Printer-Friendly Version
Testimony Before the Subcommittee on Labor, Health and Human Services, and Education Committee on Appropriations U.S. Senate Washington, D.C. April 9, 2003
Mr. Chairman, and distinguished Members of the Subcommittee, thank you for the opportunity to appear before you today to present the Department of Labor's Fiscal Year (FY) 2004 Budget.
The Department of Labor (DOL) continues to heed the call of President George W. Bush that "Government should be results-oriented guided not by process but guided by performance." The Departments FY 2004 budget was developed with just such a focus and the
outcome is the Departments first-ever integrated performance budget.
With the ongoing war against terrorism and the related conflict in Iraq, every department of the government must continue to take a hard look at all of its programs. We must provide more funding for those programs that work; reform and revitalize those that can be improved; and cut or
eliminate those that have not proven effective, are duplicative of other programs, or are not currently a great national priority. The Departments budget was developed with this outlook in mind.
The total request for the Department in FY 2004 is $56.2 billion in budget authority and 17,503 full-time equivalents (FTE). The request for the Departments discretionary programs is $11.5 billion.
The Departments FY 2004 budget was developed around four critical themes designed to make a difference in the lives of Americas working families: Helping Americans Find Jobs; Protecting Americans Employee Benefits; Protecting Americas Workers;
and Bringing DOL into the 21st Century.
In 2003, the Administration will use the opportunity presented by the expiration of the Workforce Investment Act (WIA) to make significant improvements in Federal job training and employment programs. These reforms will improve accountability; eliminate duplication through program
consolidation; enhance the role of employers in the national workforce system; and increase state flexibility.
This theme will be further accomplished through Personal Reemployment Accounts (PRAs) for job seekers who are at risk of exhausting their Unemployment Insurance benefits. The Presidents economic growth plan, released January 7, 2003, includes $3.6 billion for this new tool, which
states will have considerable flexibility to design. The accounts will provide up to $3,000 to job seekers to allow them to purchase the training, re-employment, or supportive services needed to get back to work.
The FY 2004 budget and the President's Economic Growth package reflect the Administration's commitment to assisting American workers find and keep work - and will accomplish the Departments first focus of helping Americans Find Jobs. Through funding for job training, a new
initiative to help unemployed workers, and reform of existing programs, the Administration is improving opportunities for American workers. The 2004 budget proposes a major overhaul of the administrative structure of the Unemployment Insurance (UI) system, which is an unwieldy relic that
badly needs an overhaul. This proposal would make the UI system more responsive to the needs of workers and employers by giving states flexibility and control.
Effective last month, the Department changed the name of its Pension and Welfare Benefits Administration to Employee Benefits Security Administration, or EBSA. This was done to better reflect the agencys mission and direction. Though newly named, EBSA continues to lead the
way in protecting workers health and retirement security.
As I will touch on later, this budget includes resources to enhance employee benefits and retirement security. With these additional resources, EBSA expects to dispose of 19 percent more civil and criminal cases compared with FY 2003 and restore, protect, or recover $69 million more in
pension plan assets. This proposal to increase the EBSA budget -- at a time when other national priorities such as the war on terrorism and homeland security are so compelling -- is a reflection of the Administration's commitment to protecting workers' and retirees' benefits.
In FY 2004, the Departments Office of Inspector General will continue its role in bolstering DOLs efforts related to this theme through initiatives aimed at achieving the OIG strategic goal of safeguarding and improving worker and retiree benefit programs.
While occupational injury and illness rates have reached historic lows, more can and must be done. In FY 2004, DOL will continue to balance enforcement and compliance assistance activities through the ongoing efforts of its Occupational Safety and Health Administration (OSHA); Mine
Safety and Health Administration (MSHA); the Employment Standards Administrations Wage-Hour Division, Office of Federal Contract Compliance Programs
(OFCCP), and Office of Labor Management Standards (OLMS); and the Office of Inspector General (OIG). Initiatives include:
- Strengthening existing enforcement by proposing increases for certain Civil Monetary Penalties under MSHA and Wage and Hour;
- $5.2 million and 3 FTE to expand and improve OSHAs outreach and assistance, including efforts to reach non-English-speaking and contingent workers, provide small business assistance, and increase the number of Voluntary Partnership Programs;
- Strengthening MSHAs enforcement and creating a new Small Mine Office to provide information and assistance to small mining operations; and
- Related efforts include the OIGs Labor Racketeering Initiative, to which $2.5 million and 20 FTE will be applied in FY 2004 to address union corruption.
