TODAY’S STUDY: ON CREATING AND NOT CREATING GREEN JOBS

Recovery Act: Slow Pace Placing Workers into Jobs Jeopardizes Employment Goals of the Green Jobs Program
September 30, 2011 (Office of Inspector General (OIG), Office of Audit, U.S. Department of Labor)

What OIG Found

The definition [the Employment Training Administration (ETA) of the U.S. Department of Labor] used for green jobs is jobs associated with products and services that use renewable energy resources, reduce pollution, and conserve natural resources. The definition used by ETA to award grants was in compliance with the requirements of the Recovery Act.

Of the $500 million provided, ETA retained $9.9 million for services such as program administration and technical assistance, and awarded $490.1 million as follows: $435.4 million for three training programs, $48.9 million for labor market information, and $5.8 million to develop capacity for training programs. Grantees have reported expending $162.8 million (33 percent) of the amounts awarded, with about 73 percent of the grant time having elapsed. As of June 30, 2011, $327.3 million remained unexpended. Moreover, the rate of training grant expenditures for the most recent period has decreased.

ETA and grantees have reported achieving limited performance targets for serving and placing workers. Grantees have reported serving 52,762 (42 percent) of the targeted 124,893 participants with 61 percent of training grant periods having elapsed and have reported placing 8,035 participants (10 percent) into employment out of the target of 79,854 participants. The rates at which grantees are achieving their performance goals have been increasing. However, with 61 percent of the training grant periods elapsed and only 10 percent of participants entered employment, there is no evidence that grantees will effectively use the funds and deliver targeted employment outcomes by the end of the grant periods.

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What OIG Recommended

We recommend that the Assistant Secretary for Employment and Training evaluate the Green Jobs program; and in so doing, obtain an estimate of funds each grantee will realistically spend given the current demand for green job-related skills and the job market for green jobs. Any of the remaining $327.3 million of funds determined not to be needed should be recouped as soon as practicable and to the extent permitted by law so they can be available for other purposes.

In response to the draft report, the Assistant Secretary for Employment and Training disagreed with OIG’s conclusion and expects performance to significantly increase. ETA’s intention is that all funds will be expended by September 30, 2013, or reclaimed to the extent permitted by law, as required by OMB

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Results In Brief

The definition used by ETA to award grants was in compliance with the requirements of the Recovery Act because it was derived from the Green Jobs Act of 2007 that covered the seven Green Job industries, and broadly included jobs that clean and enhance our environment. The definition ETA used for green jobs is jobs associated with products and services that use renewable energy resources, reduce pollution, and conserve natural resources. Not all green jobs so defined are new or unique occupations. Some green jobs build upon existing occupations.

One-Third of Funds Were Expended

Of the $500 million provided, ETA retained the remaining $9.9 million for services such as program administration and technical assistance, and awarded $490.1 million as follows: $435.4 million for three training programs, $48.9 million for labor market information, and $5.8 million to develop capacity. Grantees have reported expending $162.8 million (33 percent) of the amounts awarded, with about 73 percent of the grant time having elapsed. As of June 30, 2011, $327.3 million remained unexpended. Moreover, the rate of training grant expenditures for the most recent period has decreased. Grantees reported expenditures for training and non-training grants as follows:

• Training grantees reported expenditures of $126.1 million (29 percent) of the
amount awarded with 61 percent of the grant periods having elapsed;

• Non-training grantees reported expenditures of $36.7 million (67 percent) of the
amount awarded although 95 percent of the grant periods have elapsed. In
addition, 77 percent of the sampled State labor market information and capacity
grantees have received extensions of the period of performance.

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Limited Performance Targets Achieved

ETA and grantees have reported achieving limited performance targets for serving and placing workers. Grantees have reported serving 52,762 (42 percent) of the targeted 124,893 participants with 61 percent of training grant periods having elapsed, and have reported placing 8,035 participants (10 percent) into employment out of the target of 79,854 participants 17 months after the grants were awarded. Of the 52,762 participants served, grantees reported that 20,818 (39 percent) were individuals who already have jobs and enrolled in training in order to retain their jobs, obtain new work, or otherwise upgrade their skills. In addition, according to interviews conducted early in 2011 with regional officials, grantees have expressed concerns that jobs have not materialized and that job placements have been fewer than expected for this point in the grant program.

Training grantees reported placing 8,035 participants and have reported 1,336 participants retained employment for at least 6 months, or 2 percent of the targeted employment retention of 69,717 participants. The low retention rate may be attributable in part to the timing of placement. For participants placed in the quarter ending June 30, 2011, retention information will not be available until the quarter ending December 31, 2011. Nevertheless, the low rate raises concerns that original goals may not be reached before the grant periods expire.

ETA officials stated that there was no linear relationship between grant periods elapsed and grant expenditures and outcomes, but indicated that they expect performance to significantly increase over time due to an initial lag during the start-up phase of a grant.

However, ETA could not demonstrate that grantees were on target to meet grant outcomes nor was there a plan to ensure that they could. The rate at which grantees are achieving their performance goals have shown increases from December 31, 2010 to June 30, 2011. For the latest three quarters, grantees reported participants that completed training were 5, 7, and 11 percent of the targeted 96,658 participants; and participants that entered employment were 1, 3, and 5 percent of the targeted 79,854 participants.

