November 15, 2004
Publication
of the Fiscal Year 2004 Annual Performance and Accountability Report is
the culmination of an important process it makes us pause, look back,
consider how our accomplishments bettered the American workforce and determine
what
needs to be done to make further improvements. Every year brings its share
of challenges, and this past year was no exception. In keeping with our
theme for this report Serving the Needs of a Changing 21st Century
Workforce we
are reporting for the first time on our new fourth strategic goal, A
Competitive Workforce. It complements our three other strategic goals of A
Prepared Workforce,
A Secure Workforce, and Quality Workplaces. In addition to producing positive
results for the Nation's workers through our program activities, we have
strengthened our support functions under the President's
Management Agenda.
President's Management Agenda
In August 2001, President George W. 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 one of the PMA components found in selected departments:
Faith-Based and Community Initiatives. In the fourth quarter of 2004, DOL
began working in earnest on another selected PMA component, Real
Property.
On the basis of its favorable ratings for progress and status in implementation
of these initiatives, DOL is recognized as one of the best managed Cabinet
agencies.
Keeping Our Commitment to Veterans
With so many of our nation's military service members actively engaged
in the global war on terrorism, we are constantly mindful of our responsibilities
to them, to our nation's veterans and to their families; and our commitment
is unwavering. The men and women of the National Guard and Reserve must be
assured that they will have their former or comparable jobs upon return.
In addition, transitioning service members, veterans and disabled veterans
deserve the best possible assistance in obtaining meaningful and rewarding
employment. Veterans are also a key resource in our strategy to maintain
a competitive workforce; to meet the productivity and hiring demands of high-growth
business sectors, DOL is encouraging employers to leverage the technical
knowledge, discipline and training of veterans, military spouses and transitioning
service members.
Training for High-growth Industries
A Departmental priority is to help workers acquire the skills they
need for the new jobs being created in high-growth industries. As part
of the President's High-Growth Job Training Initiative, the Department
of Labor has identified twelve sectors where rapid growth or transformation
of business processes has created a shortage of skilled workers, and we
have built partnerships to help American workers access job-specific training.
Our partners include employers, industry associations, labor-management
organizations, community colleges, and the public workforce system. We
promote this demand-driven workforce investment strategy by awarding grants
in such areas as innovative health-care and biotechnology training programs
across the country. As we match skilled workers with willing employers,
we expect that more workers will obtain quality jobs that pay higher wages
and feature career ladders.
Regulatory Reform
Another way we have been Serving the Needs of a Changing 21st Century
Workforce is through regulatory reform. We need to ensure that the
Department's regulations are still relevant and effective so that
labor in both the public and private sectors is not wasted on unnecessary
bureaucratic processes or frivolous litigation. We are concentrating
on regulatory activities that actually protect workers, particularly
those who are economically disadvantaged or vulnerable. For example,
one of the Department's most important regulatory reforms in recent years
was an update of the white-collar overtime regulations that were
first created in 1938 and were so outdated that they created a legal nightmare.
The Department's belief is that most employers want to protect their
workers. Our strategy is to target enforcement resources on the relatively
few "bad
actors" and help the majority of employers understand and comply with
the Department's standards.
Expanding Our Focus on Workplace Protections
Every year, millions of teenagers work in part-time and summer jobs.
Employment helps them appreciate the value of work and our free enterprise
system. Through the Department's YouthRules! initiative we promote
positive, safe working experiences for teenage workers. The initiative
educates employers, teenagers, parents, teachers and the general public
about child labor laws through our YouthRules! website, pocket guides and
posters. We have also sponsored youth rallies, training seminars and other
activities to boost understanding of the rules.
OSHA has mounted a significant effort to reach out to Spanish-speaking workers
and their employers. The agency formed a special task force in October 2001
to examine the issue of Hispanic worker fatalities and what we should do
to address the problem. The task force is looking at three areas: sharing
best practices, expanding outreach, and determining where more information
is necessary. OSHA's current outreach efforts to the Hispanic Community
include a Spanish-language page on OSHA's web site, a Spanish-language
option on OSHA's toll free number, numerous Spanish translations, including
Todo Sobre la OSHA (All About OSHA), and much more.
Retirement Security Remains a High Priority
The last couple of years have seen the very public and visible collapse
of several major companies with grievous consequences for workers' retirement
security. Rising health care costs have made obtaining secure and affordable
health coverage increasingly challenging for employees. Strong oversight
and protecting workers' retirement and health benefits are among
the Department's highest priorities. We take great pride at the Department
of Labor in our enforcement record and results, but in the course of recovering
workers' benefits, we have seen in some employers a clear lack of
understanding or appreciation of their responsibilities under the Employee
Retirement Income Security Act (ERISA). Our compliance assistance efforts
focus on educational campaigns that reach out to the regulated communities,
educate them on what the law requires, and help prevent problems from occurring
in the first place. The nation's workers deserve nothing less than
the high standards set by ERISA that the benefit promises made
to our nation's workers are kept.
Program Data and Financial Performance
DOL managers routinely use the performance and financial data summarized
in this report to improve the quality and cost effectiveness of services
to the public. Given its importance for purposes of accountability, we
must have confidence in the validity of such information. Several procedures
are used routinely to verify data quality; findings for the current fiscal
year are described below.
Performance information presented in this report is complete and reliable
as defined by the Office of Management and Budget (OMB) in Circular A-11,
with one exception. Data for Performance Goal 1.2C (Youth Opportunity Grants)
are considered incomplete because older youth employment and retention rates
are available for participant outcomes associated with only half of the grantees.
A more complete explanation of this issue appears in the Management Issues
section of the performance goal narrative.
The Federal Financial Management Improvement Act of 1996 (FFMIA) requires
agencies to implement and maintain financial management systems that are
in substantial compliance with OMB Circular A-127, Joint Financial Management
Improvement Program (JFMIP) requirements, Federal accounting standards, and
the United States Government Standard General Ledger (SGL) at the transaction
level. All Department of Labor financial management systems substantially
comply with FFMIA.
The Federal Managers' Financial Integrity Act of 1982 (FMFIA) requires the
Secretary to report to the President and the Congress on the adequacy of
management controls in safeguarding resources. Based on the unqualified opinion,
audit results and quarterly and year-end assurances given by the agency officials
and other pertinent information, the Department of Labor's accounting systems
and internal controls comply with the provisions of the FMFIA.
Conclusion
Once again, I am proud to submit an Annual Report on Performance and
Accountability that I hope will provide a useful overview of this Department's
core missions and a clear assessment of our program and financial results.
The employees of the Department of Labor are dedicated to keeping the American
workforce strong and competitive through these rapidly changing and often
uncertain economic times. We will continue to strive to provide programs
and services to assist people to find rewarding work at good pay; foster
and protect health and pension benefits; and ensure that workplaces are
safe and healthful and free from discrimination.
Elaine L. Chao Secretary of Labor
Mission
The Department of Labor promotes the welfare of the job seekers, wage
earners, and retirees of the United States by improving their working
conditions, advancing their opportunities for profitable employment,
protecting their retirement and health care benefits, helping employers
find workers, strengthening free collective bargaining, and tracking
changes in employment, prices, and other national economic measurements.
Vision
We will promote the economic well-being of workers and their families;
help them share in the American dream through rising wages, pensions, health
benefits and expanded economic opportunities; and foster safe and healthful
workplaces that are free from discrimination.
Organization
The Department of Labor is organized into major component agencies, each
headed by an Assistant Secretary or Commissioner who administers the various
statutes and programs for which the Department is responsible. These programs
are carried out through a network of regional offices and smaller field,
district, and area offices, as well as through grantees and contractors.
The largest program agencies are Employment and Training Administration
(ETA), Employee Benefits Security Administration (EBSA), Pension Benefit
Guaranty Corporation (PBGC), Employment Standards Administration (ESA),
Occupational Safety and Health Administration (OSHA), Mine Safety and Health
Administration (MSHA), and Bureau of Labor Statistics (BLS). An organization
chart and agency mission statements appear on the following pages.
DOL Organization Chart
Agency Missions
Bureau of Labor Statistics (BLS)
To produce, analyze, and disseminate essential
and accurate statistical data in the field of labor economics to the American
public, the U.S. Congress, other Federal agencies, State and local governments,
business, and labor.
