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Before the Subcommittee on Labor, Health and Human
Services, and Education
Committee on Appropriations
United States House
of Representatives
Washington, D.C.
February 12, 2004
Mr. Chairman, and distinguished Members of the Subcommittee, thank you
for the opportunity to appear before you today to present the Department of
Labor=s Fiscal Year (FY) 2005 integrated performance budget.
The 21st Century workplace demands a competitive and
responsive workforce. And in FY 2005, the Department of Labor (DOL)
stands ready to deliver. With enhanced employment and training
initiatives and strengthened worker protection efforts, DOL will continue to
play a critical role in accomplishing the President’s domestic agenda.
The Department’s FY 2005 budget was developed around four major
initiatives designed to make a difference in the lives of America’s
working families: Innovative Programs to Help Workers Find Jobs;
Protecting Workers with Stronger Enforcement and Accountability;
Protecting America’s Immigrant Workforce; and Building a
21st Century Department of Labor.
The total request for the Department in FY 2005 is $57.3 billion in
budget authority and 17,419 full-time equivalents (FTE). The total
request before the Committee is $14.7 billion, of which $11.9 billion is
requested for the Department’s discretionary programs. The
Department’s FY 2005 budget builds upon the Department’s three
strategic goals of A Prepared Workforce; A Secure Workforce; and
Quality Workplaces. In this FY 2005 budget, DOL addresses a
newly-developed fourth Departmental strategic goal: A Competitive
Workforce. This fourth goal focuses on equipping workers to adapt to
rapidly-evolving challenges while promoting job flexibility and minimizing
regulatory burden.
Employment and Training Programs
The FY 2005 budget for the Department provides $9.4 billion in
discretionary budget authority for the Employment and Training Administration
(ETA) and supports 1,253 FTE. This represents an increase of $27 million
above the 2004 enacted level.
A cornerstone of the Department’s goal of A Competitive
Workforce is the President’s new Community-Based Job Training
Grants.
Community College Initiative: Community-Based Job Training Grants
In FY 2005, $250.0 million is targeted for Community-Based Job Training
Grants in the Department’s Employment and Training Administration.
This is but one part of President Bush’s Jobs for the 21st
Century initiative – which provides for over $500.0 million in new
funding for education and job training programs, including expanded Pell Grants
for low-income students.
The Community-Based Job Training Grants are part of the President’s
three-part strategy to train America’s workers. Together with
Personal Reemployment Accounts and reform of Federal employment and training
programs, this initiative will help ensure that every worker in the nation who
is looking for a job can find one.
The new Community-Based Job Training Grants are employer-focused
competitive grants that will tap the expertise of the Nation’s many
community and technical colleges. Grants will support training in industries
with demonstrated labor shortages, such as health care. This initiative
will help workers wishing to retool, refine, and broaden their skills.
Workforce Training Reform
In FY 2005, the Department will continue to press for significant
improvements in Federal employment and training programs. The expiration
of the Workforce Investment Act (WIA) provides an opportunity to eliminate
redundancies, strengthen resource allocation, improve accountability, enhance
the role of employers in the national workforce system, and increase State
flexibility. In WIA reauthorization, the Department strongly supports
consolidating three programs into a single adult training grant, which will
better serve both workers and job seekers.
Personal Reemployment Accounts
The Department’s FY 2005 budget for ETA also includes $50.0 million
for Personal Reemployment Accounts. This incentive-based program will
provide individuals more control over their return-to-work efforts. Under
the plan, States would offer up to $3,000 to eligible unemployed workers –
resources that can be applied to the training and services that best benefit
each individual. As an incentive to return to work as soon as possible,
recipients would keep the balance of the account as a cash bonus if they find a
job within 13 weeks.
