that it will train 264 LVERs by October 2005, and projects that an additional 240 LVERs would be trained each year. One of the key changes in the new law gives states the flexibility to establish part-time DVOP and LVER positions, though this was already permitted to some extent for LVERs. According to their fiscal year 2005 state plans, 23 states planned to use the new flexibility under JVA to employ both full- and part-time DVOPs, while 34 states planned to use the long-standing authority to employ both full- and part-time LVERs. As shown in table 1, part-time DVOP positions would comprise about 18 percent of the total DVOP staff and about 44 percent of the total LVER staff. Some states plan to use part-time DVOPs and LVERs extensively. For example, two states, Maine and Washington, planned to use part-time LVERs exclusively. In addition, South Dakota plans on having 87 percent of its DVOPs be part-time, and Vermont plans to have 91 percent of LVERs be part-time. By contrast, in New Jersey, only 5 percent of DVOPs are to be part-time and, in Indiana, 6 percent of LVERs are to be part-time. VETS has implemented JVA's requirement to establish a performance incentive awards program by issuing policy guidance that lays out criteria and monetary as well as nonmonetary awards for states to consider in developing an awards program. According to fiscal year 2005 state plans, 11 states did not plan to use the incentive program due to reasons such as conflicts with state law or other policies if the awards are given to individuals. The remaining 40 states planned to implement the incentive program in various ways. For example, in one state, two DVOPs were awarded a one-time maximum award of $1,000. In another state, however, top performing DVOP and LVER staff were given a one-time cash award for as little as $16. Regardless of their current approach to implementing incentives, some VETS officials said they would like to see award eligibility criteria expanded beyond individuals to include entire units. Labor officials acknowledge that integration of DVOP and LVER staff into the one-stop centers has been a persistent challenge. The extent that implementing changes under JVA will assist in breaking down the barriers and entrenched cultures that have precluded integration in the one-stop centers will likely take years. According to the DVOP and LVER staff we interviewed, integration still varied widely among local areas, depending on the level of support provided by the one-stop manager for the DVOP and LVER programs. For example, one DVOP staff told us that the veterans program is highly integrated with the WIA program in her local one-stop, with both sharing case management responsibilities. In addition, she participates in regular meetings with the one-stop partners and attributed this cohesion to the commitment by her one-stop manager to work cooperatively with all the partners. In contrast, a DVOP from another state told us that he was assigned to tasks that prevented him from serving as many veterans as he would have liked. In cases where there was poor integration, several reasons were cited by DVOP and LVER staff we interviewed from various states. One reason was that other one-stop staff were not educated or trained on serving veterans. An NVTI official told us that the institute has provided training to states that have requested it, but was concerned that the states that were struggling with providing veterans' services were the very ones that did not request training. Other reasons included the perception among DVOP and LVER staff we interviewed that there is little coordination between VETS and ETA to ensure integration among all partner programs, adopt uniform definitions of eligible veterans, and consistently give veterans priority of service regardless of program. VETS has implemented some JVA changes to the accountability system related to the measures used for assessing DVOP and LVER performance, but it estimates that it will be at least 2007 before it can implement a minimum standard for veterans entering employment that all states will be expected to meet. Until the standard becomes available, VETS has used historically based outcomes in negotiating performance goals with states. In addition, Labor has established an entered-employment goal of 58 percent for veterans served through the DVOP and LVER programs. While VETS reported that the DVOP and LVER programs met Labor's program year 2003 goals for some measures, concerns about data reliability remain, preventing an accurate assessment of how well DVOP and LVER staff are performing. The performance measurement system for the DVOP and LVER programs has been in transition over the last several years. Prior to JVA, performance measures placed more emphasis on process-oriented measures--measures that simply tracked services provided to veterans, not on the employment outcomes veterans achieved. In addition, states used different data sources to report employment-related outcomes, resulting in performance that was not comparable across states. According to VETS officials, VETS adopted performance measures, beginning July 1, 2003, that are consistent with those of WIA, but has not yet specified when it will implement a system for weighting the measures to provide special consideration for such groups as disabled veterans, in accordance with JVA's requirements. Another fundamental change was the use of Unemployment