Employee Benefits Security Administration (EBSA)
To protect the retirement,
health, and other benefits of over 150 million participants and beneficiaries
in private sector employee benefit plans.
Employment Standards Administration (ESA)
To protect the welfare and rights
of, and generate equal employment opportunity for, American workers by promoting
compliance with the various laws that it administers; and to provide the
best possible program for income replacement, medical treatment, and rehabilitation
for injured Federal workers, longshore workers, and miners.
Employment and Training Administration (ETA)
To contribute to the more efficient
functioning of the U.S. labor market by providing high quality job training,
employment, labor market information, and income maintenance services primarily
through State and local workforce development systems.
Bureau of International Labor Affairs (ILAB)
To carry out the Secretary's
international responsibilities, develop Departmental policy and programs
relating to international labor activities, and coordinate Departmental international
activities involving other U.S. Government agencies, intergovernmental organizations,
and non-governmental organizations.
Mine Safety and Health Administration (MSHA)
To protect the safety and health
of the Nation's miners by assuring compliance with Federal safety and health
standards through inspections and investigations and working cooperatively
with the mining industry, labor, and the States to improve training programs
aimed at preventing accidents and occupationally caused diseases.
Office of the Assistant Secretary for Administration and Management (OASAM)
To
develop and promulgate policies, standards, procedures, systems, and materials
related to the resource and administrative management of the Department and
ensure execution of such policies and directives at Headquarters and in the
field. OASAM provides leadership and policy guidance in support of the President's
Management Agenda, including the Department's progress to achieve "green" scores
on the Office of Management and Budget's Scorecard, and the Department's
Strategic Plan and Annual Performance and Accountability Report.
Office of the Assistant Secretary for Policy (OASP)
To provide advice and
assistance to the Secretary and Deputy Secretary in a number of areas, including
policy development, regulations, program implementation, program evaluations,
research, budget and performance analysis, and legislation.
Office of the Chief Financial Officer (OCFO)
To provide high integrity financial
information, policy, services, and products in support of the Department's
mission to prepare and protect American workers.
Office of Congressional and Intergovernmental Affairs (OCIA)
To provide direction
and coordination for congressional and intergovernmental liaison and outreach
activities for the Department of Labor. OCIA assists the Secretary, Deputy
Secretary, agency heads, and departmental staff to develop effective programs
and strategies to promote the Department's goals and objectives on Capitol
Hill as well as among state and local officials.
Office of Disability Employment Policy (ODEP)
To provide leadership to increase
employment opportunities for adults and youth with disabilities on both the
supply and demand sides of the labor market, by expanding access to training,
education, employment supports, assistive technology, integrated employment,
entrepreneurial development, and small-business opportunities; and by building
partnerships with employers and State and local agencies to increase awareness
of the benefits of hiring people with disabilities, and to facilitate the
use of effective strategies related to employment of people with disabilities.
Office of Inspector General (OIG)
To serve the American worker and taxpayer
by conducting audits, investigations, and evaluations that result in improvements
in the effectiveness, efficiency, and economy of Departmental programs and
operations; prevent fraud and abuse in DOL programs and labor racketeering
in the American workplace; and provide advice to the Secretary and the Congress
on how to attain the highest possible program performance.
Occupational Safety and Health Administration (OSHA)
To assure so far as
possible for every working man and woman in the Nation safe and healthful
working conditions. This includes such strategies as rulemaking, enforcement,
compliance assistance, outreach, and partnerships to enable employers to
maintain safe and healthful workplaces.
Pension Benefit Guaranty Corporation (PBGC)
To protect retirement-plan participants'
pension benefits and support a healthy retirement plan system by encouraging
the continuation and maintenance of private pension plans; protecting pension
benefits in ongoing plans; providing timely payments of benefits in the case
of terminated pension plans; and making the maximum use of resources and
maintaining premiums and operating costs at the lowest levels consistent
with statutory responsibilities.
Office of the Solicitor (SOL)
To ensure that the Nation's labor laws are
forcefully and fairly applied in implementing the priority enforcement initiatives
of and defending the actions taken by the Department; and to advise agency
officials on legal matters, including the development of regulations, standards,
and legislation.
Veterans' Employment and Training Service (VETS)
To help Veterans, Reservists,
and National Guard members in securing and maintaining employment and the
rights and benefits associated with employment.
Women's Bureau (WB)
To promote profitable employment opportunities for women,
to empower them by enhancing their skills and improving their working conditions,
and to provide employers with more alternatives to meet their labor needs.
This report, prepared in accordance with the Reports Consolidation Act
of 2000, presents the results of the Department of Labor's (DOL) program
and financial performance for FY 2004. It is divided into four sections:
Management's Discussion and Analysis begins with the Secretary's
Message, introduces the Department's mission, vision and organization,
summarizes the other three sections (beginning immediately following this
introduction) and includes a brief report on DOL's progress in implementing
the President's Management Agenda.
The Performance Section conveys, through data, analyses and examples, progress
in achieving the Department's goals as presented in the Department's
Strategic Plan and Annual Performance Plans. The two appendices provide additional
details.
The Financial Section demonstrates our commitment to effective stewardship
over the funds DOL receives to carry out the mission of the Department, including
compliance with relevant financial management legislation. It includes the
Principal Financial Statements and Notes and the Independent
Auditor's Report an independent opinion on the Financial Statements provided
by the Department's Office of Inspector General.
The Management and Performance Challenges section presents the top management
issues identified by the Office of Inspector General and the Department's
progress and plans to meet these challenges.
This year, DOL will publish in print form a summary version of the report
for public consumption, aptly titled FY 2004 Summary
Performance and Accountability Report. Although format differs, content is identical to corresponding sections
of the full "official" report. The summary version includes:
the full Management's Discussion and Analysis; Strategic Goal introductions
and Outcome Goal summaries from the Performance Section; the CFO letter;
a summary of the Inspector General's internal control and compliance
reports; a summary of the independent financial audit; condensed Financial
Statements; the complete Management and Performance Challenges section; and
Acronyms and Internet links appendices. Both versions of the report are online
at http://www.dol.gov/_sec/media/reports.
FY 2004
marks the sixth year that the Department of Labor has reported program results
under the Government Performance and Results Act (GPRA). Program and management
goals that are key to the accomplishment of Departmental strategic and outcome
goals as presented in the FY 2003-2008 Strategic Plan1 were selected
for inclusion in the Department's annual plans. These performance goals and
their indicators provide the basis for assessments of the Department's effectiveness
in this section.
This report includes performance goals from two different annual plans2
because some programs administered by the Employment and Training Administration
are "forward-funded," meaning that their spending and performance
goals are tracked on a cycle that lags the Federal fiscal year (FY) by nine
months. This period is referred to as a Program Year (PY); such goals being
reported on in this document cover July 1, 2003 to June 30, 2004 (PY 2003).
PY 2004 goals will appear in the FY 2005 report.
The Department's goal structure has three levels. Strategic goals
describe outcomes that emerge from the Department's mission. Each of
these goals in turn has several outcome goals that define general results
DOL agencies can influence. These are long term objectives that in most cases
involve more than one DOL agency. Finally, performance goals that support
each outcome goal provide program-level clarity of purpose. Each performance
goal has associated indicators and targets to measure our impact on a continuous
basis.
Program Performance Overview
Of the 42 performance goals DOL is reporting on in FY 2004 (30 program
goals plus 12 management goals), the Department achieved 25, substantially
achieved five and did not achieve 12. The percentage achieved or substantially
achieved totals 71 percent. In FY 2003, the Department achieved or substantially
achieved 66 percent of its goals. The assessment category of substantially
achieved recognizes results that were very close (i.e., 80 percent of targeted
year-on-year improvement).
Goals and Results
The table below presents each performance goal for which
results are being reported in this document. It includes the goal number,
responsible agency, goal statement, result and period covered. Two versions
of Goal 1.1F appear because ETA moved its dislocated worker goals from Outcome
Goal 2.3 before VETS changed its goal to a program year basis, deferring
it to this year's report. Goal 3.1D (OSHA) appears three times because prior
year results were not reported on schedule.