The final theme of the Departments FY 2004 budget will be accomplished by several initiatives related to the DOLs ongoing implementation of the Presidents Management Agenda. These include a $20 million, first-year investment in a new department-wide accounting system
for the Office of Chief Financial Officer, which will update and improve Departmental financial management. $48.6 million is also requested in FY 2004 for the Departments successful Information Technology Initiative, which will, in part, consolidate all DOL agency requests in support of
the Presidents Management Agenda component Expanded E-Government. For FY 2004, $23.5 million is also requested for the Departments Management Initiative to centrally manage DOLs efforts on implementing the other four government-wide initiatives on the Presidents
Management Agenda.
Further, in FY 2004, DOL intends to resubmit two legislative proposals to restore the solvency of the Black Lung Trust Fund and improve and update the Federal Employees Compensation Act (FECA). Because it integrates administrative and worker benefit costs and provides an incentive
to improve workplace safety, the FY 2004 Budget also re-proposes the FECA Surcharge.
The Department will also continue to advocate viable options to reform its Unemployment Insurance program and will support legislation allowing employers to offer employees the option of taking paid time off in lieu of receiving overtime pay.
Employment and Training Programs
Overall, the FY 2004 discretionary request for the Departments Employment and Training Administration is $9.2 billion in discretionary funds and 1,360 FTE. The FY 2004 budget request for Employment and Training Programs is $6.389 billion in new budget authority.
These resources will be combined with the estimated 2004 spending of $2.0 billion on Personal Reemployment Accounts included in the President's Economic Growth Package.
Youth
A total of $2.6 billion is requested in FY 2004 for employment and training programs for Youth. This investment will help young people make a successful transition to the world of work and family responsibility. This proposal reforms the youth program through reauthorization of WIA. The
reformed Youth Grants program will be funded at $1.0 billion, the same level at which Youth Activities is funded in FY 2003. Twenty-five percent of the Youth funds will be used to provide Challenge Grants to promote collaborative and innovative approaches to preparing youth for success in the
labor market.
Adults
A total of $3.1 billion is requested in FY 2004 for employment and training programs for Adults. The proposal reflects a new program to be authorized by an amended WIA that will consolidate the former Adult and Dislocated Worker Employment and Training Activities, together with the Employment
Service.
The new consolidated adult program will include formula grants and a National Reserve, and will give States the ability to target resources where needed, facilitate coordination, and eliminate duplication in the provision of services to adults. With this request, we expect to be able to
serve more participants than ever before.
Other Employment and Training Programs
The FY 2004 budget includes $742 million for Other Employment and Training Programs. This includes $101.0 million, approximately the same as FY 2003 levels, for new methods of providing workforce and related information through One Stop Career Centers using America's Labor Market Information
System (ALMIS). In FY 2004, a $500,000 initiative is included for the Wage Record Interchange System (WRIS), in order to help States better track performance. Efforts to improve access to One Stop information and services include enhanced technology for serving individuals including
those with disabilities.
In FY 2004, an increase of $49.4 million will be provided as the first of a two-year investment to eliminate the 300,000 case backlog in the permanent Foreign Labor Certification program. In addition, funding will be provided in the Program Administration account to provide the Federal
support necessary to address the backlog. To effectively address the situation, the backlog elimination will begin in FY 2003 as DOL makes changes to the program that will prevent future backlogs by expediting certification and eliminating the state role in the processing of applications.
In FY 2004, the budget includes $20 million for Work Incentive Grants, the same level provided in FY 2003, to enhance the prospects of employment for individuals with disabilities. This effort is undertaken in conjunction with the Department's Office of Disability Employment Policy to
increase the participation of individuals with disabilities in DOL programs and services. These grants augment the capacity of the One Stop Career Center system to deliver a full array of effective employment and training services to people with disabilities. Likewise, this effort will
ensure that people with disabilities are better prepared to enter, re-enter, and remain in the workforce. In FY 2004, the program will increase by about five percent the number of individuals placed in unsubsidized employment after program exit.
