Congressional Testimony

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Statement For The Record
Elaine L. Chao, Secretary of Labor

BEFORE THE
SUBCOMMITTEE ON LABOR,
HEALTH AND HUMAN SERVICES, AND EDUCATION
COMMITTEE ON APPROPRIATIONS
UNITED STATES HOUSE OF REPRESENTATIVES

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) 2002 Budget.

The President's 2002 budget moderates the Federal Government's recent rapid growth in spending while funding national priorities, paying down the debt, and providing tax relief. The Department of Labor's budget request for 2002 follows this responsible approach and will serve as the foundation for us to become a 21^st Century Department of Labor.

Before I discuss the specifics of the Department's 2002 request, I would like to highlight a new addition to the Department of Labor. We at the Department of Labor need to provide a beacon of hope, finding solutions for the problems facing our Nation's workers and the economy as a whole. Thanks to the bipartisan work of Congress, we have a new road map -- the Workforce Investment Act -- to lead us toward this goal. Along with states and localities, the professionals in our Employment and Training Administration are diligently implementing this new legislation. But we need even more fresh ideas, fresh approaches, and new partnerships to help us succeed in this journey. That is why I am creating within the Department a new Office of the 21st Century Workforce to bring focus and drive to this mission.

This Office is being funded out of existing resources and its first responsibility will be to hold a Summit on the 21st Century Workforce on June 20, 2001. At the Summit, I will call on leaders from business, labor unions, government, and academia to address the structural changes affecting our workforce and our economy.

We need to review every aspect of this Department's work to ensure that we are helping, not hindering, the development of a workforce that is ready for the future. We want to give workers the flexibility to custom-design their work to fit their lives -- and not the other way around. But I want to make clear that this focus on the 21^st Century workforce is about a lot more than just making sure Silicon Valley has enough engineers. Every worker should have the opportunity for a fulfilling and financially rewarding career.

Given everything we are setting into motion with our 2002 budget request, our mission at the Department of Labor must not be just to react to changes, but to anticipate them and help the Nation's workforce adapt to them. Better yet, the workforce should be able to take advantage of those changes. We need to recognize that the 21st Century economy is not the same one we grew up with and that America's 21st Century workforce has to adjust. To help people do that -- to give workers constant hope in a changing world -- we need to become a 21st Century Department of Labor.

At the Department of Labor, it is about making sure that no worker is left behind -- like those who have been laid off from jobs because their company could not keep up with technological changes or foreign competition, those who did not get a full education, or those who made a wrong turn at some point in their lives and are trying to make it back. And, as the President has insisted, we must reach out to those who have been denied the opportunity for a productive, meaningful work life because of a disability. At the Department of Labor, we are prepared to do just that.

As for our FY 2002 budget, the Department's overall request is 17,483 Full-Time Equivalents (FTE) and $44.4 billion in budget authority, of which $13.6 billion is subject to the annual appropriations process and is now pending, Mr. Chairman, before your Subcommittee. The request for discretionary programs is $11.3 billion in budget authority, which is $564 million less than 2001 -- with a net reduction of 184 FTE. In a country experiencing a current skills gap and a long-term worker shortage, this is a budget request that will allow America to achieve its full potential while still maintaining a responsible fiscal approach with precious taxpayer resources.

The Department's FY 2002 budget for Employment and Training Programs is $6.8 billion. Included in this total is $2.3 billion targeted for employment and training programs for adults -- including $1.4 billion for employment and training activities for dislocated workers. In addition, $2.7 billion is requested for youth employment and training programs -- including $1.4 billion for Job Corps -- to help young people make a successful transition to the world of work and family responsibility.

This budget represents a net decrease of $474 million from 2001, which is largely due to decreases of $359 million in formula grants related to the availability of large amounts of State unexpended carryover which can be used in lieu of new budget authority. I want to be clear,

Mr. Chairman: there will be no diminution of service. We are prepared to serve the same number of participants as in 2001. We estimate that $1.6 billion in unexpended youth, adult, and dislocated worker funds will be carried into 2002 -- approximately $600 million more than what is typically realized, which is due largely to the implementation of the Workforce Investment Act.