Goal # Agency |
Performance Goal |
Result |
Period |
1.1A
ETA |
Increase the employment, retention, and earnings of individuals registered under
the Workforce Investment Act adult program. |
Achieved |
PY 2003 |
1.1B
ETA |
Improve the outcomes for job seekers and employers who receive public labor
exchange services. |
Achieved |
PY 2003 |
1.1C
ETA |
Strengthen the registered apprenticeship system to meet the training needs of
business and workers in the 21st Century. |
Achieved |
FY 2004 |
1.1D
ODEP |
Provide national leadership to increase access and employment opportunities
for youth and adults with disabilities receiving employment, training,
and employment support services by developing testing, and disseminating
effective practices. |
Achieved |
FY 2004 |
1.1E
VETS |
Increase the employment and retention rate of veteran job seekers registering
for public labor exchange services. |
Achieved |
PY 2003 |
|
Veterans enrolled in Homeless Veterans' Reintegration Program (HVRP) enter
employment. |
Achieved |
PY 2003 |
|
Increase the employment, retention, and earnings replacement of individuals
registered under the Workforce Investment Act Dislocated Worker Program. |
Not Achieved |
PY 2003 |
|
Increase the employment, retention, and earnings replacement of workers dislocated
in important part because of trade and who receive trade adjustment assistance
benefits. |
Not Achieved |
FY 2004 |
|
Increase entrance and retention of youth registered under the WIA youth program
in education or employment. |
Achieved |
PY 2003 |
|
Improve educational achievements of Job Corps students, and increase participation
of Job Corps graduates in employment and education. |
Not Achieved |
PY 2003 |
|
Increase entrance and retention of Youth Opportunity Grant participants in education
or employment. |
Not Achieved |
PY 2003 |
|
Improve information available to decision-makers on labor market conditions,
and price and productivity changes. |
Not Achieved |
FY 2004 |
|
Covered American workplaces legally, fairly, and safely employ and compensate
their workers. |
Substantially Achieved |
FY 2004 |
|
Advance safeguards for union financial integrity and democracy and the transparency
of union operations. |
Achieved |
FY 2004 |
|
Make timely and accurate benefit payments to unemployed workers, facilitate
the reemployment of Unemployment Insurance (UI) claimants, and set up
Unemployment tax accounts promptly for new employers. |
Not Achieved |
FY 2004 |
|
Enhance pension and health benefit security. |
Achieved |
FY 2004 |
|
Minimize the human, social, and financial impact of work-related injuries for
workers and their families |
Substantially Achieved |
FY 2004 |
|
Improve customer satisfaction according to the American Customer Satisfaction
Index (ACSI). |
Not Achieved |
FY 2004 |
|
Reduce the mine industry fatal injury incidence rate and the mine industry all-injury
incidence rate. |
Not Achieved |
FY 2004 |
|
Reduce respirable coal dust, silica dust, and noise exposures. |
Achieved |
FY 2004 |
|
Reduce occupational fatalities. |
Not Achieved |
FY 2004 |
|
Reduce injuries and illnesses by 10% annually in four industries characterized
by high hazard workplaces. |
Not Achieved |
CY 2002 |
|
Reduce the days away from work case rate per 100 workers by 2% from CY 2000
baseline. |
Achieved |
CY 2003 |
|
Reduce the days away from work case rate per 100 workers by 4% from CY 2000
baseline. |
Achieved |
CY 2004 |
|
Federal contractors achieve equal opportunity workplaces. |
Achieved |
FY 2004 |
|
States that receive financial assistance under the Workforce Investment Act
provide benefits and services to persons with disabilities in a non-discriminatory
manner. |
Achieved |
FY 2004 |
|
Reduce employer-employee employment issues originating from service members' military
obligations conflicting with their civilian employment. |
Achieved |
FY 2004 |
|
Contribute to the elimination of the worst forms of child labor internationally. |
Achieved |
FY 2004 |
|
Improve living standards and conditions of work internationally. |
Achieved |
FY 2004 |
|
Maximize regulatory flexibility and benefits and promote flexible workplace
programs. |
Not Achieved |
FY 2004 |
|
The right people are in the right place at the right time to carry out the mission
of the Department. |
Substantially Achieved |
FY 2004 |
|
Reduce the rate of lost production days due to work related injuries and illnesses
by two percent. |
Achieved |
FY 2004 |
|
Reduce the total case rate for injuries and illnesses for DOL employees by three
percent. |
Achieved |
FY 2004 |
|
Reduce the lost time case rate for injuries and illnesses for DOL employees
by three percent. |
Achieved |
FY 2004 |
|
Improve the timeliness of filing notices of injuries and illnesses with the
Office of Workers' Compensation Programs. |
Achieved |
FY 2004 |
|
Complete competitions on not less than 15 percent of the FTE listed on DOL's
2000 Federal Activities Inventory Reform (FAIR) Act inventory. |
Substantially Achieved |
FY 2004 |
|
Award contracts over $25,000 using Performance-Based Service Contracting techniques
for not less than 40 percent of total eligible service contracting dollars. |
Achieved |
FY 2004 |
|
Improve the accuracy and timeliness of financial information. |
Substantially Achieved |
FY 2004 |
|
Integrate financial and performance management to support day-to-day operations
across DOL. |
Achieved |
FY 2004 |
|
E-Government - Utilize technology to improve service and efficiency. |
Not Achieved |
FY 2004 |
|
Improve the performance of Department's Cyber Security Program in accordance
with the Federal Information Security Management Act (FISMA). |
Achieved |
FY 2004 |
|
Improve organizational performance and effective information management through
the use of the Departmental IT Capital Planning Investment Control process. |
Achieved |
FY 2004 |
1http://www.dol.gov/_sec/stratplan/main.htm
2 Revised Final FY 2003 Annual Performance Plan dated December
31, 2002 and the Revised Final FY 2004 Annual Performance Plan dated
January 27, 2004. The FY 2004 plan is available online: http://www.dol.gov/_sec/Budget2004/2004app-toc.htm.
Goals Reporting in FY 2005
This table lists goals that appeared
in DOL's FY 2004 Revised Final Annual Performance Plan for which results
will be reported in the FY 2005 Performance and Accountability Report.
All apply to ETA's forward-funded Program Year 2004 (July 1, 2004 – June
30, 2005).
|
Performance Goal |
|
|
|
Increase the employment, retention, and earnings of individuals registered under
the Workforce Investment Act adult program. |
|
|
|
Improve the outcomes for job seekers and employers who receive public labor
exchange services. |
|
|
|
Increase the employment, retention, and earnings replacement of individuals
registered under the Workforce Investment Act dislocated worker program. |
|
|
|
Increase placements and educational attainments of youth. |
|
|
|
Improve educational achievements of Job Corps students, increase participation
of Job Corps graduates in employment and education. |
|
|
|
Analyze information collection and research programs for relevance. |
|
|
|
Address worker shortage. |
|
|
|
Build a demand-driven workforce system. |
|
PY 2004 |
DOL's four strategic goals – A Prepared Workforce, A Secure Workforce, Quality
Workplaces and A Competitive Workforce – express outcomes associated
with our mission, vision and theme, and serve to focus Departmental efforts on
the links between activities and their higher purpose. The table below indicates
FY 2004 program performance goal achievement by strategic goal.
DOL Strategic Goal |
|
|
|
|
Goal 1 A Prepared Workforce
Enhance Opportunities
for America’s
Workforce |
|
|
|
12 |
Goal 2 A Secure Workforce
Promote the Economic Security of Workers
and Families |
|
|
|
6 |
Goal 3 Quality Workplaces
Foster Quality Workplaces that are Safe,
Healthy and Fair |
|
|
|
11 |
Goal 4 A Competitive Workforce
Maintain Competitiveness in the 21st Century
Economy |
|
|
|
1 |
Total |
|
|
|
30 |
Costs devoted toward achieving the Department's strategic goals
(see table below) are dominated by the second goal, A
Secure Workforce,
for which net costs in FY 2004 amounted to $47.0 billion. Ninety-seven
percent ($45.6 billion) of this amount is accounted for by benefit payments
to unemployed workers or workers disabled as a result of work-related
injuries or illnesses. The first goal, A Prepared
Workforce, required
$8.7 billion (15 percent of total net costs), spent mostly in the form
of grants to States and other organizations to offer job training and
a host of employment-related services to assist workers to improve their
skills and obtain productive, long-term employment. Approximately $1 billion
(less than 1 percent) went toward the third goal, Quality
Workplaces,
to fund direct services (such as salaries of Federal employees) aimed
at improving safety and health in the workplace. The fourth goal, A
Competitive Workforce, is new; moreover, most of its programs expend
funds on a Program Year that lags the fiscal year by nine months. Its
costs were the lowest, at just $6 million.3
3Net cost data are presented. Net
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.
