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STATEMENT OF ELAINE L. CHAO
SECRETARY OF LABOR
BEFORE THE
SUBCOMMITTEE ON LABOR,
HEALTH AND HUMAN
SERVICES, AND EDUCATION
COMMITTEE ON APPROPRIATIONS
UNITED STATES SENATE
March 15, 2005
Good morning Mr. Chairman, Senator Harkin, distinguished Members of the
Subcommittee, ladies and gentlemen. Thank you for the opportunity to appear
before you today to present the Department of Labor's Fiscal Year 2006
Budget.
The total request for the Department in FY 2006 is $54.5 billion and
16,945 FTE, of which, $14.3 billion is before the committee. Of that amount,
$11.6 billion is requested for discretionary budget authority. Our budget
request will allow us to build on the accomplishments achieved in recent years
while meeting the President's call to hold Federal programs to a firm test of
accountability and to focus our resources on top priorities. In FY 2006, the
Department will continue its record-setting enforcement of worker protections
and provide innovative and effective training programs to help prepare workers
for good jobs in the 21st Century economy.
In his February 2nd State of the Union Address, the President
underscored the need to restrain spending in order to sustain our
economic prosperity. As part of this restraint, it is important that
total discretionary and non-security spending be held to levels proposed in the
FY 2006 Budget. The savings and reforms in the Budget are important
components of achieving the President's goal of cutting the budget deficit in
half by 2009, and I urge the Congress to support these reforms. The FY
2006 Budget includes more than 150 reductions, reforms, and terminations in
non-defense discretionary programs, of which 11 affect the Department of
Labor's programs. The Department wants to work with the Congress to
achieve these savings.
To set the stage for our FY 2006 budget, I would like to highlight some
of the Department's accomplishments over the last year. I am happy to report
that our programs have been getting results and we continue to make steady
gains in protecting America's workforce.
Under the Department's new Overtime Security Rule, we strengthened
overtime protection for 6.7 million workers. Today, more workers are getting
overtime pay and the rules are clearer and easier to understand and apply.
We have also set records in enforcing worker protection laws. For
example, worker fatalities are at an all time-low, and the Occupational Safety
and Health Administration (OSHA) has consistently exceeded its inspection
targets. Workplace fatalities among Hispanic workers have fallen by 11.6% since
2001. And fatalities in the mining industry have now dropped to the lowest
level since records were first kept in 1910.
In 2004, more than 288,000 workers received nearly $200 million in back
wages, including overtime, as a result of the Wage and Hour Division's
enforcement.
The Employee Benefits Security Administration achieved more than $3
billion in monetary results in FY 2004, protecting workers' health, benefit,
and retirement plans — a 121% increase from FY 2003.
We have also enhanced the transparency and accountability of labor union
finances so that union member rights are better protected and they know much
more about how their dues money is being spent. Under our union transparency
reforms, meaningful information about union financial transactions will be
available and easily accessible to union members
While we are proud of our accomplishments, we realize that more must be
done to improve the lives of America's workers. Our FY 2006 budget focuses on
four overall priorities: protecting workers' safety and health; protecting
workers' pay, benefits and union dues; protecting veterans' reemployment
rights; and preparing workers for new opportunities.
In FY 2006, $1.4 billion is requested for DOL's worker protection
activities. This increase of $27.6 million will enable the Department to
continue our record-setting protection of workers' health, safety, pay,
benefits and union dues.
Occupational Safety and Health Administration
The
FY 2006 budget request for OSHA is $467.0 million and 2,208 FTE, an increase of
$2.8 million over FY 2005.
OSHA will continue to target inspections on the worst hazards and the
most dangerous workplaces, while providing compliance assistance to workers and
employers as they create safe and healthy workplaces. The request for OSHA
includes an increase of $1.0 million for expanded compliance assistance
activities in the State plan states. These funds, when matched by OSHA's state
plan partners, will enable states to establish more Voluntary Protection
Program sites, develop new agreements similar to OSHA Strategic Partnerships
and Alliances, and provide additional outreach to workers and employers. An
additional increase of $1.0 million is requested to enhance OSHA's data
analysis and performance measurement capability.