Insurance (UI) wage records to identify veterans who get jobs rather than the use of time-consuming follow-up procedures. The current performance standards for the DVOP and LVER programs apply to various veterans populations, including disabled veterans. Three measures are based on WIA: (1) veterans that entered employment; (2) retention in employment at 6 months; and (3) job seeker satisfaction. In addition, VETS tracks entered employment following receipt of staff- assisted services and entered employment following receipt of case management. VETS officials told us, however, that the measures will change again on July 1, 2005, when VETS will adopt the Office of Management and Budget's new common measures. VETS will retain several existing measures that track employment following services provided by DVOP and LVER staff. While the new common measures afford some advantages over existing measures, the frequent shifts in focus have made it difficult to collect comparable data that can be used to establish a pattern of performance for the DVOP and LVER programs and compare outcomes across different time periods. As such, VETS anticipates that it will take at least until 2007 to collect the necessary trend data to establish the minimum standard for the entered-employment rate that all states will be expected to meet. In the interim, states are required to meet performance goals that they negotiate annually with VETS based on historic outcome levels. For example, according to VETS, states' program year 2004 negotiated goals for entered employment ranged from 46 percent to 67 percent for veterans, and from 41 percent to 65 percent for disabled veterans. Nationwide, VETS reported that the DVOP and LVER programs met Labor's goals for the entered employment rate (58 percent) for all eligible veterans in program year 2003, while they fell short of their 60-percent target entered employment rate for disabled veterans (see table 2). Similarly, VETS reported that the programs exceeded goals for the rate at which veterans retained employment 6 months later. Even after the new measures will be adopted, VETS officials remain concerned about the reliability of data used to assess performance. VETS officials attribute their concerns about service-related data reliability to DVOP and LVER staff not understanding the new definitions of the performance measures, lacking training on entering data into an automated system, inconsistent registration policies, or simply inputting erroneous data. In addition, VETS officials told us that some states have known data reliability issues with their management information systems. While Labor has established data validation procedures, the reliability of performance data is an issue that is not fully addressed by Labor's current validation procedures. For example, all states must certify that their data are correct using validation software that cross-checks the totals they report to VETS. However, validation does not extend to the case file level to ensure that DVOP and LVER staff accurately collect and report data at the point of service delivery. In comparing the reliability of data on services to those on employment outcomes, VETS officials believe that outcome data are more reliable because they are based on Unemployment Insurance (UI) wage records. However, as we have noted in past work, while UI wage records are reliable, they suffer from significant time lags, resulting in at least an approximately 1 1/2- year wait to obtain information on outcomes. In response to JVA's requirement to monitor the DVOP and LVER programs, VETS has shifted greater responsibility for monitoring program performance to the state level, and VETS' monitoring role continues to evolve from enforcer to partner in achieving state goals. VETS staff completed their first review of annual state self-assessments in program year 2004 and have completed their first round of site visits to a random sample of local offices. However, the extent that this new approach to monitoring DVOP and LVER performance strengthens program accountability may require several years of state and VETS experience collecting, reporting, and using information to improve services to veterans. Beginning in program year 2004, VETS began reviewing all the state plans for compliance with program requirements and, for any deficiencies noted during the review, required states to correct the relevant section of the plan. In addition, VETS requires states to submit annual self-assessments to identify best practices, ensure the approved state plan is being effectively implemented, determine the state's progress toward meeting its performance goals, and identify areas for technical assistance and training. Besides conducting reviews of the state plans and self-assessments, VETS also conducts annual on-site monitoring reviews of 20 percent of local offices within each state, and all local offices must be visited at least once in 5 years. While we do not know how many offices have DVOP or LVER staff, there are an estimated 1,900 comprehensive one-stop centers and about 1,600 affiliate one-stop centers around the nation. The on-site reviews include interviewing personnel who are involved in providing services to veterans, observing the flow of customers in the lobby, and reviewing local guidance and plans. Now that VETS has completed its first year under the new performance accountability system, it is