DOL Annual Report, Fiscal Year 2008
Performance and Accountability Report

Strategic Goal 4: Strengthened Economic Protections

Protect and strengthen worker economic security through effective and efficient provision of unemployment insurance and workers' compensation; ensuring union transparency; and securing pension and health benefits.

DOL increases the economic security of America's working families by administering payment of temporary benefits for the unemployed, protecting Federal workers from the economic effects of work-related injuries and illness; ensuring that labor union operations are transparent; and protecting employee benefits plans against fraud, abuse, and mismanagement, and insuring defined benefit pension plans. These operations are carried out by three DOL agencies and a government corporation whose board is chaired by the Secretary of Labor:

• Employment and Training Administration (ETA),
• Employment Standards Administration (ESA),
• Employee Benefits Security Administration (EBSA), and
• Pension Benefit Guaranty Corporation (PBGC).

Debit cards put unemployment payments into the hands of some beneficiaries faster, more safely and securely than checks because not all claimants have bank accounts. As part of its long-standing practice of promoting technological improvements in the Unemployment Insurance (UI) program, in FY 2006, DOL provided $1.79 million in grants to 20 States for the implementation of debit card and/or direct deposit for UI Benefit payments. Forty-three States now use debit cards, are pilot testing or planning for their use. Forty-four States are making UI benefit payments by direct deposit or planning to do so. Texas reports that all of its benefits are paid by debit card while New Mexico and Louisiana make at least 80 percent of their payments by debit card. [Photo credit: DOL/ETA]

For these agencies, protecting America's workers means protecting their economic security. DOL provides benefits and enforces laws that provide a safety net for workers and ensure transparency among the unions that represent them. Every employee faces unforeseen risks, and these agencies work to ensure that unemployed workers receive benefits; that workers in special industries receive compensation when injured or fall victim to job-related illnesses; that pension contributions and health benefits are secure; and that unions deliver honest elections and financial records. Here are a few highlights of FY 2008 results:

For the Unemployed

• 65 percent of unemployed workers found jobs within six months of their first benefit payment.
• For the second year in a row, over 85 percent of new employers received timely unemployment insurance tax liability determinations.

For the Injured or Ill Worker

• Federal employees lost fewer days of work due to a work-related injury or illness — 41 per 100 employees, compared to over 60 just a few years ago.
• Black Lung and both types of nuclear workers' claims (energy program Parts B and E) were processed eight percent, 29 percent, and five percent faster, respectively, than last year.
• Nearly 95 percent of final decisions on energy program claims were made timely — up more than seven percentage points from FY 2007.

For Union Members

• Although targets for further improvement were not reached, the fractions of acceptable union annual reports and unions with democratic officer election procedures both remained above 90 percent.

For Workers with Pensions

• Pension insurance program customers' satisfaction continued to increase — to 72 percent for premium filers, 80 percent for trusteed plan participants, and 89 percent for retiree beneficiaries (from 68 percent, 79 percent, and 85 percent, respectively, in FY 2005).

For more specific information on the programs, see the Performance Goal narratives.

The chart below presents FY 2008 achievements as measured by performance goals and indicators. The performance goal number, goal statement, and responsible agency appear on the left axis, the total percentage of indicator targets reached or improved is indicated in the horizontal bars, and the goal result is on the right axis. Corresponding strategic goal and DOL-wide averages are presented at the bottom of the chart. If the goal is achieved, the bar will run all the way across because, by definition, all indicator targets were reached. If the goal is substantially achieved, the total can range from 80 percent to 100 percent and includes indicators for which the target was not reached, but results improved over the previous year.

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DOL achieved or substantially achieved two of the five performance goals in Strategic Goal 4 (40 percent) — below the 50 percent Department-wide average. The Unemployment Insurance program did not achieve its goal; it reached two of its four indicator targets. ESA's Office of Workers' Compensation Programs (OWCP) substantially achieved its goal by reaching nine of 10 targets for Federal Employees' Compensation Act, Longshore and Harbor Workers' Compensation, Black Lung Benefits and Energy Employees Occupational Illness Compensation programs. ESA's Office of Labor-Management Standards (OLMS) did not achieve its performance goal; the targets for its three indicators were not reached. EBSA achieved its goal by reaching all targets. PBGC did not reach its goal but did reach three of four targets.

The following table provides net costs for all performance goals and indicators associated with this strategic goal.⁵²

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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.

Performance Goal 08-4A (ETA)

Indicators, Targets and Results

Source(s): Payment Timeliness: 9050, 9050p, Reports Payment Accuracy: Benefit Accuracy Measurement (BAM) program and ETA 227 Report, Facilitate Reemployment: ETA 9047 Report, New Status Determinations Timeliness: ETA 581 Report.
Legacy Data: Some indicators not shown for FY 2003-05. Complete indicators, targets and results for FY 2003-05 are available in the FY 2006 report at http://www.dol.gov/_sec/media/reports/annual2006/PGD.htm. See Performance Goal 06-2.2B.
Note: Costs for this goal are net costs as defined in a footnote to the Cost of Results discussion in Management's Discussion and Analysis. Approximately $2 billion of the net cost is for administration; the rest is for benefit payments to individuals. Costs are not allocated to the indicator level because performance indicators do not map to administrative cost categories or benefit payments. See Analysis and Future Plans section in the following narrative.

Program Perspective and Logic

By temporarily replacing part of unemployed workers' lost wages, the Federal-State Unemployment Insurance (UI) system minimizes individual financial hardship resulting from unemployment and stabilizes the economy during economic downturns. States operate their own programs under their own laws, which must also conform to and substantially comply with Federal law. As the Federal partner, DOL provides program leadership, allocates administrative funds, provides technical assistance, and exercises performance oversight to ensure that State partners meet Federal UI laws and regulations. Measuring efficiency and effectiveness of States' administrative operations is an important aspect of program management. For both workers and employers, success is measured by timely payment of benefits; accurate payments; prompt determination of new employers' tax liabilities; and promoting reemployment of claimants in suitable work.