The 2002 budget provides $43.2 million and 67 FTE to fund the Department's work toward eliminating policy barriers that impede the employment of people with disabilities.

A particular highlight for the Department is the new Office of Disability Employment Policy (ODEP). The 2002 budget includes $40.6 million and 57 FTE for ODEP, an increase of $20.3 million and 10 FTE over 2001, to support key elements of the President's New Freedom Initiative in areas that focus on integrating Americans with disabilities into the workforce.

The increase includes $6 million and 3 FTE to expand one-stop accessibility grants and support the process of ticket-to-work through One-Stop Career Centers; an additional $6 million and 3 FTE to build on the Youth-to-Work Grant program and ensure that young people with disabilities benefit from youth programs under the Workforce Investment Act; and $8.3 million and 4 FTE for an Olmstead grant program to assist persons with significant disabilities in making the transition from institutional settings to the community and employment.

The Task Force on the Employment of Adults with Disabilities will continue its efforts to create a coordinated and aggressive national policy to bring adults with disabilities into gainful employment. The Task Force will deliver its fourth and final report to President Bush by July 26, 2002, the twelfth anniversary of the Americans with Disabilities Act. The 2002 budget includes $2.6 million and 10 FTE for the Task Force to complete its mission.

The Department's 2002 request maintains our worker protection agencies at 2001 levels while expanding our efforts in 2002 for compliance assistance activities. An example of prior rapid growth in spending can be found in our worker protection programs. Since 1996, the Department has realized a 36% increase for worker protection programs, which significantly outpaced inflation. From providing for the safety of every worker's pension, to ensuring the safety of every workplace, and from ensuring that Federal contractors provide equal opportunities to their workers, to ensuring that all employers comply with the Nation's wage and hour laws, a responsible fiscal approach will allow us to moderate recent growth in Federal spending while still realizing the same levels of worker protection.

I want to be clear on what we wish to achieve: we will continue to make administration of labor laws a top priority, but with an eye toward a common sense, flexible approach that aims to protect workers and help employers comply with the law. To more effectively and efficiently administer our laws, our worker protection agencies will be emphasizing more -- and better -- compliance assistance as our initial strategy in preventing workplace injuries and illnesses and violations of labor laws.

One example of more and better compliance assistance is the Occupational Safety and Health Administration's approach to implementing its new "Needlestick" rule. We have a proactive strategy to ensure that employers understand this new rule -- which includes extensive outreach and educational efforts before rule enforcement. This approach will allow everyone involved -- the Department, employers, and workers -- to focus on the prevention of needlesticks and other similar injuries to workers.

Worker protection laws are only as effective as the degree to which they are understood and followed. By emphasizing compliance assistance, we help both employers and workers understand not only a rule's requirements but also how best to avoid the injury or illness the rule is designed to prevent. Each time I hear about safety violations that were discovered after an accident that cost the life of an employee, I cannot help but feel great sadness. After-the-fact enforcement cannot ease a family's grief when a loved one is injured or killed on the job. If we really are going to protect workers, we must put more emphasis on prevention. By enforcing laws before injuries or illnesses occur, and by helping employers provide the necessary levels of protection and meet their compliance obligations, we can and will save workers' lives.

The 2002 request includes $25 million in additional funding for the Bureau of Labor Statistics, including $8.1 million and 40 FTE for a key step in fundamentally changing the manner in which the Consumer Price Index (CPI) is revised and updated. For some time, the Bureau has worked to improve the accuracy and timeliness of the CPI. The additional funds requested in 2002 are critical to the continuation of this effort, which has as its goal the production of a more up-to-date CPI, and should substantially reduce the need for large periodic increases like those historically requested.

The Department requests $71.6 million and 100 FTE for international labor activities in 2002. This request recognizes the importance of promoting international labor standards and reducing abusive child labor throughout the world. I believe the Administration's request helps us to effectively balance our priorities on these critical issues while maintaining sensible spending policies.

Our 2002 request preserves the Bureau of International Labor Affairs' (ILAB) core responsibilities and allows the Department to integrate activities in ILAB with the overall foreign policy of the Administration. This budget enables ILAB to continue its work on the global HIV/AIDS initiative begun in FY 2001 and continue bilateral and multilateral projects to assist developing countries in establishing basic labor protections, enabling more and more workers to enjoy fundamental employee rights.