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 2006 budget request is $280.5
million and 2,187 FTE, representing a funding increase of $1.4 million over FY
2005.
The Administration will seek to strengthen existing enforcement by
asking Congress for higher civil monetary penalties. Legislation will be
pursued to increase the fine for mine safety violations from $60,000 to
$220,000.
The Department will also continue its high priority programs to protect
workers' pay, benefits and union dues.
Employment Standards Administration
The
Department's Employment Standards Administration (ESA) administers and enforces
a variety of laws designed to enhance the welfare and protect the rights of
American workers. The FY 2006 budget request before the Committee for ESA is
$610.7 million and 4,282 FTE. This amounts excludes and additional $31.0
million of H1B fees and $45.0 million in FECA Fair Share funding available to
the agency. This represents an increase of $81.7 million and 162 FTE from FY
2005, primarily due to the additional responsibilities associated with the
Energy Employees Occupational Illness Compensation Program (EEOICPA).
Wage and Hour Division
The FY 2006 budget request
for the Wage and Hour Division totals $167.4 million and 1,346 FTE which
excludes $31.0 million in estimated fee revenue from DOL's portion of an H-1B
visa fraud prevention fee authorized by the 2004 H-1B Visa Reform Act. The
resources requested will support the Wage and Hour Division's Overtime Security
Task Force and its “Off-the-Clock” Initiative to promote compliance
through education and enforcement efforts in low-wage industries. It will also
support Wage and Hour's YouthRules! Initiative to promote compliance with the
youth employment provisions of the Fair Labor Standards Act; enable expansion
of enforcement to protect vulnerable workers in low-wage industries; and
increase technical assistance and education to encourage compliance with labor
laws. The budget also includes a legislative proposal to increase civil
monetary penalties for violations causing death or serious injury to youths in
the workplace from $11,000 to $50,000, and to $100,000 for repeat or willful
violations.
Office of Federal Contract Compliance
The FY 2006
budget request for the Office of Federal Contract Compliance Programs (OFCCP)
totals $82.1 million and 691 FTE. OFCCP is responsible for ensuring equal
employment opportunity and non-discrimination in employment for businesses
contracting with the Federal government. OFCCP carries out this mandate by
conducting compliance reviews to discover instances of systemic discrimination,
taking appropriate enforcement action, and providing relevant and effective
compliance assistance programs. During FY 2006, the implementation of Active
Case Management and Functional Affirmative Action Programs will improve OFCCP's
results, meaning more workers will be protected.
Office of Workers' Compensation Programs
The FY
2006 budget request for the Office of Workers' Compensation Programs (OWCP)
totals $341.8 million and 1,758 FTE and supports the Federal Employees'
Compensation Act, the Longshore and Harbor Workers' Compensation program, and
the Black Lung Benefits program. Included in this request is a $5 million
increase in Fair Share funding to effectively implement the new centralized
medical bill processing contract.
The OWCP budget also includes $96.1 million and 275 FTE to administer
Part B of the Energy Employees Occupational Illness Compensation Program, and
$59.9 million and 219 FTE for the Part E program that was established in FY
2005. The two Energy programs provide compensation and medical benefits to
employees or survivors of employees of the Department of Energy, and certain of
its contractors and subcontractors who suffer from a radiation-related cancer,
beryllium-related disease, chronic silicosis or other covered illnesses due to
exposure to toxic substances as a result of their work at Department of Energy
facilities or those of certain of its contractors.
The 2006 budget also includes two legislative proposals affecting OWCP
programs. The first is a proposal to reform FECA to update its benefit
structure, adopt best practices of State workers' compensation systems, and
strengthen return-to-work incentives. This proposal is expected to generate
Government-wide savings of more than $720 million over ten years. The second is
a proposal to restructure and eventually retire the debt of the Black Lung
Disability Trust Fund (BLDTF), a debt that is estimated to exceed $9.6 billion
by FY 2006, absent legislative action.
