DEPARTMENT OF LABOR

FOCUSING ON THE NATION’S PRIORITIES

    The President’s priorities for the Department of Labor (DOL) include safeguarding workers’ pensions; helping job seekers gain the skills necessary to compete in the 21st Century; reforming programs to give workers more choice and control over their job training and career development; protecting workers through strong and effective enforcement of labor laws; improving workers’ access to health benefits; and managing for results. The 2007 Budget reflects these priorities and continues the Administration’s commitment to workers and their families.

Safeguarding Workers’ Pensions

    The President has proposed comprehensive pension reform to ensure that employers honor the retirement promises they make to their workers, and the 2007 Budget continues that commitment.

    The retirement security of the 34 million Americans who are participating in single-employer sponsored defined benefit pension plans depends on employers keeping the pension promises they make. However, the current system does not ensure that pension plans are adequately funded.

    The Pension Benefit Guaranty Corporation (PBGC) is a Government corporation created to insure benefits promised under private defined benefit pension plans in the event the sponsor can no longer maintain the plan. When underfunded plans terminate, PBGC becomes plan trustee and pays insured benefits. When large plans terminate, they place a strain on the pension insurance system and impose an increasing burden on employers who sponsor healthy pension plans. Over 1.2 million workers and retirees participated in plans that have failed and now receive their benefits, subject to guarantee limits, from the insurance program administered by PBGC. At the end of 2005, PBGC’s liabilities exceeded its assets by nearly $23 billion. Although PBGC will be able to pay benefits for some years to come, the Agency will be unable to meet its long term obligations under current law. Current projections show that the Federal budget funds devoted to paying pension benefits will run out in 2015. At that time, PBGC would liquidate assets held in trust as needed to pay benefits until these funds, too, are exhausted. Underfunding must be corrected to protect worker benefits and to ensure taxpayers do not risk paying for broken promises.

    The Administration’s proposal will reform the funding rules to ensure pension promises are kept; improve disclosure to workers, investors, and regulators about pension plan status; and adjust PBGC insurance premiums to improve the financial condition of the insurance program. These reforms will restore solvency to PBGC and encourage continued participation in the voluntary pension system by healthy plans. The Administration is currently working with the Congress on pension legislation to improve pension plan funding, transparency, and increase PBGC premiums above their current level.

Preparing Workers for Careers in the Fastest Growing Economic Sectors

    Our Nation’s economy is expanding and, as a result, the labor market is changing. The Administration’s goal is for all workers who want a job to find one. The President wants to ensure that the United States meets the education and skills training challenges brought on by the growth in industries requiring high-skilled workers. According to the Bureau of Labor Statistics, 26 of the 30 fastest growing jobs require some type of post-high school education or training. Many high growth industries are reporting shortages of qualified, appropriately skilled employees.

President Bush discusses job growth and job training.

    To address these challenges the President has proposed initiatives and reforms intended to make the Nation’s workforce investment system more responsive to the needs of workers and employers in the 21st Century. The Administration and the Congress have worked together to enact two important initiatives:

    High Growth Job Training Initiative. In 2002, the Administration began this initiative as a pilot to prepare workers for the jobs being created in high growth industries. Through 2005, $256 million in grants went to 130 partnerships of training providers, employers, and the workforce investment system. In December 2004, legislation was enacted to permanently authorize the program and finance it through fees that employers pay when they submit visa applications for high skilled foreign workers to work in the United States. The 2007 Budget provides $125 million for this program, which will train an estimated 50,000 U.S. workers and help meet American industries’ need for qualified, skilled employees.

    Community-Based Job Training Grants. The 2007 Budget continues the President’s commitment to this initiative, which he introduced in the 2005 Budget. Community and technical colleges, working in conjunction with local industries, are a powerful economic development tool. They are accessible to many workers and job seekers who need the education and skills training necessary for improving employment and earnings. In addition, these colleges are well positioned to respond to local employers and help train workers for jobs that are available in their community and region. In October 2005, the Department awarded the first 70 competitive grants, totaling $125 million, through this Presidential initiative. The 2007 Budget provides $150 million, $26 million (21 percent) more than 2006 funding, to train an estimated 60,000 workers.