Office of Disability Employment Policy
The U.S. Department of Labors Office of Disability Employment Policys (ODEPs) mission is to provide leadership to increase employment opportunities for adults and youth with disabilities. ODEP is additionally tasked with serving as the lead agency in the
Departments implementation of the employment-related goals of President George W. Bush's New Freedom Initiative. ODEPs FY 2004 budget request of $47.3 and 65 FTEmillion will be used to increase marketplace demand for people with disabilities and support DOLs strategic
goals through implementation of demonstration programs.
A primary area of emphasis will be on developing a reliable statistical measurement to determine the employment rate of people with disabilities because of the critical need for such data to inform policies and programs. In FY 2004, ODEP and Bureau of Labor Statistics will pilot test
disability employment rate questions through the Current Population Survey.
Veterans' Employment and Training Service
The Departments Veterans' Employment and Training Service (VETS) is requesting $219.9 million and 250 FTE to maximize employment opportunities for veterans, protect their employment rights and meet labor market demands with qualified veterans. VETS meets its primary
responsibilities through the funding of state veterans employment and outreach specialists, referred to as Disabled Veterans Outreach Program (DVOP) and Local Veterans Employment Representative (LVER) positions.
As our Nation continues its war on terrorism, the activation of thousands of Reservists and National Guard members has made providing technical assistance to them and their employers one of the highest priorities for the Department. The Department, through VETS, administers USERRA---the
Uniformed Services Employment and Reemployment Rights Act---a law that protects the jobs of these servicemembers at this critical time in our Nations history.
The 2004 request funds the Homeless Veterans Reintegration Project at $19 million, an increase over the 2003 level. This program will provide employment and training assistance to homeless veterans, with expected job placements and retention of approximately 9,000 veterans.
Worker Protection
As we have recently discussed, Mr. Chairman, I remain deeply committed to enforcing the many laws that protect workers safety and economic security. As demonstrated in the following initiatives, the Departments FY 2004 budget was crafted to only strengthen that
commitment.
Employment Standards Administration
The Departments Employment Standards Administration (ESA) administers and enforces a variety of laws designed to enhance the welfare and protect the rights of American workers. The budget request to conduct these programs in FY 2004 is $529.8 million and 4,360 FTE, down $38.4
million from FY 2003. This decrease is due largely to reduced funding for the Health and Human Services component of the Energy Employees Occupational Illness Compensation Program.
Office of Workers Compensation Programs
As mentioned earlier, ESA's budget request includes a legislative proposal to finance the operations of the FECA program via a surcharge. Under this proposal, the direct budget authority for FECA program administration ($87.6 million) would be replaced with offsetting collections to be
paid by Federal agencies based on their employees' pro rata share of workers' compensation benefits. Integration of the full cost of FECA benefits and administration in the appropriate agencies will boost Federal agencies' incentives for improving safety in their workplaces.
The Budget includes additional legislative proposals to promote benefit equity and to discourage unnecessary claims in the FECA program. Specifically, the budget proposes to amend FECA to move the waiting period before the continuation-of-pay period, conform the FECA benefits of future
beneficiaries over the age of 65 to a benefit level typical to what they would receive under Federal retirement programs, and make a number of other changes to improve and update FECA.
Wage and Hour Division
The discretionary funding request for the Wage and Hour Division (WHD) is $5.4 million and 3 FTE higher than in FY 2003. Wage and Hour will continue to use its multi-pronged approach of compliance assistance, partnerships, and enforcement to further its goals to promote high quality
workplaces, a secure workforce, and customer satisfaction. The budget also includes $0.3 million and 3 FTE for enhancing compliance assistance to small and minority businesses. Wage and Hours mandatory funding would decrease by an estimated $7.1 million from FY 2003 due to the
expiration of the American Competitiveness in the Twenty-first Century Act on September 30, 2003, and the corresponding reduction in fee revenues from the H-1B visa worker program.
WHD's budget includes a legislative proposal to increase civil penalties for child labor violations that cause the death or serious injury of a young worker. Our proposal would increase the maximum penalty from $11,000 to $50,000, for any type of child labor violation that leads to death
or serious injury. We also propose to raise to $100,000 the maximum penalty for willful or repeat violations that lead to death or serious injury of a young worker. This proposal would provide the Department with the tools needed to address the most serious of child labor
violations.