Office of Labor-Management Standards
The FY 2006
budget request for the Office of Labor-Management Standards (OLMS) totals $48.8
million and 384 FTE. OLMS enforces provisions of Federal law that establish
standards for union democracy and financial integrity. OLMS conducts
investigative audits and criminal investigations for embezzlement and other
financial mismanagement; conducts civil investigations of union officer
elections and supervises remedial elections where required; administers
statutory union financial reporting requirements; and provides for public
disclosure of filed reports.
To help restore OLMS after deep cuts during the 1990s, the budget
request includes program increases of $6.0 million and 48 FTE to enhance union
financial integrity, union advisory services, and compliance assistance
activities. The budget also supports legislation that would authorize OLMS to
impose civil money penalties on unions and others that fail to file required
financial reports on a timely basis.
Employee Benefits Security Administration
The
Department's Employee Benefits Security Administration protects the integrity
of pensions, health plans, and other employee benefits for more than 150
million workers. The FY 2006 budget includes a $5.8 million increase to
strengthen the retirement security of workers and retirees. These amounts
include additional resources for the E-FAST system to maintain current
operations.
With regard to pension benefits, this Administration believes that
pension promises made to workers and retirees must be kept. The current system
does not ensure that pension plans are adequately funded. Underfunded plan
terminations threaten workers' retirement security and are placing an
increasing strain on the pension insurance system. These underfunded plans also
impose an unfair and increasing burden on employers who sponsor healthy pension
plans.
The President's Budget for FY 2006 proposes to reform the funding rules,
increase disclosures to workers, and protect the pension insurance system, on
which 44 million Americans rely to protect their retirement security. The
Administration's plan will promote simplicity, accuracy, stability, and
flexibility. It will encourage employers to fully fund their defined-benefit
pension plans and ensure that benefit promises are kept. It will also expand,
and make more timely, disclosures to workers and the public.
The Administration's plan will reform the outdated premium structure to
reflect more accurately the cost of the insurance program. The plan proposes to
update flat rate premiums and index them to wage growth. We will also propose
to shift the emphasis to risk-based premiums for all under funded plans in
order to provide greater incentives for responsible funding.
The FY 2006 budget reiterates the Administration's support for
Association Health Plan legislation that will allow small businesses and others
to pool together through their trade and professional associations to provide
health benefits for workers and their families. By joining together, small
businesses and other association members would benefit from similar economies
of scale, uniform regulation and administrative efficiencies enjoyed by large
employers and labor unions. Association Health Plan legislation is a key
component of the President's plan to improve access to quality, affordable
health coverage for all Americans.
This Nation's commitment to our veterans must be honored. No veteran
should return home without the support that is needed to make the transition
back to private life a smooth and successful one.
Veterans' Employment and Training Service
For the
Department's Veterans' Employment and Training Service (VETS), we are
requesting $224.3 million and 250 FTE to maximize employment opportunities for
veterans and protect their employment rights.
The Department recently issued a notice of proposed rulemaking to
strengthen and clarify veterans' rights and employers' responsibilities under
the Uniformed Services Employment and Reemployment Rights Act (USERRA). The
rule is expected to be finalized during FY 2006. Our budget request also
includes $22 million for the Homeless Veterans Reintegration Program, an
increase of $1.2 million. This program will provide employment and training
assistance to homeless veterans, with expected job placements and retention of
approximately 10,600 veterans.
Reforming the Workforce Investment System
Overall,
the FY 2006 budget request for the Department's Employment and Training
Administration is $9.2 billion in discretionary funds and 1,216 FTE. Our budget
request will allow the Department to fulfill the President's call to improve
job training and prepare more Americans for the growing and changing economy,
ensuring that no worker is left behind. In 2006, we want to double the number
of individuals trained under the Workforce Investment Act's major grant
programs — including State formula grants and the new Community College
Initiative — from 200,000 to 400,000. Just as important, we want to help
provide workers with training that prepares them for the jobs of the 21st
century.
Under the President's job training reform proposal, we seek legislation
to reform the Workforce Investment Act (WIA) that would consolidate four
compartmentalized programs into a single funding stream so that Governors and
local officials will be able to utilize resources in a way that best meets
their communities' specific needs. This proposal, called “WIA Plus,”
would provide Governors the option of adding resources from up to five
additional federally-funded employment and training programs to this
consolidated State grant. The major goals include providing flexibility to
States and localities and reducing overhead so that more workers can receive
training.
