The National Adult Literacy Survey estimated that approximately 90 million American adults have deficient literacy skills. Of those, between 40 and 44 million adults—about 22 percent of the country’s adult population—have severe problems with literacy, defined as the ability to read, write, and speak English and compute and solve problems proficiently. An additional 50 million adults are likely to encounter some problems functioning in society and need improved literacy skills. The Adult Education Act (AEA) is administered by the Department of Education. The act represents the primary federal effort to alleviate problems in adult literacy and provides the basic legislative authority and largest source of federal funds for programs that benefit educationally disadvantaged adults. The act’s largest program is the Adult Education State-Administered Basic Grant Program (State Grant Program). In fiscal year 1995, federal funding for this program was $252 million, while state and local sources provided $890 million, or 78 percent of the program’s total budget. For the first 15 years of the State Grant Program (1966 to 1980), federal expenditures exceeded total state and local contributions; however, total state and local contributions have since surpassed federal expenditures. (See table I.2 in app. I for total annual expenditures.) Figure 1.1 compares federal expenditures with state and local expenditures since the AEA’s passage in 1966. Although total state and local contributions currently far exceed federal expenditures, federal dollars still total more than half the funds for adult education in almost half of the states. The contribution of each state relative to the federal contribution varies widely, depending on each state’s commitment to providing adult education services. For example, in fiscal year 1991, state and local contributions ranged from a low of 21 percent to a high of 96 percent; conversely, federal expenditures ranged from 4 to 79 percent. Since 1992, the AEA has restricted the federal share of each state’s expenditure to no more than 75 percent. (See table I.4 in app. I for further information on expenditures by state.) The AEA makes grants to states and requires that they be used in accordance with federally approved state plans. In developing their plans, states must assess the needs of adults, including educationally disadvantaged adults, and the capability of programs and institutions to meet those needs. The Department of Education annually makes its grants to states on the basis of the number of individuals in each state who are at least 16 years old, not enrolled in school, and lack a high school degree or General Educational Development (GED) credential. Local adult education providers then apply to the states for funds. Following are the three most common types of instruction offered under the State Grant Program: Adult Basic Education (ABE), which is instruction designed for adults functioning below the eighth grade level; Adult Secondary Education (ASE), which is instruction designed for adults functioning at the secondary level that may culminate in a high school diploma or may serve as preparation for the GED examination; and English as a Second Language (ESL), which is instruction designed to teach English to non-English speakers. (See table I.3 in app. I for further information on enrollment by instructional area.) Programs funded under the AEA are important in providing basic literacy skills needed by clients of federal employment training programs such as Perkins Vocational Education (VOC ED), administered by the Department of Education; Job Opportunities and Basic Skills (JOBS), administered by the Department of Health and Human Services; and the Job Training Partnership Act (JTPA), administered by the Department of Labor. Consequently, the AEA and employment training legislation require coordination among these programs to avoid duplication and enhance service delivery. The National Literacy Act of 1991 amended the AEA and authorized several new programs. Major provisions included the creation of the National Institute for Literacy, the establishment of state and regional literacy resource centers, and a requirement for the Department of Education to develop model indicators of program quality to guide states in developing their own indicators for improved program evaluation. The 104th Congress is considering legislation that would consolidate adult education and other programs and provide one or more block grants to states. The Senate bill would repeal most existing federal employment training programs, including the State Grant Program, and replace them with a single block grant. The House bill would also repeal most employment training programs but replace them with four block grants, including a separate grant for adult education and literacy programs. At the request of the Chairman and Ranking Minority Member of the former House Committee on Education and Labor and the Chairman and Ranking Minority Member of the former Subcommittee on Elementary, Secondary, and Vocational Education, we reviewed several issues related to the AEA. Specifically, we examined the goals of the AEA and its largest program (the State Grant Program), the population served by the program, program services, and its coordination with federal employment training programs and the extent to which the State Grant Program ensures accountability for program quality and results, including how states have implemented quality indicators. We focused our review primarily on the State Grant