As economic conditions change, the resulting workloads affect many aspects of the UI system performance. For example, when unemployment rises, more claims are filed and UI payment timeliness generally declines. On the other hand, when business creation slows, it reduces the number of new employer tax accounts and the timeliness of tax liability determinations generally improves. In addition, non-economic events can be extensive enough to affect aggregate UI system performance; an example was the series of hurricanes that hit the Gulf region during 2005. Performance targets are based on the Administration's economic assumptions, which are subject to change.

Analysis and Future Plans

Based on the most recent data covering 12 months of performance, the UI system did not reach FY 2008 targets for first payment timeliness and claimants' reemployment rate. However, the targets for new employer tax liability determinations and detection of overpayments were reached. First payment timeliness declined in California, Georgia, Indiana, Kansas, Massachusetts, Minnesota, Missouri, New Hampshire, Rhode Island, Virginia, and Washington. The decrease in performance is largely attributable to increased workloads. The number of UI first payments made from October 1, 2007 to September 30, 2008 (8.9 million) was 17.1 percent higher than those made during the preceding 12-month period (7.6 million). State agencies' overpayments established for recovery increased by 1.7 percentage points over the FY 2007 result. Overpayments estimated by the Benefit Accuracy Measurement (BAM) program decreased by $10.6 million, from 5.9 percent to 5.6 percent of UI benefits paid, while overpayments established for recovery by the state agencies increased by $25 million. The reemployment rate of 64.9 percent for claimants reemployed in CY 2007 is 0.2 percentage points below the target for FY 2008, primarily due to changes in the national unemployment rate.

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To meet all its performance goals, the Department has several initiatives under way:

• Address the largest cause of UI improper payments — claiming benefits after returning to work — by continuing to promote the use of the National Directory of New Hires (NDNH) by all States.
• Address the second largest cause of overpayments — errors in handling separation issues — by continuing two efforts: facilitating the design and implementation of the Unemployment Insurance Separation Information Data Exchange System (SIDES), which is expected to provide more timely and complete separation information; and coordinating design and development of additional State adjudication training courses to reduce claimant eligibility determination errors.
• Facilitate a National UI Benefits and Adjudication Conference for States to share best practices and discuss new strategies to improve UI benefits program performance and payment accuracy.
• Issue guidance to the states to address legislative requirements of the Unemployment Compensation Integrity Act of 2008, which authorizes recovery of some UI fraud overpayments by offsetting Federal income tax refunds.

In FY 2008, the UI system costs were $10 billion higher than in FY 2007. Approximately $4 billion of this increase is attributable to the Emergency Unemployment Compensation program. The rest of the increase reflects the increase in the average unemployment rate from 4.5 percent to 5.3 percent. Overall, benefit payments rose 32 percent to $42.281 billion in FY 2008 from $32.069 billion in FY 2007. Administrative costs increased by seven percent, from $2.578 billion to $2.755 billion. DOL collects information on State spending of UI grant funds; however, the categories in which cost data are collected are generally functional or workload categories — initial claims, continued claims, eligibility determination, appeals, employer accounts, tax audits, overhead, and infrastructure costs such as space and information technology. These categories do not align well with UI performance measures, which span multiple functions. For example, the cost of timely first payments would include some portion of the costs attributable to initial claims, eligibility determinations, employer accounts, tax audits, and a share of overhead and infrastructure costs. Therefore, separating costs by performance indicator is not currently feasible.

PART, Program Evaluations and Audits

Data Quality and Top Management Challenges

Data quality for this performance goal was rated Very Good.⁵⁶ Strengths of the data include timeliness and reliability, which result from the use of consistent data collection and reporting methods. Quality controls and procedures for verifying program data could be strengthened to reduce instances of overpayment and worker misclassification by assuring that definitions are uniformly applied among the States and that performance data are correctly reported. In FY 2008, ETA implemented a UI Data Validation (DV) program to verify that UI activities are reported according to prescribed definitions. States are required to submit their DV results as part of the State Quality Service Plan (SQSP) process. States that fail DV must describe in the SQSP Corrective Action Plan or narrative the actions they plan to take to pass DV.

Reducing improper payments and improving the integrity and solvency of the UI program remain among the Department's top management challenges (see Safeguarding Unemployment Insurance in the Top Management Challenges section of Management's Discussion and Analysis). DOL continues to aggressively address the leading cause of overpayments — individuals who claim benefits after returning to work — by promoting use of the NDNH, which provides state agencies with information on the claimants' employment status. As of July 1, 2008, 48 State agencies submitted files of UI payments for NDNH matching as part of their UI integrity operation. To improve the accuracy of the overpayment detection measure, all States are required to cross-match paid UI claims selected for BAM audits with the NDNH data. As of July 1, 2008, 45 state BAM programs had implemented NDNH matching and three additional states were matching with their State Directory of New Hires.

The weakening in the economy has affected State trust fund accounts. More than half of the States reported a negative cash flow in the 12 months ending in March 2008, and two States borrowed from the Federal Unemployment Account this fiscal year. Overall, balances are expected to decline seven percent this fiscal year. Several existing and proposed measures are expected to improve trust funds' solvency. All States' UI tax schedules are indexed; when trust fund balances fall below predetermined levels, tax rates rise to increase contributions. Ongoing efforts to prevent, detect and recover overpayments will conserve scarce funds. Finally, DOL is in the process of implementing a regulation requiring a State to meet a funding goal in order to get the interest-free cash-flow loan — which the State needs to make benefit payments. This requirement will provide an incentive to States to improve solvency and will establish a DOL position on what constitutes an adequate fund balance.