DOL Program Costs (Millions of Dollars) |
Goal |
FY 2002 |
FY 2003 |
FY 2004 |
Strategic Goal 1: A Prepared Workforce |
$6934 |
$6923 |
$8654 |
Outcome Goal 1.1 Increase Employment, Earnings, and Assistance |
3596 |
3433 |
5412 |
Outcome Goal 1.2 Increase the Number of Youth Making A Successful
Transition to Work |
2829 |
2957 |
2703 |
Outcome Goal 1.3 Improve the Effectiveness of Information and Analysis
On The U.S. Economy |
509 |
533 |
539 |
Strategic Goal 2: A Secure Workforce |
57,005 |
59,969 |
46,957 |
Outcome Goal 2.1 Increase Compliance With Worker Protection Laws |
350 |
273 |
296 |
Outcome Goal 2.2 Protect Worker Benefits |
54,993 |
57,718 |
46,661 |
Outcome Goal 2.3 Increase Employment and Earnings for Retrained Workers |
1662 |
1978 |
0 |
Strategies Goal 3: Quality Workplaces |
949 |
991 |
1021 |
Outcome Goal 3.1 Reduce Workplace Injuries, Illnesses, and Fatalities |
781 |
815 |
812 |
Outcome Goal 3.2 Foster Equal Opportunity Workplaces |
117 |
118 |
112 |
Outcome Goal 3.3 Reduce Exploitation of Child Labor, Protect the Basic
Rights of Workers, and Strengthen Labor Markets4 |
51 |
58 |
97 |
Strategies Goal 4: A Competitive Workforce |
0 |
0 |
6 |
Outcome Goal 4.1 Equip Workers to Adapt to the Competitive Challenges
of the 21st Century |
0 |
0 |
0 |
Outcome Goal 4.2 Promote Job Flexibility and Minimize the Regulatory
Burden |
0 |
0 |
6 |
Costs Not Assigned to Goals |
48 |
44 |
38 |
Total (may not be equal to sum of individual goal totals due to rounding) |
$64,936 |
$67,927 |
$56,676 |
Charts that display net costs from FY 1999-FY 2004 to illustrate trends
are provided in each outcome goal summary; brief explanations of significant
changes since FY 2003 are provided, as well. In future reports DOL plans
a more robust discussion of cost information, eventually at the performance
goal level. This will be facilitated by full cost information provided
by the new managerial cost accounting system, Cost Analysis Manager (CAM),
which is described in more detail in the Outcome Goal FM summary and the
Performance Goal FM2 narrative. Cost models that describe relationships
between resources, activities, outputs and outcomes have been completed
and will be populated with data in FY 2005. Reports from this system will
inform management how much it costs to provide the Department's
major services, thereby supporting sound decision making and accountability
for results.
Below is a breakdown, by strategic goal, of FY 2004 achievements and
developments deemed most significant in terms of outcomes.5 A tally of
goals achieved, while providing a quick 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 not just at whether targets were reached but also
at whether observed results indicate positive program impacts. The following
summaries focus on significant trends that have continued or have become
apparent in the past year and what they mean in terms of DOL's past
performance and future strategies.
4The figures for FY 2002 and FY 2003 do not match those in the annual
Consolidated Statements of Net Costs by Outcome Goal because they reflect
correction of an overstatement of grant costs in FY 2002 and corresponding
understatement in FY 2003 that were considered non-material and therefore
not corrected in the financial statements.
5Not included are the twelve
departmental management goals, of which DOL achieved eight, substantially
achieved three and did not achieve one.
Strategic Goal 1 A Prepared Workforce
As indicated in the Program Performance Goal Achievement table above,
DOL had 12 performance goals under this strategic goal in FY 2004. The
Department achieved seven (58 percent) and did not achieve five (42
percent). This achievement percentage is below the Department wide average
of 71 percent.
In FY 2004, positive trends included: employment, retention, and earnings
improved for Workforce Investment Act (WIA) adult programs; the number
of disabled workers served in pilots funded by the Office of Disability
Employment Policy nearly tripled; homeless veterans' employment
rate exceeded 60% (well above target) for the second year in a row; and
diploma attainment for younger youth (14-18) and entry to employment and
retention for older youth (19-21) increased substantially. WIA Dislocated
Worker and Trade Adjustment Assistance programs obtained disappointing
results, both having difficulty assisting workers affected by mass layoffs
in replacing their income in new jobs.
Further improvement in the preparedness of America's workforce
will be promoted by DOL's demand-driven strategy of identifying
employers' needs and using that information to identify skilled
workers and to develop suitable training programs. In response to recommendations
from the Administration's Program Assessment Rating Tool (PART)
reviews of the Trade Adjustment Assistance program, new agreements between
the Secretary of Labor and the States' Governors will include performance
expectations to encourage better results. DOL's Workforce Investment
Act reauthorization proposal places emphasis on serving out-of-school
youth, the special population DOL is uniquely qualified to serve.
Strategic Goal 2 A Secure Workforce
Of six performance goals, DOL achieved two (33 percent), substantially
achieved two (33 percent), and did not achieve two (33 percent). The
total achieved and substantially achieved (67 percent) is slightly below
the Departmental average.
The Department reached targets for increasing compliance with the Fair
Labor Standards Act (FLSA) in industries with the worst violation records,
but failed to reach its targets for reducing recidivism of prior violators
in those same industries. Labor unions' financial integrity and
transparency indicators improved by targeted quantities. The Unemployment
Insurance program reached its target for recovery of estimated overpayments
while maintaining its high level of administrative efficiency and building
its capacity to facilitate reemployment. Employee benefit security programs
reached all targets, including those for successful conduct of civil and
criminal cases against benefit plan malfeasance, and customer satisfaction
with participant assistance received. Federal workers' compensation
results were positive, overall; while lost production days rose, medical
costs rose less than the national healthcare inflation rate and claims
processing improved significantly. Finally, the Pension Benefit Guaranty
Corporation did not reach its targets for customer satisfaction.
In FY 2005, DOL will continue its targeted compliance assistance programs
for employers with respect to wage and working condition standards, including
detailed agreements and reinvestigation plans; support an amendment to
the Labor-Management Reporting and Disclosure Act authorizing civil monetary
penalties for delinquent union reports; and improve processing of workers' compensation
claims through greater Internet access.
Strategic Goal 3 Quality Workplaces
Of 11 performance goals, DOL achieved eight (73 percent) and did not achieve
three (27 percent), for an achievement ratio above the Departmental
average.
In FY 2004, mine fatality and all-injury incidence rates reached the
lowest levels recorded in over a quarter century. Other evidence of improved
mine safety is the further reduction in coal dust, silica dust and noise
overexposures observed at inspected mine sites during the past year. Fatalities
in all workplaces actually rose slightly, according to DOL estimates;
safety in its broader definition improved in all occupations, as measured
by the estimated rate of days away from work resulting from workplace
injuries. Equal opportunity to work advanced, as incidence of discrimination
among evaluated Federal contractors was just one percent, and compliance
with all other workplace standards rose sharply to 91 percent. Veterans' employment
and reemployment rights were further protected by rulemaking (clarification
of procedures that implement the Act of Congress) and by collaboration
with the Department of Defense on an annual survey to identify the issues
most troublesome for service members returning to the civilian workforce.
Evolving strategies for safety and health regulatory activity include
enforcement, training and delivery systems that address workplace demographic
trends such as increasing age of workers and likelihood that employees
may not speak English. Meanwhile, DOL continues to increase outreach,
assistance, and cooperative programs to complement enforcement activity.