Prisoner Reentry Initiative
Beginning in FY 2005, the Department of Labor teams with the Departments
of Justice and Housing and Urban Development and faith-based and community
organizations on a four-year, $300.0 million program to guide ex-offenders
from incarceration to community life and full-time
employment. The President’s FY 2005 Budget includes $35 million for
the Prisoner Re-entry Initiative, supplemented by resources that have been used
for re-entry activities for youthful offenders. The new initiative will
help ex-offenders find and keep jobs, secure transitional housing, and receive
mentoring and be guided by the belief that everyone deserves a second
chance.
Youth
In FY 2005, a total of $2.6 billion is requested for employment and
training programs for Youth. This investment, which is slightly above the FY
2004 level, will help young people make a successful transition to the world of
work and family responsibility. The proposal reflects the vision of a
reformed youth program that is contained in the Administration’s Workforce
Investment Act reauthorization proposal. The reformed Youth Grants
program will be funded at $1.0 billion and in FY 2005 will serve an estimated
337, 000 youth through Targeted Formula Grants and National Challenge
Grants. The proposal will minimize overlap between the DOL and the
Department of Education by targeting all of DOL’s formula resources to
out-of-school youth programs and national grant resources to non-schooland
out-of-school youth programs that have proven effective.
DOL’s youth investments will focus on providing young people with a
strong, core academic foundation in conjunction withappropriate post-secondary
skill certifications or degrees. These resources will help achieve
ETA’s performance goal of ensuring that 65 percent of participants in the
Youth Grants program who are not in school or employed at registration will
enter employment or enroll in post-secondary education, the military, or
advanced training in the first quarter after leaving the program. The
program will also ensure that 40 percent of students will attain a General
Equivalency Diploma (GED), high school diploma, or certificate; 40 percent will
achieve gains in literacy or numeracy skills; and the average cost per
participant will be $2,966.
ETA’s proven Job Corps program will continue to provide intensive
skill training, academic and social education, and support to an estimated
68,400 participants at 122 centers in 2005. The budget request is $1.6
billion – a $16.1 million increase above 2004. For 2005, an
estimated 85 percent of Job Corps graduates will enter employment or enroll in
post-secondary education or advanced training after leaving the program; 61
percent of students will attain a GED, high school diploma, or certificate; 40
percent of students will achieve gains in literacy or numeracy skills; and the
average cost per participant will be no higher than $22,766.
Adults
A total of $3.3 billion is requested in FY 2005 for ETA’s
employment and training programs for Adults. This request is an increase
in funding for Adults from 2004. It encompasses a consolidation of three
grant programs--the WIA Adult Program, WIA Dislocated Worker Program, and the
United States Employment Service--as well as the new Community-Based Job
Training Grants and Personal Reemployment Accounts.
The new Consolidated Adult and Dislocated Worker State Grants program
will maintain Formula Grants and a National Reserve, but will increase
States’ and the Secretary of Labor’s ability to target resources,
will facilitate coordination, and will eliminate duplication in the provision
of services to adults. This will help achieve ETA’s performance goal
of ensuring 70 percent of individuals unemployed at the time of registration in
the Consolidated Adult and Dislocated State Grant program will be employed
after program exit. The budget authority requested, together with
unexpended carryover, is expected to support 19,000,000 participants.
Reforming Foreign Labor Programs
The President’s temporary worker proposal will significantly reform
the current work-based immigration system. In addition to preparing U.S.
workers for jobs, ETA will work to improve job matching systems. As part
of the President’s proposal, ETA will develop a quick and simple system
for employers to search for American workers, before looking at other
applicants. An improved America’s Job Bank will be the cornerstone
of matching willing foreign workers with willing employers.
In addition to the new temporary worker program, ETA’s reforms to
the permanent foreign labor certification program will more effectively address
employers’ specialized needs for workers when American workers are not
available. ETA will reduce the existing backlog of petitions, prevent
future backlogs, and strengthen anti-fraud protections.
