DOL Annual Report, Fiscal Year 2007
Performance and Accountability Report

Management's Discussion & Analysis

Program Performance Overview

Fiscal Year (FY) 2007 marks the ninth year that the Department of Labor has reported program results under the Government Performance and Results Act (GPRA). Program goals that are key to the accomplishment of DOL strategic goals¹ were selected for inclusion in the FY 2008 Performance Budget Overview.² These performance goals and their indicators provide the basis for assessments of DOL's effectiveness. The Department's goal structure has three levels that are described below. The table that follows indicates FY 2007 program performance goal achievement by strategic goal.

Strategic Goals
DOL has four goals that express outcomes associated with the Department's mission and serve to focus Departmental efforts on links between activities and higher purposes: A Prepared Workforce, A Competitive Workforce, Safe and Secure Workplaces, and Strengthened Economic Protections.

Performance Goals
Each of DOL's strategic goals is supported by several program-level goals that provide clarity of purpose. This report includes 25 performance goals.³

Performance Indicators
Quantitative measures determine achievement of performance goals. For this reporting period, 87 indicators serve this purpose. DOL requires that all indicator targets are reached to qualify as Achieved. Substantially Achieved, which recognizes results that were very close to the goal, requires that for 80 percent of indicators, targets are reached or results improved over the prior year.

The total of 64 percent achieved or substantially achieved compares with 50 percent last year and 60 percent in FY 2005. Starting in FY 2007, DOL simplified its performance reporting by replacing the indicator result category "substantially reached" with "improved." Of the five substantially achieved goals, just two would have qualified under the old rule, and the overall percent achieved and substantially achieved would have been 52 percent. In other words, two percentage points of the improvement are due to performance and the other twelve points are accounted for by methodology.

Charts below present, by strategic goal, FY 2007 achievement as measured by performance indicators and performance goals. The performance goal number,⁴ goal statement, and responsible agency appear on the left axis, the total percentage of indicator targets reached or improved is indicated in the horizontal bars, and the goal result is on the right axis. Corresponding strategic goal and DOL-wide averages for indicators and performance goals (percentage of goals achieved or substantially achieved) are presented at the bottom of each chart in the bars and on the right axis, respectively, to facilitate comparisons. If the goal is achieved, the bar will run all the way across because by definition, 100 percent of indicator targets were reached. If the goal is substantially achieved, the indicator total can range from 80 percent to 100 percent as determined by the category definition (see "Performance Indicators" description on the preceding page).

As indicated in the chart above, DOL had five performance goals under Strategic Goal 1 in FY 2007, of which three were achieved or substantially achieved (60 percent) — below the Department wide average of 64 percent. BLS achieved its goal, reaching all six targets. Job Corps reached its literacy/numeracy target but not its targets for placement in employment or education and attainment of a degree, General Educational Development (GED) credential or certificate. The WIA Youth program, which uses the same measures, substantially achieved its goal; student academic attainment reached the target, while placement improved over PY 2005 results but fell slightly below the target. The Office of Apprenticeship achieved its goal by reaching its employment retention and average hourly wage gains targets. VETS' goal was not achieved; three of six targets were reached.

DOL achieved or substantially achieved five of ten performance goals (50 percent) in Strategic Goal 2, which is below the Department's average of 64 percent. The WIA Adult program goal was not achieved, but two of the three Federal job training program common measure⁵ targets were reached. The WIA Dislocated Worker goal was not achieved, either, missing the entered employment and retention targets but reaching the average earnings target. The performance goal for One-Stop employment and workforce information services was not achieved; in this case, the average earnings target was reached but targets for entered employment and employment retention were not. Results for Performance Goal 06-2D (Community Based Job Training Grants) are not reported because data are considered inadequate for the purpose of determining goal achievement. The performance goal for increasing accessibility of workforce information through National Electronic Tools was achieved, reaching all three targets. The Senior Community Service Employment Program did not achieve its goal, reaching just one of two targets. The Trade Adjustment Assistance program reached all three of its targets, achieving the goal.

