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ESA Congressional Testimony

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STATEMENT OF VICTORIA A. LIPNIC
ASSISTANT SECRETARY OF LABOR FOR EMPLOYMENT STANDARDS
BEFORE THE
SUBCOMMITTEE ON LABOR, HEALTH AND HUMAN SERVICES AND EDUCATION
COMMITTEE ON APPROPRIATIONS
U.S HOUSE OF REPRESENTATIVES
APRIL 5, 2005
Fiscal Year 2006 Request For The
Employment Standards Administration

NOTE: DOL Budget Would Streamline Training, Increase Union Transparency, Worker Safety

The Bush administration's fiscal year 2006 budget proposal for the Labor Department released Feb. 7 focuses on streamlining existing programs and increasing accountability but also raises some likely congressional hot button issues, including greater oversight of unions and another attempt at streamlining training programs.

The proposal would increase the Labor Department budget by 7 percent, from $50.7 billion in FY 2005 to $54.5 billion for FY 2006. The proposal includes a slight cut in discretionary spending, from $12 billion in FY 2005 to $11.5 billion in FY 2006, but an overall increase in mandatory spending, from $38.7 billion to $43 billion.

In announcing the proposal, Labor Secretary Elaine Chao told reporters that the budget emphasizes placing training options in the hands of workers, streamlining training programs, and continuing to protect workers' safety, pay, benefits, and union dues. END OF NOTE.

Good morning Mr. Chairman, Congressman Obey, distinguished Members of the Subcommittee, ladies and gentlemen. Thank you for the opportunity to appear before you today to discuss the Employment Standards Administration's (ESA) Fiscal Year (FY) 2006 budget request. ESA is the largest agency in the Department of Labor with over 4,200 employees. The Agency administers and enforces a wide variety of workplace laws and an Executive Order that: (1) protect wages and working conditions; (2) ensure Federal contract workers are hired, promoted, and compensated in a nondiscriminatory manner; (3) provide benefits to certain covered workers who suffer a work-related injury, disease, or death; (4) and promote democracy, transparency and financial integrity within labor unions. Nearly every wage and salary worker is impacted by one or more ESA programs.

ESA is composed of four major program activities: The Wage and Hour Division (WHD), the Office of Federal Contract Compliance Programs (OFCCP), the Office of Labor-Management Standards (OLMS) and the Office of Workers' Compensation Programs (OWCP). OWCP is further subdivided into four distinct workers' compensation programs: The Division of Federal Employees' Compensation; the Division of Longshore and Harbor Workers' Compensation; the Division of Coal Mine Workers' Compensation; and the Division of Energy Employees Occupational Illness Compensation.

ESA's budget request for FY 2006 is $6.6 billion and 4,282 full-time equivalents (FTE). This amount includes $5.9 billion in workers' compensation benefits and $689.4 million for administrative costs of which $4.5 billion is before the Subcommittee; total funding for FY 2006 will increase $87 million and 162 FTE from FY 2005, primarily due to changes and additional responsibilities associated with the Energy Employees Occupational Illness Compensation Program Act (EEOICPA). Additional resources also will fund: (1) the OWCP Central Bill Processing contract, including contract staff providing medical treatment authorization, bill processing and call center services: (2) HHS/NIOSH dose reconstruction activities under EEOICPA: and (3) union audits and compliance assistance to support union transparency and financial integrity, including a new program of union advisory services within OLMS.

Wage and Hour Division 

WHD is responsible for the administration and enforcement of a wide range of laws that collectively cover virtually all private, state, and local government employees. The budget request for WHD is $167.4 million and 1,346 FTE, an increase of $2.9 million from FY 2005. In addition to the discretionary request, the program is projecting an additional $31.0 million from a new H-1B visa anti-fraud fee. The requested resources will support WHD's Overtime Security Task Force which is working to ensure covered workers' overtime rights are secured and a new “Off-the-Clock” Initiative to increase compliance and strengthen enforcement of the Fair Labor Standards Act in those low-wage industries where workers are often not compensated for all hours that they work. The request also supports WHD's ongoing YouthRules! initiative to promote the safe and legal employment of young workers, and the agency's efforts to expand its low-wage industry enforcement to protect vulnerable workers in a broad spectrum of low-wage industries, including those in the agricultural and garment industries. The request will also enable WHD to increase technical assistance and education to encourage voluntary compliance with labor laws.