Strengthening the Unemployment Insurance Safety Net
The Administration is taking concrete steps to fortify the Unemployment
Insurance (UI) system, recognizing that it is critical to workers’
security as a safety net during economic downturns. The FY 2005 budget
request includes a new $20.0 million program to allow staff in One-Stop Career
Centers to conduct 50 percent more face-to-face eligibility reviews. More
eligibility reviews will reduce the number of erroneous payments, resulting in
annual UI savings of up to $400.0 million. The Department will also pursue
legislation to end “SUTA Dumping,” an abusive practice in which some
employers with track records of layoffs find ways to avoid paying their fair
share of state unemployment taxes, and to allow State UI agencies access to the
National Directory of New Hires, which would allow quick detection of
individuals who cheat the system by returning to work and continuing to collect
UI.
Veterans’ Employment and Training
These efforts are complemented by the Department’s FY 2005 request
to support veterans employment programs, help service members transition into
the civilian labor force when they leave active duty, and protect
veterans’ employment and reemployment rights. The total request is
$221 million and 250 FTE. This reflects a $2 million increase over FY 2004
funding. Included in this request is $19 million to assist homeless
veterans.
Worker Protection
Mr. Chairman, I remain deeply committed to enforcing the many laws that
protect workers’ safety and economic security. To that end, the
Department is proposing a $40.0 million increase in FY 2005. This
increase will enable the Department to better protect workers’ retirement
savings; ensure worker safety and health; protect workers’ pay, and
protect union member rights. The Department is also proposing increases in
certain civil monetary penalties for entities that commit repeated or flagrant
violations of labor laws. While the vast majority of employers want to
provide safe and fair workplaces, others only do so on the threat of
enforcement or strong sanctions. Reforming the Department’s civil
monetary penalties will strengthen our ongoing enforcement and compliance
assistance efforts by providing real deterrence and eliminating the practice of
treating civil monetary penalties as simply a “cost of doing
business.”
I am also very committed to preventing violations of our laws by
increasing our compliance assistance efforts. During the past two years,
the Department has initiated a comprehensive program to reach out to employers
and employees to educate them about our Nation’s employment laws. We
have created a new era of responsibility at the Department of Labor to help the
regulated community understand our comprehensive rules and regulations.
In FY 2005, these compliance assistance and enforcement initiatives will
also better protect America’s immigrant workforce. An improved labor
certification process will complement these important efforts. This will
better match willing workers with willing employers.
Employee Benefits Security Administration
The Employee Benefits Security Administration continues to
lead the way in protecting the Nation’s retirement and health benefits
security. The FY 2005 budget includes $132.3 million and 960 FTE for EBSA
– an $8.3 million increase. EBSA protects the integrity of pensions,
health plans, and other employee benefits for more than 150 million
people. These FY 2005 resources will allow EBSA to enhance enforcement
and participant assistance. We will conduct 18 percent more
investigations than in FY 2003. We will also continue to accelerate
processing the exemptions that plans need for certain financial transactions,
while also issuing more of these exemptions, determinations, and other
guidance.
To complement the FY 2005 increases, the Administration will continue to
press for enactment of the President’s retirement security plan, which
will give workers more and better information on their retirement savings and
strengthen workers’ abilities to manage their future by providing more
freedom to diversify investments. And as President Bush referenced in his
State of the Union address, we look forward to working with Congress to advance
legislation creating Association Health Plans. These Plans are key to
reducing the costs of purchasing and providing health benefits, giving more
working families access to quality health care through their employers,
especially smaller employers.
Employment Standards Administration
Funding for the Employment Standards Administration (ESA) in FY 2005
will increase by $17.9 million – or about four percent compared with FY
2004. Of the new funding, $6.5 million will finance initiatives to
improve enforcement and compliance assistance, and ESA-wide data systems
support.