In return for this increased flexibility, States will be required to
develop strategies to meet increasingly rigorous performance standards each
year, leading to a goal in the tenth year of placing in employment 100 percent
of the workers trained with Federal funds.
The President's WIA reform proposal would also establish Innovation
Training Accounts to provide workers ownership over the education and training
they pursue by:
- Allowing individuals to access a broad range of public and private
training resources through a single, self-managed account;
- Authorizing longer-term training opportunities, since many skills
needed for today's jobs require more than just short-term attention and
exposure;
- Providing access to improved labor market information to help
individuals make training decisions based on the jobs available in their local
area;
- Holding training institutions accountable for results;
- Acknowledging the need for incumbent worker training so workers can
update their skills and advance their careers; and,
- Promoting the attainment of industry-recognized credentials and
certifications.
High Growth Job Training Initiative
The President's
High Growth Job Training Initiative is designed to develop a demand-driven
workforce training system. This initiative, which began in 2002, prepares
workers to take advantage of new job opportunities in growing industries and
sectors of the American economy. The approach is based on grants to
partnerships that include the workforce investment system, business and
industry, education and training providers, and economic development entities
working collaboratively to develop industry-specific workforce solutions. Under
this initiative, the Department has awarded $164.8 million in 88 grants for
innovative training programs in high growth industries, such as health-care,
biotechnology and advanced manufacturing. By training workers with skills that
are in demand, more workers will be able to obtain quality jobs with higher
wages and enhanced career opportunities. At the same time, employers will be
able to fill critical workforce needs.
Community College Initiative
The budget also
provides $250 million to continue the President's Community College Initiative,
which provides for Community Based Job Training Grants. For 2005, the Congress
approved and financed this new initiative, and the first grants will be awarded
beginning in the summer of 2005. Eighty percent of the jobs in the fastest
growing fields require education and training beyond high school. The Community
College Initiative will help fully utilize the expertise of America's community
colleges as part of our job training programs and better train workers for jobs
in high growth sectors. These competitive grants will build on the High Growth
Job Training Initiative and strengthen the role of community and technical
colleges as partners of the workforce investment system.
Youthbuild
The President's Budget includes a
legislative proposal to transfer the Youthbuild program from the Department of
Housing and Urban Development to DOL. This change was recommended by the White
House Task Force on Disadvantaged Youth. The Youthbuild program targets
disadvantaged youth ages 16-24. The program provides grants to local
organizations that train participants for well-paying construction jobs. Their
training also results in the building of affordable housing units. Transferring
Youthbuild to DOL would provide the program with better contacts with One Stop
Career Centers, stronger ties to DOL's Job Corps and apprenticeship programs,
new links to the President's High Growth Job Training Initiative, improved
access to the post secondary and community college system, and stronger
connections to employers and local labor markets. It also promises to offer
greater placement opportunities for the youths involved.
Prisoner Re-Entry Initiative
In FY 2006, $75
million is provided for the second year of the President's four year,
multi-departmental Prisoner Re-Entry Initiative. Of this total, $35 million is
for the Department of Labor, $25 million is for the Department of Housing and
Urban Development, and $15 million is for the Department of Justice. This
initiative is designed to strengthen urban communities through an
employment-centered program that incorporates job training, short-term housing,
mentoring, and other transitional services to help recently released prisoners
make a successful transition back to society and long-term employment. It taps
the unique contributions and capacities of America's faith-based and community
organizations.
Strengthening the Integrity of the Unemployment Insurance
System
Building on previous proposals to strengthen the
Unemployment Insurance (UI) system and reduce erroneous UI payments, the FY
2006 budget proposes a $10 million increase in beneficiary eligibility reviews
in One-Stop Career Centers. This is projected to save up to $225 million
annually. In addition, a $30 million increase is requested to prevent and
detect fraudulent unemployment benefit claims using stolen personal information
— otherwise known as identity theft — that would result in annual
trust fund savings of as much as $105 million. These two discretionary
proposals are part of the Administration's proposal to fund efforts to reduce
improper payments across several agencies using a new budget enforcement
mechanism of spending cap adjustments. In addition, the Budget includes a
package of legislative changes to prevent and recover overpayments of
Unemployment Insurance benefits, saving an estimated $4.7 billion over 10
years. These budget and legislative proposals are not only an important
protection for American workers, but are also a responsible use of public
funds.