However, with 61 percent of the training grant periods elapsed, only 10 percent of participants entered employment. The performance period end date for a majority of the training grants is January 2012, or 7 months from the reporting period used in this report of June 30, 2011. At this point, there is no evidence that grantees will effectively use the funds and deliver targeted employment outcomes by the end of the grant periods. With no evidence to support grantees were on target to meet outcomes, grantees may not assist those most impacted by the recession and achieve performance outcomes such as placements within the time limits set by grant agreements.

We recommend that the Assistant Secretary for Employment and Training evaluate the Green Jobs program; and in so doing, obtain an estimate of funds each grantee will realistically spend given the current demand for green job-related skills and the job market for green jobs. Any of the remaining $327.3 million of funds determined not to be needed should be recouped as soon as practicable and to the extent permitted by law so they can be available for other purposes.

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ETA’s Response

In response to the draft report, the Assistant Secretary for Employment and Training stated that ETA disagrees with OIG’s conclusion and expects performance to significantly increase following an initial lag during the standard start-up phase of the grants. ETA has put in place measures to monitor progress and provide technical assistance to help ensure success for grantees at risk of not meeting their outcomes.

Furthermore, ETA suggested that when assessing the financial status of the grants, obligations should be used as a primary indicator in addition to expenditures. Regarding unexpended grant funds, ETA refers to OMB’s memorandum dated September 15, 2011, stating that ETA has obligated all of its Recovery Act funds and does not intend to return any money to the U.S. Treasury. ETA’s intention is that all funds will be expended by September 30, 2013, as required by OMB. If a grantee has not expended all Recovery Act funds by September 30, 2013, those funds will be reclaimed. ETA’s response is included in its entirety in Appendix D.

OIG Conclusion

ETA did not provide evidence to support its assertion that grantees will effectively use the funds and deliver targeted employment outcomes by the end of the grant periods. With time periods elapsed on training grants from approximately 50 to 75 percent, and non-training grants nearing completion or completed, performance outcomes remain low.

The use of expenditures along with performance outcomes depicts an accurate snapshot of the current status of the green jobs program. While the effort to assist grantees with technical assistance is a positive step, we remain concerned with the slow pace of meeting performance targets. Finally, we note that OMB’s recent memo also directed Agencies to accelerate the spending of remaining Recovery Act discretionary grant funds while achieving core programmatic objectives. We believe this guidance is consistent with the conclusions and recommendations in our report.

Where appropriate, we made technical clarifications in the report based on ETA’s response to the draft report.

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Results and Findings

…The definition ETA used for green jobs is jobs associated with products and
services that use renewable energy resources, reduce pollution, and conserve
natural resources.

The definition used by ETA to award grants was in compliance with the requirements of the Recovery Act because it was derived from the Green Jobs Act of 2007 that covered the seven Green Job industries, and broadly included jobs that clean and enhance our environment. Not all green jobs so defined are new or unique occupations. Some green jobs build upon existing occupations. For example, existing skills are modified to prepare workers for careers in the energy efficiency, renewable energy sectors and for other green jobs, such as power plant operators; electrical engineers; heating, ventilating and air conditioning (HVAC) mechanics and installers; roofers and construction managers.

For purposes of these grants, Employment and Training Administration (ETA) defined energy efficiency and renewable energy as follows: 1) Energy Efficiency – programs aimed at mitigating the use of energy, reducing harmful emissions, and decreasing overall energy consumption; and 2) Renewable Energy – electric energy generated from solar, wind, biomass, landfill gas, ocean (including tidal, wave, current, and thermal), geothermal, municipal solid waste, or new hydroelectric generation capacity achieved from increased efficiency or additions of new capacity at an existing hydroelectric project.

In addition to the Green Jobs Act of 2007, the definition used by ETA to award Green
Jobs grants was derived from the Energy Policy Act of 2005, and information obtained from ETA-funded Occupational Information Network (O*NET), a database of occupational requirements and worker attributes. (For definitions, see the Background section of the report.) The definition covered the seven industries required by the Recovery and Workforce Investment Acts.

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Green Jobs training grants were awarded in the following areas:

• State Energy Sector Partnership (SESP) provides participants technical and occupational skills in the green jobs industries through state workforce investment boards in partnership with state and local agencies;

• Pathways out of Poverty (Pathways) was for projects that provide training and placement services as a pathway out of poverty and into employment; and

• Energy Training Partnership (ETP) was to assist workers impacted by national energy and environmental policy, individuals in need of updated training related to Green Jobs industries, and unemployed workers.

Grants were also awarded to develop labor market information, and build capacity through purchasing equipment, developing curriculum and hiring additional staff.
ETA did not specify the percentage of funds or number of grants that would be awarded for each sector within the energy efficiency and renewable energy industries. Our analysis of a statistically selected sample of 40 training grants disclosed that the majority of the proposed training was in 1) energy-efficient building, construction, and retrofit industries; and 2) renewable electric power industries. Figure 1 provides examples of occupations and tasks pertaining to the seven Green Jobs industries and the number of sampled grantees who proposed training in each of the seven sectors.

Recommendations

We recommend that the Assistant Secretary for Employment and Training evaluate the Green Jobs program; and in so doing, obtain an estimate of funds each grantee will realistically spend given the current demand for green job-related skills and the job market for green jobs. Any of the remaining $327.3 million of funds determined not to be needed should be recouped as soon as practicable and to the extent permitted by law so that they can be available for other purposes.