Wage and Hour Division
The FY 2005 budget request for ESA’s Wage and Hour Division is
$165.9 million and 1,458 FTE – an increase of nearly four percent over FY
2004. The Wage and Hour Division is responsible for the administration
and enforcement of a wide range of laws that collectively cover virtually all
private and state and local government workplaces. With performance goals
of increasing compliance in low-wage industries and reducing employer
recidivism, Wage and Hour activities include obtaining compliance with the
minimum wage, overtime, child labor, and other employment standards under the
Fair Labor Standards Act, and many other laws including the Family and Medical
Leave Act. The budget includes $1.1 million and 12 FTE to expand the
Division’s targeted investigations to other low-wage industries that
typically employ the most vulnerable workers; $0.3 million and 2 FTE for
compliance assistance to small employers and underserved communities,
particularly those where English is their second language, to encourage
voluntary compliance; and $0.4 million and 2 FTE to enable Wage and Hour to
update its rules to better protect workers and ensure that its standards remain
relevant and useful for tomorrow’s workplaces. The ESA request also
includes a proposal to increase the civil monetary penalties for child labor
violations that cause the death or serious injury of minors. Fines will
be raised from $11,000 to $50,000, and to $100,000 for willful or repeat
violations.
Office of Federal Contract Compliance Programs
The FY 2005 budget request for ESA’s Office of Federal Contract
Compliance Programs (OFCCP) is $82.1 million and 749 FTE – an increase of
more than three percent over FY 2004. OFCCP is responsible for ensuring
equal employment opportunity and non-discrimination in employment based on
race, sex, religion, color, national origin, disability or veteran status for
businesses contracting with the Federal government. The budget request
includes $0.4 million to start up the redesign of the program’s database
system to enable OFCCP to more effectively use its resources and improve the
program’s strong enforcement record. This increase will also assist
in meeting the program’s performance goal of reducing the incidence of
discrimination among Federal contractors.
Office of Labor-Management Standards
An additional worker protection aspect of the Department’s 2005
budget is a $5.0 million increase for ESA’s Office of Labor-Management
Standards (OLMS), $3.9 million of which will restore OLMS staffing to better
protect union members’ rights and financial interests. These
additional resources will support the administration of labor union reporting
requirements established by the Labor Management Reporting and Disclosure Act
(LMRDA) and DOL regulations, including expanded compliance assistance
activities and the auditing of filed reports. The ESA request also includes a
proposal to authorize OLMS to impose civil penalties on unions and others that
fail to file their required financial reports on a timely basis.
Authorizing civil monetary penalties is intended to protect union members’
right to know, and improve compliance with the filing requirement, not penalize
inadvertent lapses.
The additional FY 2005 resources will also enable OLMS to
expand its ongoing electronic government initiatives and will reduce
administrative burdens on labor organizations. Further, these resources
will support continuing efforts to advance electronic filing and Internet
posting of union financial statements required under the LMRDA.
Office of Workers’ Compensation Programs
ESA’s Office of Workers' Compensation Programs (OWCP) administers
disability compensation programs, which mitigate hardship caused by
work-related injuries or disease, through the provision of wage replacement and
cash benefits, medical treatment, vocational rehabilitation, and other benefits
to certain workers (or their dependents or survivors). In FY 2005, DOL
requests $133.8 million and 1,160 FTE to administer the Federal Employees’
Compensation Act (FECA), Longshore and Harbor Workers’ Compensation, and
Black Lung Benefits programs. The Department also requests $40.8
million and 300 FTE to administer the Energy Employees’ Occupational
Illness Compensation Program Act (EEOICPA).
The Budget re-proposes legislative changes to improve the
FECA program, including changes that adopt best State practices; improve
program fairness; and speed claims processing. These proposals would
result in ten-year Government-wide savings of more than $573.0 million.
The Budget also re-proposes legislation to restore the long-term solvency of
the Black Lung Disability Trust Fund by restructuring the Trust Fund debt,
which is projected to exceed $9 billion in FY 2005.
Occupational Safety and Health Administration
The cornerstone of worker safety is the Occupational Safety and Health
Administration, which will continue to use a balanced approach of strong, fair
and effective enforcement; outreach, education, and compliance assistance; and
cooperative and voluntary programs for employers and employees. This balanced
approach has proven to be highly effective. In 2002, workplace fatalities
decreased by 6.6% to a historical low, and the injury and illness was 5.3 per
100 workers.