Giving Workers More Choice and Control Over Their Job Training, Reemployment, and Career Development

    The Administration supports an ownership society, in which citizens have a vital stake in the future of the United States. In keeping with this emphasis, the Administration proposes to reform Federal programs to give workers more choices to obtain the training and reemployment services they need. Existing job training programs must be transformed to meet the needs of workers and businesses in the 21st Century.

    The 2007 Budget introduces an important ownership society initiative, Career Advancement Accounts (CAAs). CAAs will be self-managed accounts available to workers entering the workforce or transitioning between jobs, or incumbent workers in need of new skills to remain employed or move up the career ladder. CAAs will give workers the resources they need to increase their skills and compete for the jobs of the 21st Century economy. These accounts will:

• Empower individuals by significantly increasing workers’ choices in the job training and education they need to get back to work. Workers will have the resources to take the longer-term training that leads to higher paying jobs.

• Triple the number of workers trained by extending training opportunities to some 800,000 workers annually. This will be accomplished, in part, by reforming how training is delivered by consolidating redundant programs.

• Increase flexibility by allowing individuals to use their accounts for training and other services to help them advance their careers.

Protecting Workers

    The President is committed to continuing the Department’s advances in worker protections. The 2007 Budget provides $1.4 billion for the enforcement of labor laws, improving worker safety, and compliance assistance.

    The Department’s Employment Standards Administration (ESA) enforces provisions regarding minimum wages, overtime, family leave, and child labor. Since 2001, productivity in ESA’s labor law enforcement programs has improved and, as a result, the amount of back wages collected, the number of workers receiving back wages, and the amount of union dues protected has increased. For example, compared to 2001, ESA’s investigators completed 15 percent more cases per investigator per year. This has resulted in a 25-percent increase in the amount of back wages collected. The number of audits conducted by the Office of Labor Management Standards has increased by 157 percent since 2001, and the amount of funds recovered by the office has increased tenfold.

    The 2007 Budget requests $772 million for the Occupational Safety and Health Administration (OSHA) and the Mine Safety and Health Administration (MSHA) to strengthen workplace safety and health through strong enforcement and innovative partnerships and cooperative agreements with employers. These efforts will be complemented by outreach, education, and compliance assistance. This balanced approach is producing notable results. Between 2001 and 2004, the workers’ nonfatal injury and illness rate dropped more than 10 percent and the fatal injury rate declined nearly five percent. Between 2001 and 2005, annual mine fatalities dropped from 72 to 57.

Boosting Penalties for Non-Compliance

    In some cases, employers’ compliance with Federal requirements hinges on the threat of enforcement and monetary sanctions. Some of DOL’s current civil monetary penalties have not been raised in decades (other than for inflation) and are not high enough to deter repeated or egregious offenses. To strengthen deterrence, the Administration again calls on the Congress to pass legislation to increase civil monetary penalties for violations of laws administered by MSHA. The Administration proposes to raise the maximum penalty for egregious violations from $60,000 to $220,000, bringing its penalties more in line with those assessed by OSHA. The 2007 Budget also proposes legislation designed to further strengthen enforcement and protect families by increasing the amount of civil monetary penalties that can be assessed to employers who willfully violate child labor laws.

Improving Workers’ Access to Health Benefits

    The President is committed to helping small business owners and their employees gain access to affordable healthcare. The 2007 Budget reproposes a plan to allow small businesses to join together through industry and professional associations to purchase affordable health benefits for their workers. These Association Health Plans (AHPs) will give small businesses the same purchasing power and options that larger firms and unions currently enjoy and would expand health coverage for many uninsured Americans in working families. The President also proposes to allow a broad range of civic, faith-based, and community organizations to offer health benefits to their members through similar AHPs. DOL would oversee and regulate AHPs to ensure that they meet strict solvency and other requirements.

Helping Ex-Offenders Join the Workforce by Expanding Choices for Services

    The Prisoner Re-entry Initiative is a four-year effort led by DOL, in partnership with the Departments of Justice (DOJ) and Housing and Urban Development (HUD), aimed at reducing recidivism and the societal costs of re-incarceration by helping inmates find work when they return to their communities. This initiative harnesses the resources and experience of faith-based and community organizations in assisting ex-offenders. As part of their transition back to society, ex-offenders need full access to job training, housing, and mentoring services provided by faith-based and community organizations—access that can be accomplished through expanded choice. Unlike traditional approaches to serving this population, the Prisoner Re-entry Initiative will enable participants to choose from among a variety of service providers. A local community grantee organization will manage and monitor these opportunities that will allow each participant to decide which service providers are best suited to meet his or her unique needs. The 2007 Budget requests $20 million in DOL, nearly $25 million in HUD, and $15 million in DOJ for the Prisoner Re-entry Initiative.