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Reduce the consequences of work-related injuries.

Performance Goal 08-4B (ESA)

Indicators, Targets and Results

Source(s): FECA Integrated Federal Employees' Compensation System, Federal agency payroll offices, Office of Personnel Management employment statistics, FECA Central Medical Bill Processing system, Milliman USA Cost Index Report, FECA Tele-communications system standard reports, FECA district office and national MIS reports, Longshore Case Management System, Black Lung Automated Support Package, and Energy Program Case Management System.
Legacy Data: Some indicators not shown for FY 2003-07. Complete indicators, targets and results for FY 2003-06 are available in the FY 2006 report at http://www.dol.gov/_sec/media/reports/annual2006/PGD.htm. See Performance Goal 06-2.2C. Complete indicators, targets and results for FY 2007 are available at http://www.dol.gov/_sec/media/reports/annual2007/SG4.htm. See Performance Goal 07-4B.

Program Perspective and Logic

Through the Employment Standards Administration's Office of Workers' Compensation Programs (OWCP), DOL protects workers, their dependents and survivors from the economic effects of work-related injuries and illnesses by providing wage replacement and cash benefits, medical treatment, vocational rehabilitation and other benefits through four disability compensation programs:

• Federal Employees' Compensation Act (FECA) program for civilian Federal workers,
• Longshore and Harbor Workers' Compensation for private-sector maritime workers,
• Black Lung Benefits program for coal miners, and
• Energy Employees Occupational Illness Compensation (EEOIC) for nuclear weapons employees of the Department of Energy or its contractors.

OWCP activities emphasize adjudicating claims and paying benefits accurately and in a timely manner, efficiently mediating disputed claims, assisting with injury recovery and return to work, controlling costs, providing responsive informational and other assistance to customers, and assisting employers with regulatory compliance and participation in program administration. OWCP examines the relationships among investments, activities and program results to allocate funds to achieve program goals.

Performance measures for this goal track the outcomes of key OWCP strategies and program priorities. Lost production day (LPD) rates capture time away from work in Federal employee injury cases. FECA uses nurse case managers and other strategies to coordinate medical care and assist with return to work to significantly reduce the LPD. Communications goals increase customer access to program information and responsiveness to customer requests for assistance. Periodic roll management generates benefit cost savings through the careful review of cases to determine if continued disability status is warranted and to determine the reemployment potential of those currently receiving compensation payments. The FECA and Black Lung programs measure themselves against nationwide indices to gauge their effectiveness in containing medical benefit costs. The Black Lung program measures average time to render claims decisions and its efficiency in producing quality decisions. By reducing the average processing time for disputed claims, the Longshore program contributes to its chief outcome of resolving claims appropriately and equitably at minimum cost to all parties. Effective dispute resolution works to reduce extended hearings and appeals processes by raising the quality of communications, medical evidence, mediation services, and clarity of decisions. The Energy program measures processing efficiency and service delivery time using two measures that track average days to process initial claims and the share of final decisions produced timely. Target levels take into consideration the differing complexities of Energy cases according to medical exposure and reported illness.

Several external factors challenge the achievement of the OWCP program mission. The number and types of jobs available for return to work placement are driven by employment and business technology trends — the modernization of U.S. Postal Service (USPS) operations and resulting elimination of traditional jobs and reductions in employment levels is one compelling example as evidenced by the recent increase in the LPD rate. These changes determine both the availability of jobs and their skill requirements for injured workers trying to return to duty. The trend in the nature of new injury cases and the type of assistance they require reflect an aging workforce. For example, while musculoskeletal injuries still predominate, back injuries that used to be the most common, are now accompanied by knee, hip and shoulder problems. The cost of medical care continues to rise with better and earlier diagnostic medical technology, medicines and treatment procedures. The nation's expanded use of private contractor resources to support the wars in Iraq and Afghanistan has increased the number of deaths and injuries compensable under the Defense Base Act (DBA) and the War Hazards Compensation Act, both of which are administered by OWCP. New technologies and higher customer expectations continue to challenge OWCP to provide greater information at higher access speeds. The EEOIC program structure mandates that certain cancer claims be transferred to the Department of Health and Human Services' National Institute for Occupational Safety (NIOSH). Length of processing times in these cases impacts EEOIC program performance.

Analysis and Future Plans

DOL substantially achieved this performance goal in FY 2008 by reaching nine of ten targets. The following results discussion is organized in three categories: Return to Work, Containing Program Costs, and Customer Service.

Returning Injured Employees to Work
Shortening the time out of work for injured workers is a major indicator of the FECA program's effectiveness. The LPD is measured for each Federal agency's cases within the first year from date of injury against the employment levels of those agencies. The rate (per 100 employees) is derived from that calculation. Both of FECA's LPD targets were met in FY 2008 and the program remains on track to achieve its long-term LPD goals. The significant decrease in the average length of disability in FECA's Quality Case Management cases — over 20 percent reduction in the past decade — contributed to this success. Under the President's Safety, Health and Return-to-Employment (SHARE) initiative (for which Secretary Chao has the government-wide lead), non-Postal agencies reduced injuries, including an annual decrease in new lost-time injury claims over the last four years, and LPD rates. While the Postal Service LPD remains higher than most agencies, FECA met its LPD target in FY 2008.

USPS continued to report high levels of new lost-time injuries. Its employment levels have declined due in part to the automation of many job functions. USPS is also reviewing limited duty positions for elimination. Overall, fewer positions are available for reemploying and transitioning injured workers. In response, FECA adjusted out-year LPD targets to capture these external factors and will track additional measures linked to specific USPS strategies. For example, FECA established an operational goal for Postal workers affected by job eliminations who return to the FECA payment rolls. Through the vocational rehabilitation program, FECA aims to increase the number of claimants placed in jobs with new employers.