unclear how it will use its monitoring results to improve DVOP and LVER program performance. At the national level, VETS has developed a system to track corrective actions needed in states' plans, but has not yet developed a strategy to best meld performance information from its other monitoring efforts to improve program performance at the local, state, and regional levels. For example, VETS officials in two states we visited told us that they use the site visit results to identify local offices needing targeted technical assistance. However, one state VETS official told us that because local offices varied considerably in their performance, he was uncertain whether the 20- percent sample used for site visits would accurately capture areas most in need of technical assistance. While information on DVOP and LVER performance is also available through local office reporting, VETS officials have not provided a consistent methodology to incorporate and analyze relative performance among the local offices, states, and regional offices. VETS and ETA continue to work on issues related to sharing the results of monitoring efforts, coordinating corrective actions, and taking a joint approach to enforcement. Mr. Chairman, this concludes my prepared remarks. I will be pleased to answer any questions you or other members of the subcommittee may have. Our remaining work will examine these and other issues in greater depth to meet our mandated reporting date at the end of the year. For further information regarding this testimony, please contact me at (202) 512- 7215. Key contributors to this testimony were Lacinda Ayers, Jeremy Cox, Meeta Engle, Emily Pickrell, and Stanley Stenersen. Workforce Investment Act: States and Local Areas Have Developed Strategies to Assess Performance, but Labor Could Do More to Help. GAO-04-657. Washington, D.C.: June 1, 2004. Veterans' Employment and Training Service: Flexibility and Accountability Needed to Improve Service to Veterans. GAO-01-928. Washington, D.C.: September 12, 2001. Veterans' Employment and Training Service: Proposed Performance Measurement System Improved, But Further Changes Needed. GAO-01-580. Washington, D.C.: May 15, 2001. Veterans' Employment and Training Service: Strategic and Performance Plans Lack Vision and Clarity. GAO/T-HEHS-99-177. Washington, D.C.: July 29, 1999. Veterans' Employment and Training Service: Assessment of the Fiscal Year 1999 Performance Plan. GAO/HEHS-98-240R. Washington, D.C.: September 30, 1998. Veterans' Employment and Training: Services Provided by Labor Department Programs. GAO/HEHS-98-7. Washington, D.C.: October 17, 1997. This is a work of the U.S. government and is not subject to copyright protection in the United States. It may be reproduced and distributed in its entirety without further permission from GAO. However, because this work may contain copyrighted images or other material, permission from the copyright holder may be necessary if you wish to reproduce this material separately.

Summary:
The Department of Labor's Veterans' Employment and Training Service (VETS) administers two programs designed to assist the roughly 700,000 veterans who are unemployed in any given month. These two programs, the Disabled Veterans' Outreach Program (DVOP) and the Local Veterans' Employment Representative (LVER) program, fund employment, training, and job placement services to veterans. In 2002, Congress passed the Jobs for Veterans Act (JVA), which redefined the roles of DVOP and LVER staff and required that VETS establish a new performance accountability system. This testimony is based on GAO's ongoing work in this area and focuses on three aspects: (1) the separation of DVOP's and LVER's roles and responsibilities; (2) VETS' performance accountability system for DVOP and LVER staff; and (3) VETS' system for monitoring DVOP and LVER performance. VETS has established separate roles for DVOP and LVER staff and has provided policy guidance and training to states explaining these changes. Under JVA, states now determine how many DVOP and LVER staff they hire, where to place them within the local workforce areas, and 23 states are planning to use some part-time DVOP staff. There are indications that integrating DVOP and LVER staff into the local workforce offices remains challenging. While VETS has issued guidance on an incentive program to encourage improved performance, state implementation of the program has varied, and 11 states do not plan to participate. VETS has implemented employment measures for DVOP and LVER staff, but a minimum standard that all states must meet for veterans entering employment will not be available before 2007. VETS reported meeting Labor's goal of achieving a 58-percent employment rate for all veteran job seekers during program year 2003, but fell somewhat short of reaching a 60-percent employment goal for disabled veterans. Assessing how well DVOP and LVER programs are serving veterans may continue to be difficult due to ongoing concerns about data reliability. VETS implemented a monitoring system in program year 2004 that relies primarily on state self-assessments of performance in conjunction with onsite reviews. It is unclear, however, how VETS staff at the state, regional, and national levels will use this information consistently to guide or improve the DVOP and LVER programs. VETS is working with other Labor agencies to coordinate monitoring and enforcement efforts.