RESTRAINING SPENDING AND MANAGING FOR RESULTS

    The Administration is committed to ensuring that taxpayer dollars are spent wisely. The 2007 Budget proposes a series of reforms, including legislative action and other improvements to protect taxpayer dollars. In addition, the Department continues its commitment to the President’s Management Agenda (PMA) and to using the Program Assessment Rating Tool (PART) to identify ways it can improve.

Controlling Spending While Getting Results

    Through achieving results and doing more with less, the Department continues to make a positive difference in the day-to-day lives of America’s working families. Since 2001, DOL’s discretionary spending has decreased, but the Department continues to attain positive results and meet performance targets. For example, the Employee Benefits Security Administration (EBSA), responsible for enforcing the Employee Retirement Income Security Act, has continued to meet its performance goals by successfully closing an increasing percentage of its criminal cases, as well as 76 percent of its civil cases, and obtaining monetary results of over $1.6 billion. EBSA’s customer satisfaction score has also increased. The Federal Employees’ Compensation Act (FECA) program met all four of its 2005 goals. FECA reduced program costs by encouraging employees to return to work sooner and by keeping medical costs down. This effort saved $21 million in 2005 alone. FECA also met its medical cost savings goal by keeping its average per case medical costs inflation well below the national average.

    Such results are complemented by the fact that DOL was the first agency to achieve an all-green scorecard on the five Government-wide PMA components. DOL also received the 2005 President’s Quality Award for Performance in Integrating Strategic Management Systems—which is the highest award given to Executive Branch agencies for management excellence and for specific management initiatives as outlined in President Bush’s Management Agenda. This was the first time an agency achieved recognition in this top award category.

Reducing Workforce Investment System Overhead While Training More Workers

    The 2007 Budget proposes reforms for job training that will increase individual choice and train more workers, while reining in overhead costs. The President’s reforms would consolidate several similar programs, put strict limits on overhead costs, and provide States with additional flexibility in deciding how they provide employment services and job training. States should be allowed to redesign their workforce investment systems so that they work better, with less Federal red tape. In return, States should eliminate unnecessary overhead so that more resources can be directed to program participants. Currently, too much funding is spent on competing and overlapping bureaucracies. In addition, the 2007 Budget reduces funding for Workforce Investment Act pilots and demonstrations by 40 percent from the 2006 level. The President’s proposal will save taxpayer dollars while training more workers.

Reducing Improper Unemployment Insurance Benefit Payments

    The Unemployment Insurance (UI) program provides monetary benefits to eligible workers who become unemployed through no fault of their own. The UI program is a joint Federal-State partnership. One of the challenges of the program is preventing improper payments. Almost $3 billion in benefits were paid to ineligible workers in 2005. To attack this problem, the Administration proposes a package of legislative changes that would reduce UI improper payments by an estimated $5 billion over 10 years. The legislation would:

• Impose a penalty for UI fraud;

• Enlist private collection agencies in the recovery of overpayments;

• Charge employers when their actions lead to overpayments;

• Collect delinquent UI overpayments through garnishment of Federal income tax refunds;

• Boost States’ incentives to go after benefit overpayments by allowing them to use a portion of recovered funds on fraud and error reduction; and

• Decrease benefit overpayments by providing more accurate date-of-hire information in State and national new hire directories so that States can quickly stop unemployment benefit payments to those people who have gone back to work.

Enhancing Unemployment Insurance Tax Integrity

    UI is funded through employer payroll taxes. Unfortunately, some employers successfully evade their responsibility to pay those taxes and impair the program’s effective service for other employers and their workers. The Administration is committed to identifying tax violators and requiring them to pay their fair share into the UI system. The 2007 Budget includes a new UI tax integrity proposal that would reduce employer tax evasion by more than $400 million over 10 years. The legislative proposal would:

• Reduce UI tax evasion by allowing States to use a portion of the taxes recovered following fraud investigations for additional tax investigations and prosecutions; and

• Increase collection of delinquent unemployment taxes through garnishment of employer income tax refunds.