Bureau of Labor Statistics
In order to maintain the
development of timely and accurate statistics on major labor market indicators,
the FY 2006 budget provides the Bureau of Labor Statistics with $542.5 million
and 2,475 FTE, which is an increase of $13.5 million over FY 2005. This funding
level provides the BLS with the necessary resources to continue producing
sensitive and important economic data, including the Consumer Price Index, the
Producer Price Index, and the Quarterly Census of Employment and Wages.
Office of Disability Employment Policy
The 2006
budget request provides the Office of Disability Employment Policy (ODEP) with
a total of $27.9 million and 59 FTE. In past years, the request for ODEP
included a large research and grant making function. ODEP has invested these
funds in testing a variety of pilot projects, and we now have several years of
results to determine which of these pilots work, and which ones don't. ODEP
will now focus on improving access by disabled Americans to DOL's programs, and
on developing proven approaches to helping Americans with disabilities find
meaningful employment opportunities.
Women's Bureau
To continue its outreach to working
women, the FY 2006 budget includes $9.7 million and 60 FTE for the Women's
Bureau, an increase of $0.3 million above FY 2005.
International Labor Affairs Bureau
The request for
the International Labor Affairs Bureau (ILAB) in FY 2006 is $12.4 million and
95 FTE. The budget returns ILAB to its core mission of developing international
labor policy, and performing research, analysis, and advocacy.
The requested funding levels would allow ILAB to implement the labor
supplementary agreement to NAFTA and the labor provisions of trade agreements
negotiated under the Trade Act of 2002, participate in the formulation of US
trade policy and negotiation of trade agreements, conduct research and report
on global working conditions, assess the impact on U.S. employment of trade
agreements, and represent the U.S. government before international labor
organizations, including the International Labor Organization.
ILAB will continue to implement ongoing efforts in more than 70
countries funded in previous years to eliminate the worst forms of child labor
and promote the application of core labor standards, and reduce employment
discrimination against persons living with HIV/AIDS.
President's Management Agenda and Department-wide Management
Initiatives
Before I close today, Mr. Chairman, I also want to
highlight the Department's ongoing efforts to implement the President's
Management Agenda. In August 2001, President Bush sent to Congress his
President's Management Agenda (PMA), a strategy for improving the management
and performance of the Federal government. The agenda called for focused
efforts in the following five government-wide initiatives aimed at improving
results to citizens: Strategic Management of Human Capital, Competitive
Sourcing, Improved Financial Performance, Expanded Electronic Government, and
Budget and Performance Integration. DOL is also responsible for three of the
PMA initiatives that are found only in selected departments. The first of these
three is Faith-Based and Community Initiatives. In the fourth quarter of 2004,
DOL began working in earnest on another selected PMA component, Real Property.
Also, in the first quarter of 2005, DOL began tracking its status and progress
on a new PMA initiative to Eliminate Improper Payments.
The Department is one of only three cabinet departments that earned
“green” status ratings on four of the five government-wide scorecards
for the first quarter of 2005, without a single red score. For progress during
this period, DOL achieved five of five green scores. On the basis of its
favorable ratings for status and progress in implementation of these
initiatives, DOL was honored with two Presidential Quality Awards and is
recognized as one of the best managed Cabinet agencies.
With the resources we have requested for FY 2006, the Department will
continue to improve its protection of workers' safety and health, protect
workers' pay, benefits, and union dues, secure the employment rights of
America's veterans, and prepare workers for the jobs of the 21st Century.
Mr. Chairman, this is an overview of the programs we have planned at the
Department of Labor for FY 2006.
I would be happy to respond to any questions members of the subcommittee
may have.
Thank you.
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