Containing Program Costs
Measured in financial terms, FECA outcomes reflect the efficiency and quality of benefit payment activities and the impact of case management and benefit services. FECA continues to meet the Periodic Roll Management (PRM) savings goal through its directed review of long-term disability cases to determine continued eligibility. Nearly half of the over 3,000 cases reviewed in FY 2008 produced cost savings of $17 million. Since 1999, DOL has saved well over $1 billion through PRM. FECA effectively manages medical costs through centralized bill processing, strengthened reviews of treatment authorization requests, fee schedules, and stronger automated edits and other controls. In FY 2008, the indexed rate of change in FECA average medical treatment costs indicator reached its target; it rose by 3.2 percent compared to the change rate of national health care costs of 8.5 percent projected by the Milliman USA Health Cost Index. Comparing the FECA medical cost growth rates to the nationwide rates since FY 2000 equates to (conservatively) a cost reduction of nearly $30 million annually.

The Black Lung Program reported baseline results of $3,281 for the average medical cost containment indicator in FY 2008. The indicator compares the annual rate of change in average Black Lung Program medical costs for eligible miners to the annual change rate reported in the National Health Expenditure Projection (NHEP), a nationwide index published by Centers for Medicare and Medicaid Services, Office of the Actuary. The Black Lung Program did not reach its FY 2008 target to maintain costs at or below the NHEP projection of 6.1 percent. The increase in average per capita Black Lung medical treatment costs was due to a surge in the number of costly, compensable in-patient hospital billings in the third quarter. With a cohort of less than 10,000 covered former coal miners, a single procedure can significantly raise average costs. For example, a lung transplant could generate costs of $250,000 to $300,000 and raise the average per capita costs by more than $25,000 to $30,000 or one percent of the expected annual cost of medical treatment care. Average medical costs were well below the target for most of FY 2008 with the exception of a short period of time during the third quarter of FY 2008 when the surge in compensable in-patient hospital billings occurred. The Black Lung Program expects to achieve its long term targets and will continue to analyze the data to determine whether additional strategies are needed to achieve the goal.

While working as a construction superintendent on a U.S. embassy project in Bogota, Colombia, Raymond developed an acute viral syndrome that led to severe cardiomyopathy. In 1995, he received an urgently needed heart transplant that was covered under the Defense Base Act and overseen by OWCP's Division of Longshore and Harbor Workers' Compensation (Longshore). In 2007, his transplanted heart began to weaken and his team of treating doctors recommended a re-transplant. The insurance carrier challenged the medical necessity of the procedure. The DOL claims examiner in Longshore's San Francisco office held an emergency conference with the attorneys of both parties that resulted in a strong recommendation that the carrier authorize the re-transplant. It was accepted and Raymond received a successful heart re-transplant in 2008. According to Raymond's attorney, "none of this would have happened without OWCP!" As demonstrated by Raymond's circumstances, the Longshore Division's role as mediator in claim-related disputes can positively and significantly impact the lives of individual claimants. DOL/ESA [Photo credit: DOL/ESA]

Customer Service
To support its communications goal, FECA has established specialist positions, strengthened procedures, and instituted challenging performance standards in FECA field offices. Results include more than doubling the number of customers obtaining information from, or submitting documentation through, FECA automated systems. Since 2003, average caller wait times have been reduced by half; turnaround time to caller inquiries has been reduced by more than 70 percent; response effectiveness has improved by nearly 40 percent; 98 percent of calls meet program standards of quality; and, in 2008, FECA extended access to its Claimant Query System and doubled — to approximately 1.2 million — the number of Federal employees that can obtain information on their claims on line.

In FY 2008, the average time to resolve disputed issues in Longshore claims was 239 days, representing a nine day increase over the 2007 result. The significant increase in Defense Base Act (DBA) injury and death cases — from 347 cases in FY 2002 to 15,141 cases in FY 2007 — in connection with the wars in Iraq and Afghanistan prompted Longshore to establish a new baseline in FY 2008 and new targets for the out-years. OWCP will continue conducting outreach and working closely with parties to contested cases in order to reach a timely resolution.

The Black Lung Program achieved its target for claims processing. The processing timeliness indicator was refined in FY 2008 to better capture performance results by setting goals for four separate categories: Responsible Operator Merit Cases, Trust Fund Merit Cases, Responsible Operator Non-Merit Cases, and Trust Fund Non-Merit Cases. As a result of addressing these cohorts separately, the overall average claims processing time was reduced from 224 days in FY 2007 to 205 days in FY 2008. The Black Lung Program will continue to evaluate the target for this indicator to ensure that it is realistic in relation to performance results.

The Energy program's commitment to providing exceptional customer service is demonstrated by improving the timeliness of recommended claims decisions. The program measures the average days to process initial claims for Part B and Part E claims separately due to the different exposures and conditions covered under each Part. The Energy program exceeded its initial processing performance measure for Part B claims with a result of 164 days against a target of 226 days, and Part E claims were processed in an average of 284 days against a target of 290 days. In addition, the Energy program measures efficiency and productivity in processing final decisions. This measure's primary focus is to increase the number of claimants who receive a final decision within the prescribed regulatory timeframes. In FY 2008, 93 percent of final decisions were issued within 180 days, against a target of 87 percent. During the FY 2010 budget review, the Energy program will evaluate the ambitiousness of FY 2009 and out-year targets based on FY 2008 results.

Costs for this performance goal rose by four percent (from $3,554 million to $3,693 million) from FY 2007-08. OWCP benefit expenditures rose by five percent reflecting regular cost-of-living increases and an increase in the proportion of Energy cases with higher benefit entitlements, including those for cancer, impairment and wage-loss. Other benefit cost changes included an increase in Black Lung Trust Fund interest payments and an upward adjustment in EEOIC program future liabilities. Administrative expenses were three percent lower ($489 million vs. $504 million) reflecting variations in the timing of contract obligations and expenditures from FY 2006 to FY 2008 and reductions in FY 2008 budget authority for the OWCP programs.