Strategic Goal 4 A Competitive Workforce
The one performance goal being reported on this year was not achieved.
Nevertheless, the Department has made progress implementing plans to
focus its programs' strategies on winning strategies in a global
economic environment. To better build a demand-driven workforce system,
DOL implemented the President's High Growth Job Training Initiative
and the Career Voyages WebSite, and began implementing the ETA Management
Information and Longitudinal Evaluation (EMILE) reporting system. In
the regulatory arena, all targets for increased flexibility and reduced
burden were not reached, but the important step of incorporating cost/benefit
analysis in all impact evaluations is proceeding according to schedule.
Next year's report will report on the first results of investments
made in support of Goal 4 the High Growth Job Training Initiative
(HGJTI) Grants awarded in PY 2003.
Reporting Performance Results
The Performance Section presents, by strategic goal, summaries of performance
at each level. Each strategic goal section is introduced by an overview
of the goal, its component outcome goals, results for FY 2004 and near
term plans for improvement. Each outcome goal section similarly begins
with a summary of results, adds net cost information and highlights
and concludes with a brief discussion of future plans. Finally, within
each outcome goal section are individual performance goal narratives
that introduce the indicators and discuss the program perspective, present
results, analysis and future plans and disclose management issues such
as data quality and program evaluations that have implications regarding
impact or effectiveness. Appendix 1 contains performance goal histories
and Appendix 2 summarizes significant evaluations and audits of DOL
programs completed during FY 2004 that have implications for performance
goals in this report.
Sound
financial management is the keystone of the Federal Government's efforts
to improve accountability and deliver better results. Decision makers
at all levels need timely, accurate and useful financial management information
and user-friendly, state-of-the-art tools to facilitate and enhance decision-making.
In keeping with the President's goals, the Department of Labor continued
to enhance its performance in financial management. This year, DOL successfully
reached green on the President's Financial Management Agenda scorecard
for financial management. All financial systems at the Department maintained
substantial compliance with the Federal Financial Management Improvement
Act of 1996 (FFMIA), assuring that the systems support full disclosure
of the costs of the Department's programs and activities. In addition,
the Department continued to comply with the Federal Managers' Financial
Integrity Act (FMFIA), indicating that the Department's accounting systems
and internal controls were sufficient to safeguard the resources entrusted
to the Department. No material weaknesses were found in the audit of the
Department's financial statements.
Financial Management Scorecard (as of 9/30/04)
Current Status
|
-
Unqualified and timely audit opinion on annual financial
statements; no material internal Current Status control weaknesses.
-
Produced accurate and timely financial information that is used
by management to inform decision-making and drive results in key
areas of operations.
-
Integrated
financial and performance management systems to support day-to-day
operations.
-
FFMIA compliant.
|
Continued
Progress
|
To implement a new financial management information system:
-
Objective 2 begin design stage involving mapping
business processes, change management, Progress testing, and
interface development.
To integrate financial/performance management:
To reduce erroneous payments:
-
Complete and present
to OMB recommendations to measure improper payments for susceptible
non-direct grant programs through changes to the Single Audit
Act Compliance Supplements.
-
Integrate IPIA efforts with the Department's
initiatives to bring internal control improvements of the Sarbanes-Oxley
Act to its operations to improve the Department's accountability.
|
The Office of the Chief Financial Officer (OCFO) has begun replacing
DOL's core accounting system with a financial management information
system using a JFMIP-compliant COTS package. DOL's current accounting
system has enabled the Department of Labor to achieve unqualified audit
opinions and has provided accurate financial information over the past
14 years. However, advances in technology, opportunities arising from
E-Government initiatives and the Department's need to better integrate
financial and performance information with a broader user-based support
the need for a new system.
On a Government wide perspective, OCFO is co-chairing the Financial Management
Line of Business (FMLOB) initiative. This initiative seeks to establish
a Government-wide financial management solution that is efficient and
improves business performance while ensuring integrity in accountability,
financial controls and mission effectiveness. Standardization of business
processes and data definitions across the Government will allow consistent
reporting of inter-agency accounting events and aid in the reconciliation
of inter-agency transactions providing better accountability.
OCFO also participates in the E-Payroll initiative, which involves consolidation
of Federal payroll operations to three providers. Cost savings will result
from standardizing policies affecting payroll process and the elimination
of duplicative IT investments across the Government. The Department has
begun the process of migrating its payroll operations to the National
Finance Center (NFC) run by the Department of Agriculture. DOL's
goal is to complete the transition to NFC in FY2005. Going forward, the
Department plans to continue its migration efforts placing emphasis on
refining interfaces to the NFC system environment to support on-line time
and attendance entry as well as human resource functions.
DOL has embarked upon a department-wide managerial cost accounting initiative
called Cost Analysis Manager (CAM). CAM provides expenditure information
to managers, analysts, and other decision-makers to help them better understand
operational costs. CAM's costing methodology is consistent with
the Statement of Federal Financial Accounting Standards (SFFAS) No.4,
which provides the guidance for full cost of federal programs. It answers
the question of what are the full costs of a program and raises additional
cost-based questions that help managers improve program performance. CAM
provides these improvements through the delivery of timely and frequent
information regarding program costs, analyzing program efficiencies and
effectiveness through "what if" scenarios, and determining
whether its spending reflects an agency's priorities. Furthermore,
CAM will provide Departmental management with cost information to evaluate
past performance and guide future decision-making.
The OCFO intends to enhance its efforts to monitor the Department's
internal control structures and procedures and alert management of potential
financial issues. This initiative will allow OCFO to assess the efficiency
and effectiveness of financial operations, the reliability of financial
reporting, and compliance with applicable Federal laws and requirements.
This will also provide DOL with the financial management information needed
to support its quarterly process to attest to the existence and effectiveness
of internal controls throughout the organization to ensure compliance
with FMFIA and FFMIA requirements.
Analysis of Financial Position
The Department's
financial statements received an unqualified or "clean" audit
opinion for the eighth consecutive year. The independent CPA firm of R.
Navarro & Associates, Inc. issued reports for Fiscal Years 2004 and
2003. This independent assessment provides assurance that the money managed
by the Department is accounted for properly.
The principal financial statements in this report summarize DOL's
financial position, net cost of operations and changes in net position;
provide information on budgetary resources and financing; and present
the sources and disposition of custodial revenues for fiscal years 2004
and 2003. Highlights of the financial information presented in the principal
financial statements are shown below:
Financial Position
DOL's Balance Sheet presents its financial position through the
identification of agency assets, liabilities and net position. Over 99
percent of DOL's investments are Unemployment Trust Fund investments.
DOL total assets decreased from $64.8 billion at the end of FY 2003 to
$62.4 billion in FY 2004. Seventy three percent of DOL assets are invested
in U.S. Government securities, compared to 75 percent in FY 2003. Liabilities
totaled $15.0 billion and $13.9 billion at the end of FY 2004 and FY 2003
respectively, leaving a difference, or net position, of $47.4 billion
and $50.8 billion at the end of each year.
Net Cost of Operations
The total net cost of DOL operations in FY 2004 was $56.7 billion, a 16
percent decrease from the prior year. The major portion of DOL costs
comprise of Income Maintenance programs. Income maintenance expense
includes costs such as unemployment checks paid to individuals who are
laid off or out of work and seeking employment as well as payments to
individuals who qualify for disability payments due to injury or illness
suffered on the job.
Employment and Training programs comprise the second largest cost. These
programs are designed to help individuals deal with the loss of a job,
research new opportunities, find training to acquire different skills,
start a new job or make long-term career plans. DOL's remaining
costs fund programs to protect worker safety, health, and employment standards;
to safeguard pension and health plan benefits; to provide statistical
information; and to support departmental management and infrastructure.
Financing
The Statement of Financing reconciles the net cost of operations with
the obligation of budgetary resources for the Department. DOL's
operations are funded primarily by Unemployment Program employer taxes,
appropriations received, and investment interest earned from various
trust funds.