Office of Labor-Management Standards
The FY 2004 budget request for the ESAsOffice of Labor-Management Standards is $40.6 million and 372 FTE. OLMS enforces provisions of Federal law that require reports from unions and others and establishes certain standards for union democracy and financial integrity. OLMS conducts
criminal investigations (primarily union funds embezzlement) and investigative audits of unions; conducts civil investigations (primarily concerning union officer elections); supervises remedial union officer elections, as required; administers statutory reporting requirements; and provides for
public disclosure of filed reports.
The FY 2004 budget request includes $5.3 million and an additional 75 FTE for enhanced outreach assistance activities and enforcement to ensure compliance with the Labor-Management Reporting and Disclosure Act. The budget request maintains resources for electronic filing and Internet public
disclosure of the statutorily required reports. The budget also includes a proposal to authorize OLMS to impose Civil Money Penalties on unions, union officers, employers and consultants, and bonding companies that fail to file their required financial reports on a timely basis. The intent is to
improve compliance, not penalize inadvertent lapses in filing reports.
Office of Federal Contract Compliance Programs
Total funding for OFCCP in FY 2004 will increase by $2.0 million. OFCCP continues to ensure that federal contractors hiring, promotion, and pay practices fully comply with federal equal employment opportunity laws. OFFCP targets and effectively remedies systemic
discrimination in companies it monitors, extending the level playing field to large numbers of Americans working or seeking employment in thousands of establishments across the nation. OFCCP has recently put in place a case management process that makes key improvements to investigations and
information management and continues to work closely with the Office of the Solicitor to bring legal expertise to bear on its investigations.
Occupational Safety and Health Administration
The cornerstone of worker safety is the Occupational Safety and Health Administration (OSHA), which promulgates and enforces occupational safety and health standards and provides compliance assistance to employers and employees. OSHA also assists Federal agencies in establishing and
maintaining occupational safety and health programs and provides funding for state-administered safety and health consultation programs. To meet its goals of reducing workplace injuries, illnesses, and fatalities, OSHA will focus on the most serious hazards and dangerous workplaces and expand
compliance assistance opportunities. The FY 2004 OSHA budget request is $450.0 million and 2,236 FTE.
Standards and Guidance
OSHAs standards and guidance activities provide for the development, promulgation, review and evaluation of occupational safety and health standards and non-regulatory products. In FY 2004, OSHA will continue to base all standards on clear and sensible priorities and review existing
rules to revise or eliminate obsolete and confusing standards or provisions. Consistent with the findings of the Administrations Performance Assessment Rating Tool (PART), OSHA will also conduct more rigorous cost-benefit analyses of its proposed standards. The FY 2004 budget provides
$14.5 million and 85 FTE for this activity.
Federal Enforcement
OSHAs Federal Enforcement activity increases compliance with workplace standards under the Occupational Safety and Health Act of 1970 through the on-site inspection of work places and by encouraging employers and employees to see safety and health as adding value to their businesses and
their lives. OSHA will continue to target inspections based on the worst hazards and the most dangerous workplaces. In FY 2004, the budget request for federal enforcement activity is $165.3 million and 1,581 FTE.
Compliance Assistance
The Agency will assist employers by continuing important programs like the Voluntary Protection Program and the State Consultation Program, which provides free, on-site compliance assistance for small employers. OSHA will also increase its efforts to reach vulnerable populations like
non-English-speaking and contingent workers. The total request for compliance assistance activities is $124.0 million and 356 FTE.
Mine Safety and Health Administration
The Mine Safety and Health Administration (MSHA) protects the safety and health of the Nation's miners through enforcement of the Federal Mine Safety and Health Act of 1977. The FY 2004 budget request for MSHA is $266.8 million and 2,334 FTE. MSHA created an additional budget activity for FY
2004, Program Evaluation and Information Resources (PEIR). In the past, PEIR activities (including information technology and support of the Government Performance and Results Act) have been funded by drawing resources from each of MSHAs budget activities. The FY 2004 Budget requests
funds for these activities in a separate line (funding for PEIR activities is level with the FY 2003 Presidents Budget).
Enforcement: Coal
The Coal Mine Safety and Health activity is responsible for ensuring the safety and health of the Nation's coal miners through special emphasis programs, compliance and training assistance, and periodic regular inspections and special investigations. The FY 2004 request includes $113.4 million
and 1,086 FTE for this activity, including $350 thousand for the cyclical replacement of health and safety sampling equipment.