PART, Program Evaluations and Audits

Data Quality and Top Management Challenges

Data quality for this performance goal is rated Excellent,⁵⁷ reflecting OWCP's long history of managing workers' compensation case record data and benefit payment histories. Performance measurement, also a long-standing priority for OWCP, relies primarily upon data extracted from internal automated case management and benefit payment systems. Technology upgrades to OWCP automated data systems have made possible more efficient reporting processes and improved statistical report design and content. Enhanced systems also enable OWCP to better test performance data, make quality improvements and increase accuracy. Outside sources, including other Federal agencies, the nationally known research institute, Milliman USA, and the Centers for Medicare and Medicaid Services Office of the Actuary within the Department of Health and Human Services, also provide performance data.

OWCP maintains strict oversight of data entry into its internal systems, with regular on-site review by local managers and formal periodic reviews that check the quality of the claims data record. Other quality tools include extensive checks and edits built into automated data processing system programming, second-tier certifications of claims and payment decisions, telephone call monitoring, and regular performance reviews by district management. Multiple OWCP analytical staff collaborate in the report production, data collection and results measurement processes. Performance results are reviewed frequently, in formal sessions, by OWCP management, which emphasizes a culture of performance accountability.

A fundamental challenge in delivering workers' compensation is to ensure proper payments while providing timely, responsive services to eligible claimants (see Improving the Federal Employees' Compensation Act Program in the Top Management Challenges section of Management's Discussion and Analysis). To that end, strengthening system controls to minimize improper payments remains an ongoing DOL priority. However, improper payments represent a very small portion of the $2.6 billion in total annual FECA benefit payments. DOL's Office of the Chief Financial Officer determined a 0.1 percent error rate in an FY 2007 sampling of FECA payments.

OWCP continues to strengthen system controls. In FY 2008, the FECA program completed the adjustment and testing of the iFECS system to ensure that current medical information for claimants is on file (an OIG recommendation), so that payments are not made to those who are no longer disabled. OWCP also has remedial actions underway that address findings of an FY 2008 GAO report (GAO-08-486) that recommended a revision of the FECA program's performance measures to ensure increased emphasis on payment accuracy, adequate internal controls, and overpayment recoveries; and that the program collect more detailed information on improper payments and use these data to better identify improper payment risks and to address areas of high risk.

The Office of Inspector General determined that discovery and prevention of fraud would be assisted through the routine matching of FECA payment records against Social Security wage records to identify those who are collecting FECA benefits while working. In response to this finding, DOL has included an additional provision into its proposal to reform the FECA that would provide the legal authority to conduct these matches. The FECA reform proposal, which also includes provisions to enhance incentives for injured employees to return to work and address benefit equity issues, was included in the 2009 President's Budget.

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Ensure union financial integrity, democracy, and transparency.

Performance Goal 08-4C (ESA)

Indicators, Targets and Results

Source(s): OLMS union compliance audit information and e.LORS data system.
Note: Costs for this goal are net costs as defined in a footnote to the Cost of Results discussion in Management's Discussion and Analysis. Allocations among the three enforcement areas are provided opposite the old indicators for FY 2006-07 and opposite the new indicators for FY 2008.

Program Perspective and Logic

The Employment Standards Administration's Office of Labor-Management Standards (OLMS) ensures union transparency, financial integrity, and democracy by administering and enforcing the Labor-Management Reporting and Disclosure Act (LMRDA). The LMRDA requires public disclosure reporting by unions and others, establishes standards for union officer elections, and imposes criminal sanctions for embezzlement of union funds. To implement the LMRDA protections, OLMS conducts criminal and civil investigations and union audits, and administers the reporting and public disclosure program.

Union transparency underpins the achievement of union democracy and financial integrity objectives. OLMS measures transparency by tracking the acceptability — compliance with a series of filing standards — of union financial reports filed for public disclosure. The 2003 baseline revealed that approximately 73 percent of union reports met standards of acceptability. Since the FY 2003 baseline of 73 percent, OLMS has consistently achieved compliance rates exceeding 90 percent for the last four years.

OLMS Investigator Robert Loniewski (standing) and Assistant United States Attorney Richard Resnick of the Western District of New York review the facts of the case prior to a court appearance regarding an OLMS investigation. This investigation resulted in the conviction of a former employee who embezzled more than $17,000 from a labor union. The employee was ordered to make full restitution to the union and was placed on probation for five years. [Photo credit: DOL/ESA/OLMS

OLMS measures the effectiveness of its audit and embezzlement investigations by tracking indicators of fraud in a random sample of audited unions. OLMS did not reach its FY 2008 target. However, since 2004, union audits with indicators of fraud have decreased by 1.4 percent — from nine percent to 7.6 percent in FY 2008. The same sampling also determines whether unions are in compliance with critical LMRDA standards for democratic union office elections, such as the timely notification of elections. While OLMS did not reach the target for this indicator, the compliance rate decreased by two percent between FY 2007 and FY 2008 (95 percent versus 93 percent), but remains high overall.

Approximately 25 percent of OLMS resources support the agency's Internet public disclosure system and a wide range of compliance assistance, liaison, enforcement, and regulatory activities to increase union transparency and LMRDA reporting compliance. OLMS dedicates more than 50 percent of its annual resources to support a program of audits and criminal investigations to protect the millions of dollars in dues paid by labor union members. OLMS dedicates about 20 percent of its annual budget to investigating union member complaints of election misconduct and supervising union officer election reruns to assure compliance with LMRDA union democracy provisions.