The budget submission also includes a legislative proposal to increase WHD's civil monetary penalties for child labor violations that cause the death or serious injury of a young worker. The proposal would increase the maximum penalty from $11,000 to $50,000, for any type of child labor violation that leads to death or serious injury, and raise the maximum penalty for willful or repeat violations to $100,000. ESA will submit draft legislation to Congress to authorize these new penalties, which would give added strength to our worker protection efforts.

Office of Federal Contract Compliance Programs

OFCCP ensures that employers doing business with the Federal Government comply with the laws and regulations requiring equal employment opportunity, and that they operate workplaces that are fair and free from unlawful discrimination. OFCCP works to ensure equal employment opportunities for approximately 26 million American workers employed by approximately 200,000 federal contractors.

An increase of $2.0 million for OFCCP activities — from $80.1 million in FY 2005 to $82.1 million for 2006 — is requested to support Active Case Management (ACM) and Functional Affirmative Action Programs to improve results and aid ongoing efforts to build upon the program's strong enforcement record. More workers will be better protected, while contractors will be less burdened in meeting regulatory requirements. ACM emphasizes identification of systemic discrimination and careful application of statistical analyses. Through ACM, OFCCP expects to target and use existing resources much more effectively. OFCCP will also continue to promote industry best practices and equal employment opportunity programs through the Secretary's Opportunity Award, Exemplary Voluntary Effort (EVE) and Exemplary Public Interest Contribution (EPIC) program, as well as its partnerships with nationwide Industry Liaison Groups.

Office of Labor-Management Standards 

The FY 2006 budget request for OLMS totals $48.8 million and 384 FTE, an increase of $7.1 million and 48 FTE from the FY 2005 level. OLMS enforces provisions of Federal law that require financial reports from labor organizations and others, and establish certain standards for union democracy and financial integrity. OLMS conducts union audits, criminal investigations primarily concerning union funds embezzlement, and civil investigations primarily concerning union officer elections. In addition, the Office supervises remedial union officer elections, administers statutory reporting requirements, and provides for public disclosure of filed reports. OLMS also administers an employee protection program in connection with the transit grants program of the Federal Transit Administration.

The budget request includes an increase of $6.0 million and 48 FTE to support union financial integrity protections and to implement a program of union advisory services as part of the agency's compliance assistance activities. The budget also supports proposals that would authorize OLMS to impose civil monetary penalties on unions and others that fail to file their required financial reports on a timely basis. Enabling OLMS to assess civil monetary penalties would encourage the regulated community to comply with statutory filing deadlines. The intent is to improve compliance, not penalize inadvertent lapses in filing reports.

Office of Workers' Compensation Programs

OWCP administers disability compensation programs, which mitigate hardship imposed by work-related injuries or disease, through the provision of wage replacement and cash benefits, medical treatment, vocational rehabilitation, and other benefits to certain workers (or their dependents or survivors). The FY 2006 budget requests $341.1 million and 1,758 FTE to support the Federal Employees' Compensation Act, Longshore and Harbor Workers' Compensation Act, Black Lung Benefits Act and Energy Employees Occupational Illness Compensation Program Act programs. Included in this request are $45 million and 128 FTE in the Special Benefits account using “Fair Share” administrative funds. These funds will be used for the operation and enhancement of OWCP's automated data processing, as well as for periodic roll review activities. The 2006 request for Fair Share also includes a $5.0 million increase for the centralized medical bill processing contract to cover higher contract costs.

The OWCP budget includes $96.1 million and 275 FTE to administer the EEOICPA — Part B program, and $59.9 million and 219 FTE for the Part E program, which was established in FY 2005. EEOICPA provides compensation and medical benefits to employees or survivors of employees of the Department of Energy (DOE) and its contractors. Part B covers those who suffer from a radiation-related cancer, beryllium-related disease, or chronic silicosis as a result of their DOE work; the new Part E provides benefits for covered employees who develop occupational illness as a result of exposure to toxic substances at DOE facilities.