The Foreign Labor Certification program goal was not achieved; one of four targets was reached. ODEP achieved its goal, reaching all three targets. The Office of the Assistant Secretary for Policy achieved its goal by reaching all three of its targets. ILAB's goal to reduce exploitive child labor worldwide was achieved by reaching both targets.

For Strategic Goal 3, DOL achieved or substantially achieved four of five performance goals (80 percent), exceeding the FY 2007 average of 64 percent. OSHA achieved its goal by reaching targets for reducing the workplace injury and illness rate and the fatality rate. MSHA substantially achieved its goal to improve mine safety and health by reaching targets for four performance indicators and improving results for another (of six total). ESA's Wage and Hour Division did not achieve its goal because it reached just one of four targets — for improving efficiency of the wage determination process. ESA's Office of Federal Contractor Compliance Programs achieved its goal, reaching its targets for reducing discrimination and increasing compliance among Federal contractors. VETS' goal for protecting employment and reemployment rights of service members was achieved via improvement in the program's comprehensive Progress Index.

DOL achieved or substantially achieved four of the five performance goals in Strategic Goal 4 (80 percent) — above the 64 percent Department wide average. The Unemployment Insurance program did not achieve its goal; however, it reached two of its four indicator targets and improved results for a third. ESA's OWCP substantially achieved its goal by reaching eight of nine targets for Federal Employees' Compensation Act, Longshore and Harbor Workers' Compensation, Black Lung Benefits and Energy Employees Occupational Illness Compensation programs. ESA's OLMS substantially achieved its performance goal by reaching one target and improving results for the other two indicators. EBSA achieved its goal, reaching all three targets. PBGC substantially achieved its goal by reaching five of six targets and improving results for the sixth indicator.

A tally of goals achieved and targets reached, while providing an indication of whether DOL is on schedule with its plan, does not convey any actual performance information. To understand what was achieved in terms of benefits to the public, it is necessary to look at whether observed results indicate positive program impacts. Separate performance goal narratives in the Performance Section discuss significant trends and their implications.

The next table lists Program Year 2007 goals (July 1, 2007 — June 30, 2008) for which results will be reported in the FY 2008 Performance and Accountability Report. All track spending and performance on a cycle that lags the Federal fiscal year by nine months due to WIA forward-funding provisions.

Program Assessment Rating Tool (PART) Reviews

The Program Assessment Rating Tool (PART) was developed to assess and improve programs' positive impact on outcomes that matter to the public. A review using the PART helps identify a program's strengths and weaknesses to inform funding and management decisions aimed at making the program more effective. Federal programs are scored on their purpose and design, strategic and performance planning, management, and results and accountability. Total scores determine ratings: Effective, Moderately Effective, Adequate, Ineffective, or Results Not Demonstrated. The final category can apply to a program with any score if performance goals and measures are not sufficiently outcome (results) oriented and/or the program does not have adequate data. Summaries of each program's assessment and improvement plan are published on ExpectMore.gov, a site dedicated to making meaningful information about Federal program performance more accessible to the public.

To date, 35 DOL programs have been assessed using the PART. One is rated Effective, ten Moderately Effective, fifteen Adequate, four Ineffective, and five Results Not Demonstrated. The table below lists the programs as they are identified in ExpectMore.gov. For cross-referencing with the performance section of this report, where Departmental performance goals apply, goal numbers are provided. The list is sorted first by the calendar year in which the review was conducted, then by total score.

PART assessments are useful because they lead to improvement plans intended to enhance accountability and performance. Improvements DOL has recently implemented include development of new outcome-oriented performance measures for two DOL programs currently rated Results Not Demonstrated (Job Training Apprenticeship and the Women's Bureau) and development and implementation of efficiency measures for each of the DOL programs assessed through the PART.