Streamlining the Trade Adjustment Assistance Program

    For more than three decades the Trade Adjustment Assistance (TAA) program has provided for the training and income support that many workers have needed following a trade-related job loss. An analysis by the PART found that the program was not well-coordinated with other programs that could help trade-displaced workers return to work quickly. DOL is developing and implementing new rules and strategies to make TAA more responsive and accessible to workers, including:

• Ensuring that all workers petitioning for TAA receive immediate rapid response assistance, including financial and career counseling;

• Encouraging States to provide TAA participants the reemployment assistance available to all displaced workers under the Workforce Investment Act and other programs, including skills assessment, counseling, and job placement services;

• Providing a career assessment for each TAA participant to promote better training and reemployment choices; and

• Providing greater flexibility in training programs by loosening restrictions on distance learning and permitting workers to attend part-time training.

Strengthening Federal Workers’ Compensation Programs

    The FECA and Black Lung Benefits Act programs play a critical role in protecting workers’ economic security, providing monetary and medical benefits, and rehabilitation services to Federal employees and coal miners whose ability to work has been diminished by an occupational injury or illness. The 2007 Budget proposes critical reforms to improve the operation and stability of these programs.

    FECA Improvements. FECA, which provides wage-replacement and medical benefits to Federal employees for occupational illness, injury, or death, has not been substantially updated since 1974. The Budget reproposes reforms to strengthen program integrity, promote benefit equity, and encourages workers to return to work as early as possible. These proposals would save the Federal Government $592 million over 10 years.

    Black Lung Trust Fund Restructuring. The Black Lung Benefits Act provides wage-replacement and medical benefits to coal miners who are totally disabled due to black lung disease and to eligible survivors. The program pays benefits from the Black Lung Disability Trust Fund, which is financed through an excise tax on coal. In the early years of the program, the excise tax did not cover the program’s costs, so DOL had to borrow from the Treasury. Since 1990, the Trust Fund revenues have been adequate to pay benefit amounts and administrative costs, but have not been enough to cover the ever-growing interest accrued on these loans or any of the outstanding principal. As a result, DOL continues to borrow just to pay interest on a debt approaching $9 billion. To restore the program’s financial stability and integrity, the Administration will repropose legislation to restructure the Trust Funds’ debt and eventually retire it.

Updating Key Economic Data

    Each month, DOL’s Bureau of Labor Statistics (BLS) publishes the Consumer Price Index (CPI), a key measure of the Nation’s economic well-being that directly affects the income of some 80 million Americans. To construct this economic indicator, BLS gathers monthly data on prices in 87 U.S. urban areas, and surveys more than 45,000 families to identify their spending habits, the importance they place on the items they purchase, and where they go to buy these items. Changes in the CPI ripple through the economy, influencing such diverse factors as school lunch prices, collective bargaining agreements, alimony and child support payments, and income taxes. Because the CPI has a major effect on the Nation’s economy—including consumers, financial markets, and Government benefit programs—BLS must ensure that its data is accurate and up-to-date. The 2007 Budget includes $8 million to update the CPI’s housing and geographic area samples, thereby improving accuracy of the CPI by incorporating recent demographic and geographic trends and changes in the Nation’s housing stock.

Providing Timely Access to Employee Benefit Information

    Workers need timely, accurate information about their employee benefit plans to make informed decisions about their retirement and plan for the future. Additionally, DOL needs timely data about the status of pension, health, and welfare benefit plans to evaluate plan sponsors’ financial obligations and to ensure compliance with the law. The 2007 Budget includes $12 million to allow EBSA to launch a new data system that will electronically process employee benefit compliance information. This new data system will replace the current reporting system, which is paper-based, error-prone, and inefficient.

    When fully implemented in 2008, the new system will provide more timely, accurate, and comprehensive data on employee benefits, and support the President’s plan to ensure the transparency of retirement information for workers, investors, and retirees. The system also will help EBSA and other Federal agencies to effectively target enforcement efforts and strengthen compliance with the law.