Program because it is the largest of the AEA’s funded programs. In fiscal year 1995, 83 percent of AEA funds were allocated to this program. To obtain nationwide information on the State Grant Program, we interviewed federal officials from the Department of Education. We also reviewed Department of Education data and recent national studies, including the National Evaluation of Adult Education Programs and the National Adult Literacy Survey. We selected three states for closer review: California, Connecticut, and Iowa. We selected these states because they provided some geographic dispersion and represented a range of (1) state and local financial commitments (as demonstrated by the percentage of matching funds each state contributes), (2) program size (as demonstrated by dollars and enrollment), and (3) ESL enrollment levels. Within each state, we visited at least two communities that we selected with the help of state adult education officials. We selected communities that represented different types of locales (urban, suburban, rural) and were involved in a variety of local coordination activities. To identify the goals of the AEA, including the State Grant Program, we reviewed federal legislation. To determine the populations served and services provided by the program, we reviewed Department of Education data and national studies. We also interviewed local adult education providers. To provide information on the coordination of AEA programs with employment training programs, we interviewed federal officials at the Departments of Education, Labor, and Health and Human Services, and held discussions with national experts, including representatives of the National Institute for Literacy. We also reviewed studies on coordination. In the states we visited, we met with state officials from adult education and JOBS, JTPA, and VOC ED programs. In Iowa and parts of California, where the community college system is the major adult education provider, we also met with state community college representatives. At local levels in the three states, we met with adult education providers as well as representatives of local employment training programs. To provide information on program accountability and quality, we interviewed Department of Education officials and held discussions with national adult education experts. We also reviewed the Department’s model indicators of program quality and studies on program accountability and quality issues. In addition, we interviewed state and local officials in California, Connecticut, and Iowa and reviewed program documents, including the quality indicators developed by these states. We conducted our work between November 1994 and August 1995 in accordance with generally accepted government auditing standards. The AEA is a broad and flexible act and its largest program, the State Grant Program, reflects this. The State Grant Program, the federal government’s primary adult education program, has many goals and enables people with a wide range of needs to receive instruction from a variety of service providers. Many clients of employment training programs are among those needing the basic skills taught by adult education. Although the program has some restrictions, it allows states considerable flexibility in the types of instruction they fund with their federal grants as long as they fund programs in accordance with federally approved state plans. In keeping with their state plans, which call for coordinating adult education with employment training programs, a variety of coordination activities were taking place in the states and communities we visited. Recognizing the wide range of adult literacy needs in this country, the Congress passed the AEA with broadly stated goals. Although adult education programs are commonly viewed as the means to obtain a high school diploma or its equivalent, the AEA established goals that are far broader and include citizenship and employment as well as the overall improvement of the adult education system. Specifically, the purpose of the AEA is to improve educational opportunities for adults who lack literacy skills necessary for effective citizenship and productive employment; expand and improve the current adult education delivery system; and encourage the establishment of adult education programs for adults to (1) acquire basic skills needed for literate functioning, (2) acquire basic education needed to benefit from job training and obtain and keep productive employment, and (3) continue their education to at least the secondary school level. Adult education students have diverse needs, circumstances, and personal characteristics. A student might be a high school dropout, a client in a job training program, an immigrant or refugee, a displaced worker or homemaker, an adult in the workplace, a welfare recipient, or a retiree. Students who enroll in adult education classes vary in age, race and ethnicity, and employment status. In one program we visited in a rural California town, a 23-year-old refugee was enrolled in an Adult Secondary Education (ASE) class. He was a machine operator with an eleventh grade education who planned to earn his GED and become a bilingual teacher. A 45-year-old unemployed mother of four with a third grade education was enrolled in an English as a Second Language (ESL) class. Having done seasonal work in the past, her goal was to obtain a GED and find work in the nursing field. In an urban Connecticut program, a 19-year-old mother on welfare wanted to complete high school and become a cosmetologist.