Enforcement: Metal/Nonmetal
The FY 2004 Budget includes $66.4 million and 622 FTE for Metal and Nonmetal Mine Safety and Health activities. These activities promote a healthful working environment in the Nation's metal and nonmetal mines and mills and MSHA will accomplish this goal through compliance and training
assistance, periodic regular inspections, and special investigations.
The request includes a $2.0 million and 20 FTE increase over the FY 2003 request for health, safety, and compliance assistance to respond to the growth of the metal and nonmetal mining industry. The request also includes an increase of $200 thousand for the cyclical replacement of health and
safety sampling equipment.
Educational Policy and Development
The FY 2004 request includes $2.4 million and 21 FTE for a new Small Mine Office. The Office will help small mining operations by providing compliance assistance, guidance, and training; and reviewing regulations that impose undue burdens on small mines.
Retirement Security
President George W. Bush and I share the priority of ensuring increased retirement security - and the Department of Labor continues to lead the Nations efforts in achieving such a goal.
Employee Benefits Security Administration
The name change that I mentioned earlier - from the Pension and Welfare Benefits Administration to the Employee Benefits Security Administration - does not alter and only strengthens the agencys mission: to protect the pension, health, and other benefits of participants in private
sector employee benefit plans. In FY 2004, the total request for EBSA is $128.6 million and 930 FTE. This is an increase of $12.3 million and 69 FTE over FY 2003. The request includes $8.6 million and 69 FTE for the Departments Enhanced Retirement Security
initiative which was designed to bolster compliance assistance and enforcement efforts related to pension and health fund protections.
In accomplishing its mission, EBSA directly affects the livelihood of over 150 million people who participate in Employee Retirement Income Security Act (ERISA)-covered plans, and protects the U.S. economy's single largest source of capital for investment: pension funds. EBSA will
employ an integrated approach that encompasses programs for enforcement, compliance assistance, interpretive guidance, legislation, and benefits research to protect employee benefits and retirement security for our Nation's workers and retirees.
Enforcement and Participant Assistance
Mr. Chairman, since I appeared before this Subcommittee last year, EBSA has received 185,000 calls for assistance from Americans with questions about their retirement or other benefit plans. Many of those calls led to investigations. It is this activity that conducts criminal and
civil investigations, performs reviews to ensure legal compliance, and further ensures compliance with applicable reporting requirements, as well as accounting, auditing, and actuarial standards. During 2002, as a result of EBSA's enforcement action, there were 134 criminal indictments issued,
4,925 civil investigations closed with monetary results of over $832 million. The 2004 request includes an initiative to enhance retirement security and nationwide enforcement coordination. In FY 2004, the budget request for enforcement and participant assistance is $106.7 million and
800 FTE.
Policy and Compliance Assistance
This activity conducts policy, research, and legislative analyses on pension, health, and other employee benefit issues. Agency staff supporting this activity provide compliance assistance, especially to employers and plan officials, draft regulations and interpretations, and issue
individual and class exemptions from regulations. In FY 2004, the budget request for this activity totals $17.4 million and 108 FTE.
Executive Leadership Program
This activity provides leadership, policy direction, strategic planning, and administrative guidance in the management of employee benefits security programs. It provides analytical and administrative support for financial and human capital management and other administrative functions related
to coordination and implementation of government-wide management initiatives. This activity also manages the technical program training for enforcement, policy, legislative and regulatory functions. In FY 2004, the budget request for this activity totals $4.5 million and 22 FTE.
Office of Inspector General
The Departments request for the Office of Inspector General is $67.1 million and 473 FTE for FY 2004, an increase of $4.9 million and 20 FTE over FY 2003.
Program Activities
The OIG budget includes resources for audit; program fraud; labor racketeering; special evaluations and inspections of program activities; and executive direction and management. The OIG performs audits of the Department's financial statements, programs, activities, and systems to
determine whether information is reliable, controls are in place, resources are safeguarded, funds are expended in a manner consistent with laws and regulations and managed economically and efficiently, and desired program results are achieved.
The OIG also administers an investigative program to detect and deter fraud, waste, and abuse in Departmental programs and to identify and reduce labor racketeering and corruption in employee benefit plans, labor management relations, and internal union affairs.