Statement of Budgetary Resources
This statement reports the amount of resources received to effectively
carry out the activities of the Department as well as the status of
those resources at the end of the fiscal year. DOL had direct obligations
of $61 billion in FY 2004, a decrease of $10 billion from FY 2003.
Limitations on the Principal Financial Statements
As required by the Government Management Reform Act of 1994 (31 U.S.C.
3515 (b)), the principal financial statements report DOL's financial
position and results of operations. While the statements have been prepared
from the books and records of DOL in accordance with formats prescribed
by the Office of Management and Budget (OMB), the statements differ
from the financial reports used to monitor and control budgetary resources,
which are prepared from the same books and records. The statements should
be read with the realization that they are a component of the U.S. Government,
a sovereign entity, and that liabilities reported in the financial statements
cannot be liquidated without legislation providing resources to do so.
Improper Payments Information Act Compliance
Identifying
and reducing improper payments continues to be a major financial management
focus for the Federal Government in FY 2004. A key component of the President's
Management Agenda is to improve agency financial performance through reductions
in improper payments. The Office of Management Budget (OMB) originally
provided Section 57 of Circular A-11 as guidance for Agencies to identify
and reduce improper payments for selected programs.6
The Improper Payments Information Act of 2002 (IPIA) broadened the original
erroneous payment reporting requirements to programs and activities
beyond those originally listed in Circular A-11. The IPIA requires Agencies
to report annually on the extent of improper payments and the actions
taken to increase the accuracy of payments.
The Department has historically been engaged in efforts to reduce improper
payments, as shown by the Agency's commitment to the Benefit Accuracy
Measurement (BAM) program, which statistically quantifies and reports
the Unemployment Insurance Program's erroneous payment performance.
This measurement program has been in place for more than 15 years and
includes sampling activities to identify errors, fraud, and abuses. To
coordinate and facilitate the Department's efforts under the IPIA,
the Chief Financial Officer (CFO) was designated as the Erroneous Payment
Reduction Coordinator for the Department in FY 2004. The Office of the
Chief Financial Officer (OCFO) worked with program offices to develop
a coordinated strategy to perform annual reviews for all programs and
activities susceptible to improper payments. This cooperative effort included
developing actions to reduce improper payments, identifying and conducting
ongoing monitoring techniques, and establishing appropriate corrective
action initiatives.
Methodology
To identify Agency programs that meet IPIA reporting requirements, the
Department established an inventory of existing programs and conducted
an initial risk assessment. This risk assessment identified those programs
and activities with potential improper payments exceeding both 2.5%
of outlays and $10 million. The Department then conducted statistical
sampling for any program or activity meeting the initial risk assessment
thresholds, except for certain grant programs, which are discussed in
the paragraph below. To produce timely and accurate results, the Department
conducted the sampling using FY 2004 data. Agency programs and activities
with an estimated annual amount of improper payments in excess of $10
million, and those required by Section 57, were identified as meeting
the threshold for reporting.
6Section 57 identified Unemployment Insurance (UI), Federal Employees' Compensation
Act (FECA) and Workforce Investment Act (WIA) as programs required to
report annual erroneous payments
Challenges of Grant Programs for IPIA Compliance
To achieve compliance for susceptible grant programs, the Department faces
challenges similar to those of many other Federal Agencies. Often, grant
programs are structured to provide Federal funds that empower local
entities to operate programs based on local need. The Federal Government
provides the monies to States, cities, counties, private non-profits,
and other organizations to distribute these Federal funds. The Federal
Government relies on single audit report findings from the Single Audit
Act to monitor the recipients of these Federal funds. However, the single
audits do not always contain the details necessary to meet the reporting
requirements of the IPIA. Specifically, single audits do not have the
detailed testing criteria or sufficient reporting requirements to provide
the data necessary to statistically estimate improper payments within
the grant programs. This limits access to the data needed to estimate
aggregate Federal error rates.
Accomplishments and Plans for the Future
In FY 2004, the Department conducted the required initial risk assessment,
statistically sampling all programs deemed susceptible and established
appropriate reduction targets (save for the grant programs). The initial
assessment identified 12 programs "susceptible" to improper
payments. The Department conducted statistical sampling for 7 of these
12 programs. The remaining five programs, for which statistical sampling
was not feasible for FY 2004, were grant programs. Only two of the seven
programs (Unemployment Insurance and Federal Employees Compensation)
met the IPIA reporting requirement thresholds.
Using analysis of the sampling data, the Department developed corrective
action initiatives for the programs reporting in the Performance and Accountability
Report (PAR). During the past year, many UI initiatives in particular
delivered results. Specifically, access to the National Directory of New
Hires and the Social Security Administration Data Exchange will enable
States to reduce payments to ineligible recipients, a significant source
of improper payments. Additionally, the Department is developing an approach
to evaluate UI's corrective action initiatives through a performance
measurement metrics pilot. This pilot will enable the sharing of best
practices and comparative performance metrics among States by quantifying
the successes associated with each initiative. Such data will allow States
to direct funding to the initiatives with the most powerful effect on
improper payments.
To address the challenges of grant programs the Department co-chaired
the government-wide CFO Council's Erroneous and Improper Payments
Grants Subcommittee. The Department made significant contributions to
multiple recommendations that contemplate various solutions for grant
programs. In FY 2004, the OCFO analyzed the Department's single
audits to determine how modifications to the Circular A-133 Compliance
Supplements will help to achieve IPIA compliance. The analysis confirmed
that the most efficient means to gather data regarding Federal grant programs
is to use the existing infrastructure provided by the Single Audit Act.
The Department's grant analysis also produced recommended changes
to testing and reporting requirements of Circular A-133 that are necessary
to statistically estimate error rates. To further enhance these modifications,
the Department intends to conduct a pilot for a selected grant program.
The pilot would gather data using the single audits for a selected grant
program and allow the Department to refine its initial Circular A-133
recommendations on how to better achieve estimates of improper payment
rates at the Federal level.
Finally, the Department believes that IPIA implementation requires concerted
support from component Agencies to realize significant results. As such,
the Department's OCFO has initiated the development of assistance
activities that, while focused on improving financial management and internal
controls, will also coordinate program Agency efforts to achieve compliance
with the IPIA. To ensure accountability for achieving real reductions,
the Department will integrate IPIA efforts into the existing quarterly
financial certification meetings with Agency heads. The development of
this infrastructure is an important step in supporting the environment
of accountability.
Other Significant Information
Audit Follow up
The Inspector General Act Amendments of 1988 require explanations for
all audit reports with recommendations open for more than one year. DOL
management and audit communities agree that some of these audit resolutions
will require several years to complete the corrective action. As of September
30, 2004, 158 audit reports have been open for over one year. The total
value of open audits of $236 million covers 739 separate recommendations.
DOL agencies and the OIG jointly manage and update an audit tracking
system where the current status of each open audit is maintained. Final
closure of the audit is determined only by final decisions of the reviewing
officials. Many of these decisions take years before being rendered and
the audit closed.
The most significant of the non-monetary open audit findings are discussed
in this report. A listing of all open audits is available upon request
from the Department's Office of the Chief Financial Officer.
2004 Audit Summary as of 9/30/2004 ($ in thousands) |
Affected accounts in 158 audits with 739 recommendations over one year old… |
|
Less: |
|
Value of 18 open recommendations Under administrative law
or Federal Court Appeal…
|
|
|
|
Amounts referred or in process of referral to the Department of Treasury
|
|
Balance of 158 open audits… |
|
Debt Management
The Debt Collection Improvement Act of 1996 (DCIA) designated the Department
of the Treasury as the central agency for collection of Federal debts
over 180 days delinquent, and DOL cross services all delinquent debts
in accordance with this statute. Debt management accounts for a relatively
small part of our financial management activity. The majority of debts
managed by DOL relate to the assessment of fines and penalties in our
enforcement programs. During FY 2004, the Department improved its compliance
with DCIA and referred $79 million, which represents 96% of all eligible
delinquent debt, to Treasury for collection. The amount of debt referred
to Treasury in FY2003 was 92%.
User Charges Policy Review Process
In accordance with the CFO Act and OMB Circular A-25, department wide
guidance has been developed to establish policy, procedures, and responsibility
for implementing and managing user charges in DOL. The guidance includes
the biennial review requirements of the CFO Act. DOL continues to review
and adjust user fees in programs to reflect current costs and market
value of these services.