ESA's request also includes two legislative proposals affecting OWCP programs. The first is a proposal to reform FECA to update its benefit structure, adopt best practices of state workers' compensation systems, and strengthen return-to-work incentives. This proposal is expected to generate Government-wide savings of more than $720 million over ten years. Secondly, the Administration will re-propose a restructuring of the debt of the Black Lung Disability Trust Fund (BLDTF), a debt that is estimated to exceed $9.1 billion by FY 2006 unless legislative action is taken. This proposal would extend, at current rates, BLDTF excise taxes, which are due to decline in January 2014; and provide for a one-time appropriation (estimated at $3.8 billion) to compensate the General Fund of the Treasury for interest payments lost as a result of the restructuring. Without this critical legislation, the Trust Fund debt will continue to grow, and seriously jeopardize the Fund's solvency and our programmatic objectives. The Office of the Inspector General has identified the Trust Fund debt as one of the Department's top management challenges.

Implementing the President's Management Agenda 

Program Assessment Rating Tool

The Program Assessment Rating Tool (PART), a central element of the Budget and Performance Integration component of the President's Management Agenda, has rapidly become an important management tool for ESA that is used for program planning and internal evaluation purposes. A total of four ESA programs have been evaluated with the PART thus far, including the Black Lung Benefits Program, the Davis-Bacon Wage Determination System, Federal Employees' Compensation Act, and the Office of Federal Contract Compliance Programs.

The Black Lung Benefits Program was rated as “Moderately Effective,” and was cited for having a clear purpose, strong program management, and a low erroneous payment rate. However, the PART noted the growing Trust Fund debt, lack of cost-effectiveness goals, need for an independent evaluation, and lack of performance measures for the adjudicatory agencies that play a critical role in processing Black Lung claims. ESA intends to address these issues by re-proposing legislation to restructure the Trust Fund debt, tracking and reporting on productivity, and conducting a program evaluation.

Although the Davis-Bacon program was complimented for its strong management, it was cited for longstanding measurement and design problems. To address these issues, Wage and Hour convened a work group to develop clear and ambitious efficiency measures, and continues to work closely with stakeholders to identify and recommend appropriate improvements to the program.

The Office of Federal Contract Compliance Programs was originally rated “results not demonstrated” due to its lack of data documenting program results, its inability to measure year-to-year efficiency improvements, and its need to simplify regulatory requirements, and modernize its data collection systems. However, since its initial assessment, OFCCP's score was raised to 65 or “adequate” as a result of the program's aggressive steps to address the PART findings. The program: (1) Sponsored an external evaluation and in-house impact study; (2) Established an efficiency measure to track usage of FTE resources per systemic discrimination case resolved; and (3) Assessed the utility of the Equal Opportunity Survey.

The Federal Employees' Compensation Act (FECA) was rated “Moderately Effective” and has taken a number of actions to address the findings, including a program evaluation; setting government-wide goals for reducing occupational injury and illness as part of the SHARE initiative; providing more timely FECA liability estimates, establishing customer service measure baselines, developing an efficiency measure to improve the program's cost-effectiveness, and seeking legislative reforms to update and improve the program and strengthen return-to-work incentives (as discussed previously).

ESA seeks to continuously improve overall program effectiveness and the efficient use of taxpayer dollars through the use of performance measurement tools such as the PART. The 21 st Century workforce is changing rapidly — the PART will assist us in efficiently keeping pace with the workforce of the new millennium. 

President's Management Agenda Scorecard 

ESA continues to make solid progress in implementing the President's Management Agenda. As of year's end, the Department of Labor's internal program-level management scorecard showed ESA with three Green status scores, one Yellow status score, and four Green progress scores in its programs, a marked improvement from last year's four yellow status scores.

Conclusion

Mr. Chairman, this concludes my comments on ESA's FY 2006 proposals. I will be happy to answer any questions you or the Members of the Subcommittee may have.

 

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