The FY 2005 OSHA budget request is $461.6 million and 2,238 FTE.
This represents a $4.1 million increase to better accomplish the
Department’s occupational safety and health mission.
Consistent with its strategic goals, OSHA will focus on the most serious
hazards and dangerous workplaces and expand compliance-assistance
opportunities. To that end, DOL is seeking a $4.9 million increase to
expand its OSHA’s Federal Compliance Assistance efforts. This
activity supports a variety of cooperative programs, training, and outreach to
provide compliance assistance to employers and employees – particularly
small businesses. The total request for Federal compliance-assistance
activities is $71.4 million and 358 FTE. The Agency will also assist
employers by continuing important programs like the Voluntary Protection
Program and by seeking a $1.7 million increase for the on-site Consultation
Program for small employers to encourage safe and healthy
workplaces. Through its compliance assistance efforts, OSHA works
to help employers and employees recognize that safety and health adds value to
their businesses and their lives.
OSHA’s FY 2005 budget request includes $16.1 million to meet the
commitments of its regulatory agenda and to develop and issue guidance products
to better protect employees from workplace hazards. The budget request
for OSHA’s Federal Enforcement activity is $171.0 million and 1,581 FTE
– a $5.0 million net increase over FY 2004 that includes $2 million to
support the Agency’s enforcement of 14 whistleblower statutes, which have
produced an increasing number of complaints in recent years. OSHA’s
Federal Enforcement activity increases compliance with workplace standards
under the Occupational Safety and Health Act of 1970 through the on-site
inspection of work places. OSHA will continue to target inspections based
on the worst hazards and the most dangerous workplaces. OSHA will also
assist other Federal agencies in establishing and maintaining occupational
safety and health programs for Federal workers, including the President’s
recently announced Safety, Health and Return-to-Employment, or S.H.A.R.E.,
initiative, which creates a strong and visible incentive for Federal agencies
to look more carefully at workers’ compensation costs and workplace injury
rates.
Mine Safety and Health Administration
In 2003, mining fatalities were at their lowest levels since such
statistics were first recorded in 1910. DOL will build upon these
successes in FY 2004 and 2005. The FY 2005 budget request for the
Department’s Mine Safety and Health Administration (MSHA) is $275.6
million and 2,334 FTE – an increase of $6.7 million. These resources
will bolster MSHA’s mission to protect the safety and health of the
Nation's miners through enforcement of the Federal Mine Safety and Health Act
of 1977. DOL will also seek to increase MSHA’s Civil Monetary Penalties to
better protect the Nation’s workers; the maximum penalty for flagrant
violations will be raised from $60,000 to $220,000. The resources will also
allow MSHA to continue its progress in reducing the fatal injury incidence rate
by 15% and the all-injury incidence rate by 50 percent from the baselines by
the end of FY 2008.
The FY 2005 request for MSHA’s Coal Mine Safety and Health activity
is $114.9 million and 1,081 FTE. The Coal Mine Safety and Health activity
is responsible for ensuring the safety and health of the Nation's coal miners
through special emphasis safety programs, compliance and training assistance,
and periodic regular inspections and special investigations. This request
includes an increase of $0.3 million to produce an updated Engineering and
Design Manual, which will compile available information on the design,
construction, maintenance, and monitoring of coal waste impoundments.
A total of $66.8 million and 617 FTE is requested in FY 2005 for
MSHA’s Metal and Nonmetal Mine Safety and Health activities. This is an
increase of nearly $800,000 over FY 2004. These activities promote a safe and
healthy working environment in the Nation's metal and nonmetal mines and mills
- and represent the fastest growing segment of the mining industry. MSHA
will accomplish this goal through compliance and training assistance, periodic
regular inspections, and special investigations.
