Summary
The Trade Adjustment Assistance (TAA) program, administered by the Department of Labor (Labor), is the nation's primary program providing income support, job training, and other benefits for manufacturing workers who lose their jobs as a result of international trade. In preparation for TAA reauthorization in 2007, GAO was asked to assess several aspects of the TAA program. Specifically, we examine (1) recent trends in Labor's certification of petitions and workers' participation in training; (2) the challenges, if any, that states face in managing TAA training funds; and (3) the extent to which workers use the TAA wage insurance and health coverage benefits and the factors, if any, that limit participation.
During the past 3 fiscal years, the number of petitions certified has declined from about 1,700 in fiscal year 2004 to about 1,400 in 2006, covering an estimated 400,000 workers. The proportion of petitions certified has remained at about two-thirds. About 40 percent of the petitions were denied because workers were not involved in producing an article. While many certified workers receive training, nearly three-quarters of the states reported that enrolling workers by the training deadline was a challenge. Labor's process for allocating training funds presents significant challenges to states. Training funds allocated to states at the beginning of the fiscal year do not accurately reflect states' spending the year before or the demand for training services, in part because Labor's policy guarantees that each state will receive at least 85 percent of what it received the previous year. For example, 13 states spent virtually none of their fiscal year 2006 training funds. Not only did these 13 states receive about $41 million in fiscal year 2007, 5 of them even received larger allocations than the previous year. States also cited as a challenge the lack of flexibility to use training funds to provide trade-affected workers with case management services. Few TAA participants take advantage of the wage insurance and health coverage benefits, and several factors limit participation. While the number of new workers receiving the wage insurance benefit has increased since 2004, it remains relatively low. The major factor preventing more workers from participating is the requirement that workers find a job within 26 weeks. The number of workers receiving the health benefit is also relatively low, with about 6,900 workers enrolling for the first time in the advance health coverage benefit in 2006.
Recommendations
Our recommendations from this work are listed below with a Contact for more information. Status will change
from "In process" to "Implemented" or "Not implemented" based on our follow up work.
Director:
Team:
Phone:
Sigurd R. Nilsen
Government Accountability Office: Education, Workforce, and Income Security
(202) 512-7003
Matters for Congressional Consideration
Recommendation: To to allow states greater flexibility in how they may use their TAA funds to provide services to workers, Congress may wish to consider allowing a portion of TAA training funds to be used for case management services.
Status: In process
Comments: As of September 2007, reauthorization of TAA is pending.
Recommendation: In order to make it easier for workers to comply with the training enrollment deadline, Congress may wish to consider simplifying the deadline by specifying a single time period that commences when workers are laid off or petitions are certified, whichever is later.
Status: In process
Comments: As of September 2007, reauthorization of TAA is pending.
Recommendation: If Congress decides to extend the wage insurance benefit demonstration program, Congress may wish to consider easing some of the constraints on accessing this benefit to enable more workers to take advantage of it, including increasing the length of time workers are allowed to become reemployed, eliminating the requirement that a firm's affected workers must lack transferable skills in order for a group of workers to be certified as eligible for wage insurance, and eliminating the requirement that a significant number of a firm's workers be age 50 or over in order for a group of workers to be certified as eligible for wage insurance.
Status: In process
Comments: As of September 2007, reauthorization of TAA is pending.
Recommendations for Executive Action
Recommendation: In order to better ensure that TAA training funds are allocated to states that have demonstrated a need for training funds and have used a significant portion of the funds they have already been allocated, the Secretary of Labor should change the process for initially distributing training funds, including the initial allocation percentage and the hold harmless policy.
Agency Affected: Department of Labor
Status: In process
Comments: Labor agreed that the formula, and in particular, the hold harmless provision, should be reviewed to ensure that funds are allocated efficiently to meet training needs.
Recommendation: In order to better ensure that TAA training funds are allocated to states that have demonstrated a need for training funds and have used a significant portion of the funds they have already been allocated, the Secretary of Labor should develop procedures to better allocate the reserve funds throughout the fiscal year to enable states to carefully manage their training resources, ensuring that these reserve funds are distributed only to those who have spent or obligated a significant portion of the current fiscal year allocation.
Agency Affected: Department of Labor
Status: In process
Comments: They agreed to examine the process for distributing reserve funds throughout the year instead of waiting for states to request these funds. Labor, however, noted that it did not think that the 15 percent allocation for TAA administration should be increased to finance case management for trade-affected workers, saying that these services should be funded through co-enrollment in the Workforce Investment Act. Our report does not recommend this, but suggests that Congress consider allowing states the flexibility to use some portion of TAA training funds to provide this service.