Analysis and Future Plans

Despite the decreased performance from FY 2007, the level of performance remains high. These results further support OLMS' intent to transition to new performance measures, which clearly demonstrate room for improvement. In 2008, OLMS began developing strategies to achieve success under the new performance goals, including additional internal measures for the timely resolution of union member complaints. OLMS has also identified barriers to submitting union reports electronically, including specific recommendations from a cost-benefit analysis of its electronic reporting and disclosure system.

In 2008, OLMS established the baseline results for three performance measures that will replace the current measures. As demonstrated by prior year results, OLMS has achieved consistently high performance in the current measurement areas. To promote targeted program improvements, the new measures more narrowly focus on key program processes. In addition, the union fraud and democracy measures will no longer rely upon random audits, thereby redirecting resources to targeted enforcement activities.

• Union Transparency. OLMS aims to increase the percent of union financial reports filed electronically to improve their accuracy, completeness, and timeliness for public disclosure on the OLMS Web pages.
• Financial Integrity. OLMS aims to more effectively and accurately identify cases of fraud and embezzlement, which will be measured as the percent of audits resulting in the opening of a criminal case.
• Union Democracy. OLMS aims to improve the timely resolution of union election complaints, which will be measured by the days to resolve the complaints.

A major challenge is the increased complexity of union financial investigations. By employing improved analytical tools and using statistical techniques to identify anomalies in union financial reports, OLMS will strive to more effectively identify criminal violations. OLMS will continue efforts to identify procedures that can be streamlined in order to better serve its constituents.

Net costs associated with this performance goal decreased by fifteen percent from FY 2007-08, mostly due to a shift in OIG audit and investigative priorities.

PART, Program Evaluations and Audits

Data Quality and Top Management Challenges

Data quality for this performance goal was rated Good.⁵⁸ OLMS had relied on annual survey data to report for measurement of performance goals. By replacing the studies presently being used for its performance goals, OLMS expects to greatly improve data quality in all areas. OLMS uses its Case Data System to track investigations and performance. The electronic reporting and disclosure database provides quick access to accurate and timely union financial data. OLMS is in the process of implementing three new performance measures. Each of these measures will rely on data from either the Case Data System or the Electronic Labor Organization Reporting System. Both are mature, robust systems, and OLMS expects that the data retrieved from these systems will allow the Office to track long-term trends and identify areas in which program operations can be improved. OLMS will continue to promote the use of electronic filing for union financial reports that will enable additional error checking for data accuracy. Further, because the data used for performance measurement is available in databases routinely used for agency management, no additional resources will be required to maintain and update the data set, thus improving reporting efficiency over prior efforts which required additional effort to acquire and collate required data.

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Enhance pension and health benefit security.

Performance Goal 08-4D (EBSA)

Indicators, Targets and Results

Source(s): Enforcement Management System (EMS) and Delinquent Filer Voluntary Compliance (DFVC) Tracking System.
Legacy Data: Some indicators not shown for FY 2005-07. Complete indicators, targets and results for FY 2003-06 are available in the FY 2006 report at http://www.dol.gov/_sec/media/reports/annual2006/PGD.htm. See Performance Goal 06-2.2C. The customer satisfaction indicator was dropped this year; FY 2007 results are available at http://www.dol.gov/_sec/media/reports/annual2007/SG4.htm (Performance Goal 07-4D).
Note: Costs for this goal are net costs as defined in a footnote to the Cost of Results discussion in Management's Discussion and Analysis. The cost listed for the first indicator also includes the costs associated with the civil ratio measures. Costs are not allocated to the indicator level for the civil and criminal ratio measures because these programs are not separable into individual costs.

Program Perspective and Logic

The Employee Benefits Security Administration (EBSA) is responsible for ensuring compliance with the Employee Retirement Income Security Act (ERISA). EBSA's activities are essential to maintaining the public's trust and confidence in the employee benefits system. By achieving successful civil and criminal case closure and acceptance rates, DOL demonstrates its success in identifying and pursuing wrongdoers. By providing outreach and education and directly assisting plan participants, beneficiaries, employers and plan officials in understanding their rights and responsibilities under the law, DOL helps ensure workers' and retirees' benefits are protected.

EBSA oversees benefit security for nearly 700,000 private retirement plans, 2.5 million health plans, and similar numbers of other welfare benefit plans, such as those providing life or disability insurance. Benefit plans under EBSA's jurisdiction cover approximately 150 million participants and beneficiaries and over $5 trillion in assets.

Analysis and Future Plans

EBSA achieved its performance goal. The agency reached its performance target for the ratio of closed civil cases with corrected fiduciary violations to closed civil cases. With respect to criminal case work, EBSA reached its target to report cases accepted for prosecution. In 2008, EBSA began implementing a regulation that provides a safe harbor for assessing the timeliness of forwarding participant contributions to 401(k) plans with less than 100 participants. The regulation defines the period under which participant contributions to a small plan will be deemed to be made in compliance with the law. This safe harbor regulation could substantially impact both the civil and criminal enforcement programs because approximately one-third of all investigations conducted by EBSA focus on this issue. EBSA has historically found and corrected violations in a high percentage of these cases. The new regulation, which provides plan sponsors with a bright line rule to follow, could materially reduce EBSA's enforcement ratios, because there may well be fewer violations — the intended purpose of the regulation. It is difficult, however, to predict the magnitude of the impact. EBSA will analyze the impact of the regulation subsequent to FY 2008 results and adjust its performance targets, as necessary.