Reforming Foreign Labor Certification Processing

    The Permanent Foreign Labor Certification program was designed to help employers hire foreign workers when no willing U.S. worker is available. However, the PART and other analyses have indicated that this program requires major reform. In 2005, the backlog of employer applications stood at more than 300,000, and in some instances it took applicants up to six years to receive the certification necessary to work in the United States. DOL is overhauling the program and automating the certification process. The Department recently created two processing centers to handle new applications and two backlog elimination centers to process and eliminate the application backlog. The Department predicts that the new centers and processes will reduce average processing time to approximately two months, eliminate the backlog by the end of 2007, better monitor fraud, and improve responsiveness to employer requests for foreign workers. The 2007 Budget also proposes legislation to authorize a cost-based user fee to be paid by employers and finance the administrative costs of the reformed Permanent Foreign Labor Certification program.

Returning Programs to Their Original Missions

    The Administration is committed to focusing programs and agencies on achieving their core mission. Two DOL programs that have significantly expanded their activities to include grant-making activities that are not part of their core missions are the International Labor Affairs Bureau (ILAB) and the Office of Disability Employment Policy (ODEP). The 2006 Budget proposed significant reductions in funding for these grant-making activities. Between 2005 and 2006, funding for these two programs was reduced by approximately 22 percent and 40 percent, respectively. The 2007 Budget furthers the commitment to restore ILAB and ODEP to their original mission of research and advocacy by again reducing grant-making activities. The goal is to return these agencies to their original roles and ensure they achieve desired results.

Modernizing the Senior Community Service Employment Program

    The Senior Community Service Employment Program (SCSEP) provides part-time employment, job training, and other assistance to 90,000 seniors each year. The aim of the program is to promote pathways to economic self-sufficiency for senior citizens, and help the business community tap a steady stream of experienced, dedicated workers. A PART analysis indicated that reforms were necessary to modernize and improve the effectiveness of SCSEP. DOL has completed one of the PART recommendations, which called for an open competition of national grants. The expiration of SCSEP’s authorization in 2007 presents a new opportunity to modernize the program. The 2007 Budget proposes legislation to streamline the administration of the program by eliminating multiple, overlapping administrative structures, and strengthen emphasis on training and helping participants secure jobs in the paid labor force.

Strengthening Performance Measures

    An important component of the PMA is ensuring that Government programs produce results and American taxpayers get the most for their money. One critically important component of this results-oriented management approach is the measurement of program performance. DOL continually strives to identify, evaluate, and improve the performance measures it uses to ensure that they lead to better management of programs and a focus on relevant results. One way to evaluate and improve performance is to have common performance measures for programs with similar goals. DOL, in coordination with other Federal agencies, has developed uniform evaluation metrics, called “common measures,” for all job training and employment programs. For example, the common measures for programs serving adult workers focus on whether they find and keep a job and how much they earn after completing the program.

Update on the President’s Management Agenda

    The table below provides an update on DOL’s implementation of the President’s Management Agenda as of December 31, 2005.

	Human Capital	Competitive Sourcing	Financial Performance	E-Government	Budget and Performance Integration
Status
Progress
The Department continues to be a leader of the PMA. The Department is the first agency to receive an all-green scorecard. In Human Capital, DOL conducted program reviews in several regional Human Resource offices, developed and implemented a work-life management plan, analyzed and revised the employee incentive award program, and developed a formal leadership succession plan. In Competitive Sourcing, DOL has completed over 15 competitions, saving an estimated $19 million. DOL also continued the implementation of a new core financial system, completed automation of many data sources, and refined metrics and targets for financial performance plans. In E-Government, DOL improved information technology (IT) security, updated their IT strategic plan, and invested resources in training of their IT project managers. In Budget and Performance Integration, the Agency continued to demonstrate the use of logic models for estimating full and marginal costs, develop more accurate efficiency measures, and use performance and PART results to justify funding requests and management actions.

Initiative	Status	Progress
Eliminating Improper Payments
Real Property Asset Management
Faith-Based and Community Initiative
During 2005, DOL continued to demonstrate that it is a Government-wide leader on the improper payments initiative, eliminating $600 million in improper payments in the UI program and reducing errors in the FECA program by nearly 50 percent for a savings of approximately $3.1 million. To support the Real Property Asset Management initiative, DOL has developed an accurate and current inventory of its property and has begun implementing initiatives within its Asset Management Plan that will ensure that DOL’s real property inventory is maintained at the right size and cost to best support its mission. Regarding the Faith-Based and Community Initiative, DOL continues aggressive outreach, education, and technical assistance for State and local workforce authorities that builds on successful pilot projects, evaluations of existing programs, and the use of practices found to hold promise for successful implementation of program goals.