Moving Toward Market-Based Government: The Changing Role  of Government as the Provider

The Workforce Investment Act (WIA) of 1998 required states to streamline employment and training services and established three separate funding streams for serving youth, adults, and dislocated workers, for which about $3.3 billion was appropriated for fiscal year 2003. The formulas for distributing these funds to the states were left largely unchanged from those used to distribute funds under the Job Training Partnership Act (JTPA) of 1982, which served a different set of target populations. In anticipation of the upcoming debates on WIA's reauthorization, you asked us to review these formulas in the context of current program goals.

Specifically, you asked us to assess the formulas used to distribute funds to the states, identifying any mismatches that might exist between the formulas and WIA's program goals and populations served and identifying where the formulas are most vulnerable to wide fluctuations in funding levels from year to year.

To identify issues associated with the current formulas, we: (1) summarized relevant provisions of the WIA statute and compared formula factors with target populations for each program, (2) analyzed the U.S. Department of Labor's formula calculations and states' historical allocations to identify factors that contribute to fluctuations in yearly funding levels, and (3) interviewed key experts and program stakeholders and reviewed relevant literature on federal workforce training policy and federal funding formulas. We conducted our work from December 2002 to February 2003 in accordance with generally accepted government auditing standards.

On February 28, 2003, we briefed your offices on the results of our work. This report conveys the information provided during that briefing.

Sigurd R. Nilsen, Director Education, Workforce, and Income Security Issues