Prompt Payment Act
The Prompt Payment Act requires Executive agencies to pay commercial obligations
within discreet time periods and to pay interest penalties when those
time constraints are not met. In FY 2004, of approximately $1.2 billion
in gross payments, $115,452 was paid in interest fees and penalties.
Additionally, during FY 2004, there were over 66,000 payments made to
vendors and travelers. Of this amount, 1,451 invoices were paid late
resulting in only 2% of the total payments made during FY 2004 incurred
interest penalties.
Electronic Fund Transfer (EFT)
On average, DOL made approximately 82 percent of its salary, awards, travel
and miscellaneous payments electronically in FY 2004. The Department
continues to lag behind Government averages due to the low EFT participation
and the heavy volume in ESA's medical and benefits programs. These
ESA programs account for over 71 percent of DOL's total payment
volume.
DOL EFT Payments |
|
FY00 |
FY01 |
FY02 |
FY03 |
FY04 |
Administrative Vendors |
|
|
|
|
|
Travel & Miscellaneous |
|
|
|
|
|
Salary & Awards |
|
|
|
|
|
ESA Programs |
|
|
|
|
|
Total |
|
|
|
|
|
Source: DOL DOLAR$ and Payroll System EFT reports. |
DOL's
Inspector General identified nine areas considered to be the most serious
management challenges facing the Department:
- Reducing Improper Payments
- Safeguarding Unemployment Insurance
- Integrity of Foreign Labor Certification
Programs
- Financial and Performance Accountability
- Systems Planning and Development
- Information Systems Security
- Security of Employee Benefit Plan Assets
- Accounting for Real Property
- Workforce Investment Act Reauthorization
Each issue is discussed briefly below, along with Departmental management's
responses. Detailed descriptions of the challenges identified by the
Office of Inspector General and the Department's responses are in
the Management and Performance Challenges section of this report immediately
following the Financial Section.
Reducing improper payments
Reducing improper payments in DOL administered benefit programs, including
Unemployment Insurance (UI) and the Federal Employee Compensation Act
(FECA) program, is a challenge to the Department. Improper payments
include those made in the wrong amount, or to an ineligible recipient,
or improperly used by the recipient. The need for Federal agencies to
take action to eliminate overpayments is recognized by the President's
Management Agenda (PMA) and the Improper Payments Information Act of
2002. UI overpayments by the states are projected by DOL at about $4
billion annually. The Department's estimate for FECA overpayments,
which we consider conservative, is $10 million annually.
DOL response
ETA was very pleased with the enactment of a law based on
draft legislation proposed by the Department that gives State UI agencies
access to the National Directory of New Hires. This will enhance states'
ability to detect unreported work violations by UI claimants working in
other states or for certain multi-state employers who may be all new hires
to only one state. ETA is working with the Department of Health and Human
Services on the details of implementation and will encourage states to
use the directory when it becomes accessible. ETA continues to promote
activities to prevent and detect overpayments. In FY 2004, $2.3 million
is being made available to states that submitted acceptable proposals
to implement or enhance benefit payment control activities such as computer
cross-matches to detect overpayments, for example, through the use of
the states' Directories of New Hires as well as through an electronic
data exchange between State UI agencies and the Social Security Administration.
Safeguarding Unemployment Insurance
Improving the integrity and solvency of the UI program to better serve
qualified recipients is a challenge for the Department of Labor. During
FY 2003, the UI program paid over $53 billion in income maintenance
benefits to American workers. Among the difficulties faced by the program
are inadequate Unemployment Trust Fund (UTF) reserves, overcharges for
UTF administration, and the program's susceptibility to fraud
schemes involving identity theft and organized crime.
DOL response
ETA again notes that there is no Federal solvency standard.
There is nothing wrong from ETA's standpoint if a state must borrow from
the fund. In fact, the greater the drawdown in states' solvency
positions during a downturn, the greater the system would impact as an
automatic economic stabilizer.
Integrity of Foreign Labor Certification Programs
Reducing the susceptibility of DOL foreign labor certification programs
to abuse remains a challenge to the Department. These programs allow
U.S. employers to hire foreign workers when their admission does not
adversely impact the job opportunities, wages, and working conditions
of citizens and legal residents. DOL received almost 400,000 employer
applications for foreign workers through these programs in FY 2003.
Problems with the integrity of the labor certification process and fraud
against the program persist. This may result in economic hardship for
American workers, the abuse of foreign workers, and may have national
security implications when applications are not adequately screened
before being certified.
DOL response
ETA seeks to add clarification to the observations of the
OIG. Our authority is not to investigate aliens for possible security
risks, but rather to ascertain whether the area of intended employment
has been adequately tested such that there are no available, willing,
able, and prepared U.S. workers for the position being proposed by an
employer.
Financial and Performance Accountability
In order to manage DOL programs for results and fully integrate budget
and performance, the Department needs timely financial data, a managerial
cost accounting system that matches cost information with program outcomes,
quality performance data, and useful information from single audits
that cover 90% of its expenditures. While DOL has received high marks
on the President's Management Agenda scorecard for financial performance
and budget and performance integration, it faces challenges in fully
implementing improvements undertaken in these areas.
DOL response
OCFO recognizes effective project management as a significant
factor affecting the eventual success of the New Core Financial Management
System Project (NCFMS). Effective and responsive project monitoring, oversight
and controls, clear and effective direction, and governance systems can
mitigate the risk of missing the intended end result. Project risks for
NCFMS are managed through detailed project plans and resourced work breakdown
structures (WBS). The project plan and WBS enable effective management
of project tasks to be performed at the activity level, monitoring resource
and time consumption, and comparing baseline estimates with actual costs
and schedule. The project plan also includes activities associated with
testing various software deliveries against DOL requirements documents
and responding to regulatory requirements and changes. OCFO's partnership
with the OIG will help ensure that all Federal financial system requirements
and user needs are met.
Systems Planning and Development
Developing efficient and effective systems to perform the day-to-day business
of DOL is also a challenge to the Department. Judicious planning and
program management are critical to the implementation of new systems.
Enduring problems in existing systems must also be addressed in a timely,
effective manner. The OIG has concerns about insufficient planning for
new DOL information technology and other systems. Lack of progress in
addressing longstanding concerns in established programs like the Davis-Bacon
prevailing wage determination process are also of concern.
DOL response
The Office of Chief Information Officer (OCIO) continues
to implement a comprehensive project management structure that employs
a rigorous system development life-cycle management process. This process
includes checks and balances to ensure projects are executed according
to plan, within budget, and meeting performance expectations. Systematic
quarterly reviews are conducted during which the OCIO and the Departmental
Budget Center evaluate the progress of information technology (IT) projects
against a range of parameters, including: cost, schedule and performance;
enterprise architecture alignment; and compliance with security requirements.
IT development projects are then rated on quarterly review "scorecards" in
each of these categories. The OCIO has also established policy for and
implemented an earned value management system (EVMS) for major IT investments
in FY 2004, which allows the cost, schedule and performance of major IT
investments to be monitored over time.
Information Systems Security
As is the case for all government agencies, information technology security
is an ongoing challenge for the Department of Labor because of new threats
and increased automation through E-Government initiatives. Keeping up
with these developments, and providing assurances that DOL systems will
function reliably and safeguard information assets in an E-government
environment require a sustained effort. The security of DOL IT systems
and data is vital, since it relates to key economic indicators and the
payment of billions of dollars to workers.
DOL response
The OCIO performed a comprehensive review of the Department's
Security Program to measure its efficiency and effectiveness. This review
included a broad assessment of security vulnerabilities identified by
the OIG, as well as applicable Departmental IT security policies and procedures.
Based on this review, a DOL Plan of actions and Milestones (POA&M)
was developed which mapped out a strategy to mitigate the identified security
vulnerabilities, including other program areas needing improvement. Agency
senior management were advised by the Chief Information Officer to give
priority and resources to their agency-specific vulnerabilities prior
to funding new IT investments. Agencies were also advised to ensure these
vulnerabilities and their corrective actions were documented in their
Plans of Actions and Milestones (POA&Ms). In addition, the OCIO established
several focus groups comprised of representatives from multiple Departmental
agencies to leverage agency expertise and assistance in enhancing the
Department's Cyber Security Program.