Bureau of International Labor Affairs
The Department’s FY 2005 request for the Bureau of International
Labor Affairs (ILAB) of $30.5 million will allow ILAB to continue to
fulfill the mandates of the Trade Act of 2002 by assisting in the negotiation
of labor provisions in trade agreements; provide technical assistance to
countries seeking trade agreements with the United States; and produce reports
on countries’ labor laws and practices and on the economic effects of
trade agreements on labor. In addition, the request will allow ILAB to continue
its efforts to combat exploitative international child labor, including child
soldiering, through modest grants and close oversight of the more than $250
million in prior-year grants that are still active. ILAB will continue to
conduct research and develop policy on trade and immigration issues, as well as
engage in a number of new initiatives aimed at supporting the President’s
foreign policy priorities.
Office of Inspector General
The Department’s FY 2005 request for the Office of Inspector
General (OIG) is $69.9 million and 480 FTE – an increase over FY
2004. This includes a $4.3 million increase for OIG to protect the
financial integrity of U.I. benefits and prevent organized crime influence in
labor organizations.
The OIG budget also includes resources for audit; program fraud
investigations; labor racketeering; special evaluations and inspections of
program activities; and executive direction and management. The OIG
performs audits of the Department's financial statements, programs, activities,
and systems to determine whether information is reliable, controls are in
place, resources are safeguarded, funds are expended in a manner consistent
with laws and regulations and managed economically and efficiently, and desired
program results are achieved.
Helping Workers Balance Work and Family
In FY 2005, the Department of Labor is pleased to play a role in the
President’s support for families with a $5.0 million request to promote
greater use of telework and flexible work arrangements that can help
individuals balance the demands of work and family. As the private sector
addresses this issue, DOL can play a role in promoting these family-friendly
efforts.
Building a 21st Century Department of
Labor
The President’s FY 2005 budget will allow us to position our agency
as a 21st Century Department of Labor. It provides $25.0
million for acquiring a new core Financial Management System to better serve
our internal and external clients. We will also build upon the proven
successes of the Department’s Information Technology cross-cut – for
which we will apply $33.6 million. We are also requesting $10.1 million
for the Department’s Management cross-cut initiatives. Both of these
initiatives strengthen the Department’s ability to serve its customers and
allow the Department to operate more efficiently by reducing duplicative agency
requests and implementing Department-wide management strategies.
Implementing the President’s Management Agenda
Before I close today, Mr. Chairman, I also want to highlight the
Department’s ongoing efforts to implement the President’s Management
Agenda – as well as to discuss our recent assessments and actions
resulting from the Program Assessment Rating Tool (PART).
As you know, the President's Management Agenda is an aggressive strategy
for improving the management of the Federal government by focusing on five
management areas across the government where the most progress can be
made. The five government-wide areas are: Strategic Management
of Human Capital; Competitive Sourcing; Improved Financial
Performance; Expanded Electronic Government; and Budget and
Performance Integration. In addition, the Department is one of a
select few agencies responsible for implementing a sixth Agenda
component: Faith-Based and Community Initiatives.
The Department continues to make significant progress in its ongoing
implementation of the President’s Management Agenda. As of December
31, 2003, DOL has four Green scores and one Yellow score on the
scorecard that tracks our progress in implementing the five government-wide
initiatives.
Program Assessment Rating Tool
At the core of the Budget and Performance Integration component
of the President’s Management Agenda is the need to improve government
programs by focusing on results. As such, the Program Assessment Rating
Tool (PART) has been used to assess approximately 40 percent of Federal
programs. As part of this process, DOL programs that were first reviewed
in calendar year 2003 included the Mine Safety and Health Administration; the
Employment and Training Administration’s Unemployment Insurance and
Migrant and Seasonal Farmworkers programs; and the Employment Standards
Administration’s Wage Determination and Black Lung programs. Each
program was rated on overall effectiveness. Highlights and results of the
PART reviews can be found in the agency-specific sections of the
Department’s budget. We are working to address program weaknesses
identified during the 2003 round, and lay the groundwork for this year’s
PART assessments.
Conclusion
Mr. Chairman, this is an overview of what we have planned at the
Department of Labor for FY 2005. I will be happy to answer any questions
you may have.
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