Each of the indicators in the table to the left are component indicators of the broader "Ratio of closed civil cases with corrected fiduciary violations to civil closed cases" indicator whose performance is presented in the table on the preceding page. These indicators monitor the success of five critical national enforcement priority initiatives. The agency measures the success of these initiatives through ratio performance measurements (see table). The composition of these performance measures may change from year-to-year as the agency satisfies its commitments and assumes new priorities. The Consultant Advisor Project (CAP) ratio, which includes a small number of carefully targeted cases and focuses on the receipt of improper, undisclosed compensation by pension consultants and other investment advisers, is a new program with extremely complex and time consuming cases; baseline data are being collected. EBSA exceeded its targets for the Employee Contribution, Multiple Employer Welfare Arrangements, and Rapid ERISA Action Team projects. Although EBSA did not reach its Employee Stock Ownership Plans project target, the result was a significant improvement over FY 2007. EBSA is reviewing the strategies to improve performance further.

EBSA reached its voluntary compliance target in FY 2008. EBSA continued to monitor its compliance assistance measure that demonstrates achievements in voluntary compliance programs, such as the Voluntary Fiduciary Correction Program and the Delinquent Filer Voluntary Compliance Program. To meet the demands of a rapidly changing and complex employee benefits environment, EBSA will deter and correct violations of relevant statutes, facilitate compliance assistance by plan sponsors, plan officials, providers of services to benefit plans, and other members of the regulated community; and assist workers in understanding their rights and responsibilities via aggressive, grassroots outreach and education.

EBSA investigated a health plan responsible for providing benefits to more than 1,000 restaurant and bar workers in New Jersey and discovered more than 10,000 unpaid medical claims. In addition, service providers to the health plan had charged excessive administrative fees. The Department sued, and in February 2008, the court approved a settlement and appointed an independent fiduciary to take over the plan. The defendants paid $2.3 million to the plan and were barred from ever serving as a fiduciary or service provider to any other ERISA-covered benefits plan.

In addition, EBSA continued to assist workers in getting the information they need to exercise their rights, assist plan officials to understand the requirements of the law, and develop policies and regulations that encourage the growth of benefits. This year, Benefit Advisors continued to provide superior participant assistance by responding to 99 percent of all written inquiries within 30 days of receipt and responding to over 99 percent of telephone inquiries by the close of the next business day. In FY 2008, DOL obtained monetary results of approximately $1.2 billion. Monetary results are a product of EBSA's investigative, compliance and participant assistance activities.

Last year, the Gallup Organization deemed certain aspects of the agency's customer service program as World Class, a designation reserved for only the highest performing organizations. In 2008, the General Services Administration recognized the EBSA Participant Assistance Program with its first-annual Citizen Service Award for excellence in customer service. To continue customer service improvement, EBSA completed work with Gallup to evaluate a Regional office experiencing challenges with customer satisfaction. Through this evaluation, EBSA identified several barriers to customer service success as well as actionable recommendations that would mitigate or eliminate the barriers. Regional staff received customized training incorporating this barrier analysis.

EBSA investigated a Jacksonville, Florida building contractor�s profit sharing plan and determined that the building contractor had withdrawn all of the assets from the plan and used them to operate his business, contrary to law. As a result of the Department�s efforts, the building contractor restored $194,109 to the plan for the benefit of 11 participants.

In 2008, EBSA also continued its critical regulatory role implementing the Pension Protection Act (PPA) of 2006. The President signed the PPA to protect workers and retirees and to encourage continued sponsorship of pension plans. EBSA has the primary responsibility for developing more than two dozen regulations to implement the PPA. EBSA is working closely with the other ERISA agencies (i.e., the Internal Revenue Service and the Pension Benefit Guaranty Corporation) to coordinate respective regulatory and guidance efforts to implement the PPA.

The three percent decrease in net cost of this performance goal between FY 2007 and FY 2008 reflects changes in administrative expenses.

PART, Program Evaluations and Audits

Data Quality and Top Management Challenges

Data quality for this performance goal is rated Excellent.⁵⁹ EBSA's Enforcement Management System (EMS) provides the data for the enforcement ratios. EBSA's quality assurance processes require that individuals not directly involved with the investigation at hand approve all case openings. Cases with monetary results receive several levels of scrutiny, including national office oversight and review. Additionally, EBSA uses a peer review method to conduct quality assurance of randomly selected closed cases. The Voluntary Fiduciary Correction Program data is maintained in the EMS and the Delinquent Filer Voluntary Compliance Program tracking system.

The Inspector General has listed "Ensuring the Security of Employee Benefit Plan Assets" (see the Top Management Challenges section of Management's Discussion and Analysis) as a major challenge for EBSA that cites benefit plan audits, benefit plan fraud, and corrupt multiple employer welfare arrangements as areas of concern. Because these risks go to the heart of EBSA's goal to secure pension and health plans, the agency has taken specific actions, including strengthening benefit plan audits through increased oversight of accounting firms, meeting ambitious targets for civil and criminal cases, and vigorously pursuing fraudulent multiple employer welfare arrangements.

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Improve the pension insurance program.

Performance Goal 08-4E (PBGC)

Indicators, Targets and Results

Source(s): American Customer Satisfaction Index (ACSI) and Federal Register.
Legacy Data: Some indicators not shown for FY 2007. Results for the three indicators that were dropped are available at http://www.dol.gov/_sec/media/reports/annual2007/SG4.htm. See Performance Goal 07-4E.
Note: Costs are not provided because the PBGC is not included in the Consolidated Statement of Net Costs. However, in accordance with the requirements of the Government Performance and Results Act (GPRA), the PBGC's performance reporting is included in this report because its performance goals are included in the Department's performance budget.

Program Perspective and Logic

The Pension Benefit Guaranty Corporation (PBGC) operates in accordance with policies established by its Board of Directors: the Secretaries of Labor (Chairman), Commerce and Treasury. PBGC protects the retirement incomes of 44 million American workers in over 30,000 defined benefit pension plans, which provide specified monthly benefits at retirement, often based on salary and years of service. The Corporation safeguards the pension insurance program and provides exceptional service to its customers, while it exercises effective stewardship over its resources. It is responsible for the current and future pensions of about 1.3 million people, including those who have not yet retired and participants in multiemployer pension plans receiving financial assistance.