Unemployment Insurance

The FY 2002 budget includes a request of $2.4 billion for Unemployment Insurance administration. This is an additional $50 million above the FY 2001 appropriation level, to reflect the increased unemployment insurance claims workload under the President's economic assumptions. The increase reflects an average weekly insured unemployment (AWIU) rate of 2.622 million compared with the 2.396 million level set in the FY 2001 appropriations.

The Department's budget includes $136 million and 413 FTE for administration of the Energy Employees' Occupational Illness Compensation Program. In addition, $597 million will provide compensation and medical benefits to eligible workers and survivors.

The Administration proposed to reverse the budget practice of using advance appropriations simply to avoid spending limitations. Accordingly, the amount requested to be appropriated for the 2002 budget is sufficient to provide normal funding, and no advance appropriation is requested.

For 2002, the Department requests $211.7 million for the Veterans' Employment and Training Service (VETS), the same funding level as for 2001. This request includes 250 FTE to accomplish the VETS mission of providing employment and training opportunities for veterans through the public employment service and other employment and training programs, as well as protecting veterans' employment and re-employment rights. The 2002 request continues the funding of the Homeless Veterans Reintegration Project at $17.5 million. This program, as authorized by the Stewart B. McKinney Homeless Assistance Act and title 38, will provide employment and training assistance to homeless veterans, with expected job placements of approximately 10,000.

A total of $80 million -- an increase of $43 million over 2001 -- is requested for the centralized Information Technology (IT) account to fund the Department's IT investments within four cross-cutting areas: $40.5 million for Enterprise Architecture; $10.6 million for a Common Office Automation Suite; $19.7 million for Security and Privacy; and $9.1 million for Common Administrative Systems. This request will support the second year of our efforts to replace duplicative and disparate systems with a coordinated approach to provide centralized information technology investments managed by the Department's Chief Information Officer. These IT resources will help ensure program effectiveness among DOL programs and are key to my renewed commitment to compliance assistance through maximum use of technology.

There is a small -- but important -- amount of $5 million in our 2002 request for a centralized fund to finance program evaluations, primarily in the Department's worker protection agencies. These funds will be used to improve overall program effectiveness and data quality pursuant to the Government Performance and Results Act (GPRA) of 1993. The Department has made significant strides in implementing the provisions of GPRA and we believe that funding for program evaluations will provide data that can be used to further evaluate and improve program effectiveness and data quality. In addition, the Budget request for the Employment and Training Administration includes $9 million to evaluate job training programs, including an evaluation of the Workforce Investment Act's performance management system.

$1.8 million is requested for the Department's administration of grant funds to improve the timeliness, accuracy, and usefulness of financial and performance information. $1.5 million of this increase would go to the Employment and Training Administration to increase its financial management capacity and strengthen program management through specialized oversight and assistance to states and other grantees. The Office of the Chief Financial Officer will use the remaining $300 thousand to develop financial tools for grant programs and provide added oversight to grantee cost reporting.

The President's 2002 budget includes a proposal to amend the Federal Employees' Compensation Act (FECA) to provide for a surcharge, to be paid by each agency, to finance the administration of the FECA program. The surcharge will replace the $80.3 million in budget authority to finance FY 2002 program administrative costs and will be based on the amount of the workers' compensation benefits paid by each agency. The purpose of this surcharge is to boost Federal agency incentives for improving safety in their respective workplaces.

For FY 2002, $415.7 million is requested for the Employment and Training Administration's Federal Unemployment Benefits and Allowances. Legislation will be proposed at a later date to reauthorize the TAA and NAFTA-TAA programs, which expire on September 30, 2001.

Mr. Chairman, this is an overview of what we have planned at the Department of Labor for FY 2002. While the President's 2002 budget presents a responsible approach to meet the needs of America's workers -- including funding national priorities, paying down the debt, and providing tax relief -- it will also ensure that our Nation's workers are prepared for the 21^st Century workplace.

I will be happy to answer any questions you may have about the Department of Labor's budget request.