The FY 2004 request includes $2.5 million and 20 FTE to conduct a nationwide comprehensive initiative to combat labor racketeering relative to: pension and health care plan corruption and organized crime or corruption affecting industries and union leadership.
International Labor Affairs
As I referenced before, Mr. Chairman, the Department's budget request was developed with careful consideration of all the realities now facing our country. Development of the Bureau of International Labor Affairs (ILAB) budget was no exception. During the budget process, we had to
set priorities to fund from our limited pool - and our Nations current economic and employment conditions must be included more prominently in this equation. As a result, our FY 2004 request for ILAB is $12.3 million and 60 FTE. This is a reduction of $135.0 million and 65 FTE
from FY 2003.
The FY 2004 budget request refocuses ILAB on U.S. international policies and programs of greatest concern to American workers. ILAB will continue to coordinate the Departments global responsibilities in 2004 and to provide expert support for many of the Administrations
international initiatives, including the promotion of core labor standards. The Bureau will continue to represent the U.S. Government at the International Labor Organization (ILO) and on the Employment, Labor and Social Affairs Committee of the Organization of Economic Development. The
Bureau will also continue to fulfill the Department's responsibilities related to our participation in the development of U.S. trade policy and the negotiation of trade agreements.
The Department will continue to play a supportive role for other federal agencies in their efforts to further prevent and eliminate child labor and combating the spread of HIV/AIDS and will help to ensure that those priorities are addressed.
Implementing the Presidents Management Agenda
Before I close today, Mr. Chairman, I also want to highlight the Departments ongoing efforts to implement the Presidents Management Agenda as well as to discuss our recent experiences with the Office of Management and Budgets Program Assessment Rating Tool (PART).
At my FY 2003 appropriations hearing last year, I briefed the Subcommittee on the Departments progress in implementing the Presidents Management Agenda. As you know, Mr. Chairman, the Presidents Management Agenda is an aggressive strategy for improving the management of
the Federal government with a focus on five government-wide areas: Strategic Management of Human Capital; Competitive Sourcing; Improved Financial Performance; Expanded E-Government; and Budget and Performance Integration. Further, DOL is also one of
just five Cabinet agencies with Agenda responsibilities related to Faith-based and Community-based initiatives.
On a quarterly basis, the Office of Management and Budget has continued to rate the governments progress in implementing the Presidents Management Agenda on a "stoplight" color grading scale - and DOL continues to lead the way. As of the most recent OMB scorecard of December
31, 2002, DOL received a Yellow baseline rating for Human Capital with a Green progress score. For Competitive Sourcing, DOL received a Red baseline score with a Yellow progress rating. For Financial Management, DOL received a
Yellow status score with a Green rating for progress - the exact same scores for E-Government, Budget and Performance Integration, and Faith-based and Community-based Initiatives. With that assessment, DOL continues to lead all Cabinet agencies in Status
scores.
As OMB Director Mitchell E. Daniels, Jr., indicated at OMBs mid-session review last summer, "Labor has demonstrated a sustained commitment to implementation of the management agenda and is making good progress. A key component of the departments success is its Management
Review Board, which monitors progress by regularly reviewing department-wide reform implementation."
Program Assessment Rating Tool (PART)
Improving programs by focusing on results is an integral component of the President's budget and performance integration initiative. As such, the Administration rated effectiveness with its PART for approximately 20 percent of Federal programs. As part of this process, nine DOL
programs were reviewed in calendar year 2002: Bureau of Labor Statistics; OSHA; EBSA (formerly PWBA); Office of Federal Contract Compliance Programs; FECA; Community Service Employment for Older Americans; Dislocated Worker Assistance; Trade Adjustment Assistance; and Youth Activities.
Each program was rated on Purpose, Planning, Management, and Results/Accountability and the experience provided an invaluable management tool.
Highlights and results of the reviews, along with discussion of reforms we will make to address certain weaknesses identified using the PART, are included in the agency-specific sections of the Departments Congressional Budget Justification. We are already working with OMB on the
programs to be reviewed in the next round of PART.
Conclusion
Mr. Chairman, this is an overview of what we have planned at the Department of Labor for FY 2004.
I will be happy to answer any questions you may have on the Department=s FY 2004 budget request.
|