PBGC receives no funds from general revenues. Operations are financed by insurance premiums set by Congress and paid by sponsors of defined benefit plans, investment income, assets from pension plans trusteed by PBGC, and recoveries from the plans' former corporate sponsors. However, the PBGC's premium structure does not adequately reflect the risks posed by individual plans. While the Deficit Reduction Act and the Pension Protection Act, both enacted in 2006, made significant structural changes to the defined benefit system, they did not fully address the Corporation's long-term challenges. Although current assets are sufficient to meet liabilities for a number of years, the PBGC does not have the resources to fully satisfy its long-term obligations to plan participants. Further reforms are needed to address a large gap between assets and liabilities ($11 billion as of 9/30/2008).

PBGC uses the American Customer Satisfaction Index (ACSI) survey methodology to monitor its progress in meeting the needs and expectations of participants, premium filers, and other stakeholders. Using ACSI survey results, PBGC evaluates the effectiveness of its services to customers and makes targeted improvements. Another key measure of PBGC mission effectiveness is the time required to provide participants with a final determination of their benefits. To address the shortage of resources needed to satisfy long-term plan obligations, this year PBGC will provide an analysis of options for improving the pension insurance program's financial condition.

Analysis and Future Plans

In FY 2008, PBGC met or exceeded its targets for most of its performance indicators. As demonstrated in the chart, the result for the premium filer customer satisfaction indicator was 72, up two points from last year's record high of 70. This improved satisfaction can be attributed to two new avenues for providing information to practitioners — a free online subscription service and frequently asked questions (FAQs) on the Web site as well as expanded hours of customer support at peak filing times. The ACSI score for participant callers to the Customer Contact Center was 81 this year, up three points from last year — a record high for PBGC. This improved satisfaction can be attributed to increased training of Contact Center staff to ensure callers receive high-quality service. Retirees scored PBGC's service at 89, maintaining a consistently high level of satisfaction of services from PBGC. Finally, PBGC did not meet its target for the average time (number of years) to issue benefit determinations, which increased to 3.3 years from 3 years. The issuance of very complex determinations from plans trusteed in 2004 and 2005 adversely impacted performance measurement and will continue to impact 2009 performance. Process improvement efforts underway should streamline the benefit determination process and reduce process times in the future.

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Through the 2007 PART process, PBGC established a qualitative performance goal to "commit to eliminate PBGC's deficit and account for PBGC's expected losses." While PBGC alone cannot fix the Corporation's solvency problems, the agency is actively supporting efforts to eliminate its deficit and account for its expected losses by providing research and analytical support to Administration policymakers and Congress as they consider alternative reform efforts. To address the shortage of resources needed to satisfy long-term plan obligations, this year PBGC began an analysis of options for improving the pension insurance program's financial condition. The Corporation expects to complete this report in early calendar year 2009.

PART, Program Evaluations and Audits

Data Quality and Top Management Challenges

Data quality for this performance goal is rated Very Good.⁶⁰ PBGC moved from a rating of Data Quality Not Determined in 2007 to Very Good this year with the addition of the benefit determination timeliness measure. The timely issuance of the benefit determination is an important outcome for PBGC beneficiaries. By moving beyond customer service and including an important dimension of PBGC's operations — benefit determinations — PBGC satisfied the criterion of relevance.

Top management challenges include governance of PBGC, information security and implementation of the pension reforms in the Pension Protection Act. To address the governance issues, the Board of Directors amended PBGC by-laws to streamline processes and clarify the roles and responsibilities of the Board, Board Representatives and PBGC Director. Continuing with its comprehensive approach to information and infrastructure security and to address information technology security concerns, PBGC completed IT Certification and Accreditation of its general support systems and major applications. This long-term effort will conclude in 2011. Following enactment of the Deficit Reduction Act and the Pension Protection Act in 2006, PBGC focused on drafting regulations to implement the premium reforms. At the end of March 2008, PBGC published final regulations that amend premium rates and payment, and change the variable-rate premium for plan years beginning on or after January 1, 2008.

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⁵²Rows labeled "Dollars not associated with indicators" indicate costs that cannot be associated with the current set of performance indicators. For some goals, indicator costs are intentionally combined by merging cells because program activities are not separable into categories associated with one or another of them (e.g., job training program common measures — entered employment, employment retention and average earnings).
⁵³Net cost as defined in a footnote to the Cost of Results discussion in Management's Discussion and Analysis.
⁵⁴Costs for Performance Goal 08-4E (PBGC) are not referenced because the Corporation's financial statements are not part of the Department's consolidated statements. PBGC's financial statements can be found in their Annual Management Report at http://www.pbgc.gov/docs/PBGCAMR.pdf.
⁵⁵Mandatory benefit payments for Unemployment Insurance and Workers' Compensation programs account for most costs for Performance Goals 08-4A and 08-4B. Because performance indicators and the Department's managerial cost accounting system that generates this information are designed to inform analysis and decision-making related to discretionary budgets and program management, such payments are shown separately and not included in allocation cost models.
⁵⁶Information on DOL's Data Quality Assessments, conducted annually for each performance goal, can be found in the Introduction to the Performance Section.
⁵⁷Information on DOL's Data Quality Assessments, conducted annually for each performance goal, can be found in the Introduction to the Performance Section.
⁵⁸Information on DOL's Data Quality Assessments, conducted annually for each performance goal, can be found in the Introduction to the Performance Section.
⁵⁹Information on DOL's Data Quality Assessments, conducted annually for each performance goal, can be found in the Introduction to the Performance Section.
⁶⁰Information on DOL's Data Quality Assessments, conducted annually for each performance goal, can be found in the Introduction to the Performance Section.