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Cost of Results

Total Net Cost⁶ of DOL activities for FY 2007 was $47.872 billion. An allocation based on the Department's goal structure indicates that the fourth strategic goal, Strengthened Economic Protections, is dominant — accounting for $38.495 billion, or 80 percent of the total. This figure consists in large part ($35.101 billion, or 91 percent) of mandatory benefit payments to unemployed workers or workers disabled as a result of work-related injuries or illnesses. The first goal, A Prepared Workforce, required $3.103 billion (6 percent) for employment-related services. The second goal, A Competitive Workforce, accounted for $5.027 billion, 11 percent of the total, which went toward job training programs and other services focused on maintaining America's position in a global market for labor. Approximately $1.237 billion (3 percent) went toward the third goal, Safe and Secure Workplaces, to fund direct services (such as salaries of Federal employees) aimed at improving safety and health in the workplace.

The table that spans the next several pages, DOL Program Net Costs, provides a comprehensive view of the cost information presented in the Performance Section, including footnotes that explain terms and methodology. It is important to note that while all net cost information in this report is derived from the same financial accounting system, DOLAR$, there are significant differences between statements in the Performance Section and in the Financial Section due to the Department's numerous forward-funded programs (those operating on a Program Year).

Where applicable, the program net cost statement includes a row labeled "Dollars not associated with indicators" to indicate costs that cannot be associated with the current set of performance indicators. Remaining difficulties may be resolved over time and lead to more complete allocations in future statements. However, it could also require a change in performance indicators that reduces the overall value of performance information. Frequently, costs for several indicators are intentionally combined by merging cells because program activities are not separable into categories associated with one or another of them (e.g., job training program common measures — entered employment, employment retention and average earnings).

As indicated in the preceding paragraph, several programs make mandatory benefit payments that account for the majority of their costs. Because performance indicators and the Department's managerial cost accounting system that generates this information are designed to inform analysis and decision-making related to discretionary budgets and program management, such payments are shown separately and not included in allocation cost models.

DOL's FY 2005 Performance and Accountability Report was the first to feature a statement of full costs at the performance goal level. Last year, allocation of costs reached the performance indicator level for some goals. This year, most DOL programs were able to associate costs with their performance indicators. This information is provided along with results in the tables at the beginning of each performance goal narrative in the Performance Section. Many of these narrative sections also include charts that display three years of net cost data at the performance goal level.

Cost of Regulations Enforced by DOL

The Department enforces a broad range of regulations that provide for Safe and Secure Workplaces and for Strengthened Economic Protections.¹³ However, the cost data reported in the preceding table — and in the Financial Section of this report — do not include the costs (and benefits) to non-DOL entities of compliance with these regulations. To further improve transparency and accountability of our PAR, we are introducing data on the cost of our regulations this year, and plan to make additional information available in subsequent reports. Reporting costs at the performance indicator level took several years, and we expect this ambitious effort to take some time, as well.

In the Performance Section of the PAR, we quantify our results (or benefits) via outcome or output indicators that are seldom monetized, or valued in dollars. However, the DOL regulatory agencies do provide reports to OMB's Office of Information and Regulatory Affairs (OIRA), which produces the annual Report to Congress on the Costs and Benefits of Federal Regulations. Accounting in these reports relies on rigorous, defensible estimates of the monetary value of both the cost and benefit sides of the ledger. OIRA's report to Congress covers reviews of major final rules concluded in the preceding fiscal year.¹⁴ OSHA's final rule — issued in February 2006 — on Occupational Exposure to Hexavalent Chromium was the only DOL rule among the seven added to OIRA's 2007 Report to Congress.

Hexavalent chromium compounds include chromate pigments found in some dyes, paints, inks, and plastics, and can also be used in the production of stainless steel and as anticorrosive agents in paint, primers, and other surface coatings. Workers who breathe hexavalent chromium compounds at their jobs for many years may be at increased risk of developing lung cancer — and breathing high levels of hexavalent chromium can irritate or damage the nose, throat, and lungs. Annual costs of this regulation were estimated to range from $244 million to $253 million, and annual benefits were estimated at $36 million to $896 million (both cost and benefit data are expressed in 2001 dollars). OSHA's estimated compliance costs are based on the need to install engineering controls and to purchase and use supplemental respirators. Benefits are based on OSHA's estimate that the rule would prevent 40-145 fatal cancers annually and 5-20 non-fatal lung cancers per year. OSHA also quantified, but did not monetize, an estimated benefit of avoiding from 332-1,140 nasal perforations per year.