Security of Employee Benefit Plan Assets
Protecting the benefits of American workers, including pensions and health
care, remains a significant challenge to the Department. DOL is responsible
for overseeing and protecting the interests of participants in about
730,000 private pension plans and six million health and welfare plans
covered by the Employee Retirement Income Security Act (ERISA). These
pension plans hold over $4.8 trillion in assets and cover more than
150 million workers. Recent failures in corporate financial management
and reporting, as well as in the auditing and oversight of these activities,
show the need to enhance worker pension and healthcare security by expanding
safeguards and improving benefit plan regulatory enforcement.
DOL response
The Department has responded to the challenge of pension
plan fraud and mismanagement with a strong enforcement program accomplished
through civil and criminal investigations of plans, plan sponsors, fiduciaries,
and service providers. During FY 2004, the Department's Employee Benefits
Security Administration (EBSA) achieved more than $3.1 billion in monetary
results and 121 criminal indictments. Further, the Department continues
to take steps to improve the financial audit process established by the
Employee Retirement Income Security Act (ERISA). In February 2003, EBSA
initiated its second nationwide review to assess the quality of employee
benefit plan audits using a statistical sample of 300 plan audits, to
assess compliance with professional accounting and auditing standards;
a report of findings is pending. EBSA is also fully committed to enhancing
health care security by putting an end to the fraudulent and abusive practices
of corrupt Multiple Employer Welfare Arrangements (MEWAs) and their operators
with a three-pronged approach: (1) emphasizing prevention by educating
employers and consumers; (2) aggressively pursuing civil and criminal
enforcement actions to shut down scams; and (3) supporting legislation
to establish a secure and affordable alternative for small businesses
looking to purchase health insurance for their workers Association
Health Plans (AHPs).
Accounting for Real Property
The Department is challenged to improve accountability for and management
of millions of dollars worth of real property. The GAO designated Federal
real property as a high-risk area in January 2003, and in February 2004
the position of Senior Real Property Officer for Federal Agencies was
established by Executive Order. The President's Management Agenda
also includes a government-wide initiative aimed at improving stewardship
of Federal real property assets. With respect to the DOL, OIG audits
have highlighted opportunities for improvement in real property management.
DOL response
ETA's Office of Financial Administration Services (OFAS)
completed its first annual (physical) inventory of Job Corps capitalized
real property in January 2004, which effectively resolved differences
between Job Corps site survey data and the Capitalized Assets Tracking
and Reporting System (CATARS). Procedures are in place to ensure that
OFAS and Job Corp coordinate effectively to ensure future land acquisitions
are entered within the ETA database in a timely manner. ETA generally
agrees with the OIG that an accurate, up-to-date inventory and valuation
of State Workforce Agency (SWA) real property must be maintained. Currently,
ETA sends a letter to SWA Administrators every two years asking that ETA
property records be reviewed and updated. ETA also has a Training and
Employment Guidance Letter (TEGL) on SWA real property in the final clearance
process, which requires states to report changes and/or updates to their
real property data by November 30, 2004. States are also required to remit
the proceeds from real property sales to DOL.
Workforce Investment Act Reauthorization
The Department also faces the challenge of improving Workforce Investment
Act (WIA) programs through the WIA reauthorization process. To date
Congress has not reauthorized the WIA legislation. Prior OIG audits
identified areas in which WIA could be improved to better achieve its
goals. Based on our audit work, the recommended changes are: increase
training provider participation, improve dislocated worker program services
and outcomes, improve documentation of youth program outcomes, and better
assess states' current WIA funding availability. DOL has agreed
to most of our recommendations, but many have yet to be implemented.
DOL response
As of September 2004, the House and Senate WIA reauthorization
bills that were passed in 2003 are still awaiting conference. As noted
in the examples from specific ETA Program Offices, the Department has
taken numerous steps to address the concerns outlined in the OIG findings,
even while we await further action on WIA reauthorization. In addition
to the specific steps referenced above, ETA convened two Federal/State
Policy Forums in 2004 to discuss high-level policy issues such as those
identified by the OIG. The continued implementation of the President's
High-Growth Job Training Initiative is also helping to address these key
issues by funding innovative partnerships between the workforce investment
system, business and training providers to train adults and young people
for jobs that are in demand.
In
August 2001, President Bush called for a government that is:
- Citizen-centered, not bureaucracy-centered;
- Results oriented, not output
oriented; and
- Market based, actively promoting rather than stifling
innovation through competition.
Together, initiatives created to achieve these goals
are referred to as the President's Management Agenda (PMA). The
five government wide initiatives are: Strategic
Management of Human Capital, Competitive Sourcing, Improved Financial
Performance, Expanding Electronic Government, and Budget and Performance
Integration. In addition,
DOL is responsible for two of the PMA components found in selected departments:
Faith-Based and Community Initiatives and Federal
Real Property Asset Management. The latter was just added in June 2004.
The Office of Management and Budget (OMB) regularly assesses all Federal
agencies' implementation of the PMA, issuing an Executive Branch
Management Scorecard rating of green, yellow or red for both status and
progress on each initiative. The breakdown by initiative, comparing last
year's ratings with those for FY 2004, is indicated in the table
below. Under the OMB-led Proud to Be campaign, DOL set ambitious goals,
demonstrated measurable progress and in just nine months elevated five
of its status scores. The Department continues to be rated among the best
Cabinet agencies in overall implementation of the PMA. Highlights of achievements
associated with each initiative follow the table.
Executive Branch Management
Scorecard |
|
|
Human Capital |
Yellow
|
Green
|
Competitive Sourcing |
Red
|
Yellow
|
Financial Performance |
Yellow
|
Green
|
E-Government |
Yellow
|
Green
|
Budget & Performance Integration |
Yellow
|
Green
|
Faith-Based and Community Initiatives |
Yellow
|
Yellow
|
Real Property |
|
Red
|
Strategic Management of Human Capital
Competency models are the main criteria for rating candidates and for
conducting skills assessments for development. Managerial and employee
performance plans are being reviewed for clear links to outcome goals.
A recent survey indicated a time-to-hire of 41days.
Competitive Sourcing
DOL has an ambitious plan to compete designated commercial functions by
the end of FY 2007. In FY 2005, the plan includes 377 FTE approximately
half in Finance and Accounting and over 100 in Education and Training
functions.
Improved Financial Performance
DOL earned elevation in the last quarter of FY 2004 by improving data
integration practices. In FY 2005, the new Cost Analysis Manager tool
will capture and report data that will achieve operational and program
efficiencies. Improper payments identification and mitigation activity
has moved beyond the sampling stage; a key priority for FY 2005 is development
of approved plans for measurement of error rates and dollar amounts
for remaining programs.
Expanding Electronic Government (E-government)
DOL achieved green status by developing acceptable business cases for
all major systems in FY 2004 and by reaching other ambitious milestones.
In FY 2005, DOL plans release of a Technical Security Manual and completion
of a revised Capital Investment Plan.
Budget and Performance Integration
DOL earned a Green status score on this initiative by improving PART scores,
creating efficiency measures for all programs, developing capabilities
of full and marginal costing of performance goals and institutionalizing
use of performance results to inform funding and strategic decisions.
Faith-Based and Community Initiatives
Since 2001, DOL has awarded 417 grants totaling $140.5 million as part
of its ongoing efforts to implement the President's Faith-Based
and Community Initiative. The Department is working with workforce boards
nationwide to increase partnerships with faith-based and community organizations
that help transition hard-to-serve individuals into employment. DOL
recently invested $10 million in the Ready4Work Offender Reentry Program
to enhance training and employment services at 18 reentry sites nationwide.
The Department also published two final regulations in July 2004 designed
to ensure the equal treatment of faith-based and community groups that
partner with DOL.
Federal Real Property Asset Management
DOL's priorities for FY 2005 are development of an Asset Management
Plan and performance measures for operational costs consistent with Federal
Real Property Council standards.
|