The only major final rule issued by a DOL agency in FY 2007 is MSHA's Mine Evacuation Rule. A summary of the costs and benefits of this rule appears in the narrative for Performance Goal 07-3B.

¹See the DOL FY 2006-2011 Strategic Plan at http://www.dol.gov/_sec/stratplan/main.htm
²http://www.dol.gov/_sec/Budget2007/overview-pb.htm#app1
³This report includes performance goals from two different reporting periods. Workforce Investment Act (WIA) programs are forward-funded, meaning that their spending and performance goals are tracked on a cycle that lags the Federal fiscal year by nine months. This period is referred to as a Program Year (PY); such goals being reported on in this document cover July 1, 2006 to June 30, 2007 (PY 2006). PY 2007 goals will appear in the FY 2008 report.
⁴The first two digits of each goal number indicate the funding year. In this report, all "06" goals are reporting on the Program Year period defined above.
⁵Several Federal agencies, including the Departments of Labor, Education, Health and Human Services, Interior and Veterans Affairs, administer programs that share the goal of helping people find jobs. To inform comparative evaluations of effectiveness, the Administration worked with these agencies to develop outcome measures that apply to their diverse methods and target populations. While these measures have evolved over the last several years, they have consistently focused on participants' entered employment and employment retention rates, and earnings.
⁶Net Cost reflects the full cost of each program as assigned by DOL entities to the Department's outcome goals less any exchange revenue earned. Full cost consists of (a) both direct and indirect costs, and (b) the costs of identifiable supporting services provided by other segments within the reporting entity and by other reporting entities.
⁷Strategic goal subtotals reported in DOL's FY 2006 Performance and Accountability Report are not valid for comparison to FY 2007 due to restructuring pursuant to the FY 2006-2011 Strategic Plan. Most performance goals moved, and costs for FY 2005 and FY 2006 have been restated to facilitate comparison. In addition, VETS' costs for FY 2005 and FY 2006 were restated to reflect a more accurate allocation; totals for Strategic Goals 1, 2, and 3 were affected.
⁸Costs associated with Performance Goal 06-2D (Community Based Job Training Grants) are not listed separately because the goal was omitted from this report due to inadequate performance data; they are included in Goal 2 Other. Costs associated with Performance Goal 07-2J (OASP) are included in costs allocated to other performance goals.
⁹This is a new goal that was listed with Other in the FY 2005 table.
¹⁰In FY 2005, OSHA and MSHA shared performance goals. Amounts shown for Performance Goals 07-3A and 07-3B for that year represent agencies' shares of the total costs.
¹¹Costs for Performance Goal 07-4E (PBGC) are not referenced because the Corporation's financial statements are not part of the Department's consolidated statements. PBGC's financial statements can be found in their Annual Management Report at http://www.pbgc.gov/docs/PBGCAMR.pdf.
¹²This total does not match total net costs in the Consolidated Statements of Net Cost as certain costs in this table are presented on a program year basis. All costs in the Consolidated Statements of Net Cost are on a fiscal year basis.
¹³Occupational Safety and Health Administration (OSHA), Mine Safety and Health Administration (MSHA), Employment Standards Administration (ESA), Employment Training Administration (ETA), and Employee Benefits Security Administration (EBSA).
¹⁴Major rules include those likely to result in (A) an annual effect on the economy of $100 million or more; (B) a major increase in costs or prices for consumers, individual industries, Federal, State, or local government agencies, or geographic regions; or (C) significant adverse effects on competition, employment, investment, productivity, innovation, or on the ability of United States-based enterprises to compete with foreign-based enterprises in domestic and export markets — per the Small Business Regulatory Enforcement Fairness Act of 1996 — or that may result in the expenditure by State, local, and tribal governments, in the aggregate, or by the private sector, of $100 million or more (adjusted annually for inflation) in any one year — under the Unfunded Mandates Reform Act of 1995 — or that may have an annual effect on the economy of $100 million or more or adversely affect in a material way the economy, a sector of the economy, productivity, competition, jobs, the environment, public health or safety, or State, local, or tribal governments or communities — per Executive Order 12866.